(Article) Füller, J., Hutter, K., & Faullant, R. (2011). Why co-creation experience matters? Creative experience and its impact on the quantity and quality of creative contributions. R&D Management, 41(3), 259-273.
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key insights: The first key insight is that co-creation in the form of a design competition, enables companies to be seen as customer-oriented and innovative, and the company gets insight into trends and innovative ideas. This can result in a stronger brand and increased customer loyalty, but only if the company creates a positive experience for the participants.
The second key insight is when a co-creation platform is used by the participants, the company does not only receive ideas, but it allows the participants to interact with like-minded people, build social networks and establish a sense of community. This contributes significantly to participants’ positive co-creation experiences which leads us to our third insight. The third insight is that the outcome/results of the co-creation is strongly linked to the experience of a co-creation competition. If a participant has a positive experience through the co-creation process, they are more likely to perform at their peak levels and contribute with designs which are considered to be extraordinary by an external jury.
implications: First, as an implication to a business the article helps pave your own path to participation.Going from customer insights to co-creation or even customer as brand, the way you choose to integrate customer participation in the company’s business is the first step; depending on your captivity, team structure, working structure and values there are various ways to include customer engagement in the product life cycle.
In this the need to add the factor that the product for the customer is a reflection of socio-cultural values is very important as no one wants to tie themselves to things they deem “wrong”. Secondly, there are ways that one can induce customer collaboration, the most effective ones are: providing virtual truthing, enabling customization, to create communities and to use collaboration.
limitations: Co-creation is not applicable to all sectors and types of business. For example, in technical sectors you’ll require many skills, you may have a lower rate of response and the result can be negatively impacted. Also, the co-creation competition will not apply in B2B or service sector. Indeed, as co-creation is already an integral part of service, co-creation competition may be irrelevant.
As a second limitation, it is explained in the text that the positive results of the experiment are due to the satisfaction that emerges from the participants. If they are not satisfied, they might not participate in the next experiment. The company could lose creative people and not be able to use the co-creativity contests as a source of innovation.
Finally, having too much competition in co-creation events can lead to failure. The satisfaction of the participants comes from a feeling of autonomy, competence, and task enjoyment. But also, to receive feedback on the creations and to collaborate with each other. But when the competition is too tough, there’s no more collaboration and feedback, the task enjoyment is much lower due to stress.
further references:
(Article) Venkat Ramaswamy, V., Ozcan, K. (2018). What is co-creation? An interactional creation framework and its implications for value creation. Journal of business research, 84, 196-205.https://www.sciencedirect.com/science/article/pii/S0148296317304721?casa_token=YnGkCUChatoAAAAA:aRZ1tNo9le0yodowvxSSSSOIS4jb0LiENQa02LCeo97OXICBaNwGvc23uSel1miDCz9tQhLn
(Article) Cossío-Silva, F., Revilla-Camacho, M., Vega-Vázquez, M., Palacios-Florencio, B. (2016). Value co-creation and customer loyalty. Journal of business research, 69, 1621-1. https://www.sciencedirect.com/science/article/pii/S0148296315004518?casa_token=0gNLKQYhLQcAAAAA:9Gm8qDDXez5I_tlDwQaifOWUnuogsk3uywx08JzZUFPh_RHEk1yGUZVeQkM8Oq3JOXZS-QNT
The first one develops a definition of the concept of “co-creation”. Indeed, a large body of papers are using the term “value co-creation”, but without clear definition and consensus on what « co-creation » is. We chose this reference because indeed, some of us had some difficulty in clearly understanding what the term “co-creation” meant when reading our main article. The second one analyzes the relation between value co-creation and customer loyalty in the framework of services firms, from both the attitudinal and behavioral viewpoint. The results show that a significant relationship exists between value co-creation and attitudinal loyalty. The latter also significantly affects behavioral loyalty.
(Article) Muralidharan, R. (1997). Strategic control for fast-moving markets: updating the strategy and monitoring performance. Long Range Planning, 30(1), 64-73.
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The most important key points of this document are the variables that make external and internal R&D easier or harder. We want to highlight the cognitive distance (any difference between two company makes this distance bigger), the transaction cost (the cost of externalizing R&D instead of doing it internally, and the absorptive capacity of the company (if they are able to use optimally external R&D or not)
We identified 4 managerial implications. The first one is that if you are a well-established company and you need to innovate just to maintain your status quo you should opt for a partnership with a related industry company. Depending how much you are investing in it will be an almost certain success. The second implication is that if your company is not solid and you need to innovate to remain in the market and not to fail, you should implement a partnership with an unrelated industry company. It will be harder and more complex to implement but if it turns out to be successful, it will be very likely to have a radical innovation that could put you as top-level company. Third implication is that depending on which are your goals, you can opt for different options. If you want to expand your core business, you should adopt a partnership with an unrelated industry company to gain new knowledge and create innovation in other businesses to implement in your company and expand in other sectors. The last implication is that if your company is competing in various sectors, you should try to implement a collaboration with an unrelated company because you have different field in which innovation can be applied and implemented
We found limitations in some of the managerial implications. The first limitation is about maintaining status quo, so we said that to stay safe, you should partner with a company in the same industry, but it’s not always safe. Some industries are highly competitive, for example the biopharmaceutical industry is really competitive and being in this industry increases the risk of opportunistic behaviors. A manager should really be careful in which industry he operates and if it’s not too dangerous to ally intra-industry.
The second limitations of our managerial implications concern competing in different sectors. In order to compete in different sectors, you form a partnership with an unrelated company but that may lead to a failed diversification strategy. For example, in 1996, Harley Davidson tried to launch a perfume, so they ally with a company specialized in perfume and cosmetic products, but it was a huge failure because the sector they chose to expend in is too far away from their own industry. So, a manager shouldn’t compete in another sector if this one is too unrelated to its own.
The first reference is a scientific article, about the different strategies of companies to start or to maintain an alliance and the different challenges companies have to face to stay competitive. Through this article, we learned that the senior management (the executive/top management) has to structure their alliances as learning platforms to assimilate new technologies and skills to revitalize their core operations and to find new uses for existing skills. The alliances platforms will be useful for all the members of the companies so that everybody knows exactly what this alliance brings in addition to the company. Thanks to this efficient share of technologies and skills, they will be able to innovate though new tools and they will find new uses of existing skills. The biggest challenge is to stay competitive, so the companies have to regularly check the efficiency of the partnership.
The second reference is a more concrete example of those partnerships. It is a speech of Bill Mohri, President of M Consulting. In the second part of the video, he gave a concrete example of a partnership between two companies: Microsoft and Nokia. In 2011, 4 years after the first iPhone was launched, they decided to start a partnership to design the smartphone of the future. They were both big companies and they had the same goal/they followed the same way. But this partnership was a complete disaster: in 2013 Microsoft acquired Nokia but shortly after Microsoft admitted that this acquisition was a complete failure. Through this example he wanted to show that partnerships aren’t always successful, even if it is between 2 big firms.
Sources :
Youtube : Partnership Strategy 101
https://www.linkedin.com/pulse/strategic-alliances-success-failures-ron-byron-phd
Show lessSawhney, M., Verona, G. & Prandelli, E. (2005). Collaborating to create : The Internet as a platform for customer engagement in product innovation. Journal of Interactive Marketing, 19(4), 4 17. https://doi.org/10.1002/dir.20046
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Key Insights
The article contrasts two perspectives: the traditional one on customer participation in the new product development process. In which companies seek to hear the voices of customers. But where they have a particularly passive role. In this perspective, the relationship is one-way: it goes mainly from the customer to the company and the knowledge captured is limited. And the emerging perspective of customer collaboration in virtual environments. The environments enhance customer collaboration by helping companies to engage in conversations with customers rather than importing knowledge, to gather individual and social knowledge, and to engage customers directly or through third party mediators.
