15 07, 2013

[Featured Research] User Generated Brands and their Contribution to the Diffusion of User Innovations

By | 2018-06-14T06:34:20+00:00 Juli 15th, 2013|Co-creation, Design, Featured Research, Research Studies|

Continuing our mini-series on noteworthy research from around the world, today we feature new work by Johann Füller, Roland Schroll and Eric von Hippel who show that usersnot just are the source of most innovation, but also can create powerful brands


ResearchUser Generated  Brands and their Contribution to the Diffusion of User Innovations
, by Johann Füller, Roland Schroll, Eric von Hippel

Published in: Research Policy, Volume 42, Issues 6–7, July–August 2013, Pages 1197–1209

Available on: ScienceDirect.com

 

(based on the abstract)

It has been argued that users can create innovations
and also diffuse them peer-to-peer independent of support or involvement
by producers
: that “user-only” innovation systems can exist. It is
known that users can be incented to innovate via benefits from in-house
use.

But users’ incentives to invest in diffusion are much less clear:
benefits that others might obtain from their innovation can be largely or entirely an externality for user innovators.

Of
course, effective distribution of information products can be done
near-costlessly via posting downloadable content – for example, software
– on the Internet. However, potential adopters must still learn about
the product and trust its qualities.

In producer systems, this aspect of
diffusion is heavily supported via the creation of trusted brands. It
has been shown that brands help to increase awareness, to communicate a
product's benefits, and to reduce perceived risks of adoption. The
development of brands by producers is traditionally seen as a very
costly exercise
– unlikely to be thought of as worthwhile by users who
expect little or no benefits from the diffusion of their innovations to
others.

In this paper the authors explore the creation of a strong and trusted
brand by the Apache software community
– and find it was created
costlessly, as a side effect of normal community functioning. The authors think
the costless creation of strong brands is an option that is
generally available to user innovation communities. As they 
propose, it supports the existence of robust, user-only innovation systems by
helping to solve the problem of low-cost diffusion of trusted
user-developed innovations.

15 07, 2013

#OUI2013 Conference Summary in One Picture

By | 2018-06-14T06:34:24+00:00 Juli 15th, 2013|Featured Research, Open/User Innovation|

The OUI 2013 conference just started at the University of Brighton. Many of the core people from the community will be presenting their research here during the next three day.

While Joel West probably will cover the event much better than I do, here the entire conference in three graphs, as presented ny host Steve Flowers in the opening talk:

– Top and minor themes in the papers.

– Tags pro-duced from the titles

– The sociale network of topics

Oui_pictures

4 04, 2013

Mass Customization at HannoverMesse – Project KUMAC Featured in #HM13 Science Hall

By | 2018-06-14T06:47:53+00:00 April 4th, 2013|Co-Design Process, Customization Trends, Events, Featured Research, Offline Customization, Research Studies, Service Customization, Technologies & Enablers|

BannerFrom 8th to 12th of April 2013, famous trade show  HannoverMesse will take place in Hannover, Germany. Are you going to be there? Great! So will I.

The German Federal Ministry of Education and Research (BMBF) will have a large exhibition stand in a prominent spot (hall 2, stand C24) and has invited my research group at RWTH Aachen University to join them. We will present the latest findings from our research project KUMAC which is being funded by the BMBF.

I will be there on Monday, 8th, during the afternoon. Of course, members of our project team will be present throughout the week. So if you are going to visit any the largest industry tradeshow of the world, make sure to stop by! 

The objective of the KUMAC project is to develop new
methods for mass customization providers in the German retail market
.
These methods support an increase in productivity and value creation
potential of these retailers.

At HannoverMesse we will simulate the prototype of an interactive value-creation process in mass customization, using KUMAC technology to demonstrate its potential to increase both effectiveness and efficiency. In detail we will show and expain:

  • The Live-Help-System connecting online-offline configuration,
  • The Tablet Configuation Software,
  • 3D-Scanner and Softwaretools as well as
  • RFID-Technology for mass customization.

