Innovation Heroes

Understanding Customers as a Valuable Innovation Resource

Fiona Schweitzer, Joe Tidd

• Publisher: WSPC (EUROPE)
• Year: 2018
• ISBN:
  9781786345387
• Topic: Business
• Subtopic: R&D
• Index: Business

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This book provides the knowledge necessary for succeeding in a world where companies increasingly work side-by-side with customers to create new products and services. It is a pivotal navigation tool that helps cruise the ocean of customer integration methods and explains how the methods work, when to choose which, and how to seize advantages while avoiding pitfalls.

This title is an essential read for research and development managers, marketing professionals, and other practitioners who are involved in new product development to apply customer integration methods effectively and efficiently to drive new product development success. While the application of methods is no guarantee of success, knowledge of the correct selection and appropriate application increases the probability of new product and service development success. Rich in theoretical frameworks, research findings, and practical information about customer integration methods, Innovation Heroes will help the reader appreciate the value of customers as an innovation resource and ways to profit from them.

--> Contents:

• Customers at the Center Stage
• Direct Approaches to Open the Solution Space: Users as Creativity Machines
• Indirect Approaches to Open the Solution Space: Methods to Identify Latent Needs
• Approaches to Close the Solution Space: Customers as Evaluators
• Integrated Approaches to Open and Close the Solution Space: Multiple Customer Interaction
• Development of Organizational Customer Integration Capabilities and Implementation of Customer Integration in NPD and NSD

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--> Readership: R&D, marketing, and innovation practitioners who want to improve their knowledge of customer integration in new product and service development as well as graduate and undergraduate students with a degree in innovation management, engineering management, design, or marketing. -->
Keywords: New Product Development;Customer Integration;Innovation;Innovation ToolsReview: Key Features:

• These videos provide insights in some theoretical concepts or practical examples covered in the book
• The book provides web links for diving further into the one or the other topic discussed in the book

Chapter 1

Customers at the center stage

1.1Introduction

Companies are increasingly opening up their innovation processes to customers. Customer integration could boost new product and service success, as it increases the product’s/service’s fit to customer needs and wants. For example, Threadless, a US-based T-shirt manufacturer allows its customers to preselect the T-shirt designs it produces. Customer integration also provides easy accesses to customers’ creative talents as an inspiration for new product and service ideas or as a contribution to problem solving throughout new product and service development (NPD and NSD). Local Motors unchains users’ technical and design-related expertise by allowing them to codesign innovative car models. Lego, the manufacturer of small play bricks, runs the vibrant virtual community platform Lego Ideas to which users can upload their sketches of brick sets. The Lego management board considers producing sketches that receive a minimum of 10,000 votes. When this happens, the user whose idea it was receives 1% of the product net sales. The successful Lego Mindcraft line originates from this community.

Customer integration is not only a business-to-consumer (B2C) topic, but business-to-business (B2B) companies also strive to exploit its results. 3M has successfully carried out lead user workshops to codevelop concepts in the fields of medical imaging, surgical drapes, and infection control. This company has also rolled out the lead user method beyond the medical division (von Hippel et al., 2000; von Hippel, 2005). IBM runs Industry Solution Labs in four locations (New York, Zurich, New Delhi, and Beijing). The labs are the starting point for innovative partnership projects, connecting future client needs with emerging technologies. In these labs, IBM discusses individual client companies’ complex business challenges, and key technology trends that IBM has captured in its annual Global Technology Outlook report, which serves as a basis for strategic planning inside IBM. The discussion of the Global Technology Outlook focuses on the impact of trends on clients’ business, as well as on changes in trends and new trends, which will subsequently serve as a basis for the following year’s report. The Industry Solution Labs also function as a starting basis for first-of-a-kind projects where IBM scientists and clients test a new technology on a real business problem for the first time. This process allows them to leapfrog the traditional development cycle and helps guide research efforts toward strategic markets. IBM and the client share the costs and risks, while client benefits from the competitive advantage gained by being the first to use the new technology (Kaiserswerth, 2013).

Where there is light, however, there is also shadow. Several innovation practitioners and researchers complain that customers are conservative and find it difficult to visualize future product usage when confronted with radical innovations. They thus fail to evaluate new product concepts correctly, let alone generate meaningful new product ideas.