Implications
First, Internet-based mechanisms (forums, online surveys etc.) should be used to support different stages of the new product development process and to acquire different types of knowledge. They support the content dimension of knowledge by allowing the firm to gain insights into knowledge that would not be possible to obtain using traditional research techniques, but they also support the process dimension by creating a strong sense of belonging to virtual communities which increases customers’ willingness to share knowledge. Then, the adoption of collaborative innovation with customers should come with organizational changes because true co-creation requires a fundamental redesign of marketing processes to support dialogue with customers as well as to share the information within the firm. Finally, autonomous Web-based third parties play an important role as intermediaries in facilitating collaborative innovation by allowing them company to expand its vision beyond its own customers and Website. Therefore, firms can, access competitors’ customers who are unlikely to interact directly with them.
Limitations
The key constraint of the co-creation is the willingness of customers to participate in interactions and privacy concerns that may limit the depth of information that customers may be willing to share with the firm and even if customers are down for it, it cannot be applied in all sectors. Then, consumers involved in the creative process, although supposed to be representative of the company’s target, can imagine a product that meets their expectations and needs but will not completely satisfy those of the end customers. It is important that the result of customer co-creation is in line with the brand image so that consumers are there. Lastly, the ability to absorb technological intelligence from external sources is complicated and generally requires a new organization for companies.
Further References
We found on creativity and innovation management a paper which illustrates the implications of more fun approaches to collaborative innovation and in particular to co-creation, i.e. the interaction and exchange of ideas between users, customers, suppliers and other stakeholders in developing new solutions. And a video that is about the power of collaborative innovation in which Dr Gloor explains how collaborative innovation networks are evolving and how companies can harness their creativity.
Patricio, R., Moreira, A., Zurlo, F., & Melazzini, M. (2020b). Co‐creation of new solutions through gamification: A collaborative innovation practice. Creativity and Innovation Management, 29(1), 146–160. https://doi.org/10.1111/caim.12356
MIT Center for Transportation & Logistics. (2015b, April 29). The Power of Collaborative Innovation by Peter Gloor[Video]. YouTube. https://www.youtube.com/watch?v=-d7emYMMuIc
(Article) Almeida, P., Dokko, G., & Rosenkopf, L. (2003). Startup size and the mechanisms of external learning : increasing opportunity and decreasing ability?. Research Policy, 32(2), 301-315.
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For this workshop, we have chosen the article ‘Startup size and the mechanisms of external learning: increasing opportunity and decreasing ability? It is about how people and organisations exploit technological opportunities. Three elements can provide useful opportunities for companies to source technological knowledge. These are alliances, such as two companies operating in the same location in order to work together peacefully, the mobility of experts, and the informal mechanisms associated with geographical co-location, i.e. when two or more independent companies cooperate in different departments such as production, sales or development.
We have learned in this paper that the size of the organisation can have an important impact on the extent of external learning because it affects the likelihood of learning through formal and informal mechanisms differently.
Through an examination of a sample of startups, it was found that external learning increases with startup size. Regardless of the size of the company, companies learn from alliances. However, regarding mobility and geographic co-location mechanisms, external learning decreases with firm size. This is because as firms grow, they will have more opportunities to access and exploit external knowledge, but their motivation to learn from more informal sources may decrease.
There are several mechanisms that can be used to help the development of knowledge within the company. The first mechanism is the formation of strategic alliances, which means that strategic alliances are agreements between two or more separate companies to collaborate on the manufacture, development or sale of products and services, as well as other corporate objectives. In a strategic alliance, for example, Company A and Company B pool their resources, capabilities and core competencies to generate mutual interests in the design, manufacture or distribution of goods or services. The second mechanism is the mobility of expert, it’s the proportion of scientists or engineers who help the company in its research and development. Obviously the more the better. The third and last mechanism is the appropriation of informal networks. It could be illustarted by geographically mediated informal networks or colocalization, it means that it is a relationship between several companies that is beneficial because the relationship brings added value thanks to a good knowledge of the environment.
We now turn to the limitations of the managerial implications explained. First of all, creating alliances between several companies is not possible for public companies such as the police. Indeed, these companies work with private data on citizens and cannot share them. It is therefore not possible to establish alliances that require the sharing of private information.
Secondly, hiring experts undoubtedly brings added value to companies. However, in highly competitive sectors with high mobility of experts, there are great risks in hiring many experts. Indeed, if they decide to change company and go to work for the competitor, they will leave with all their knowledge and the company will lose its competitive advantage.
Finally, with regard to informal networks such as colocation, it is absolutely necessary that both companies are on the same wavelength. If they share their workplace, it is important that they have the same culture and share the same values. For example, if we take an extreme case, Patagonia and Total will not be able to work on the same site.
The first further reference comes from the International Small Business Journal and tells us that the size of a company influences the number of resources that the company has, which positively influences the success of their projects. The size of the company therefore influences the success of projects.
The second source explains the TBSF (technology-based small firms) strategy. This article highlights the importance of informal relationships for the exchange of information and resources in companies. The article says that social networks can be used as a tool to expand resources and knowledge in the company.
Flynn, A., McKevitt, D., & Davis, P. (2015). The impact of size on small and medium-sized enterprise public sector tendering. International Small Business Journal, 33(4), 443-461.
Martin-Rios, C., & Erhardt, N. (2017). Small business activity and knowledge exchange in informal interfirm networks. International Small Business Journal, 35(3), 285-305.
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One popular way to generate ideas in companies is through open innovation contests that post all ideas submitted to participants. The authors show that seeing numerous competitive ideas harms the creative performance of others instead of stimulating it. We will see what are the reasons why this creativity is reduced and we will give you some solutions to improve that.The article demonstrates that, in the case of competitive open innovation contests, seeing numerous prior ideas has a negative impact on the creativity performance as the participants have some trouble getting out of the scope of what has already been done, they are influenced and have difficulties distinguishing prior ideas from their owns. Also, participants tend to be less motivated when winning chances are low. Contrary to the case where there is no competition, prior ideas are a source of inspiration, in this case it has a positive influence on the creativity performance. The implication is how to ensure creativity performance and motivation of participants? Firstly, form groups to build an emulation of creativity. Also, insist on other sources of motivation such as networking, experience, feedback, … Indeed, participants tend to be less motivated when the chance of winning the financial reward is low. In terms of limitation, depending on the domain and urgency, it is not always pertinent to see prior ideas as it limits the scope of ideas. Moreover, without competition it has a positive impact on the creativity performance but not to be forgotten that without competition participants might be less motivated.A second key point is the different kinds of problems. Firstly, low complexity ideation problems are problems with many solutions. A problem is considered as simple if all the elements required to solve it are known or accessible. However, for more complex problems, positive stimulation effects of prior ideas can become more relevant. These questions point to the importance of academia and management understanding of the democratization of innovation. A complex problem requires the consideration of several aspects at the same time, and different representations of the problem can be defined according to considered assumptions, information, and opinions. An implication is that behind a complex problem, there is an opportunity for innovating. Companies can use Design Thinking to solve complex problems. It is an innovative methodology for converting ideas and projects into real actions and tangible prototypes. Its aim is to apply a designer’s approach to a problem or an innovation project. This way of thinking and innovating is based on user feedback. Companies that practice this way of working will always be much more creative. They will be ahead of competing companies and can innovate more easily. It is the method behind many successful products like iPod or iPhone. A limitation of this key point is that the complexity of a problem can have a negative impact on innovation. Indeed, faced with a complex problem, given that information may be incomplete, imprecise and contradictory, people can quickly feel discouraged without knowing where to start. This feeling of helplessness is amplified in the management of innovative projects because of the uncertainty and the appropriation of new technologies. For the third key point, we will see in the context of a competition to generate ideas how the way in which previous ideas are given influences creativity. Indeed, we have seen that previous ideas can have a negative effect on creativity, in this point we will see how the way of giving ideas can attenuate this negative effect.
The article we have analysed points out 3 different ways of giving ideas to the participants of the competition:
The first would be to list all previous ideas, the second would be to restrict the number of previous ideas given, the last one would be to categorise the previous ideas.
After analysing these three methods on the same group of people we can see that restricting and categorising ideas has a positive influence on creativity.
