Last week, we wrote about Lufthansa Cargo’s second open innovation contest, which is looking for ideas to improve customer service in the air freight industry. To get a better understanding of how the initiative works, we got in touch with Erik Feder, the project manager behind the Air Cargo Innovation Challenge. Feder works at HYVE, a European crowdsourcing and open innovation company that is helping Lufthansa Cargo run the project. Feder took some time to explain HYVE’s role in putting the contest together and to give his thoughts on what makes a successful open innovation challenge.

Anton Root, Crowdsourcing.org: I’ll begin by asking about HYVE – why do you think Lufthansa Cargo chose to work with you last year and again this year to run the challenge?

Erik Feder, Air Cargo Innovation Challenge project manager: This is the second Air Cargo Innovation Challenge. The simple answer is that because it went so well last year – that’s probably a big reason why they decided to do it this year. Also, they’re looking for ideas that come from outside their four walls, from customers as well as people who ship and who have experience in this. Lufthansa Cargo decided to do this with us because they see that it works for a lot of companies and that it can be very beneficial to solicit ideas from around the world.

It really does give a company a chance to get some really interesting perspectives on what they do, and on how what they do is seen. They’ve gotten some interesting ideas. Some of them are really out of the box and really wild, and some of them are not so wild, but a lot of them are very, very good. Lufthansa Cargo sees it as a benefit to them, because they get these ideas from people all over the world. Some of them may be professionals in the cargo industry, some of them may not, but there are interesting ideas out there. And it benefits the contestants in a lot of ways too, so it’s a win-win.

I’ve heard of Lufthansa, of course, but not its cargo-shipping subsidiary. How have you guys managed to attract an active community to this somewhat unexciting field?

Well, there are a lot of ways, from a crowdsourcing perspective. We did do some media stuff, sending out emails to people in the industry, or anyone related who may be interested in covering the challenge. Some eyeballs will see it and maybe check it out and think, “Hey, I’ve got some ideas on this.” And it’s really easy to submit an idea. It’s free, of course, but you’re talking about minutes to register and submit and idea. Of course, you have to have an idea, but a lot of people do have great ideas.

As I said, Lufthansa Cargo did this challenge last year. So, we’re able to go back to the people who were registered for that challenge and say, “Hey, just so you know, there’s another one, maybe you’re interested in taking part.” And because we do work for different companies, we’re able to build up a database. We offer people the possibility to sign up for a newsletter, where they can be informed when future contests are launching.

We also try to get universities involved, we send them information telling them it’s open to their students. We very much encourage student participation. And of course, we’re talking about the web, so there’s always a chance that these things go viral, and that has happened in the past – we start to get coverage, interest, and people going to check it out. They tell people about it and somebody posts something, and that gets picked up, and hopefully it steamrolls. As I said, the last contest went really well. I think we had something around 250 ideas submitted, and a lot of participation – a lot of members who joined, ideas, and comments, and stuff like that. This challenge is looking good so far too, we’ve gotten a good turnout, and we’re just hoping it keeps going.

I wanted to ask about potential security concerns. Is Lufthansa Cargo worried that its competitors may look at this and piggyback off the ideas?

That’s a good question, and sometimes clients do have that concern. On the web, of course, everything is pretty much open, and anyone can look at the ideas. But if you go to the contest, and click on the idea pool, you see a whole bunch of ideas. And if you click on one of the ideas, you’re getting a pretty short blurb and a lot of times comments about that idea. So the genesis of the idea is there, and someone could theoretically piggyback off that, like you’re saying. But the winners get to come and present their idea to the top brass, and in that presentation, there is a lot more detail.

I think if someone piggybacks, they may be getting the genesis of the idea, but they’re not going to be getting all the details. They’re also not going to be conversing directly with the person who submitted the idea, who theoretically has some thoughts about its implementation. At the same time, if the competitor sees an idea, clicks on it, wants to jump on it – they still don’t have the idea before Lufthansa Cargo. Unless the competitor is living on the page, chances are Lufthansa Cargo is seeing it first. And Lufthansa Cargo has some of its experts participating by giving some feedback and being on the site. So they’re aware of the danger, but they’re comfortable enough that it doesn’t deter them from going forward.

