Xiaomi: Fueled by Open Innovation

Student comments on Xiaomi: Fueled by Open Innovation

1. November 13, 2018 Zhuopei Chen says:

   To some extent, the business model of Xiaomi is quite similar to Valve. For Valve, users are involved in game modifications on the Steam platform, which became a major source of innovation for Valve. Xiaomi’s fast growth and expansion is largely fueled by its online forum and “Mi Fans” too, and they are able to maximize customers’ life time value through cross-selling. Once a customer buys in Xiaomi’s philosophy, he or she is likely to buy Xiaomi’s other products such as TVs and rice cookers. I wonder, though, to what extent was the innovation at Xiaomi achieved through open innovation? As we can see from the results, their products lack originality and innovation. Are the Mi Fans really contributing to the company’s innovation process?
2. November 14, 2018 mrrobot says:

   It is surprising that Xiaomi would rely on open innovation to develop their products given that “the company had no brand or reputation”. In stark contrast to Xiaomi, Apple explicitly refuses to solicit customer feedback for product design, opting instead to dictate what users want. Apple’s brand and reputation were founded on Steve Jobs’s unwillingness to cater to the masses and his decision to set trends in a top-down manner. I am doubtful that Xiaomi’s decision to crowd-source their product development strategy can translate into any sort of consistent brand or reputation. While open innovation may allow Xiaomi to develop products quickly, I wonder if this method of design results in a muddled company vision and strategy. I also imagine that this may contribute to a lack of cohesion when it comes to marketing Xiaomi’s products.
3. November 14, 2018 Keagan Pang says:

   I love the idea of crowdsourcing innovation from a pool of dedicated customers. At the very heart of Design Thinking is to empathize with the end-users to truly understand their pain points and hence, unmet needs. By involving Xiaomi fans in the innovation process, the end product is far more congruent than any other product that could be dreamed up in a vacuum without user input. I think a salient question here is whether Xiaomi is able to keep up with the Mi fans’ collective imagination!
4. November 15, 2018 MM says:

   The use of open source is quite interesting here and I wonder where the main benefit comes from. Is it from the companies ability to build better products based on input from their following? Or is it based on the open source nature encouraging and building up a large “fan base” which has translated to a large customer base?

   On the IP point, it’s concerning to see they are facing lawsuits in many geographies. Given its rapid diversification and expansion into industries beyond smart phones, it is not surprising that they have been challenged to adequately monitor and control that products coming through their platform are not built on protected IP. I imagine that in the search for rapid growth, they’re okay with taking on these lawsuits, believing that slower growth with tighter controls would ultimately be more costly for them.
5. November 15, 2018 Ahcaros18 says:

   Open innovation seems to be ingrained in Xiaomi’s identity since they built their first products based on Mi fans’ feedback. I think my main concern about their entrance into markets for other products would be whether those innovations would actually result in sales. Consumers may feel engaged and excited by the prospect of participating in the company’s product development process, but they may not actually end up purchasing those products especially if their quality is poorer than other brands. Additionally, what customers demand may sometimes not be congruent with the image or purposes that the brand wants to work towards.
6. November 15, 2018 Kriti says:

   Really fascinating and well-researched paper! It’s interesting how a hard-ware company could crowd-source ideas and garner such a large consumer interest before it even launched or became a brand. I do however wonder, how the company applies the filter on this pipeline of ideas to develop really differentiated and congruent products. I would also question ways in which Xiaomi could engage or incentivize their users for the ideas they contribute to avoid legal issues.
7. November 15, 2018 Peter Le says:

   Fantastic article!! When I think about opensource innovation, Xiaomi immediately came to my mind. With Xiaomi’s “MI ecosystem”, it was able to build an empire based on connected hardwares. Xiaomi’s effort was largely overlooked by the world, especially the western world, evidenced by the comments above who expressed surprise. I think you asked very insightful and thought provoking at the end. How sustainable is Xiaomi’s model remains to be seen. However, I do believe there’s a network effect around Xiaomi’s products.
8. November 15, 2018 Adam Smith says:

   Really interesting article and I learned a lot! To add to one of the previous comments, it’s a bit of a myth that Apple doesn’t do customer research. While the popular narrative is that Apple told customers what they should want, in reality Steve Jobs talked to customers relentlessly. He stood inside Apple stores, listening to customer reactions, questioning how people perceived the products, listening for unmet needs. Jobs and others at Apple did constant customer research to influence product design.
   Xiaomi’s approach of buying a plethora of startups could somewhat be called a form of open innovation. By investing in a wide variety of disparate industries, Xiaomi is incorporating new ideas, new technology, and new people. I question the longer term business viability of this strategy — while incorporating new technologies and exposure to new ideas is good, it isn’t clear to me that casting a wide net across many product categories is the right approach. Does that lead to a lack of focus and a scrambled org? Should Xiaomi instead focus on the core smartphone business and continue to use open innovation to improve that vertical?