The implication of this key point is that a manager can really learn from the fact that creativity changes depending on how ideas are given to an innovation team. This is an opportunity to stimulate the creativity of his teams. It could even go further than just restricting ideas or categorising them. For example, testing the creativity of the innovation team if you give them wacky ideas or the opposite if you give them very traditional ideas. It’s always interesting to find new ways of stimulating creativity to try and change the way of looking at things, especially if the innovation team remains the same. The limitation In the article we are in a competition context. But in a company where we are talking about people working together, we don’t know if the results will be the same. And even in the context of a competition, perhaps if the study had analysed another group of people the results would have been different for exemple if you have a group with a shy person and a person who talks a lot maybe it will not be very effective if the shy person does not give his opinion.
The first additional resource we found is interesting because it talks about the importance of the selection of participants for an innovation contest. This paper gives advice on the selection of participants depending on whether you want to achieve a radical innovation or an incremental innovation. Indeed, it is interesting to identify the people who have the characteristics required to solve the innovation task in the best way to increase the chances of success. Here are 3 tips we have selected: They recommend that innovation managers do not actively search for highly creative people in general. Because they are not conducive to innovation in general and in particular to high levels of incrementality. For the creation of incremental ideas, people with very high levels of domain expertise are counterproductive as participants tend to stick too closely to established principles. In the case where companies are looking to generate more radical innovations, they can call on individuals with creative personalities but beware that their ideas will often be difficult to implement.
The second article is interesting because it raises the issues of pressure in Competition. If a company wants to achieve a goal and they don’t want to find nothing. So, the pressure will lead to less successful innovations because the people doing the competition will limit themselves to simpler ideas. So it would be in the company’s interest to remove any negative stigma associated with a failed competition, if it really wants to maximise the performance of the competition.
(1) Mack, T., & Landau, C. (2018). Submission quality in open innovation contests ‐ an analysis of individual‐level determinants of ideainnovativeness. R&D Management, 50(1), 47‑62. https://doi.org/10.1111/radm.12345
(2) Gama, F., Frishammar, J., & Parida, V. (2019). Idea generation and open innovation in SMEs: When does market‐based collaboration pay off most? Creativity and Innovation Management, 28(1), 113-123. doi:http://dx.doi.org/10.1111/caim.12274
Angelika C. Bullinger, Anne-Katrin Neyer, Matthias Rass and Kathrin M. Moeslein. (2010). Community-Based Innovation Contests: Where Competition Meets Cooperation. Blackwell Publishing Ltd. Volume 19, Number 3, 290-303.
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Community-Based Innovation Contests: Where Competition Meets Cooperation
Executive Summary
A competitive setting was found to generate more creative ideas (Shalley & Oldham, 1997) yet communicating more was found to foster the development of innovations (Monge, Cozzens & Contractor, 1992). The article tackles the duality between competition and cooperation by doing a survey on innovation contests.
We derived two key insights from their findings:
1. A very high as well as a very low degree of cooperative orientation result in a high degree of innovativeness, while a medium degree of cooperative orientation results in a low degree of innovativeness.
2. Boundary spanners (individuals that have a cooperative orientation) are divided into two sub-types: proactive (driven by curiosity, support or assertion) or reactive (people driven by the improvement of their own work).
Out of the 73 innovation contests, 50 were conducted by firms. This is why we’ve looked further into the managerial implications if a manager were to apply these concepts inside the company.
We first advise the manager to estimate the employees’ cooperative orientation with surveys or personality tests. If they are found to be cooperative, making them work in teams might lead to high degree of innovativeness.
We then suggest to the manager to create a work environment that pushes collaboration. Practical solutions are brainstorm-focused meetings and open space offices.
Finally, if the employees are found to be more innovative in a competitive setting, we recommend focusing on the design of the rewards, as to not make the competition to intense therefore unhealthy (Steinhage, Cable & Wardley, 2017).
We have identified three limitations related to these implications.
First, “given the relatively short run time of an innovation contest, this effect is expected to be even stronger than, for example, in a long-standing organization setting”. Therefore, a low cooperation in the long term would not be possible in the long term.
Secondly, employees can be resistant to change (Strebel, 2009). So even if the workplace is made to be a cooperative environment, employees with a higher competitive orientation could prefer to stay competitive.
Finally, managers could be torn between cooperation and competition because trying to implement one could lead to the other. We use the example of Silicon Valley where open spaces were implemented, yet it is a competitive environment.
A. Steinhage, D. Cable, D. Wardley. (2017). The Pro and Cons of Competition Among Employees. Harvard Business Review. https://hbr.org/. Accessed 25 Nov. 2020.
L. Kaufman. (2014). “Google got it wrong. The open-office trend is destroying the workplace.” The Washington Post, https://www.washingtonpost.com/. Accessed 25 Nov. 2020.
Monge, P.R., Cozzens, M.D. and Contractor, N.S. (1992). Communication and Motivational Predic- tors of the Dynamics of Organizational Innova- tion. Organization Science, 3, 250–74.
P. Strebel. (2009). Why Do Employees Resist Change? IEEE Engineering Management Review 37(3).
Shalley, C.E. and Oldham, G.R. (1997). Competition and Creative Performance: Effects of Competitor Presence and Visibility. Creativity Research Journal, 10, 337–45.
Show lessRitter, T., & Gemünden, H. G. (2004). The impact of a company’s business strategy on its technological competence, network competence and innovation success. Journal of Business Research, 57(5), 548-556.
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The first key insight of this article concerns the skills that a company needs to be successful
in innovation. The first is technological competence, which relates to the ability of the company
and its members to create, understand, use and apply leading-edge technologies. The other skill
is called network competence. This includes connecting and having relationships with other
companies to combine each other’s strengths, resulting in greater innovation. The second key
insight analyses the role of a company’s business strategy (policies, plans and procedures, etc.)
in skills development and successful innovation. Innovators will allocate a large budget to the
R&D of their products, look for the most qualified employees and create a strong corporate
culture based on learning and creativity. We therefore conclude that a technology-driven
strategy does not have a direct impact on the success of innovation. In fact, this strategy
develops the network competence as well as the technological competence, which in turn have
a significant impact on innovation success.
The first implication of this article is that a company’s technological competence is not the
only factor in the success of its innovations. Success depends as much on internal technological
strength as on the ability to access the essential technological resources of others through interorganizational relations. In the network economy, increasing attention must be paid to the
capacity of a company to interact with its environment, otherwise it will be limited to its
internal resources (consultants, audits, etc). For example, the partnership between UCL and
Kaneka Eurogentec to accelerate innovation in the field of biomedicines enabled UCL’s
knowledge and Kaneka’s expertise to be combined. The second implication indicates that the
relationship between business strategy and innovation success is not significant. This result
highlights the fact that it is not enough to claim technological leadership. The success pursued
comes from converting strategy into action. A clearly formulated strategy must include the
importance of skills development because it is precisely these skills that will lead to successful
innovation.
Regarding the limitations, this paper looks at the sources of innovation in terms of
technological competences and network competences. However, other factors play a role in a
company’s innovation success such as internal management processes for new product
development. An interesting design theory for product development is modularity because it
subdivides a system into smaller parts called modules, which can be independently created,
modified, replaced or exchanged. By including these factors, we can develop a broader frame
of reference, which would allow further insights into the mechanisms that trigger innovation
success. Another limitation is that the article presents innovation success as the only contributor
to corporate success. Even if innovation success is one of the most important, the manager
should not forget that other sources of corporate success need to be considered at the same
time. We have identified 3 additional sources contributing to corporate success : stakeholder
integration, rapid adaptation to change and sustainability integration.
Further references
Thanasopon, B., Papadopoulos, T., & Vidgen, R. (2016). The role of openness in the fuzzy
front-end of service innovation. Technovation, 47, 32-46.
Martín, G. (2015). Knowledge management and innovation in knowledge-based and high-tech
industrial markets: The role of openness and absorptive capacity. Industrial Marketing
Management, 47, 143-146.