 

17 01, 2013

[Featured Research] Study Backs Long Term Claim with Hard Data: User-Generated Products Make More Profit

By | 2018-06-14T06:48:38+00:00 Januar 17th, 2013|Co-creation, Crowdsourcing, Featured Research, Furniture - Home, Open/User Innovation, Research Studies|

Since years we argue that customers / users not just have good ideas for new products & services, but that products with roots in user innovation are actually more profitable and superior to inhouse-developed products. There has been some anecdotal evidence to prove this claim, and lots of case studies, but not hard data. But now a study provides hard evidence:


Journal_of_marketingUser-generated versus designer-generated products: A performance assessment at Muji
, by: Hidehiko Nishikawa, Martin Schreier, Susumu Ogaw, in: International Journal of Research in Marketing (2013)

Our colleagues Hidehiko Nishikawa (Hosei University), Martin Schreier (WU Vienna University) and Susumu Ogawa (Kobe University) show that user-generated products perform better
on the market than their (professional) designer-generated counterparts. Their idea is to systematically compare actual market performance of user-generated products with firm (designer)-generated ones.


User innovation (red) vs firm innovationThe authors present a unique data set gathered from the Japanese consumer goods brand Muji, which has drawn on both sources of ideas in parallel in recent years. They demonstrate that user-generated products in the furniture category, which are found to generally contain higher novelty outperformed their designer-generated counterparts on key market performance metrics.

Specifically, in the first year after introduction, sales revenues from user-generated products were three times higher and gross margins were four times greater than those of designer-generated products.

These effects also increased over time: after three years, the aggregate sales revenues of user-generated products were, on average, 1.25 billion yen (approximately 16 million dollars) higher, or five times greater, than the sales of designer-generated products. The corresponding average margin was an impressive 619 million yen (approximately 8 million dollars) higher, or six times greater, than the margin for designer-generated products. Finally, user-generated products were more likely to survive the three-year observation period than designer-generated products (i.e., were still on the market three years after introduction).

These findings clearly favor the paradigm shift identified in marketing research and appeal to managers considering the integration of user ideas into the process of new product development. In their paper, the authors discuss the study’s limitations and identify important avenues for future research.

I find this study especially interesting as MUJI is world-wide admired for their great inhouse design team! Also, the study shows that this is more than a novelty effect: Customers did not know whether a product was user designed or not, they just liked (and purchased) the product!

2 01, 2013

[Featured Research] Designing the Organization for User Innovation

By | 2018-06-14T06:48:52+00:00 Januar 2nd, 2013|Featured Research, Open/User Innovation|

Our series on featured research articles continues. Today I want to recommend a paper by fellow researchers Peter Keinz, Christoph Hienerth and Christopher Lettl. In their paper they focus on the paradigm shift from producer-centered towards user-centered processes.


Cover_issue_823_en_USDesigning the Organization for User Innovation

By Peter Keinz, Christoph Hienerth & Christopher Lettl

Availible at: Journal of Organization Design

 There is increasing consensus among practitioners and academics alike that we are in the midst of a paradigm shift from producer-centered and internal innovation processes toward user-centered and open innovation processes.

This paradigm shift induces significant changes to the design of organizations. Even though the research field of user innovation has been developing over a period of more than four decades, there have been only occasional intersections with the research field of organizational design. In this article, the authors aim to provide an integrated perspective of the two fields. Therefore they first identify major user innovation strategies and then derive the implications for each user innovation strategy on key dimensions of organizational design.

After outlining existing user innovation approaches, the authors continue to explain the need for organizational (re-)design when employing user innovation strategies. They then present design principles for companies employing user innovation strategies, followed by a detailed discussion of their findings (so far). 

In this video, Christopher Lettl explaines the central topic of their research for this paper. 

Designing the Organization for User Innovation from JOD on Vimeo.

Read the full article at Journal of Organization Design, Vol. 1, No. 3 (2012)!

23 12, 2012

TIM in the MIX: Vote for Our Hack at the HBR M-Prize: Global solutions, local failure: Overcoming barriers in implementing open innovation

By | 2018-06-14T06:48:54+00:00 Dezember 23rd, 2012|Crowdsourcing, Featured Research, OI Market Study, Open/User Innovation|

Hbr-mck-mixOur group has been invited to participate at the HBR-McKinsey M-Prize . Now we need your support! If you want to see our proposal outlined below become a winning idea, please head over to the official website and "like" our idea: Global solutions, local failure – Overcoming barriers in implementing open innovation
For those not familiar with the M-Prize, here is a short summary from their official website:

The Management Innovation eXchange (MIX) is an open innovation project aimed at reinventing management for the 21st century. The MIX is based on the premise that management is nothing less than the technology of human accomplishment and that, after 100 years of incremental tweaks, it now needs to be reinvented for a new age.
The M-Prize is the MIX’s call to management innovators (and aspiring management innovators) around the world to make a real difference when it comes to improving management thinking and practice.