I saw there are both messages and comments users can leave – what’s the difference between the two?

If you submit an idea, I can comment on your idea. If you made a comment, it would be on that idea page, about that idea. A message I can post on your profile. If I wanted to say something to you that’s not specific to one idea, which sometimes can be as simple as, “Hey, welcome to the contest.” So, comments are idea-specific and messages are contestant-specific.

In the initial article I wrote about this, I pointed out that you are getting a lot of interactions among the members. Why do you think you’ve had success in that?

I know you said at the beginning that cargo is not that interesting, but we try to pick things that at least try to be interesting. If you look at the ideas, some of them are cool and pretty interesting. When you start thinking about different ways to apply apps to customer service, or loyalty programs, there are some pretty cool ideas in there. I think the subject has the potential for that.

In addition, if you check out the prizes that Lufthansa Cargo is offering, we do offer a specific reward for the most valuable participant. What that means is a combination of the person who is submitting the most ideas, the best ideas, being helpful to other contestants, making suggestions on other ideas – we get that kind of stuff a lot. The most valuable participant is going to get 25,000 Lufthansa Miles and More Miles. I think the ideas are cool, and there is an actual prize incentive as well.

I was curious about that – even for the grand prizewinners, there is no monetary prize, as far as I understand, right?

There is no actual money. There is a trip to Frankfurt, which is certainly worth something and is a valuable experience. And winners get to meet the top brass at Lufthansa, which could lead to a job, or future engagement. It also gets you to interact with other like-minded people, whether they are cargo professionals or whoever, on the contest. There is also flight training and air miles, which is not money, but can be used as money if you’re going to be flying.

Offering a monetary prize seems like a way to get people to submit ideas just because there is actual money involved. But if the reward is an opportunity for development, actually meeting the top brass, and going to Frankfurt – do you think that helps to attract the more interested individuals?

I think in regards to a monetary prize, if you’re talking about enough of a prize, then I think you might get more people who think they have a chance to win $20,000 or something. But that’s a lot to offer. If the monetary prize is not very much, only a few thousand dollars, let’s say, I don’t know how much difference it would make. I do think that the people who look at this probably feel like they’re the kind of people who have good ideas. In this contest specifically, one of the categories is app development – Applify Cargo. That has to do with new and modern technology.

If someone is in that field or wants to be in that field and feels he or she has great ideas, even though there is no money, there’s a great way to showcase an idea. As I said, we also encourage student participation. Students are often known for wanting to get their name out there and wanting to meet more people. This is a great way to meet people – other contestants, Lufthansa experts who are on the platform. And if Lufthansa Cargo loves an idea and loves the way the person presents it, there is always a possibility for that relationship to continue on past the contest.

I don’t know how much the prizes narrow it down, but I do think that if the prize money was substantial, you might get some more participation from people who think they can win $20,000. But I don’t think the prizes, the way they are, really discourage anyone. I don’t think people would be looking at the challenge if they didn't have some interest in this kind of stuff. A layperson who comes across the contest still needs an idea, and they need to know a bit about this field. So money might have a small effect, but the prizes are enough that the participation is still really good and the people see the benefit.

What is HYVE’s role exactly in setting this up and running the actual contest? Do you oversee the contest from the very beginning to the end?

We’re talking to clients, so if a client wants to do something like Lufthansa Cargo, we have to conceive what the contest is. So, we’ll talk to Lufthansa Cargo about what areas ideas could be beneficial in. We ask them to give us some idea of what they’re looking for. We listen to their ideas and do some conception around that. If they’re looking for ideas about X, how can we develop this? What kind of contest can we run that would help them?

