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.

9 03, 2012

The Market for Mass Customization: Results from the Customization500. Part II: The State of Choice Navigation Toolkits

By | 2018-06-14T07:13:44+00:00 März 9th, 2012|Books, Cases-Consumer, Co-Design Process, Customization Trends, General, Research Studies, Technologies & Enablers|

 (Part 2 in our series with key results from the Customization500 study. Part 1: Some Data on the MC industry structure).

MC 500 cover finalThe Customization500 study (see http://www.mc-500.com) provided us also a very detailed view into the current practice of choice navigation and online configuration. When crunching the numbers, we found a large puzzle:

The reality of toolkits clearly falls behind the broad body of academic research on design parameters of successful toolkits.

You find lots of additional information about the Customization 500 (short: MC500) study in a special section in my blog, www.mc-500.com

 

How did we evaluate customer satisfaction with a configuration toolkit

 

We used more than 40 parameters to evaluate the state and design features of each toolkit in our study (Table 3).

Data presented for each Customization 500 company
Table 3: Data collected for each configuration toolkit profile

 

This objective data was then matched with the performance outcome of the toolkit, i.e. the perception of our trained experts of the configurator.

For this evaluation, we used five criteria to measure the performance of a configuration toolkit in our sample:

(1) visual realism, (2) usability, (3) creativity, (4) enjoyment and (5) uniqueness.

All impressions were measured by our panel of trained expert judges on a 1 to 5 rating scale (1=very low value / 5=very high value).

  • Multiple items: For most of these criteria, we used multiple items to gather the scope of these criteria. Items were grouped and tested with the help of factor and reliability analysis.
  • Inter-rater reliability of these factors was checked with the Intra- Class-Correlation-Coefficient.
  • Performance: Finally, the single factors were combined to one overall performance factor.

In more detail, the five evaluation criteria were constructed as follows:

  • Visual Realism was measured by means of one question “How realistic do you assess the visualization of the configuration process?”
  • To measure usability, the evaluators were asked to rate: "The configurator is (1) intuitively usable, (2) user-friendly as well as (3) clearly and (4) logically structured".
  • The creativity factor consisted of two items: "(1) The website gave me a lot of freedom", and "(2) I could give my creativity free rein while designing the product".
  • To determine enjoyment, the experts had to rate: "The configuration was (1) fun, (2) delight, (3) pleasure, (4) entertaining and (5) interesting".
  • To assess uniqueness following statements had to be evaluated: "My created product (1) is unique, (2) is different, (3) helps me to differentiate; and (4) no one else has such a product."

In addition, we had multiple other scales for performance like the satisfaction with the final product, the willingness to purchase, the likelihood to recommend the vendor to a friend, etc. 

All 500 companies that are included in the Customization500 are presented with a profile picture like the following Figure 4.

Example company profile 2
 Figure 4: Sample profile picture (purchase the full report for all 500 evaluations)

 

Configuration process experience is driving overall customer satisfaction

 

Our analysis showed that on the one hand side, “preference fit” and the meeting of a customer’s “need for uniqueness” are strong drivers of satisfaction with a particular mass customization offering.  

However, process satisfaction, resulting from the enjoyment and creative involvement during a user-friendly configuration process, has an even higher impact in many cases, according to our data.

This confirms the early findings of researchers like Nikolaus Franke or Martin Schreier who have stated that in B2C mass customization about 50 percent of the additional willingness to pay can be explained by the process experience and a feeling of achievement and co-design success – and not by the higher functionality of fit of a custom product.

Our study clearly supports this claim. We urge managers to look beyond the sheer technology and back office integration of configuration toolkits and also focus on delivering a great configuration experience.

 

Meaningful visualization

 

Academic research often has stressed the importance of realistic visualization as a core element of a good toolkit. But many companies in practice still have very simple visualization features, and sometimes no illustration of the outcome at all.  But there also can be too much of a good thing:

Evaluators often highlighted not those sites with the most advanced 3D visualization as best in class, But those with visualization features that matter and come to the point.

For many products, a realistic, fast, plug-in free and well-described visual of an individual configuration is better than a complicated 3D model wearing, for example, my custom T-shirt – that takes many seconds to load and almost crushed my computer when playing with it. Sounds obvious? Well, it is not. We still see many sites where technology is used as a point of differentiation – but not as a source of customer value!

 

Providing help and process navigation

 

When looking at the data which features of a configurator drive most the perceived usability and use experience, we found that navigation- and orientation-help features, such as a progress bar or an activity list, play a key role. Co-design toolkits with a higher level of company- and/or customer-help features, such as design inspirations, deeper product information or recommendations by other consumers, in general performed better in terms of satisfaction.