Here is a short summary of our submission:
Many companies today pilot open innovation (OI) and crowdsourcing, but only few are making it a permanent practice. A consortium of six German SMEs finds that OI can radically improve the productivity of technical problem solving, but demands strong internal promotors and dedicated processes to overcome resistance and barriers.
You can find the full proposal here! Thank you for your support!!

PS: The topic of implementing open innovation in an established firm also is the theme of our upcoming European Open Innovation Practicioner Program.

20 07, 2012

Featured Research: Open Innovation in the German Automobile Industry

By | 2018-06-14T06:54:55+00:00 Juli 20th, 2012|Cases-Industrial, Crowdsourcing, Deutsch (in German), Featured Research, Open/User Innovation, Research Studies|

Copyright Ili Consulting, www.ili-consulting.de, all rights reserved!German cars are the best in the world. While I can see this statement instantly being challenged by some, the international reputation of and demand for German cars, especially in the high price segment is pretty high.

A brand new study by German innovation expert Ili Consulting shows that the advantages of open innovation have been understood by managers of German car manufacturers and their suppliers.

While companies like BMW, Audi, or Daimler have been forrunners in customer co-creaton via ideation contests, I did not see much OI on the technical level in German Big Auto.

This 2012 edition of the study "Open Innovation in der Automobilindustrie" is the second iteration after a similar survey in 2009. Comparison impressively shows that more and more of the asked managers on the middle, higher and top level follow the trend to get their company's research from a closed to an open one, thereby laying grounds for the harvest of the great innovation potential that the crowd of consumers is.

 

Copyright Ili Consulting, www.ili-consulting.de, all rights reserved!

Comparison chart of manager's answers from the 2009 and 2012 iterations of the study. Clear shift towards open innovation

As has been said by many participating mangers, highly innovative ideas are short in supply. These are, however, one of the most valuable goods a technology company can have, and also the most important advantage Germany has on the international market.

The understanding that the old credo of "we have all the experts we need in house" no longer works in todays fast, interconnected markets and that flexibility and openness for external input, both for criticism and ideas, is crucial to mission success, has finally gotten a solid foothold in headquarters of majors and SMEs alike.

Open innovation is, however, not as easy as putting a website up, asking for ideas. There is much more to it to successfully tap into the wisdom reservoir of the crowd, and without competent guidance by experienced innovation consultants, opening oneself's knowledge stock up to the masses can be a risky venture.

For those of you engaged in businesses where your market share and revenues depend on technological advantage and satisfied customers (not only car-industry specific), the  study may hold some very interesing findings regarding the market, the progress from open to closed innovation, sources of innovation and their rating by practitioners as well as actual obstacles one will face when opening innovation.

The study can be obtained by contacting Ili Consulting directly. For contact information please refer to the contact section of their homepage (while writing about open innovation,, they were not open enough to provide the study as "open access").

21 06, 2012

Mass Customization Explained – The Full Series from Innovationmanagement.se

By | 2018-06-14T06:55:51+00:00 Juni 21st, 2012|Customization Trends, Featured Research, General, MC/OI on the Web, MC500, Research Studies, Technologies & Enablers|

Innovation management, all rights reservedI have been tweeting about it during the past weeks as more episodes have become availible:

Together with my colleagues Fabrizio Salvador and Dominik Walcher, we have been given the opportunity to provide an extended overview on eight parts of various aspects of mass customization on the well-known innovation blog Innovationmanagement.se .Finally, the last episode has been published.

The series consists of 8 parts, starting here.

