On the Putting People First blog, Mark Vanderbeeken does an excellent job of wrapping up insights and findings from the People-Inspired Innovation conference in the U.K. The people-inspired innovation movement attempts to design better and more commercially successful products and services by incorporating information about the needs of real people into the design process. Among the companies mentioned for making people (i.e. users) part of the innovation process: BMW DesignWorks, the BBC, Pitney Bowes and Intel’s China research group. One of the examples is the Pitney Bowes SmartMailer, which was developed in coordination with real users.

Vanderbeeken also posts about the HomeLab from Philips Research, which also appears to be putting some of the principles of people-inspired innovation to work:

“The new HomeLab allows Philips to test its new home technology prototypes in the most realistic possible way… Philips researchers carefully watch how tenants are living with these technologies 24 hours a day through tiny cameras, microphones and two-way mirrors that are hidden unobtrusively throughout HomeLab. According to the scientists who developed Philips HomeLab, being able to study people in their natural home environment for long stretches of time will help them to develop better products, faster. It gives them a true sense of how people are interacting with technology beyond the initial “newness” euphoria, and the test subjects act naturally because they are in a comfortable home setting—not a stuffy laboratory.”

[photo: 10meters.com via Philips]

The FORTUNE Business Innovation blog is pleased to announce the second of its “Get Back in the Box” contests. Douglas Rushkoff, a globally-recognized thought leader on media, marketing and Internet culture, has created a second reader contest based around the notion of “social currency” as described in his forthcoming book Get Back in the Box: Innovation from the Inside Out:

“Today’s marketers believe that the way to capture and retain customers is by engaging in a conversation with them. The strategy is to create a brand so compelling and layered that people want to have a relationship with it. Detroit’s brand managers believe that kids will develop loyalty to one car brand by the time they are 10, and then — if properly engaged over the years — maintain brand “fidelity” throughout their adult lives. Homemakers are to pick one brand of fabric softener over another because they are endeared to the market-research-generated bear that appears in its commercials. Such surface distinctions are no longer enough. The commodification of brands, combined with the widespread use of brands as social connectors, rather than ends in themselves, has made this strategy obsolete.

In an age of interactive media, customers don’t want to communicate with brands or their spokespeople, anymore. They want to communicate through them. Brands for this era can become a form of social currency, offering opportunities for affiliation and, at best, even authorship.

Choosing a brand, today, is more like joining a club. It conveys not simply a willingness to be associated with that brand’s values, but a desire to associate with the people who have already joined. Those brands that can appeal to people on this level — as social facilitators and meaning systems — rise to the level of secular cults. The best brands today are not merely names on products consumers can own, but cultures to which people feel they can belong. And cultures begin with real people.”

Based on that description by Rushkoff, “What is your favorite example of a brand that serves as social currency - a way for customers to communicate not with the brand itself, but with one another?”

Submit your selections over the next few days for your favorite example of a “social currency” and you could win a free, autographed copy of Get Back in the Box: Innovation from the Inside Out by Douglas Rushkoff. The most innovative entry, as judged by Douglas, is the winner. That’s all you need to know – so start submitting today (either by adding comments to this blog entry or sending email responses with “CONTEST” in the subject line to: basulto@gmail.com).

In a recent issue of The New Yorker, Malcolm Gladwell (author of The Tipping Point and Blink) described the efforts of Project Delta to find the perfect cookie that would be both healthy and great-tasting. Moreover, the perfect cookie would have to “delight” consumers, not just provide nutrients. What, you may ask, does creating the perfect cookie have to do with innovation? As is always the case, Gladwell looks at the mundane events around us and finds inspiration: in this case, it appears that Project Delta was a cookie “bakeoff” that was all about finding the best, most innovative method for making the cookie. There were three teams, each representing a different methodology of invention: the XP (extreme programming) team, the open-source team, and a “managed R&D” team that would employ a traditional, hierarchical approach. The winner might surprise you - the “managed R&D” team won, with 44% of the vote!