However, about 50% of the toolkits in the "Customization 500" do not offer any or only a low level of these features. Here, we find many untapped opportunities for practice to enhance the gross utility of customers.

At the other side, we’ve found quite a few offerings without or with only a low level of these features which were performing excellently nonetheless. In some cases, the simple product design (solution space) did not require special help features. In other cases, customer satisfaction with the offerings was excessively influenced by the particular value provided by the customizable product itself.

There is not one best way. Companies should “customize their mass customization strategy” based on the requirements of their customer stock. But having an understanding of the perception of customers or a firm's toolkit is crucial to make such a decision.

 

Parameter versus need based configurations

 

The largest gap between practice and recommendations of academic research can be found in the area of parameter- versus need-based toolkits.  We found that in today's mass customization reality, basic parameter (option) based toolkits still rule. Customers have to make their own decisions from a list of predefined options. This often demands a large number of decisions and also knowledge of the user about the product. While this may be perfect in the business-to-business context, it is not always the best option in consumer markets.

Here, need-based configuration has been shown to provide better results. In such a need-based system, users share something about their preferences, requirements, or expected outcomes. This input then is transferred by an algorithm into a product configuration. A need-based configurator hence mimics the behavior of a good sales person who also may recommend you exactly the right product (configuration) after asking just a few but insightful questions. In our study of the best 500 toolkits, less than 3% of companies had such a need-based configurator in place. While we acknowledge that it is more costly to develop a good need-based configurator, these systems seem to offer a great opportunity for differentiation and larger customer satisfaction.

 

Conclusion

 

MC 500 signConcluding, we can state that mass customization still is an area in the making. While there has been much progress, and there are some really great toolkits in the market, the majority of systems still are in an early stage. But as our data shows, from the customer perspective it often is just a small step between a good to a great toolkit.

All companies that have been included in the Customization500 received this vignette to illustrate that they are part of the leading companies in the field of mass customization and personalization. So when search for customization on the web the next time, watch out for this sign.

But we expect that the Customization500 is a very dynamic field. Even during the time of our research we found many developments, improvements, and failures. This is why studying the field of mass customization remains a continuous endeavor … but a fun one, too!

 

Context information

 

Part 1: of this series:  Data on the MC industry structure

MC 500 cover finalwww.mc-500.com: More information on the Customization500 study and a list of the 500 companies included in the evaluation.

 

Mcpc2011_proceeding_long_coverhttp://bit.ly/mcpc-proceedingsThe Proceedings of the last MCPC conference cover many dozens of case studies, latest research, 2500+ slides, and 15+ hours of video of the plenary presentations. As part of the proceedings, you also find three detailed PPT presentations using the Customization500 data in larger detail.

MC 2012 banner blockwww.mc2012.org: Speaking German? Then participate at the next meeting of the German-speaking mass customization community (Salzburg, 29 June 2012) – and learn from some of the German champions of the Customization500.

 

6 03, 2012

The Market for Mass Customization Today: Results from the Customization500. Part I: Company & Industry Structure

By | 2018-06-14T07:13:47+00:00 März 6th, 2012|Cases-Consumer, Co-Design Process, Customization Trends, General, Personalization, Research Studies, Service Customization, Technologies & Enablers|

MC 500 cover finalIn his recent report about mass customization, Forrester's J.P. Gownder concluded that "mass customization is finally the future of products".  But how does the future of products look today?

In a joint project, Dominik Walcher and I looked together with our colleagues Thorsten Harzer, Christoph Ihl and Fabrizio Salvador into the practice of mass customization. Our multi-stage study, "The Customization 500", is the first global benchmarking study on mass customization and personalization in consumer e-commerce.

In a series of postings, I want to introduce some of the results from this research. You find all about the Customization 500 (short: MC500) study in a special section in my blog, www.mc-500.com


Sample construction for the Customization500 benchmark study

 

Given the scope of the mass customization market, we focused our analysis in the Customization500 on companies that sell directly to end consumers (B2C), using an online toolkit for user co-design that is applied to change the physical characteristics of the product in a dedicated manufacturing step (hence excluding products where customization is embedded in the product like a smartphone). In addition, we pragmatically focused on companies which we were able to analyze as they had a website in either English or German language.

In total, we found almost 1000 firms meeting these criteria (refer to www.configurator-database.com, a continuously updated list of mass customization companies). Following an extensive evaluation activity, we identified 500 companies that lead this field from a customer perspective (see here the full list). For each company, we gathered more than 100 data points. Data was collected by a group of trained expert evaluators who spent hours on each website.