In the series, we tried to shed some light onto:

  • Part 1: Introduction: Competing in the Age of Mass Customization
  • Part 2: The Market for Mass Customization Today
  • Part 3: Solution Space Development: Understanding where Customers are Different
  • Part 4: Robust Process Design: Fulfilling Individual Customer Needs without Compromising Performance
  • Part 5: Choice Navigation: Turning Burden of Choice into an Experience
  • Part 6: Choice Navigation in Reality: A closer look into the Customization500
  • Part 7: Overcoming the Challenges of Implementing Mass Customization
  • Part 8: A Balanced View: Conclusions and Key Learnings
9 05, 2012

Featured Research: New Forms of Collaborative Innovation and Production on the Internet

By | 2018-06-14T06:57:24+00:00 Mai 9th, 2012|Books, Co-creation, Crowdsourcing, Featured Research, MC/OI on the Web, Open/User Innovation|

In my series of featured research on open innovation and mass customization, today I would like to present you a book (also availible as free downloadable pdf) published by my colleagues Volker Wittke and Heidemarie Hanekop (Goettingen University). They present an interdisciplinary view on the effects of broad (online) collaboration on innovation and production.

WittkeNew Forms of Collaborative Innovation and Production on the Internet

By Volker Wittke and Heidemarie Hanekop (Editors)

Published byUniversitätsverlag Göttingen, 2011, ISBN 978-3-86395-020-0

Availible for free download and hardcover purchase at Universitätsverlag Göttingen

 

The Internet has enabled new forms of large-scale collaboration. Voluntary contributions by large numbers of users and co-producers lead to new forms of production and innovation, as seen in Wikipedia, open source software development, in social networks or on user-generated content platforms as well as in many firm-driven Web 2.0 services.

In their book, editors Volker Wittke and Heidemarie Hanekop take a nuanced look at the (online) collaboration landscape, presenting a collection of papers contributed by international scholars from sociology, management research, economics, and law. Complemented by a number of very interesting case studies, this book provides a good (academic) overview on the "big picture" of online-based collaboration in innovation and production.

Large-scale collaboration on the Internet is an intriguing phenomenon for scholarly debate because it challenges well established insights into the governance of economic action, the sources of innovation, the possibilities of collective action and the social, legal and technical preconditions for successful collaboration. Although contributions to the debate from various disciplines and fine-grained empirical studies already exist, there has been a lack of an interdisciplinary approach. This is exactly where this book provides great value — and as it is open access and free for download, it may serve as a good starting point for the debate.

Note: For more books on open innovation, co-creation, and corwdsourcing, head to the Knowledge Base of my website.

10 04, 2012

Featured Research: From Social Media to Social Product Development: The Impact of Social Media on Co-Creation of Innovation

By | 2018-06-14T07:13:24+00:00 April 10th, 2012|Co-creation, Crowdsourcing, Featured Research, Open/User Innovation, Research Studies|

For our series of featured research on open innovation and mass customization, today — in another act of shameless self-promotion — a new paper from our group at RWTH Aachen University in which we discuss the impact of social media on co-creation of innovation.

Dieunternehmung2From Social Media to Social Product Development: The Impact of Social Media on Co-Creation of Innovation

By Frank Piller, Alexander Vossen, Christoph Ihl (RWTH Aachen University)

Published in: Die Unternehmung – Swiss Journal of Business Research and Practice, Volume 66, No 1 (March 2012), pp. 7-26.  Free download at nomos.de

 

In this paper, my fellow researchers Alexander Vossen and Christoph Ihl discuss with me the impact of social media on customer co-creation in the innovation process.

Customer cocreation denotes an active, creative and social collaboration process between producers and customers (users), facilitated by a company, in the context of new product or service development. We propose a typology of co-creation activities in order to develop conceptual arguments how social media can impact the relationships among customers involved in co-creation as well as the relationship between customers and the hosting firm.

Interestingly, the impact of social media on customer co-creation may be two-sided: Social media can make economic- exchange relations more collaborative and social, but may also turn relations formerly based on social-exchange into “money markets” with strong competition among actors.

Impactsocialmedia

As a result of this paradox, we develop a set of questions that can lead future research in these regards. Read the article for our full argument.

4 04, 2012

Featured Research: Whom Should Firms Attract to Open Innovation Platforms? The Role of Knowledge Diversity and Motivation

By | 2018-06-14T07:13:28+00:00 April 4th, 2012|Featured Research, Open/User Innovation, Research Studies|

Our series of featured research on open innovation and mass customization continues. Here is a great study by my colleague Chrsitian Luethje and his co-authors on open innovation platforms.

 

SciencedirectWhom Should Firms Attract to Open Innovation Platforms? The Role of Knowledge Diversity and Motivation

By Karsten Frey, Christian Lüthje and Simon Haag

Published in: Long Range Planning, Volume 44, Issues 5–6
Download full article here: ScienceDirect.com

 

My dear colleague Christian Lüthje, one of the German pioneers of open innovation research, has just published an interesting study that looks into a different side of open innovation: Design parameters of an OI platform for technical problem solving.