Saebi, T., & Foss, N. (2015). Business models for open innovation: Matching heterogeneous
open innovation strategies with business model dimensions. European Management
Journal, 33, 201-213.
Schreier M, Oberhauser S.& Prügl R.(2007). Lead users and the adoption and diffusion of new products: Insights from two extreme sport communities. Marketing Letters, 18, 15-30.
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This article explains the effect that lead users have on development, adoption and diffusion of a new product when it is launched on the market by studying two extreme sport communities. The first key point that the author does is giving a definition of what a lead user is: “Lead users in a given domain are defined as users who face needs that will be general in a marketplace but face them before the bulk of that marketplace encounters them, and are positioned to benefit significantly by obtaining a solution to those needs”. The second key point consist to say that unlike early adopters, lead users serve to help companies with the products and problems of tomorrow. Lead users are specifically selected by companies to help them find solutions for so-called search fields/problem fields. The last key point is about the author who makes four hypotheses, based on previous studies, in order to understand if they apply even in his two cases. Finally, the findings of his research have shown that his hypotheses are true and that lead users are fundamental for B2C companies.
We selected three main implications of the effect that lead users have on development.
Firstly, companies should integrate lead users as a variable for the development of a new product. Indeed, lead users adopt in an easier way the new products than the other ordinary users. Therefore, the companies should integrate these users before the launching of the product for example during their test phases such that he helps to find what the customer want and are attending. But also integrate them after the launching in the view that these users could help to improve the product.
It can also be interesting to analyze and find what is the profile type of the lead user in the market where the company is competing and why they have this tendency to adopt faster than the other customers.
Finally, these users have also an impact as opinion leader role. In fact, if they adopt the new product and do not have any improvements to do, they can so give arguments to other consumers to buy after them the product. There are two often ways to do that: via the social display by bringing knowledge to other consumers or also via legitimation in the view to present the security of the new product and reassure the clients.
About the limitations, concerning the development of a new product, in reality, the number of lead users in a specified market can be very small. By the definition explained before, you can well imagine that this type of users isn’t so frequent. It can be difficult for the firms in research of innovation to find them because these users are not going to work in all the companies.
We also explained that these users could help companies promoting their product by bringing knowledge to other consumers. However, a lead user is not necessarily an influencer. Indeed, they don’t have all the visibility to promote new products and to give feedbacks widely to potential consumers. Moreover, some people will be happy with the new product but won’t necessarily do word of mouth with other people. A solution for the firms could be to provide visibility and to encourage lead users to promote the new product more easily.
Finally, the implications are based on the assumption that « lead users are ahead of an important marketplace trend » but, it’s very hard to make the difference between lead users and individuals who feel another need than others. It is only over time that it has become clear what really has become a trend and what has not. Companies should probably not start to innovate something with someone that “just” has a good idea if there is no real sign that a trend will follow. Or at least should know that they are taking a risk. They have to balance the risk of missing out on something or investing in something that only a minority is interested in.
Further references
Hienerth, C. & Lettl, C. (2016). Perspective: Understanding the Nature and Measurement of the Lead User Construct, The Journal of product innovation management, 34(1), 3-12.
Korreck,S. (2018). Opening up Corporate Foresight: What Can We Learn from Open and User Innovation?, Journal of innovation management, 153-177.
Stockstrom, C., Chester Goduscheit, R., Lüthje, C. & Hoj Jorgensen, J. (2016). Identifying valuable users as informants for innovation processes: Comparing the search efficiency of pyramiding and screening, Research Policy, 45(2), 507-516.
Show less(Article) Nobelius, D. (2004). Towards the sixth generation of R&D management. International Journal of Project Management, 22(5), 369-375.
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The first key point is the five generations of R&D management. For the first generation of R&D (1950 to mid-1960s), most of the new products that were produced were also sold. During the second generation of R&D (the mid-1960s to early 1970s), the supply and demand were in a more stable relationship, the competition was intensified, and more emphasis was placed on marketing efforts to increase the sales volume. The third generation of R&D can be discerned during the period of the mid-1970s to mid-1980s, when the economy was shivering with high rates of inflation and demand saturation The next identified period ranged from the early 1980s to mid-1990s, when the economy recovered and business people rethought their diversification strategies in favor of returning to their core business. Finally, the predicted fifth generation of R&D broadens the boundaries for companies R&D activities, all in the light of increased global competition, rapid technological change, and the need for sharing heavy technology investments.
The second key point is the Managerial Approach of those R&D generations. The company’s reaction related to the first generation of R&D was to create corporate research labs, labs where technology could flourish. The characteristics, of the second generation of R&D, were typically handled by incorporating R&D into the business unit. Further, the characteristics of the third generation of R&D were met with a stronger focus on the R&D projects, introducing portfolio and project management techniques and structured design methods to improve efficiency. The fourth generation of R&D introduced the concept of lead customers, parallelized activities, and involved suppliers in the development efforts. Finally, the fifth generation of R&D is met by firms taking on a cross-boundary alliance strategy, involving the company network in both research and development, and linking research to development to enhance the overall precision.
The first implication concerns the relationship between the R&D department with the rest of the company. R&D needs to be aligned with the overall business strategy, which will bring many benefits to the company. By integrating technology development with product development the firm can increase lead-time precision, increase the quality of products, reduce development costs and become a foundation for competitive advantage. The second implication is regarding the sixth generation of R&D management. To move forward the new generation management means companies will need new partnerships and cooperation. Since this era will have a focus on the research part of R&D, the research efforts of firms will be connected around the world to achieve breakthroughs and discover new technologies.
However, those implications have limits. The first implication focuses on having a well-functioning interaction between technology development and product development but this could be a real challenge if the company does not work on technology development. For example, phone fabricants can not have a great interaction with the development of 5G since they are not involved in its process.
The second implication which advice to have worldwide collaboration but in the long term, it could weaken the strong links between the research component of R&D and the company. It can also be a problem when the law does not accept collaboration. Those policies prevent collusion.
In order to have some further insight into this R&D topic, it could be interesting to look at these three different articles:
“Learning from R&D outsourcing vs. learning by R&D outsourcing”, by C. Annique Un, Alicia Rodríguez. This article talks about how R&D outsourcing could have an influence on product innovation.
Retrieved from : https://www.sciencedirect.com/science/article/pii/S0166497217309057
“There’s No Good Alternative to Investing in R&D”, by Anne Marie Knott. This one explains how important it is for big companies to make long term investments in R&D.
Retrieved from : https://hbr.org/2018/04/theres-no-good-alternative-to-investing-in-rd
“Measuring R&D Effectiveness”, by I. Robert Szakonvi. This one gives a new approach to measuring R&D effectiveness and allows R&D managers to identify which activities their department needs to improve and how it needs to improve.
Retrieved from : https://www.tandfonline.com/doi/abs/10.1080/08956308.1994.11670966
(Article) Sawhney, M., Verona, G., & Prandelli, E. (2005). Collaborating to create: The Internet as a platform for customer engagement in product innovation. Journal of Interactive Marketing, 19(4), 4-17.
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Internet transforms all aspects of our life and it is also true for company. Here we are focus on research and development and the impact of internet in this sector. With internet company are able to reduce their research and development cost. Before internet area you had to do personal interview or door to door in order to gather information. Today you can ask customer to be part of the team giving their meanings at each step of the development. Given that clients are volunteer they provide better/honest feedback.
Internet gives also the possibility for the customer to take part at each step of the development and it allows a 2-way permanent feedback between clients and firms. In literature and in practice product innovation is generally conceptualized as a five-stage new product development. From the process ideation to product introduction. At each stage, firms need a different kind of interactions. And thanks to internet you can ask the advices of the customer at each stage.
Furthermore, it develops a community feeling between the customers, bringing mutual assistance and reducing the need of call center assistance. Customer doesn’t feel any more like classic customer but appears to be a part of the team. Thanks to internet we can see that fans create a big community. Fans are able to help each other, and it reduce the time that the firm need to answer their questions. To be part of the community also increases individual commitment and brand loyalty.