  MC 500 Sample construction

 Figure 1: Selecting the data for the Customization 500

Also, each website was at least evaluated independently by three evaluators, and we took care to investigate all cases where the inter-rater reliability was not sufficient. The result of this exercise was a ranking of all companies, and allowed us to identify some of the leading offerings in the field. Figure 2 shows a summary picture of one of the companies included in the study.

  Nike

Figure 2: A typical illustration of the overall score sheet of a company included in the Customization 500 (to get access to  all 500 profiles included in the Customization500, you have to purchase the full market study).

 

Which are the dominating industries with mass customization offerings

 

Table 1 provides an overview of the categories where mass customization in BtoC online today is employed. We find some very crowded categories that dominate the market. As expected, the option to personalize items by applying a user design on a basic product by different forms of digital printing is leading the field (categories 1, 2 and 4). There also always seems to be room for another custom shirt business or personalized sticker / foil to decorate your smart phone. Interestingly, however, there also is a very large (and still growing) field of applications in the food and nutrition industry where mass customization is applied to customize taste and nutrition of food.

  MC 500 Categories Table 1

Table 1: Categories of mass customization application in the Customization500

Using customized products for the gift market is a growing, but still not over-crowded opportunity. Most vendors still see mass customization as a one-to-one business, providing a custom product for the buyer (hence, also the dominance of me, my, mein etc. brand names).

However, some of the most successful mass customizers have realized that mass customization offers a perfect cure of a common problem: „Oh my good,

[Name here]‘s birthday is coming up in a few days — I need to rush to get an „original“ present now – but what?“ Take customized chocolate. Chocri and MyM&Ms, for example, are competing with gift cards and gift books, not with other candy items. They are not to be eaten – even if they taste very good – but to express that I have thought of you and really have spent some effort in getting this present done. For this, I am willing to pay a premium of 1,000 percent or more. As a provider, however, this means that a delivery time of 24 hours is a must, plus advice for easy gifting, wrapping, additional greeting cards etc. Here, we still see many untapped opportunities.

When looking further in the domains of mass customization application, we interestingly only found very few good configuration toolkits (for functional customization) in the field of consumer electronics and computers. Here, apparently the improvements of hardware apparently make it less useful to customize a product via toolkits before purchase, but allow users to customize the product during the usage stage with an embedded toolkit. It may be a sign of the shift in mass customization that the early pioneer, Dell, today almost offers no customization at all at its website. Well, there still is a configurator, but the choice options are very limited.

 

A closer look into company structures

 

For 120 of the 500 companies, we also could obtain extensive data by means of a company survey. Figure 3 shows our two-step data gathering approach.

MC 500 Expert and company survey

Figure 3: The expert evaluation of the Customization 500 was followed by an extensive company survey of 120 companies

Descriptive statistics for the responding firms are given in Table 2, providing an enhanced insight into the company structures of the players in the mass customization market today.

  • About 83% of the firms were founded exclusively with the purpose of mass customization, while 17% run their mass customization business in addition to their standard business. In general, most firms are rather young.
  • Only 16% of the mass customization offerings are older than five years, indicating the long time lag from the description of the idea to the broader application of toolkits for co-design.
  • 54% of the firms have less than five employees.
  • Annual sales of the responding firms range from less than $100,000 to over $5 million in the last fiscal year, with the majority having sales of less than $1 million (83.5%).

These observations are consistent with our observation that the current dynamism in mass customization is driven primarily by innovative startups that have built their business models from the ground up and focus entirely on the promises of mass customization.

Table 2 Descriptive Data of Company Survey

Table 2: Descriptive data from the company survey of responding firms

Clones dominate mass customization entrepreneurship

If you have a good idea for a custom product, it will be copied fast. This is one of the major conclusions we can draw from our observations of the market. The barrier to entry for many products is rather low, and once an interesting idea comes on the market, copycats follow quickly. This in general has not to be a bad thing, as also clones help to build the market, generate attention, and signal to press that this is a new category.

However, for the pioneers this means that they have to focus as much attention on branding and differentiating their business as upon building the processes and systems. Patents or other forms of IP do not provide much help here, thus, we conclude: As a pioneer, be fast, smart, and differentiate your business beyond the brand name and your core products.

Despite the many "me-too" offerings, surprisingly often the late followers are doing very well in their segments. We see three reasons here:

(1) Strong growth opportunities in every market: The late comers even in the most crowded categories (like custom men's shirts) enter into a market that still is not matured at all. Overall, there is not one category in consumer B2C where custom products have more than a few percent of the overall category (in most cases, they have a few tenth of a percent!). So there is still enough space for everyone.