Together with Simon Haag and Karsten Frey he looks into the question how a open innovation platform can attract the right participants into a technical problem solving contest.

The researchers use the Switzerland-based open innovation platform Atizo, which, like InnoCentive, NineSigma or Yet2.com, acts as a virtual knowledge broker between firms seeking support to solve innovation challenges, and skilled external contributors willing to contribute to solving those challenges. Founded in late 2007, Atizo now employs nine people and recently acquired 1 million Swiss francs of venture capital to accelerate its internationalization strategy.

However, compared to its large US competitors, Atizo still is rather focused. Atizo’s innovation platform today consisted of about 8,000 members. A distinct feature of Atizo however is that it offers its participants the option of developing solution proposals not just individually, but also collaboratively.

The majority of the participants who contributed to the challenges investigated in the Frey et al. study chose to work collaboratively via Atizo’s website. Teams working on a proposal for a given innovation challenge are generally formed by contributors who either have similar ideas or who possess the complementary knowledge necessary to advance an elaborate proposal.

At its basic structural level, Atizo resembles most Internet discussion forums: the postings to all solution threads are visible to all other participants, and participants may contribute to whichever thread interests them. There are no means for actively hindering someone from posting on a particular solution thread – but new posters are usually only accepted as discussion partners if existing team members see their contributions as valuable.

All innovation challenges are closed on a predefined deadline, after which the solution seeking firms assess all the proposals submitted and award the prize money to the most promising ideas. The prize is then split among the contributors to the winning solution proposals according to their input in the development process.

So far, more than 80 different new product and service development challenges have been broadcast on the Atizo platform, and its more than 60 clients include telecommunications providers such as O2 and Swisscom, FMCG manufacturers such as P&G, the Swiss bank Credit Suisse, the motorcycle manufacturer BMW and clothing manufacturers Odlo and Mammut. The authors investigate ten innovation challenges that were posted on Atizo’s website by nine different firms in 2008: Some were aimed at finding a technical solution for a specific problem whereas others asked for new service o product ideas.

When analyzing who were contributing to these contests, the researchers found that an extrinsic desire for monetary rewards tends to be positively related to the making of non-substantial contributions. People who are intrinsically motivated however tend to breed more substantial postings, and knowledge diversity facilitates all types of contributions to open innovation projects. The most valuable contributors are those who combine high levels of intrinsic enjoyment in contributing with a cognitive base fed from diverse knowledge domains.

 Figure2

Well, this sounds not too surprising, on the first sight. However, based on my personal experience with running several different kinds of contests as a client of various platforms, I believe that in the long run extrinsic motivation by money is more important. The Atizo structure is set up in a way that price money is rather small. So there may be a strong self-selection effect that those people that have "real" valuable solutions even don't bother to participate at all.

But the study by Karsten Frey, Christian Lüthje and Simon Haag shows clearly that hosts of OI platform and contest shall …

  • ideally try to raise intrinsic motivation by creating an enjoyable environment for participation,
  • make problem statements divisible into different subtasks, which supports the formation of teams and the division of labor among team members
  • provide structures and interaction tools to facilitate task partitioning and task coordination in collaborative problem solving.
  • ensure that participants feel empowered to proceed in their solution process autonomously, for instance, by not imposing too many restrictions about what mechanisms and principles are admissible in order to solve a given innovation problem.
  • facilitate valuable feedback to contributors both from other contributors and from the seeker firms to ensure that the solutions proposed will meet the firm’s basic requirements. Constant feedback also contributes positively to the contributors’ feeling of competence, which in turn raises their motivation to work on innovation challenges.

 

Hence, the study clearly showed that open innovation is an art and craft that demands careful management and specific competences, and that it is not just another piece of software.

15 03, 2012

Featured Research: Is your company ready to benefit from an open innovation processes?

By | 2018-06-14T07:13:42+00:00 März 15th, 2012|Cases-Industrial, Crowdsourcing, Featured Research, Open/User Innovation, Research Studies, Technologies & Enablers|

Today I want to continue our little series on new papers dealing with one (or many) aspects of mass customization, open innovation and innovation management. In an act of shameless self promotion, we picked this short management article on some of the key requirements that can decide whether or not a company is ready to benefit open innovation.
 

