Virtual customer integration in the innovation process.

Transcription

1 Virtual customer integration in the innovation process. René Rohrbeck, Fee Steinhoff and Felix Perder Technische Universität Berlin, An-Institute Deutsche Telekom Laboratories

2 Content. 1 Introduction 2 Theoretical background 2.1 MAP-CAP paradigm 2.2 Customer Integration 2.3 Virtual Customer Integration 3 Methodology 4 Results 4.1 Focus on idea generation 4.2 Non-monetary motivation sources make it work 4 Conclusion

3 Benefits are reduction of uncertainty, in-sourcing of competencies and enhancement of success rates of NPD. Benefits of Customer Integration Reduce uncertainty (Ernst 2002) In-source competencies (Gemünden et al. 1996; Iansiti and Clark 1994) Enhance success rates in NPD (Prahalad/ Ramaswamy 2000) Customer needs Preferences Co-designer Mutual learning processes Successful innovators use competence within an extended network

4 Content. 1 Introduction 2 Theoretical background 2.1 MAP-CAP paradigm 2.2 Customer Integration 2.3 Virtual Customer Integration 3 Methodology 4 Results 4.1 Focus on idea generation 4.2 Non-monetary motivation sources make it work 4 Conclusion

5 Innovation management has moved from a manufacturer to a customer centric process. Manufacturer active paradigm (MAP) Customer active paradigm (CAP) The manufacturer: identifies target groups discovers customer needs builds and develops promising products The customer: is purely passive Until 1970s "speaks only when spoken to" (von Hippel 1978) From 1970s The customer: is essential to start the innovation process generates ideas formulates concepts implements the innovative idea as prototypes transfers innovation to manufacturer The manufacturer checks market potential develops a marketable innovation produces and commercializes

6 Customer integration was found to have a significant positive effect on NPD and company success. Theory on customer integration Steinhoff (2006) Lüthje (2000) Singh, Ranchhod (2004) Kahn (2001) Mason, Harris (2005) Ekström, Karlsson (2001) Active use of customer competence is an essential characteristic of customer-oriented innovation processes. Customer orientation is a critical factor both for the success of the company and the new product. A lack of customer orientation continues to be a frequent phenomenon in the process of innovation.

7 Previous studies have identified various risks and rewards associated with customer integration. Areas Reward Risk Uncertainty Resources better market understanding higher product quality more innovative products access to missing resources faster product development cost reductions potential problems in identifying suitable customers internal barriers to acceptance conflict during interactions high costs of customer integration inefficient product development opportunistic customer behaviour Turnover higher product advantage higher customer loyalty multiplier effects through reference customers excessive orientation towards a niche negative image effects

8 By using the Internet as a communication channel Virtual Customer Integration yields many benefits. Virtual Customer Integration (VCI) Internet is the prime communication channel Characteristics unidirectional (the customer can post ideas for new products) bidirectional (allowing for discussions between the customer and the manufacturer) interact easier and less costly (Ernst 2004) by-pass intermediaries such as market research firms (Ernst 2004) Benefits enable users to contribute creativity (Füller et al. 2006, Füller 2007) integrating a large number of customers (Füller/Matzler 2007) address customers individually (Füller et al. 2006) learn about wants and needs of specific customer segments (Dahan/Hauser 2002)

9 Content. 1 Introduction 2 Theoretical background 2.1 MAP-CAP paradigm 2.2 Customer Integration 2.3 Virtual Customer Integration 3 Methodology 4 Results 4.1 Focus on idea generation 4.2 Non-monetary motivation sources make it work 4 Conclusion

10 Research questions. Following three research questions the study identifies current practices of VCI and identifies enhancement potential. Research questions 1 To what extend do the Euro Stoxx 50 companies use VCI? Within the innovation process phases and to what intensity 2 What are the means by which customers are motivated to participate? 3 What possible extensions and enhancements of VCI practices exist? Building on the best-practice cases

11 Through the internet we identified VCI platform and classified them by a double review. 1 Data collection 2 Data filtering 3 4 Data interpretation Data validation Intensity 3 4 Data interpretation Data validation 1.Browse corporate website 2. Search annual report 3. Search Internet Filter criteria: Addressed to customers Systematic approach to feed innovation process Enable virtual interaction 1.Classification in: Innovation process phase Motivation source 2. Assessment of intensity Two researchers: First interpreted Second validated 3. Identify archetypes of VCI platforms

12 The first classification was in regards to what phase of the innovation process was supported. Idea generation Creativity Selection Decision Making Execution Speed Commercialization Cost Search and pre-selection of ideas Market-pull Technology-push Investigation of feasibility Assessment of return on investment Production and test of prototypes Design freeze with essential functions Introduction of innovation in the market Designing the operational processes

