Open-Source Innovation
By Julie Sloane

(FORTUNE Small Business) – Any management expert will tell you to listen to your customers, but some companies are going beyond that and letting customers design their own products. Canadian shoe company John Fluevog asks its customers to design shoes they would like to see made, and sets up online polls to rate them. Of 2,000 submissions, six have been manufactured (all sold well). Seattle's Jones Soda, a small beverage company, not only prints customer photos on its labels but also asks for feedback on possible new flavors. The company recently created My Jones Music for customers to post and swap indie music MP3s. In 2005, according to experts, more companies are likely to launch such projects.

"Customers are looking for the ability to interact with the company," says University of Michigan Business School professor Venkat Ramaswamy, 40, who wrote a book on the subject with C.K. Prahalad called The Future of Competition. Technological links such as cellphones and the Internet allow consumers to express their opinions more easily—and frequently—while managers are realizing that consumers can be a valuable source of new ideas. That exchange, says Ramaswamy, is the future. —JULIE SLOANE