If you’re still scratching your head about why a traditional R&D team was able to outsmart a “Dream Team” of the industry’s best cookie thinkers employing an open-source innovation model, Noise Between Stations has an excellent analysis:

“For anyone thinking about how to arrange people to create innovative products I’d say [Gladwell’s article] is a must read primer. With a couple caveats:

1. The “open source” and XP methods are for building products, not for inventing new ones. The article illustrates why they don’t work well for inventing new things. We need some vocabulary to distinguish between innovation teams and building teams.

2. Either the implementation of the methods or the description of them lacked key elements of what make them work. Open source is not simply an unstructured group of people contributing independent pieces. In Linux, for example, code is tested and reviewed by a central committee. And XP uses structured roles for programming vs. reviewing.

The explanation of getting team size right alone is worth reading the article for. Some expertise on the team is good, but too many people create friction in the process and impedes progress.”

[pic: Chocolate.com]

On October 24, Hugh MacLeod of Gaping Void announced the launch of an innovative marketing campaign for Budget Car Rental called Up Your Budget. The marketing campaign is being completely managed and run via the blogosphere - there was no press release, and no trappings of a typical marketing campaign - and this was for a major company that ranked third in its industry! It was, as Henry Copeland pointed out, “the first blue-chip marketing campaign created by a blogger, illustrated by a blogger, run on blog software, advertised exclusively on blogs and first reported by blogs.”

While the marketing campaign has attracted a lot of blog support, some bloggers - like Evelyn Rodriguez of Crossroad Dispatches in a blog post called Dear Budget-Train Clue Rental - questioned the rationale of such a marketing campaign:

“As a blogger, I couldn’t help noticing your new marketing campaign. But I write now as a customer, not as a blogger… I have a time budget. I’ve no time for contests. Yet give out $160,000 to the most disruptive ideas - from employees or customers - who cares where the best ideas come from? - and I’d been intrigued to participate in investing in my own future customer experience. Why not incent us to come up with reasons so that a mere $3/day or $5/day or $15/day difference won’t make us fickle? (You know you’re a commodity when I have to look for the rental agreement jacket to remember which agency to return the car to at the airport.) It’s self-evident that I like, trust and read blogs, but I ain’t changing my rental car buying behavior one iota. Next time I’m going right back to the comparison engine, 100% blog campaign or no… Ah… but give me a remarkable distinguishable service and experience, and then you’re conversing.”

The key, I think, to understanding the innovative new Budget marketing campaign is realizing that Budget’s brand had become a “roadblock.” The very name implied cost savings - and customers had a difficult time looking beyond the notion of cost savings when deciding whether or not to use Budget. Hence, Budget was perenially the third-largest American car rental agency, year in and year out. Customer who wanted superior customer service or a “hip” car rental experience or anything else simply looked elsewhere.

What happened, though, was that Budget finally realized that its brand had become a “roadblock.” With that in mind, they went out and tried to change things. At Budget Truck Rental, for example, they changed their advertising style to include cute cartoons pasted on the sides of trucks. (To see how effective this is, check out Budget Truck Rental’s actual moving guidelines in dry, bland text.) This was the first step - convincing customers that the company had more to offer than just cheap prices - that there was a personality inside the company. The second step was to change the very perception of the brand: the whole point of the blog-inspired Up Your Budget contest was not to increase brand consciousness - it was something more profound: to alter the very notion of “budget” through the Up Your Budget Treasure Hunt. The third step, no doubt, will have to do with the unlocking of value at Cendant, the huge travel and real estate conglomerate that owns Budget. Once Budget breaks free of the huge umbrella company, one can only expect more innovation and more original thinking from the car rental company.

As an interesting footnote: at the upcoming FORTUNE Innovation Forum in New York City, there’s a panel discussion about “Brand Roadblocks,” in which executives from Avon Products and Yum Brands discuss ways that brands can typecast or pigeonhole a company into standard ways of doing business. A brand, as Budget found out, can actually block you from pursuing dynamic, new paths to innovation and growth. The question becomes: How do you break through this roadblock?

(photo credits: Gail on the Web and happysteve via Flickr)