(2) Market education: Pioneers in a category often have to spend a lot of attention to educate the market and just let consumers (and journalists) know that this kind of custom product is available. Latecomers can build on this generated market education.

(3) "Best of Breed" solutions: Latecomers often perform as best of class of established players, combining the design elements of pioneers, but also of mass customization sites in other categories.  A recent good example if getwear.com, which came late with another custom jeans offering, but has the best online configurator in its industry.

Mass customization platforms make the third wave of mass customization

But despite many clones, we also found a lot of innovative business models. Some of the best performing companies in the Customization500 are not stand-alone businesses that deal directly with consumers, but are mass customization platforms. These platforms can be regarded as the third stage of mass customization development.

The first wave of mass customization was driven by the early pioneers in the field in the early 1990s, motivated by the opportunities of new flexible manufacturing technology. Levi Strauss is a typical example from this time. Most of these offerings worked offline in a traditional retail environment. Also, first internet offerings coming of in 1995 and 1996, like CyberChocy or Creo Interactive, came up at this time. But in most markets, consumers were not ready yet.

The second wave came with the internet economy, around 1998-2002. Often, startups at that time just opened, as everybody could do it, not as customers needed it. But some great examples of mass customization survived, like NikeID (opening only because former Nike CEO Phil Knight wanted to have „something in the internet“, and so they selected mass customization as this promised to cause little channel conflicts with established retailers). In the following years, the internet-based mass customization offerings matured, and many more followed. It was the broader development of online configurators that made mass customization happening in a larger scale.

But a third wave of mass customization is happening now: It is driven by companies like Ponoko, Zazzle, Spreadshirt, Cafepress, Lulu, Gemvara, and many others, which offer design, manufacturing, and retail capacity to everyone. These platforms allow entrepreneurs to open a dedicated mass customization business at very low investment cost. On these platforms, people are not just customizing to fulfill their own needs, but to create (micro) niche markets for their peers. The platform providers have successfully combined the eBay idea of very easily selling things over the internet with the customization model of robust fulfillment processes. Here, we are just at the beginning and will see many more applications soon.

In an upcoming posting, we look more closer into the state of the practice of choice navigation (configuration) toolkits.


Context information

 

MC 500 cover finalwww.mc-500.com: More information on the Customization500 study and a list of the 500 companies included in the evaluation. 

 

Mcpc2011_proceeding_long_coverhttp://bit.ly/mcpc-proceedingsThe Proceedings of the last MCPC conference cover many dozens of case studies, latest research, 2500+ slides, and 15+ hours of video of the plenary presentations. As part of the proceedings, you also find three detailed PPT presentations using the Customization500 data in larger detail.

MC 2012 banner blockwww.mc2012.org: Speaking German? Then participate at the next meeting of the German-speaking mass customization community (Salzburg, 29 June 2012) – and learn from some of the German champions of the Customization500 

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

13 02, 2012

Public Proceedings of the last MCPC Conference Published — Access all Conference Presentations, Papers, Videos

By | 2018-06-14T07:14:06+00:00 Februar 13th, 2012|Crowdsourcing, Customization Trends, Events, General, MC/OI on the Web, MCPC2011, Open/User Innovation, Personalization, Research Studies, Service Customization, Technologies & Enablers|

Mcpc2011_proceeding_ISBN_coverDid you miss the MCPC 2011 conference? It was a terrific event, and we really got great feedback and comments on the conference.  Check here for some conference pictures!

Richard Henderson at UC Berkeley has been very helpful in creating the best conference documentation we ever had! On a special conference website, the full conference program  is  now available with links to the slides of the presentations, full papers (when available), and many full videos of the plenary and keynote presentations (for Day 1 and 2).

To access this rich source of information (I estimate that this are 2500+ slides, 1000+ pages of papers, and 15+ hours of video), either use the access code you got as a conference participant, or purchase* the full text proceedings:

Bridging Mass Customization & Open Innovation. Proceedings of the MCPC 2011 Conference — including an access code to all presentations, papers, and videos. Edited by Henry Chesbrough and Frank Piller. Published by Lulu, Inc. (Raleigh, NC), 2012.

=>  Paperback version: ISBN: 978-1-4716-3023-1 (ca. 5 day delivery time)

=>  eBook version: ISBN: 978-1-4716-3086-6 (instant download)

For detailed information about presentations and speakers please also refer to the conference proceedings flyer!


*Note: Why do we sell these proceedings and do not provide open access? First, this would have been unfair to all people participating at the conference and paying the full fee there. Second, organizing such a conference is a big effort and investment, and we still need the proceeds from this publication to cover our cost. Third, many authors and presenters do not want to have their papers and presentations openly on the web, but agreed to a controlled publication only.