We might make some proposals back to the clients about how we think the contest could work, what the themes might be, what kind of things we might ask for. There’s a lot of give and take. In other words, we’re not telling them what the contest is going to look like. Generally, they’re interested in our ideas, so we’re going to go back and forth and come up with something the client is happy with and that we feel can work.

Then, it’s up to HYVE to host it, put together the website, do the campaigning, try to get as many eyeballs as possible to the site – and specifically interested eyeballs, people who we feel have some relevance or would be interested in participating. In addition, of course, Lufthansa Cargo has social media outlets where they have their own followers, and of course we can hit those areas as well. So it’s our job to conceive the idea, put it together, get the site up and going, launch it, and to get people to come and participate. At the end, we’re looking for happy contestants and a happy client.

Have you seen more companies reaching out to you and asking about open innovation? Or is it still a challenge to get companies to understand the value in it?

I think it’s a little bit of both. Certainly, people have heard that it’s been going on and they’re more open-minded than they were some years ago. And we have a good track record. We have a lot of big clients, both international and ones that are more specific to certain countries. We have some big things in the works that I’m stopping myself from talking about, but big international clients. We have a good track record, and that makes people feel more comfortable. We’re able to go back to past contests and say, “Well, look, we did this for X company, and this is how many ideas we got,” and we can give them at least some ideas about how happy the client was with the ideas.

Generally, they’re very happy because we do get a lot of repeat business, and we’re able to really show them how it’s been, what we’ve done, our history. It’s not a new thing that we’re trying, we’ve done this for big, international, billion-dollar companies. We also tend to get some feedback from clients after that we can use, some positive reviews or blurbs. And just the way the world is going, I think people are more open to it because there’s more about it on the web that they can read and learn what it’s about.

Getting close to wrapping up here, is there anything else you wanted to mention about open innovation in general or about the Lufthansa Cargo’s contest?

I think it’s important to mention the kind of ideas Lufthansa Cargo is interested in. I think it’s very good that what we’re doing here is giving a couple of categories for people to focus on. There is Customer in Touch, which is basically dealing with customers. Lufthansa Cargo really identified what really they think are the most valuable traits to customers. Up there is customer service: availability, responsiveness, friendliness, competence, reliability, speed. They're saying this is what they think, but are there other things they’re missing?

Applify Cargo is really important too – how can we use technology to make the process better? The third category is Catch Me, If You Can, which is basically customer loyalty programs. I think it is important to note that with Lufthansa’s passengers, a person’s experience with the company is going to be researching and booking flights, but also taking the flight. What’s their experience like in the airport, at check-in, at the gate, checking out, at baggage, etc.

But with Lufthansa Cargo, that’s not really the case. With Lufthansa Cargo, your experience is setting up, booking, and tracking the flight, maybe, and did it get there when it was supposed to in one piece? So the cargo is flying, but the passenger is not. So Lufthansa Cargo is saying, “We realize that, and we realize that what’s even more critical is that we don’t get to see you on board, or at the airport. We get you when you’re setting it up, tracking it, and at the end. So we want to make sure that you’re happy with that, and what else can we be doing to make this a better experience? What would help you as a customer?”

I think the last category, the Blank Room, is really important, too, because it’s asking for any other idea you have – if anything is falling through the cracks, or if your idea doesn’t really fit in just one of these categories. Whatever it is, Lufthansa Cargo wants visionary, out of the box ideas, whatever they are. I think that’s really cool and smart of them because you don’t want to just limit your contestants to the categories you define. It gives Lufthansa Cargo a chance to say, “If it doesn’t fit, put it here, we want to see it.”

A quick follow-up question on that – by engaging these ideas that don’t fit into the other categories, are they also getting an idea of how customers perceive their services?

That’s one of the ideas, yes. After the contest, they can look through everything, and they can certainly parse it into the different categories and see how much was submitted in each, and what kind of ideas were submitted. They definitely want to see what the perception of them is from the outside. I think that’s a very good reason to run the contest as well. So, I think, the answer is a resounding yes.