EycoverIncreasing innovative capacity: is your company ready to benefit from open innovation processes?

By Philipp Wagner and Frank Piller (RWTH Aachen)

Published in: Ernst & Young Performance Journal, Volume 4, Issue 2
Download full article here at Ernst & Young (very nice layout 🙂

A company’s ability to innovate is key to its success. The strategic and systematic opening up of internal innovation processes to include external knowledge – in other words, open innovation – can result in significant competitive advantages.

Core dimensionsThere is now a whole range of open innovation methods that complement traditional innovation management methods. While there is already considerable evidence of the potential that open innovation offers, many companies still have a comparatively closed innovation process, or are still in the process of transitioning to a more open approach.

In order to exploit the potential of open innovation, the corresponding methods must be tightly integrated into the Innovation management toolbox. Moreover, open innovation calls for a shift in strategic orientation, the organization and companies’ culture. These requirements are not dissimilar to those of traditional innovation management. Open innovation also needs to be planned, managed, monitored and formalized.

In this paper, we have presented a tool that enables companies to assess their readiness for open innovation as a basis for defining targeted internal measures aimed at promoting the benefits of open innovation.

How open the innovation process is depends less on the specific industry involved than on the decision of the management of the company in question. Companies that have been successful in implementing open innovation have reported that creating an open innovation culture is a powerful motivating factor, and that internal cultural barriers and a lack of motivation are the greatest obstacles

In our experience, dealing with external knowledge and external players poses another major challenges for many companies. In practice, the application of open innovation tools does not always lead to the desired results, and the potential theoretically possible is not fully exploited. A company’s readiness to assimilate external information is a key challenge in this regard.

In this paper, my fellow colleague at RWTH Aachen, Philipp Wagner and myself present an audit aimed at helping companies assess their readiness for open innovation and, where necessary, optimize structures and processes.

Audit_dimensions

The articles comments on the factors that determine a company’s actual situation with regard to specific criteria and, by comparing this to a target situation, endeavors to determine the company’s readiness to utilize open innovation successfully and derive suggestions for action from these findings.

==> Download the full article here as a PDF

And a disclaimer: In the present state, our open innovation audit still is a really customized and lengthy consulting project that we are happy to offer to interested companies. But it IT IS NOT A QUICK SCALE that you just can fillout online and then get your readiness score.  We are working on this, too, but at the present stage, we were not satisfied with the results of such a self assessment.

However, such a self assessment is available in form of the Open Innovation Assessment by NineSigma. Have a look there. This is a nice illustration and complementation to our paper.

29 02, 2012

Featured Research: The Value of Crowdsourcing: Can Users Really Compete with Professionals in Generating New Product Ideas?

By | 2018-06-14T07:13:50+00:00 Februar 29th, 2012|Cases-Consumer, Co-creation, Crowdsourcing, Featured Research, Open/User Innovation, Research Studies|

Today I am happy to present you another paper in our series of recommendable reads:  A study by two fellow researchers on the question whether or not crowdsourcing is „worth it“. Also, thank you all for the great feedback on this new series! I will continue to introduce new papers over the next weeks. 
 

JPIMThe Value of Crowdsourcing: Can Users Really Compete with Professionals in Generating New Product Ideas?
By Marion K. Poetz and Martin Schreier
 

Published in: Journal of Product Innovation Management,  Vol. 29 Issue 2 (March 2012)
Download working paper version at SSRN.com or Bocconi University 

Generating ideas for new products used to be the exclusive domain of marketers, engineers, and/or designers. Users have only recently been recognized as an alternative source of product ideas.Whereas some have attributed great potential to outsourcing idea generation to the “crowd” of users (“crowdsourcing”), others have been more skeptical.

Our colleagues Marion K. Poetz from Copenhagen Business School and Martin Schreier from Bocconi University join this debate by presenting the first real- world comparison of ideas actually generated by a firm’s professionals with those generated by users in the course of an idea generation contest.

MAM baby productsFor their research, the two scholars coopersated with the MAM Group, a leading company in the baby products. MAM is based in Austria and sells more than 40 million baby products sold each year, being the market leader in many countries, It especially has positioned itself as the firm that is highly capable of designing leading-edge baby products (as demonstrated by several international design prizes).