4 02, 2012

New Book: Customer-Driven Supply Chains: From Glass Pipelines to Open Innovation Networks

By | 2018-06-14T07:14:16+00:00 Februar 4th, 2012|Books, Cases-Industrial, Customization Trends, General, Open/User Innovation, Research Studies, Technologies & Enablers|

As a result of our EU-funded research project REMPLANT, we are proud to announce a new book that Prof. Frank Piller partly co-authored:

Book cover springerCustomer-Driven Supply Chains From Glass Pipelines to Open Innovation

by Lyons, A.C., Coronado Mondragon, A. E., Piller, F. and Poler, R

Find Customer-Driven Supply Chains at Amazon.com

More book info and download of individual chapters at Springer.com

The Book reviews the concept of lean thinking and its relationship to other key initiatives associated with supply chain management. Detailed industrial case studies based on the authors’ experience illustrate the principles behind lean supply chains. Moreover, a series of diagrams are used to illustrate critical concepts and supply chain architectures. Special emphasis is placed on the importance of transferring lean principles from the organisational level to the supply chain level. The theory and principles behind lean supply chains are reviewed. Other concepts related to lean supply chains discussed in the book include: mass customisation, agility, information sharing and the bullwhip effect. A methodology used to measure the performance of supply chains is introduced; this methodology comprises the tools of decision timeline, data-flow diagramming, supply chain value stream mapping and a performance measurement scorecard.

Readers will gain a clear picture of the competitive implications of lean supply chains. Customer-Driven Supply Chains: From Glass Pipelines to Open Innovation Networks will be a valuable resource of material to students studying supply chain/operations management as well as researchers in this field. Industry practitioners will learn how to develop sound supply chain strategies that can have a positive impact in their organisation.

Lead author and driver behind the book has been Andrew Lyons from the University of Liverpool, a great research partner in the REMPLANET project. He has been a Lecturer in Operations Management at the University of Liverpool Management School since 2002. His research interests include: operations strategy, supply chain design and performance measurement, supply chain information structures, mass customisation and build-to-order strategies.

7 11, 2011

#MCPC2011 Business Seminar: The Future of Mass Customization: The New Open Manufacturing System at #Materialise, #Ponoko and #ILT

By | 2018-06-14T07:15:26+00:00 November 7th, 2011|Cases-Consumer, Cases-Industrial, Co-creation, Co-Design Process, Crowdsourcing, Customization Trends, Design, Events, MC/OI on the Web, MCPC2011, Offline Customization, Open/User Innovation, Personalization, Research Studies, Service Customization, Technologies & Enablers|

MCPC 2011
On November 16th, the MCPC 2011 conference kicks off at the Marriot SFO Airport, San Francisco. In this series of postings, we introduce our speakers at the business seminars of the conference.

Additive Manufacturing and the opportunity for every consumer to turn any idea into a tangible product will change not just mass customization, but our dominant perspective of design and manufacturing. Learn the key facts from visionaries and business leaders in this field.

Wim Michiels, Executive Vice President, Materialise
The Industrial Revolution 2.0: Personalization through Additive Manufacturing

MichielsEvery year, consumers’ interest in customization increases and market demand for personalization is creating new opportunities for entrepreneurs as well as entrepreneurs who have an existing offering that they now wish to tailor. With the technological advancements in Additive Manufacturing (AM), commonly known as 3D Printing, individuals have the ability to add a personal touch to the things they use and love most from cell phone cases, to shoes, to accessories for their cars and more.


David ten Have, CEO, Ponoko
Building the World's Easiest Making System

Ten_haveThe future of products – using software to connect consumers, designers and making devices. Ponoko Inc is the creator of Personal Factory — the world’s most advanced platform for the mass creation of custom goods. Creative consumers can turn their design ideas into custom goods on demand using Ponoko's global network of making devices. This local production reduces the environmental impact of manufacturing. So far, more than 100,000 customer designed products have been made in 15 locations throughout the USA, Europe and Australasia – everything from 3D printed jewelry to laser-cut clocks to CNC routed furniture. Just as the Internet revolutionized the exchange of digital photos, music and movies, Ponoko pioneered the exchange of digital designs, reinventing the way consumer goods are designed, made and distributed. In a future when there is a making device in every home, school and business, Personal Factory is the software that makes it easy for everyone to create custom goods.

 Reinhard Poprawe, Director of Fraunhofer ILT, RWTH Aachen University
Laser Additive Manufacturing – The Key to the Next Generation of Economic Custom Production

Poprawe

 

 

 

 


Please find the complete program at the official MCPC 2011 website.