Manager have to put things in place in order to take benefits from internet. We can, firstly, encourage customers to participate in online surveys, as this is currently the simplest and most traditional use of the Internet for collaborative innovation. Then, business managers should strive to integrate knowledge sharing mechanisms as part of an integrated innovation strategy to support the various stages of the NDP process (from design to product testing). Manager have to share information with customer but also listen to their advice. After creating the community feeling you have to use it, it is necessary for a company to organize its entire marketing department around the community function, and to link the community management function with the division in charge of the New Product Development process.
Unfortunately, there are some limitations to those statements. One limit of this key insight is that this information represents only the proportion of the consumers who are involved in the brand. Indeed, it necessary not represents all the consumers: some of them simply do not want to give their opinion. Furthermore, companies have to adapt to the new information that they receive and redesign their model in function of those information. Otherwise collect information is useless. Create a big community is not always something easy. Indeed, this approach fits perfectly with brand which have a strong identification force like symbolic brands (sport, car…). It is sometimes difficult to build a community/ a group of fans if the target audience is too narrow or for functional brands.
Further references:
(article) Kim, D. (2019). Internet and SMEs’ internationalization: The role of platform and website. Journal of International Management, 100690.
(article) Molinillo, S., Anaya-Sánchez, R., & Liébana-Cabanillas, F. (2019). Analyzing the effect of social support and community factors on customer engagement and its impact on loyalty behaviors toward social commerce websites. Computers in Human Behavior.
(article) Pavez, I., Correa, T., & Contreras, J. (2017). Meanings of (dis) connection: Exploring non-users in isolated rural communities with internet access infrastructure. Poetics, 63, 11-21.
Show lessEnkel, E., Perez‐Freije, J., & Gassmann, O. (2005). Minimizing market risks through customer integration in new product development: learning from bad practice. Creativity and Innovation Management, 14(4), 425-437.
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Key points :
Integrating customers in new product development is theoretically a good idea because a firm can learn from them how to develop innovation and finding new market ideas or solutions;
However, trying this approach will probably lead to failure, especially if it is involved a radical innovation. The process involved too many specific factors that are influenced by the high uncertainty of technology;
It is not impossible to use it, but it requires caution and timing. Find the right customers and integrate them in the right moment is crucial to have success.
Implications :
As we just mentioned, integrating the customer in the new product development process can be difficult, this is why the authors give different recommendations in the article to make it easier. Here are the three that we thought were most important:
1) Find the right customer for the right stage of the NPD: There are two important points that stand out are that it is important to have different type of clients for the different stages of the new product development process and that those customers should have a high degree of involvement. To do so, an example they give is to use a table like table 2 in the article which contains a list of different criteria and gives the possibility to the company to grade the different customers on those. This can help for the selection process.
2) Involve co-developer users: The managers shouldn’t underestimate the contribution of the customers in the development of innovations. They are not just clients and could be very useful during the whole process. The companies must involve more lead users that will work as co-developers with the company’s crew in order to develop radical innovations. The lead users are people that anticipate, well in advance, the crucial needs of the customers. They are, moreover, well qualified experts in their field, ready to contribute to the development of products and services that could generate benefits for them. These forward-thinking inventors could therefore provide a strategic advantage for the making of new innovative products that will anticipate the needs of the customers. Indeed, these external and innovative point of view and knowledge are a precious source of opportunities. However, the identification of the lead user is difficult. Managers must search for lead users on the analogue markets, users with technical knowledge and who answer some criteria such as motivation to innovate and cooperate or capacities to innovate, … and also users for whom the innovation related benefits are high. The managers need to maximise the benefits that the lead user could obtain in order to have a high degree of involvement.
3) Involve the customers from the beginning: The managers shouldn’t wait the last phase of the development of the innovation to integrate the customer. The customers are not just testers and first buyers who give their opinion when the product is almost finished. In this case, the opinion of the customers will not bring a lot to the company. They will just confirm what the company already knows and obvious trends, no real revelation or new information on the customer needs. And it will lead to small incremental improvements of the product, no radical changes. That is why the managers should identify and integrate the customer needs in an early phase of the innovation project in order to develop a product that matches their expectations and needs.
Limitations :
It is complicated to be customer centric for companies because they have to observe what clients really do and not what they say they do. A first limitation is the evaluation of consumer’s attitude because it actually not reflects what are the market needs. A second issue with the customer integration is the scepticism of the management. The example of the article shows that the project management did not believe the usefulness of customer implication. This approach needs to be implemented at the beginning of the process to be useful. Also, the management must be clear with the customer’s contribution; they are not supposed to bring technical knowledge but to help co-developing the project.
Finally, it must not be forgotten that market research often reflects only the present trends and do not provide any information that can help in the process of creation. The main problem is that those kinds of research always focus on future and technology is uncertain. The paper explains that the customer integration can be a great idea to improve innovation developments in companies, but it demands a good timing and vigilance from the management.
Further References :
Belz F-M. & Baumbach W. (2010). Netnography as a Method of Lead User Identification. Creativity and Innovation Management, Vol. 19, Issue 3, pp. 304-313, September 2010
Sanjin Pajo, Paul-Armand Verhaegen, Dennis Vandevenne, Joost R. Duflou. (2015). Towards Automatic and Accurate Lead User Identification. Procedia Engineering, Volume 131, 2015, Pages 509-513
Sandmeier Patricia. Customer Integration in Industrial Innovation Projects. Springer Science & Business Media, 2 août 2008 – 268 pages
Show less(Article) Díaz-Díaz, N. L., & de Saá Pérez, P. (2014). The interaction between external and internal knowledge sources: an open innovation view. Journal of Knowledge Management, 18(2), 430-446.
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Nowadays CEOs don’s ask why to innovate but HOW to innovate because there are so much information and studies that show the growth of the company when they invest in R&D, actually what this research recommend is to see the acquisition of external knowledge must be considered more as a learning opportunity than as a cost. But they must also be aware of the limit between the growth of the internal knowledge of the company and the inertia, besides, be aware to not get so much information on the external sources in order to not be replaced or get expropriated by the partners
After long research, the authors discovered that companies have to take into account three main things:
1- Capacity to absorb information reaches a limit where the company gets stuck. This means that companies who only growth internal knowledge reach a point where they get involved in an inertia state. (“A firm’s absorptive capacity has an inverted U-shaped relationship with innovation”)
2- External knowledge can be dangerous for the company if it is not well managed. This means that at low levels of internal knowledge alliances can take advantage and substitute the company product, but when a certain level of internal knowledge is reached the external knowledge becomes complementary to the innovation.
3- Environment affects innovation. The internal environment of the company must be motivated and with the willingness to innovate, this is hard because people don’t want to change their routines. Besides, the external environment can be dangerous for competition, so in order to have a better growth must exist the willingness to share and not sabotage each other.
This guides the strategy of the company to choose the right mix between internal and external knowledge in order to innovate without inertia and without being substituted.
There are multiple managerial implications of the key insights we have seen.
First a manager has to identify the absorptive capacity of its firm. In fact, the strategy depends on the level of this capacity. Furthermore, more absorptive capacity doesn’t mean more being more innovative.
Secondly, managers should evaluate the knowledge assets inside the company and deploy its strategy accordingly. Because in fact, there is no single strategy for every companies.
After the identification work is done, it is now possible to adopt the best strategy to acquire external knowledge. And this in order to renew the internal knowledge of a company. This can be done in different ways. Through contracting, for example with licenses, buying new equipments or outsourcing its research, a firm can enter new markets and obtain highly specialized technology. Firms can also use alliance, with other companies or even universities, it is a different way to acquire external knowledge and it is useful for tacit knowledge. Finally, by hiring qualified personnel. Personnel with professional experience. Sometimes when you want to implement a new project in a new firm, you need to move people to transplant the project into the new firm. It helps to gain time and to have a full advantage of the project.
For the limitation, we can say first that if a society is too accustomed to being overly dependent on internal knowledge, this can create organizational routines that can have several negative effects on a company’s ability to innovate. Indeed, it is rather easy to understand that if we do the same things the same way all the time, it is complicated to keep innovating in this way. Moreover, it could be very difficult for a society to go out this type of routine.