In their study, Martin and Marion first faciliated a company-internal idea generation process (i.e., ideas generated by professionals) that led to a total of 51 ideas.

Users and customers, in contrast, were invited to submit their new product ideas via an online ideation contest. The incentives for participation were a cash prize of €500 for the winning idea and 50 noncash prizes to be raffled off among participants. Overall, 70 users participated in this idea generation contest.

Executives from the company then evaluated all ideas (blind to their source) in terms of key quality dimensions, including novelty, customer benefit, and feasibility. The following picture has the core results:

Peotz_Schreier_2012_Table_1_JPIM_3-2012-p252

 

As the table shows, Marion and Martin find that on average user ideas score higher in novelty and customer benefit, but lower in feasibility. Even more interestingly, they find that user ideas are placed more frequently than expected among the very best in terms of novelty and customer benefit.

My comments to this paper:

First, this finding is even more striking as the researchers did not use a state of the art ideation contest and invested much into external recruitment of ideas.It really shows the value of looking out of the box and engaging for your firm’s periphery.

However, this does not mean that a company’s internal R&D people are dump and we all sjopuld better get rid of them. No! For most ideas and innovation, I strongly believe that the internal innovation function still provides the more valuable, as feasible, input of ideas. Consumers only can take a very limited number of highly novel ideas and products.

But in the few times where a company really needs radical innovation, engaging with external users may be more beneficial.

But these external users are often not the customers of the firm (here I find the paper a bit misleading). It are not „average“ customers of a firm that come up with the really good ideas, but industry experts, young designers, lead users, and other „non-representative“ people that take the opportunity of an ideation contest to pitch their idea to a potential manufacturer.  And these contributors will not work for Euro500 price money in the mid term!

 

20 02, 2012

Featured Research: The Paradox of Tie Strength in Customer Relationships for Innovation: A Longitudinal Case Study in the Sports Industry

By | 2018-06-14T07:13:55+00:00 Februar 20th, 2012|Co-creation, Featured Research, Open/User Innovation, Research Studies, Sneaker|

I am happy to announce the publication of a new paper on a topic that is strongly underlying this blog: The relationship between firms and customers for innovation and value creation.This post shall be the start of a series of posts on our own papers and papers from others in the area. In an act of shameless self promotion, I start with one of our own papers.

Piller:fredbergThe Paradox of Tie Strength in Customer Relationship for Innovation: A Longitudinal Case Study in the Sports Industry, by Tobias Fredberg & Frank T. Piller 
 

Published in: R&D Management, Vol. 41, Issue 5 (Dec 2011)
Download working paper version at SSRN.com

Current literature argues that firms should have strong ties to customers to benefit from increased customer retention and loyalty. Strong ties, however, have also been shown to prevent innovation, suggesting that firms should also develop weak ties to other customer groups.

Our paper tries to explain this paradox. We look in situations where strong ties facilitate, rather than prohibit, innovation.Picflow Kopie Our paper is based in a seven-year longitudinal research project with a global sporting goods company.

From the case we find that the paradox of tie strength results from an overly simplified view of the nature of company-customer relationships.

Contrary to the established literature, we find that strong ties in the case supported significant innovation. In fact, the involvement resulted in the development of a new product with a radically different product architecture and led to one of the most successful product launches in the company’s history.

To explain these findings, we introduce the nature of customer participation in a firm’s value creation processes as a new dimension of the constitution of firm-customer ties and discuss how such a kind of relationship can develop (see Figure).

In addition to the known continuum of strong and weak ties, firms have to look on the nature of ties which results from different modes of interacting with customers: Firms can either select rather passive modes, where customers just response to an activity of a firm, or much more interactive relationships, where customers actively contribute and participate. We find that the latter kind of relationships can be created by a firm, and that here radical innovation despite (or better: due to) strong ties can be possible.

Context information:

Benedict Dellaert and colleagues recently had a great paper on a similar topic, see "Corine S. Noordhoff, Kyriakis Kyriakopoulos, Christine Moorman, Piet Pauwels and Benedict G.C. Dellaert (2011), “The Bright-Side and Dark-Side of Embedded Ties in Business-to-Business Innovation,” Journal of Marketing, forthcoming (pdf download here)."

Interested in more recent / upcoming research papers? Then look here for a list:

SSRNRecent Working Papers / Work in Progress by Frank Piller: Download of recent working papers at SSRN