3 11, 2011

#MCPC2011 Keynote Session: Setting an Agenda for Research & Innovation

By | 2018-06-14T07:15:39+00:00 November 3rd, 2011|Cases-Industrial, Co-creation, Co-Design Process, Crowdsourcing, Customization Trends, Events, MCPC2011, Open/User Innovation, Personalization, Research Studies, Service Customization, Technologies & Enablers|

MCPC 2011 On November 16th, the MCPC 2011 conference kicks off at the Marriot SFO Airport, San Francisco. In this series of postings, we introduce our speakers at the business seminars of the conference.

Discuss with your fellow participants your insights from the MCPC 2011 and close the conference with three forward-looking keynotes and a review by the conference chairs that will set the agenda until the next MCPC.

Vishal Gupta, Director Developer Network, Elsevier
Wither Scientific Publishing? Collaborative Innovation, Open Platforms and Personalized Workflow Solutions Has an Answer

GuptaWith an exponential growth of scientific information and wider distribution of services and data sources; integrated and intelligent search and discovery become crucial to the success of researchers. This is not possible without partnering on a platform that provides the ability to integrate workflow solutions in a seamless way, allowing a more meaningful use of the content. At Elsevier we are trying to bring a paradigm shift in partnering with researcher and developer communities on open platforms to jointly develop innovative workflow tools that are embedded deeply in user’s workflow, personalized to suit the individual needs, and geared towards driving research outcomes.

Kent Larson, MIT Media Lab
Urbanization from a Perspective of Mass Customization and Open Innovation

LarsonThis talk will provide a thought-provoking outlook by looking on urbanization from a mass customization perspective. It will propose a systems approach to creating new cities at four scales:

  1. New Urban Strategies – parametric tools to create urban blocks with the optimal mix of housing, commercial, retail, and services and their related infrastructure.
  2. Mobility-on-Demand – modular approach to assembling an ecosystem of mobility modes and new vehicles (like the CityCar)
  3. Personalized Places of Living and Work – mass-customization strategies for high-performance urban housing
  4. Proactive Technology – sensors, algorithms, and interfaces to proactively encourage energy conservation, healthy behaviors, and mobility choices.

Mitchell Tseng, Hong Kong University of Science and Technology
Embodying Innovation for Customer Value – Building Bridges Between Mass Customization and Open Innovation

TsengIn our knowledge economy, value comes from generating creative ideas and then embodying them in products for transactions. Mass Customization starts from finding out the customer value and then try to create the best combination of components that shape the physical products for customers to buy. On the hand, Open innovation invites creative idea from everyone, from partners, suppliers, customers and others to contribute for a defined purpose that is valuable. Either approach involves a critical step of transforming abstract idea to tangible products, connecting concept to physical world in order to achieve customer value. Although there are products that can be valuable in abstract forms or software, majority of products still relies physical embodiment. This presentation will like to address the interface between electronically moveable and immoveable. Some of the techniques that can be adapted to amplify the synergy between these two essential components will also be reviewed and discussed.

Please find the complete program at the official MCPC 2011 website.

28 10, 2011

#MCPC2011 Business Seminar: Using Social Media for Customer Co-Creation at #Quirky and #IndieGoGo

By | 2018-06-14T07:15:57+00:00 Oktober 28th, 2011|Cases-Consumer, Cases-Industrial, Co-creation, Co-Design Process, Crowdsourcing, Customization Trends, Events, MCPC2011, Open/User Innovation, Personalization, Research Studies, Service Customization, Technologies & Enablers|

MCPC 2011
On November 16th, the MCPC 2011 conference kicks off at the Marriot SFO Airport, San Francisco. In this series of postings, we introduce our speakers at the business seminars of the conference.

Social media is becoming a core platform for new product & new service development. Learn from the pioneers in this field and discuss how these approaches could work in your company.

John Jacobsen, Head of Engineering, Quirky
 Social Product Development – Launching a Great New Product Every Few Days

JacobsenQuirky is a social product development company that brings two brand new consumer products to market each week through its online collaborative platform. Quirky’s community of almost 90,000 members weigh in on every aspect of product development from research to industrial design to branding; quirky shares its revenue with the influencers who help bring each product to life. Since its launch in 2009, Quirky has collaboratively developed more than 120 new products. Top influencers are making tens of thousands of dollars. National retail partnerships include Bed, Bath & Beyond and HSN, with its own show on the HSN Channel each month. Quirky will also have its own show premiering on The Sundance Channel on August 30th. The show, called Quirky, is about the powerful process of making invention accessible. Each one-hour episode will demonstrate how Quirky has successfully re-engineered and democratized the business of innovation.