Seizing the opportunities of customer integration while avoiding the pitfalls and negative side effects requires a clear understanding of customer integration’s goals and of the value of including different customer types prior to choosing the customer integration method. A first approach to thinking about customer integration goals is finding answers to questions such as the following: What output do you expect from the customer integration activity? Are you looking for radically new products and services or incremental ones? Are you searching for a solution to a tricky technical problem? Are you searching for inspirations on a potential customer problem that you can solve through a new product, service, or product–service combination? Are you trying to identify latent customer needs? Do you want to assess your concepts’ and ideas’ perceived customer value in order to determine their market acceptance?

1.2Opening and closing the solution space

Questions about the customer integration’s goal are closely connected to the problem-solving tasks that NPD teams perform. These teams acquire customer knowledge in an endeavor to solve creative problems (Rindfleisch and Moorman, 2001; Parry and Song, 2010). In the NPD process, creative problem solving can be differentiated into divergent thinking and convergent thinking tasks. In divergent thinking, a person generates a number of ideas. This thinking style is associated with intuition, spontaneity, taking paradoxical perspectives, breaking with established thinking patterns, as well as unconventional and nonlinear problem solving. This style provokes out-of-the-box thinking, encourages the breaking of existing frames of reference, and aims at generating a large quantity of original solutions. In convergent thinking, a person applies logical, linear, and systematic patterns and steps to eliminate ambiguities and arrive at a single best answer to a problem. It is associated with critical thinking and using probabilities and standards to arrive at conclusions (Guilford, 1967).

In NPD, divergent thinking tasks focus on opening the solution space by identifying significant new customer problems and opportunities, generating new product and service ideas and concepts, and searching for technical possibilities to turn ideas into producible goods. Opening the solution space aims at generating multiple perspectives, as well as novel and unique ideas and solutions. Once the open solution space has generated enough new input, closing it requires evaluations and detailed considerations in order to select the best option. Convergent thinking closes the opportunity space by prioritizing opportunities, ideas, and concepts on the basis, for instance, of their meaningfulness and novelty (Isaksen et al., 1994; Proctor, 2013).

The two tasks of opening and closing the solution space are an excellent basis for categorizing the vast array of customer integration methods. Figure 1 illustrates the different roles that customer involvement plays in opening and closing the NPD solution space.

In terms of opening the solution space, customer integration aims to gather customer input in order to develop various options regarding strategic arenas, product and service ideas, and concepts. Managers can integrate their customers directly or indirectly into activities aimed at opening the solution space. Direct activities include methods that aim at directly generating ideas, developing concepts, or codeveloping products and services with customers. In direct methods, customers’ role is that of solution providers. In this category, typical methods used are online idea competitions, virtual idea communities, R&D alliances with customers, and lead user workshops.

Figure 1: Customer integration to acquire information for opening and closing the NPD solution space.

In indirect methods, the interaction with customers inspires NPD/NSD teams’ development efforts. Customers function not as codevelopers in indirect methods but as providers of latent needs information. These methods thus help NPD/NSD teams decipher unexpressed needs and translate them into new products and services. Ethnographic approaches, outcome-driven innovation (ODI), and the repertory grid technique are all indirect customer integration methods. A case (Rosenthal and Capper, 2006) from Panasonic’s household electronic devices division illustrates the use of ethnography to detect latent needs. This case involved the electric shaver market for females and led to the NPD/NSD teams using novel materials to redesign the company’s shavers. For example, the observation of users in spatially restricted, wet-shaving environments led to ergonomic design changes, including a shift from shiny, hard-edged form to soft, curvilinear ones.

In terms of closing the solution space, customer integration helps managers select, from a set of strategic arenas, product and service ideas, or concepts the one or the few worth carrying forward through the NPD/NSD process. In closing tasks, customers evaluate and choose from options. Customer integration methods for closing the solution space fall into two subcategories: qualitative and quantitative methods. Concept testing is a classic example of such methods. Qualitative methods are rich in verbal feedback rather than numbers. They allow for a rich understanding of customer evaluations’ underlying reasons and motivations throughout the NPD/NSD process. Qualitative concept tests reveal why the target customers like or dislike a product or service, provide in-depth knowledge of the changes they would like to see in product or service features, as well as the reasons for requesting these changes. Data is gathered by means of semistructured personal interviews or group discussions employing open-ended questions, while the data analysis is nonstatistical. Quantitative methods provide descriptive data from large numbers of representative cases, thus allowing conclusions to be drawn from the sample to the target population. Quantitative concept testing employs both strictly structured surveys to gather data and statistical data analyses in order to gather adoption information from respondents, which help forecast their purchase intention and the market demand of the key markets’ different market segments.