13 The second classification was in regards to the motivation source used to integrate customers in the process. Motivation sources Description Entertainment and curiosity Social recognition Personal need and product usage builds on pure enjoyment of the interaction itself users see participation in such VCI activities as an enjoyable activity which is perceived as intrinsically rewarding (Füller 2007) prime driver of participation in open source software development (Bitzer/Schrettl/Schröder 2007) being part of the group and being recognized by their peers (Wu/Gerlach/Young 2007, Piller 2003) prime motivation source for lead users (von Hipple 1986) users participate in order to solve a specific problem and they benefit directly from the output (Füller 2007) Monetary incentives immediate as well as delayed pay-offs (Füller 2007)

14 Content. 1 Introduction 2 Theoretical background 2.1 MAP-CAP paradigm 2.2 Customer Integration 2.3 Virtual Customer Integration 3 Methodology 4 Results 4.1 Focus on idea generation 4.2 Non-monetary motivation sources make it work 4 Conclusion

15 Usage of Virtual Customer Integration tools remains limited. Usage of VCI (Euro Stoxx 50 companies, n=50) Yes No

16 Within the VCI tools the idea generation remains to be the most popular purpose. Usage of VCI along the innovation process (Euro Stoxx 50 companies, n=50) Low 6 Medium 4 3 High Idea generation Selection Execution Commercialization

17 Non-monetary motivation sources make it work, monetary motivation sources are of limited importance. Motivation sources for participation in VCI (Euro Stoxx 50 companies, n=50) Low 2 Medium High Entertainment & Curiosity Social recognition Product usage & personal need Monetary incentive

18 Through cluster analysis we have identified four types of Virtual Customer Integration platforms. VCI type Innovation process phase Motivation source Open Innovator All phases High intensity Non-monetary (emphasis on curiosity and product usage) Outsourcer Idea generation and execution phase Medium to high intensity Monetary (and in some cases also product usage) Idea Seeker Experimenter Idea generation and selection High intensity Various phases Low intensity Non-monetary (emphasis on entertainment, curiosity and product usage) Non-monetary (emphasis on product usage and entertainment)

19 Open Innovators interact with their customers along the whole innovation process and with high intensity. VCI type Example: Vodafones betavine Open Innovator Outsourcer Idea Seeker Experimenter

20 Outsourcers integrate external resources but have little proactive interaction with their customers. VCI type Example: Forum Nokia Open Innovator Outsourcer Idea Seeker Experimenter

21 Idea seekers seek to in-source creativity and use customers to rate these external ideas. VCI type Example: DELLs Ideastorm Open Innovator Outsourcer Idea Seeker Experimenter

22 Idea seekers seek to in-source creativity and use customers to rate these external ideas. VCI type Example: Philips Live simplicity Open Innovator Outsourcer Idea Seeker Experimenter

23 Idea seekers seek to in-source creativity and use customers to rate these external ideas. VCI type Example: Lego Ideastorm Open Innovator Outsourcer Idea Seeker Experimenter

24 Experimenters have only made a first step into VCI, limit their interaction as well as their exposure. VCI type Example: Deutsche Börse Blog Open Innovator Outsourcer Idea Seeker Experimenter

25 Content. 1 Introduction 2 Theoretical background 2.1 MAP-CAP paradigm 2.2 Customer Integration 2.3 Virtual Customer Integration 3 Methodology 4 Results 4.1 Focus on idea generation 4.2 Non-monetary motivation sources make it work 4 Conclusion

26 The study has identified a overall limited implementation of VCI tools and some best-practices. Contributions Limitations Some VCI platforms might still be undetected Primary motivation sources were not collected from the actual users Information about actual usage was not collected only the potential has been assessed With the Euro Stoxx 50 companies only 26% of companies used VCI platforms resulting in a small sample size Identification of best-practices Contributions The motivation systems has been identified as a key success criteria for VCI platforms Definition of archetypes will enhances the effectiveness VCI and facilitate its implementation

27 I am looking forward to the discussion! René Rohrbeck, Fee Steinhoff and Felix Perder Technische Universität Berlin, An-Institute Deutsche Telekom Laboratories

28 Thank you for your interest. I am looking forward to further discussion. For exchange on The Deutsche Telekom Laboratories Personal contact René Rohrbeck Deutsche Telekom Laboratories Ernst-Reuter-Platz 7, Berlin (Tel) [email protected]

29 Open Innovators interact with their customers along the whole innovation process and with high intensity. VCI type Example: Spreadshirt Open Innovator Outsourcer Idea Seeker Experimenter

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