Erica Labovitz, Director of Marketing, IndieGoGo
Experiences with Crowdfunding in the Movie Industry

Labovitz

 

 

 

 

 

 

Please find the complete program at the official MCPC 2011 website.

27 10, 2011

#MCPC2011 Business Seminar: Winning with Open Innovation at #Procter&Gamble, #Eyeka and #Clorox

By | 2018-06-14T07:16:00+00:00 Oktober 27th, 2011|Cases-Consumer, Cases-Industrial, Co-creation, Co-Design Process, Customization Trends, Events, MCPC2011, Open/User Innovation, Personalization, Research Studies, Service Customization, Technologies & Enablers|

MCPC 2011
On November 16th, the MCPC 2011 conference kicks off at the Marriot SFO Airport, San Francisco. In this series of postings, we introduce our speakers at the business seminars of the conference.

The business seminar today will focus on open innovation. We will start the day by two inspirational keynotes on companies that really "got it" in open innovation and co-creation.

Ashish Chatterjee, Director Connect+Develop, Procter & Gamble
Celebrating a Decade of Open Innovation at P&G – Key Lessons

ChatterjeeWith every celebration comes reflection. What’s worked, what hasn’t? What can be better moving forward? Such is the case for Procter & Gamble, now marking 10 years of Connect+Develop℠, the Company’s branded approach to open innovation. In the true spirit of collaboration, P&G shares both the good and the bad they’ve experienced along the way. From the first deal, to some of the biggest, to some that simply never were, or never should have been, P&G also will discuss new open innovation frontiers and challenges on the road ahead.


Suzan Briganti, US Rep., Eyeka S.A. & CEO, Totem Brand Strategy
Edward Rinker, Research Fellow, Clorox

Co-Creation Among the Fortune 500

Briganti_rinkerIn many ways, co-creation has been more of a European phenomenon. The (according to Forrester Research) top three co-creation platforms (Eyeka, Jovoto and Hyve) are based in Europe and until fairly recently, many US companies have hesitated to adopt the methodology. In this presentation, Eyeka’s US Representative and their first Bay Area client, Clorox, will discuss their views on the state of co-creation among the US Fortune 500. They will reveal why companies are turning to co-creation, the internal resistance they sometimes face, and how they overcome it to use this unconventional new methodology. Their remarks will touch on some ways in which co-creation differs from traditional market research and customer insights.

Please find the complete program at the official MCPC 2011 website.

25 10, 2011

#MCPC2011 Program Highlights: MC Manufacturing and Supply Chain Management

By | 2018-06-14T07:16:09+00:00 Oktober 25th, 2011|Cases-Consumer, Cases-Industrial, Co-creation, Co-Design Process, Customization Trends, Design, Events, MCPC2011, Open/User Innovation, Research Studies, Service Customization, Technologies & Enablers, User Manufacturing, Virtual Models|

MCPC 2011In a series of postings, we present some of the program highligths of the MCPC 2011 conference. The following is just one of more than 50 sessions we will host on Nov 16-19 in San Francisco, CA.

Successful Mass Customization not only depends on the design and proper employment of the consumer backend (configurator). Of equal importance is the organizational structure "behind the scenes" that allows a company to actually keep the promiss of individual production while still remaining profitable. In this session we will hear expert advices about the key aspects of successful MC Manufacturing and Supply Chain Management.

 

Sessions 7.4 (Nov 19): MC Manufacturing and Supply Chain Management

Modeling & Simulation of MP-MC Apparel Manufacturing

Apparel companies that initiate Mass-Customization (MC) must identify a suitable manufacturing (assembly) strategy, which is vital for their success. Most companies that produce apparel using Mass Production (MP) systems, are interested in investigating if the existing systems can be used to implement a MC strategy.

In this part Muditha Senanayake (Cal Poly Pomona) and Trevor Little (North Carolina State University) will explore the opportunity to mix MP and MC using computer modeling and simulation. Based on varying sizes of bundles and varying frequencies of products tested on simulated production lines they will present their observations of the production system performance. As a result they will present possible implementations of mix manufacturing strategy and its limitations.

Using a Simulation-Based Framework to Design Supply Chain Offering Mass Customization in the UAE

Mass Customization has emerged as a successful business model that can address the contemporary challenges of global markets. Although companies have adopted various levels of MC, a major challenge for firms is to efficiently design their supply chain in function of their MC offers, which also needs to support the involvement of customers in the innovation process. Marc Poulin will present a work in progress of a simulation framework that enables UAE firms to design supply chains that offer MC products and services. Using the leading edge simulation software SIMIO he will model and simulate supply chain models in the UAE.