Another issue may be that companies must be able to find another society with activities and knowledge different enough to be able to learn something new, but not too far either to be able to understand each other. The perfect partner is thus difficult to identify.
Finally, the moral hazard is a limitation that directly joins the previous one. The moral hazard will mean that when a company tries to identify a potential partner, the latter may very well hide its real level of knowledge and thus support the presence of information asymmetry.
The presence of moral hazard is reinforced by the fact that companies sometimes have an interest in minimizing their share of work in order to be able to enjoy the efforts perceived by this partnership.
– Further references :
Fernhaber, S., Mcdougall-Covin, P. and Shepherd, D. (2009). International entrepreneurship: leveraging internal and external knowledge sources. Strategic Entrepreneurship Journal, 3(4), pp.297-320.
Denicolai, Stefano & Ramirez, Matias & Tidd, Joe, 2016. “Overcoming the false dichotomy between internal R&D and external knowledge acquisition: Absorptive capacity dynamics over time,” Technological Forecasting and Social Change, Elsevier, vol. 104(C), pages 57-65.
Show less(Article) Bogers, M., Afuah, A., & Bastian, B. (2010). Users as innovators: a review, critique, and future research directions. Journal of Management, 36(4), 857-875.
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First, this article talks about the user as an innovator. there are two important points to understand what a user as an innovator is. First of all, the type of user that exists and secondly the reason why the user innovate.
What are the different types of users as innovators? There are two types of users as innovators: intermediate users and consumer users.
On the one hand, intermediate users are companies that use components to produce goods or services.
On the other hand, the consumer user is the end user of the product. Research shows the dominant role of users in the invention process. It also shows how end-users develop, share and disseminate innovative ideas within their communities. The importance of the impact of innovative users is particularly relevant in sectors where user needs are changing rapidly. As in high technology or extreme sports. But there are also examples in low-tech industries and services
The second main point is the reason why the user innovates. There are a lot of reasons for users to innovate. Users and producers have different interests in the development of innovative ideas. Users want to get exactly what they need but producers want to reduce their development costs by incorporating solution elements that are already in-house or that can be used for other users.
Users create innovative, low-cost solutions to meet their unique needs. They are more likely than producers to innovate if expectations of the benefits of innovation are higher.
The document explains two ways to take advantage of the user as an innovator
For the first, studies have shown that users play an important role in the innovation process after the implementation of a technology. Producers must therefore give users the opportunity to change parts of the product to meet their needs.
In fact, users have a great heterogeneity of needs and are very willing to pay for exactly the product they want. Thus, allowing them to modify the products themselves could lead to an increase in sales of this product. A limitation of this idea is the difficulty for the producer to perfectly meet the needs, because some product characteristics can be costly and unnecessary from the producer’s point of view.
The second is to give the user a more active role in the product innovation process.
Producers must therefore involve key users, who collect information on needs and solutions from users in the target market and other users facing similar problems.
After gathering all the information from the main users, producers will have a better idea of the solution that the company can provide to the customer’s needs. The problem is that the information collected can be tacit information and that tacit knowledge is difficult to share correctly because it is intangible, it is very personal like experience, feelings,… So it is complicated to articulate, identify and evaluate them.
Further reference :
• Users as sources for radical service innovations: opportunities from collaboration with service lead users. Skiba, Florian; Herstatt, Cornelius. International Journal of Services Technology and Management; Geneva Vol. 12, N° 3, (2009): 317.
• Thorsten, Pieper, T. P. (2019). User Innovation Barriers’ Impact on User-Developed Products An Empirical Investigation on User Innovation Processes. Wiesbaden : Wiesbaden Springer Fachmedien.
Show lessAntorini, Yun Mi & Muñiz, Jr, Albert & Askildsen, Tormod. (2012). Collaborating With Customer Communities: Lessons From the Lego Group. MIT Sloan Management Review. 53.
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Key insights:
The emergence of a strong community thanks to a customer-oriented strategy
Strong communities of adult fans built themselves around Lego. The firm took advantage of this opportunity to improve its products and innovate.
The organization of the relationships with Lego users
The first step of this collaboration was to gather fans into a dedicated platform. Therefore, Lego created in 2005 the AMBASSADOR PROGRAM, where people could give their opinions and their recommendations.
Main principles to ensure successful interaction with users
As soon as the customer takes place in the creation process, things must be fixed to avoid any problems. Lego has put in place a team of employees who control if users that want to be part of the adventure are in line with the marketing’s goals of the company.
Managerial Implications:
Overview: The community generates an input towards the company. The company then tries to use that input in order to create extra value for the product/service (output).
Project Management
The first managerial implication is to manage the input properly. Amongst the different project management skills required, the most important is to define clear rules and expectations since the early design stage. In the case of Lego it is important to inform the community about the safety rules the products need to respect, the targeted market of the product and some common building techniques (through publishing some best practices for instance).
Clear communication means
It is also important to distinguish the different types of input the community can send towards the company. It seems obvious to use different communication means for different purposes; an Online design platform (i.e. a dedicated Lego CAD software) for technical development purposes (requires design skills); a poll to better understand what the market wants (i.e. community can choose between different projects); idea boxes to help with the invention stage. Please note that the latter two don’t require specific skills and allow the whole community to be involved.
Valuing the work done by the community
In order to make sure that there is, and will be, an input generated by the community it is important that the company shows the recognition it has for the work done by the community. It is also important to give some incentives to the people that are part of the program. This can be done through rewards (i.e. giving points or Lego products to the best contributors), community-based projects, employees showing that the company is active on the community forums, Lego Community meetings and much more.
Limitations:
We draw inspiration from an article written by Gassman et al on the negative side effects of a collaboration with users. The risks a company faces when including users in the innovation process are numerous.
As a company, you have to observe your customers and not only ask them what they want. Moreover, when asking them for ideas, they often come up with incremental improvements concerning already existing products. As a company, you should not forget that disruptive innovation is an option too. Secondly, serving only a niche market is also a risk because you only meet the needs and expectations of a small basis of customers. Hence, a company should imply different users at different steps of its innovation process. Third, the needs of all stakeholders have to be considered. They can diverge and the motivation can be different regarding the employees or the collaborators.
Then, the interlocutor that is responsible to communicate with users should be chosen carefully. Lego realizes that customers discuss more with an employee directly involved in the project than with a manager. Finally, the users can acquire some of the company’s know-how while collaborating on a project. Therefore, non-disclosure agreements are necessary. But they shouldn’t be too tough otherwise the communication between fans can turn off.
Further references:
– Howe, J. (2008). Crowdsourcing: Why the power of the crowd is driving the future of business. New York: Three Rivers Press.
This article covers a broad range of stories to look at the various implications of crowdsourcing.
– Thallmaier, S.R. (2015), Customer Co-Design: A Study in the Mass Customization Industry. Retrieved from https://link.springer.com/content/pdf/10.1007%2F978-3-658-07526-2.pdf
How to coordinate digital media and customer interface in order to increase customer value perception along the co-design process.
– Gassmann, O., Kausch, C. and Enkel, E. (2010) ‘Negative side effects of customer integration’, Int. J. Technology Management, Vol. 50, No. 1, pp.43–62
Today we know more and more about the benefits of this collaboration but opposite effects have not yet been sufficiently investigated, this article tries to reduce this gap.
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Bettencourt, L.A., & Ulwick, A.W. (2008). The customer-centered innovation map. Harvard Business Review, 86(5), 109.
Key insights :
Most companies take care of the product or service they are developing, and not enough of the needs of the customer. “JOB” is the main concept mentioned in the article and refers to these customer needs. To support the use of the perspective of “getting a job done” and find much more opportunities of innovation, the authors of the article identify 3 key insights and propose the model called “Job mapping” which breakdowns the structure of a job in a universal structure. The goal is to identify “what customers are trying to get done at every step, not what they are currently doing “. Here are the 3 statements including the 8 processes of a Job mapping method : (1) All jobs are processes : have a start, a middle, and an end, and including a set of process steps (2) All jobs have a universal structure which represents the journey of a customer : 1. Define, 2. Locate, 3. Prepare, 4. Confirm, 5. Execute, 6. Monitor, 7. Modify, 8. Conclude. (3) Jobs are separate from solutions.