Figure 2 categorizes the various customer integration methods according to their ability to provide insights into their ability to directly or indirectly open and close the solution space via qualitative or quantitative approaches. Some methods, such as focus groups, are very versatile and flexible; they are therefore found in more than one of the four categories. Focus groups can be adapted to fit opening and closing tasks. Creativity sessions in focus group workshops entice customers to generate ideas, while questions on personal experiences with products and services stimulate revelations of their personal background, attitudes, and behaviors, thus resulting in knowledge about customers’ latent needs. In addition, a shift to concrete feedback on the presented concepts provides information on customers’ purchase intention and the factors influencing this intention.

Figure 2: Customer integration tools for opening and closing the solution space.

Other methods fit one task specifically. For example, the repertory grid technique is limited to those methods that identify latent needs. Other methods are stepwise processes that form a combination of opening and closing tasks. For example, ODI comprises specific qualitative interviewing techniques involving a small number of customers to elicit their latent needs first. In a subsequent quantitative survey, customers are asked to evaluate the identified latent needs, which forms the basis for NPD/NSD teams to search for solutions that satisfy the most relevant latent needs in successive steps.

The categorization of methods according to their ability to provide direct or indirect customer insights into opening the solution space, as well as qualitative or quantitative information on closing the solution space, helps choose appropriate methods for different customer integration tasks. This categorization allows a three-step procedure for successful customer integration in NPD/NSD: First, the innovating company clearly defines the goals of the customer integration activity. Second, it chooses the right category of customer integration method based on these goals. Third, it selects a specific method within the category based on the advantages and disadvantages of the optional methods and the innovating company’s experience with customer integration activities.

1.3Customer integration along the different NPD phases

The NPD process covers a bevy of activities that an NPD team undertakes to transform rough ideas into real products for a market launch. The core idea of NPD processes is to launch successful products by continuously filtering bad ideas and refining good ones, eventually resulting in the realization of the most promising ones. The first approaches to structure NPD into consecutive subtasks and to review the points that allow managers to discern between successful and ineffective ideas can be traced back to the 1970s (Utterback, 1971; Utterback and Abernathy, 1975).

The stage gate model (Cooper, 1990, 1994) is an important NPD process model that is widely used in management practice (Cooper and Kleinschmidt, 1991; Griffin, 1997). The process guides NPD activities through a series of prescribed stages with each stage’s achievements evaluated at the gates. In these gates, projects are prioritized; those that do not meet the gate criteria are filtered out and the remaining are moved to the subsequent, costlier stage. The stages evolve from early idea generation to concept design, product development, testing, validation, and launch (Cooper, 2008). Throughout each stage, NPD teams not only undertake tasks to open the solution space but also carry out closing tasks to prepare for the gate evaluations.

Prior research has demonstrated that stage gate processes improve top management’s ability to exert control over NPD (Poskela and Martinsuo, 2009; Rijsdijk and van den Ende, 2011; Schultz et al., 2013), entail more discipline regarding go/kill decision-making (Cooper, 2008; Schultz et al., 2013), and speed up a firm’s NPD efforts (Shaw et al., 2001; Salomo et al., 2007). While stage gate processes introduce a certain level of rigor and control to NPD processes, which helps reduce the uncertainties and increase the speed (Griffin, 1997; Cooper et al., 2002), they also have drawbacks. Increased control comes at the expense of flexibility (Sethi and Iqbal, 2008; Lenfle and Loch, 2010). Since certain parameters are frozen after a project passes a specific gate, gates undermine the NPD team’s ability to effect changes as they see fit (Verganti, 1999). Sethi and Iqbal (2008) provide empirical evidence of the negative effect of such inflexibility on NPD teams’ ability to gather and integrate new information. To cure these shortcomings, advanced stage gate models include spiral and agile processes that allow repetitive, iterative feedback loops (Cobb, 2011; Conforto and Amaral, 2015; Cooper and Sommer, 2016), as well as overlapping stages and contingent gates that allow concurrent activities (Cooper, 1994; Ettlie and Elsenbach, 2007).

Irrespective of gate rigor and iteration options, any NPD process includes certain activities for opening and closing the solution space around the raw idea, the product concept, and the final product. Customers can be integrated into all these opening and closing activities to incorporate the customer perspective. This step promises to reduce the technical and market uncertainties throughout the NPD...