Implications :
1) Customer oriented : companies have to be focus on the help they must give to their customers to execute the steps successfully. Concretely, they must do market research, looking for what the customer wants and where they are unhappy about the service you provide at each steps. Example : Apple, “while other MP3 manufacturers were concentrating on helping customers listen to music, Apple reconsidered the entire job of music management, enabling customers to acquire, organize, listen to, and share music”.
2) Managing risk and problem resolution : due to eventual problems at many points in the process, you have to anticipate and provide solution for each. Example : MasterCard provides downloadable contact numbers, so that customer who lost a card while traveling knows exactly how to contact the company to report the loss. Then, MasterCard can send out emergency cash advances and a replacement card within 48 hours.
3) Being more agile : to follow this 8 steps, we advise you to be more agile. Make some prototypes and avoid the direct final result. It is important to try new things by moving step by step. Example : Sonaca launched 10 projects that they tried to improve steps by steps. The Sonaca 200 Aircraft had done a perfect minimum viable product. At the end it was a success.
Limitations :
1) It is a framework, it needs to be adapted to your own company and therefore, it can demand much more time than expected.
2) It is customer-oriented and therefore risky, the data are not always reliable. Each customer is different and have a personal way of “getting the job done”. Furthermore, market researches will demand lots of time and money.
3) It is not always easy to match the company and the customer interests because of the budget/ time/ resources or legal restrictions that the customer does not take into account.
Further references:
– Kaushik Mukerjee, (2013), “Customer‐oriented organizations: a framework for innovation”, Journal of Business Strategy, Vol. 34 Issue: 3, pp.49-56, https://doi.org/10.1108/JBS-Jun-2012-0013 : This article provides the same customer-oriented approach. It goes further by saying you must capture some information of what customers need and want, also having a suitable culture which fit your strategy.
– Christian Homburg, Danijel Jozić,Christina Kuehnl, (2017), “Customer experience management: toward implementing an evolving marketing concept”, Journal of the Academy of Marketing Science, Volume 45, Issue 3, pp 377–40. https://link.springer.com/article/10.1007/s11747-015-0460-7?fbclid=IwAR09X82UKjwAG4DdzLvz8LKpdHDVatOz5JYJo-M2vQeCIJjClHLHerJ7eGc : This article provides a strong theoretical framework about this marketing approach which is related to your possible sources of innovation.
– Strategsys, (2017), Video : Jobs-to-Be-Done by Prof. Clayton Christensen, https://www.youtube.com/watch?v=Q63PZR7mG70&list=FLl4E4AYbXG_udfYCXyy58Lw&fbclid=IwAR1pywd6bDR0kWwtqtsPfmz-kqOAlVPlnmHAYhnYbIOEuJGdA1rTQxtAtow : A theory to understand how and why people buy your product.
Fuchs, C., & Schreier, M. (2011). Customer empowerment in new product development
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Key points
In this paper, they are two kinds of customers. On one hand we have the customers who participate actively to the empowerment in the company. On the other hand, the customers from the “periphery” that are aware of this empowerment but that are not involved actively in the process. The paper focus on customers from “the periphery”. They are also 3 ways of empowerment. First, involved the customers in the creation process of products. Second, involved the customers in the selection process in order to let them choose which product will be on the market. And third is to do both which is the most efficient way. The question in this article is to find what are the impact and consequences of the empowerment of customers on companies. To answer this question 2 studies have been performed. The study 1 is about the customer perception about customer orientation. The study 2 is to find how the reputation is affected by the empowerment? and what are the attitudes and intentions of the customers toward the companies (buy or not for example). The results of the analysis of these two studies, show that there is well a positive impact of the empowerment of customers on the companies. The companies that use empowerment are perceived as customer oriented and the customers have so a positive view on the companies. Moreover, firms who empower their customers can generate better products at lower risks and lower costs. The empowerment of customers can also be used by marketers as an efficient tool to improve the customer orientation and attract customers. Another interesting fact is that the customers will have a more positive corporate attitudes and intentions like they will be more able to buy products or to make a positive word of mouth or loyalty than the firms who doesn’t empower their customers.
Implications
So from what we’ve collected from this paper, what could a manager learn?
• Create new product desing
First, it would be to a great idea to imply the customers through the creation process of the NPD process. An efficient way to implement that would be to create an online platform which aims to integrate their customer’s innovative new product idea through the New product development process. To convince customer to participate in this process, a system of reward would be a good idea to put in place (check of money, profit-sharing model, etc.)
• Vote
The second way to implement the empowerment to customers in the NPD project is to let the later to evaluate the attractiveness of the different submissions ,to vote the project that should ultimately be produced. The product concepts which receive a substantial number of customer vote are then examined by the company in terms of production costs to see if it is feasible or not.
So we’ve talked about the implication of customers through the NPD process with the customer empowerment to create ideas for new product designs and the customer empowerment to select the product designs to be produced. A third idea would be then to combine both of these processes which leads to better results.
• Agile management:
The division of the process into specific parts is the same as in usual NPD process (waterfall). However, in the agile project management we iterate the process many times, providing at each iteration an intermediary version (often each 15 days) of the product. This type of method is based on a collaborative principle: client and provider work hand in hand and create the final product by successive adjustments.
Limits
What are the limitation of those managerial implications? First of all, managers should pay attention to the effective empowerment. Which means that, implementing a platform to allow the customers to give new product ideas or to vote, is not enough. It should be valued in the company. The involvement of the customers should be valorized and recognized. Managers should also be aware that of course this customer empowerment for the will work better in basic and easy product domains. That’s why when a company in a high technological field ask costumer to give ideas or vote, they should maybe adapt the rewarding and the advertising for those kinds of fields. Above having no involvement of your customer, you can have negative effects when a company tries to use the costumer empowerment. Indeed, the customer involved in the NDP might not be a representative group of your average costumers. In addition to that, customer could have the impression, if you’re not valorizing their work, that you’re just trying to steal their idea.
Further references
Füller, J., Bartl, M., Ernst, H. et al., Consumer Empowerment Through Internet-Based Co-creation, Electron Commerce Res (2006) 6: 57. https://doi.org/10.1007/s10660-006-5988-7
Stevens, E. (2009). Co-création de valeur et communautés d’utilisateurs : Vers un renouvellement des modèles de chaine de valeur et d’innovation. Management & Avenir, 28,(8), 230-244.
Cova, Bernard & Pace, Stefano. (2006). Brand community of convenience products: New forms of customer empowerment – The case “my Nutella The Community”. European Journal of Marketing. 40. 1087-1105.
Füller, J., Mühlbacher, H., Matzler, K. and al. (2009). Consumer Empowerment Through Internet-Based Co-creation, Journal of Management Information Systems, 26,(3), 71-102.
Laursen, K., & Salter, A. (2006). Open for innovation: the role of openness in explaining innovation performance among UK manufacturing firms.
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KEY INSIGHTS
In order to analyze the relationship between the openness of U.K manufacturing firms’ external search strategies and their innovative performance, measured by the sales, the paper introduced 2 main concepts:
External search breadth, defined as the number of external sources that firms rely upon in their innovative activities.
External search depth, defined in terms of the extent to which firms draw deeply from the different external sources
The results strongly suggest that searching widely and deeply across a variety of search channels can provide ideas resources that help firms gain and exploit innovation opportunities.
On the one hand, the lack of firm’s openness of their external environment may reflect on organizational myopia indicating that managers give too much importance to internal sources. On the other hand, there are negative impacts if the firms conduct over-search. Indeed, up to a certain point in term of depth and breadth, the openness can negatively affect innovation performance.
It is also possible to examine the importance of external search breadth and depth for different types of innovation: Radical innovation where the firms often need to make a considerable investment in R&D and where the chances of success are lower as the rewards are great. Incremental innovation, therefore is more common but the reward is smaller but its performance implications appear to be more modest.
IMPLICATIONS & LIMITATIONS
Implication 1: The first managerial implication shows that there exists a substitution effect between the number of innovation sources and the R&D department. Proctor & Gamble for example changed their strategy of R&D in “Connect and develop” instead of focusing on internal R&D.
Limitation 1: The limit of this implication is that too much external sources can slow down the innovation process. Important to know as well is that some sectors need more external sources than others. For example, according to the paper the textile industry needs less external sources than the electrical industry.
Implication 2: The second implication is that a manager shouldn’t take too much external sources but invest more in a range of external sources he chose, because of the over-search effect presented before. At a certain point, performances decrease as the external sources increase.
Limitation 2: If you invest in one innovation and you focus to much on one particular source, there Is a risk that innovation fails and so the company could be in a bad situation.
OTHER REFERENCES
1. SANTAMARIA SANCHEZ, L. (2009) Beyond formal R&D: Taking advantage of other sources of innovation in low- and medium-technology industries. Vol. 38 No. 3. pp. 507-517
2. ZOBEL A. (2017) Benefiting from Open Innovation: A Multidimensional Model of Absorptive Capacity. The Journal of Product Innovation Management. Vol 34 No.3 pp. 269-288
3. DIAZ-DIAZ, NIEVES L, DE SAA-PEREZ P. (2014). The interaction between external and internal knowledge sources: an open innovation view. Journal of Knowledge Management. Vol. 18 No. 2. pp. 430-446.
Franke, N., & Schreier, M. (2002). Entrepreneurial opportunities with toolkits for user innovation and design
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Today, we live in a world highly influenced by the development of new media, and mainly the expansion of the Internet. This development enables enterprises to have way more contact with the customers, and thus learn more about them. This leads to a heterogeneous demand because they ask specifically what they want.
To meet this demand and the customer needs, there is what is called “toolkits”, allowing the customers to configure themselves their product. It also allows companies to spend less time and money and to minimize the risk of failure for a new product.
Toolkits
There are two different kinds of toolkits. First of all, there is the high-end toolkits. Those toolkits offer to users a theoretical unlimited open solution space. It allows you as a user to modify or create a module in case of mistake or missing module. The outcome of such a toolkit can be new functions or even completely new products. For example, the statistics software Stata has a high-end toolkit where all the users can improve the product, but of course you have to own the knowledge for programming and statistics. The validity of the modifications is of course controlled.
The second type of toolkits is low-end toolkits. Those one allows for the user incremental innovations, product adaptation and individualization. In that sense, the company provides the user tools to modify a product already existing. For example, Nike which allows you to customize your own shoes on their website.
The first implication for the manager is to analyse the sector of his product, to analyse what are the need of the users and what are the knowledge of the targeted clients. Afterwards he has to choose the right toolkit. All the toolkits are not suitable for all industries. For example, the car industry where you can’t have high-end toolkit. The user will not build a new car, you need specialist for that.
Another one would be to train the employees to use toolkits in the company. To begin with, it is very important because without the training of the employees it would not be possible to implement the target of the company. As for the process, the executives must recognize what skills and knowledge is required for each part. Secondly the managers have to create a plan of what each employee have to do and third which ways and methods they are going to use to fulfill their aim. Some ways they can use are the following. Firstly, all the employees from each part must have general knowledge about the technological changes and the development that each country may has. Then is the appropriate coaching, which means that an expert from another part will guide the employee and give him some advice about the process. Last but not least the business games. These help the employees to understand better the plan because they realize in practice how this new method works and after all they can do more easily an evaluation. Of course there are some limits in this part too, such as the method that they planning will not be understood from all the employees or it may not be acceptable from them .
Appendix :
Further references
Simplifying Solution Space Enabling Non-Expert Users to Innovate and Design with Toolkits [ressource électronique]
The author contributes towards understanding and designing toolkit solution space, first using qualitative studies to explore mechanisms for simplifying the use and structure of toolkit solution space, and then using a design study of an innovative toolkit. The findings are relevant to innovation and product managers eager to incorporate user ideas with toolkits.
Mens, K., Van Den Brand, M. G. J., & Kienle, H. M. (2014). Guest editors’ introduction to the 4th issue of Experimental Software and Toolkits (EST-4). Science of Computer Programming, 79, 1-5.
How to get the same level of rigor than academic papers in academic software development. Also, how to widen you audience by enhancing the accessibility and reproducibility of the submitted software, creating a wider range of adoption
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Schiele, H. (2012). Accessing supplier innovation by being their preferred customer. Research-Technology Management, 55(1), 44-50.
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This article highlights the significance of successful buyer-supplier collaborations in innovation and proposes additional sourcing criteria to identify innovative suppliers. To better understand how a firm can access the innovation power of their suppliers and develop an outstanding supplier portfolio, a research consortium was formed giving new and unexpected findings.
In the context of open innovation, firms must go beyond internal boundaries and expand their scope by collaborating with external partners. The findings of the research consortia showed the importance of firms being attractive to suppliers and collaborating closely with them to get the preferred customer status. This status revealed highly competitive benefits such as privileged treatment or priority in supplier production. Regarding the process, two approaches emerged as a foundation for the implementation of a preferred customer strategy. The first approach focusses on expanding the set of criteria to identify innovative suppliers, while the second one centers on developing a portfolio model by creating a matrix of four possible supplier collaborations.
To identify innovative suppliers the researchers built a clear framework based on 3 different criteria.
First, the “Operational Sourcing Criteria” which goes over the capabilities of the supplier to support joint innovation processes. That criteria can be determined and analyzed through 4 main ways: audit result, supplier’s R&D capabilities, supplier’s product and supplier’s specialization degree.
Second, the “Relational Sourcing Criteria”. It highlights the relationship between the customer and the supplier. Moreover, to define the likely supplier partners you may examine 4 main aspects of the surveyed suppliers: level of trust, prior shared experiences, history of collaboration and smooth communication.
Last, the “Strategic supplier selection criteria”. It concerns the way the organization will carefully develop its relationship with the supplier, to focus on creating a strategic environment where the enterprise will be seen as the preferred customer. Therefore, managers should take 5 aspects into consideration to align with strategic suppliers: technical importance, commercial importance, cultural fit, history of collaboration and key account status.
Becoming a preferred customer is highly important when integrating suppliers into innovation processes. Firms would certainly find it advantageous to analyze their full portfolio of suppliers to identify the suppliers that lead the field and those that will treat them as the preferred customer. The preferred customer matrix allows for the assessment of a supplier’s competitive advantage in conjunction with the firm’s relationship with them, leading to four unique scenarios. Each scenario necessitates a distinct strategy for the firm seeking to collaborate with the supplier
However, it involves its own set of challenges. These include the potential for being resource intensive, the possibility of becoming dependent on the supplier, and the fact that not all suppliers offer the same level of service or quality. These factors underscore the importance for businesses to thoroughly evaluate their supplier relationships, as well as the potential risks and costs associated with attaining preferred customer status. Balancing the advantages of supplier innovation against possible drawbacks is crucial. Therefore, it is imperative for companies to devise strategies that can effectively mitigate these risks.
In summary, this research highlights the importance of strategic buyer-supplier relationships in achieving innovation. Firms must carefully select and manage suppliers using defined criteria to achieve preferred customer status, balancing the benefits of innovation against potential challenges. This approach is crucial for maintaining competitive advantage in a rapidly evolving market.
Additional relevant sources:
Tessaro Afonso, J., Harms, R., Schiele, H. (2023). How startup become attractive to suppliers and achieve preferred customer status: Factors influencing the positioning of young firms. Industrial Marketing Management, 113, 100-115.
Qingyun, Y., Suicheng, L., Hecheng, C., Jiangi, Q. (2023). How does supplier relationship management affect supplier innovation contribution? Interorganizational learning and social exchange theory integrated perspectives. Industrial Marketing Management, 114, 165-180.
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