Methodology for Implementing the Right Supply Chain for Mass Customization

In this presentation Luigi Battezzati (University of Milan) will focus on the definition of preliminary implementation guidelines in order to define the proper supply chain for different products (emotional, functional), manufactured by different companies (mass or handcraft producer), in compliance with different winning criteria impacting on critical areas for Mass Customization

Listen to the full content of these talks at the MCPC 2011, Marriot SFO Airport, San Francisco, Nov 16-19, 2011:

– Conference Website and Registration

– All info here in one compact MCPC flyer

Conference hotel and travel (rooms fill quickly, book now!)

– All posts about the conference in my blog

21 10, 2011

#MCPC2011 Program Highlights: Strategic Capabilities for Mass Customization (Showcase Session)

By | 2018-06-14T07:16:16+00:00 Oktober 21st, 2011|Cases-Consumer, Cases-Industrial, Co-creation, Co-Design Process, Crowdsourcing, Customization Trends, Events, MCPC2011, Open/User Innovation, Personalization, Research Studies, Technologies & Enablers|

MCPC 2011In a series of postings, we present some of the program highligths of the MCPC 2011 conference. The following is just one of more than 50 sessions we will host on Nov 16-19 in San Francisco, CA.

Proven by many success stories from all kinds of businesses, Mass Customization is one of the most promising concepts of our time. History shows, though, that a great theory is worth little without practical knowledge. Mass Customization is no different and hence it is of great importance to correctly understand why and, most important, how value can be created by the employment of MC. In this session we will hear about failure and success, core capabilities and different approaches to make the most out of a concept that is easy to comprehend, yet hard to master.

Sessions 7.1 (Nov 19): Strategic Capabilities for Mass Customization

Why MC Organizations Fail

In this session, Dominik Walcher (Salzburg University of Applied Sciences) will explain the development of a classification system for failure reasons of MC organizations based on literature review both form entrepreneurship and Mass Customization research as well as qualitative expert interviews. He will then discuss the exemplary application of this system to the Custom Foot failure case study.

Value Creation by Mass Customization: An Analysis of the Three Core Capabilities of Mass Customization

This part will focus on the key essentials of Mass Customization. Thorsten Harzer and Frank Piller (RWTH Aachen University) and  Fabrizio Salvador (Instituto de Empresa) will give an insight in and discuss the importance of the three core capabilities of Mass Customization.

Comparing Four Personalization Approaches to Understand Value of Personalization

Chenjie Wang (Georgia Tech) and Mitchell Tseng (Hong Kong University of Science and Technology) will present the findings of their study regarding sources of distinctive value as being perceived “unique” by individual consumers. Based on the results of their investigative work they will share their conclusion about how different business models and associated design approaches can be developed to augment the value of product design. Presenting four different approaches in personalized products they will discuss different ways of customer engagement with respect to these four values, analyzing how personalization values are addressed and identifying their unique design features, user interactions and other relevant parameters in design ecosystems.

Listen to the full content of these talks at the MCPC 2011, Marriot SFO Airport, San Francisco, Nov 16-19, 2011:

– Conference Website and Registration

– All info here in one compact MCPC flyer

Conference hotel and travel (rooms fill quickly, book now!)

– All posts about the conference in my blog

14 10, 2011

European Commission is Funding Research on Mass Customized / Personalized Food – Call for SMEs to particiapte

By | 2018-06-14T07:16:24+00:00 Oktober 14th, 2011|Research Studies|

EuropeWhile the European Commission since many year has supported lot of research on mass customization, they now have issued a specialized call on personalisation and customisation of food.

In their call "KBBE.2012.2.3-04: Personalised approaches to food production and distribution" they ask for proposals to research this issue in a consortium of SMEs and Research Institutes.

The aim is to further develop processing, packaging and distribution aspects of convenient, personalised food products attractive to the consumer. Personalisation can take many forms, and might refer to individual health or lifestyle aspects and/or address personal preferences regarding quality, portion size or cost, convenience, packaging, taste or pleasure, or it might concern specific target groups.

Interestingly, they clearly say that they WANT MORE THAN known approaches like nutrigenomics, genotyping and phenotyping; specific nutrients or dietary advice, but demand a real prototype of a customizable food product:

"The conceptual models should be applied to developing prototype foods for a limited segment of the market, preferably in a demonstration unit."

I hope the people at the EU are aware that a lot of this is happening already in the European Community, driven by great entrepreneurs like Chocri, MyMuesli, Allmytea, and many others!

If anyone thinking of participating in the call and submitting a proposal still needs a partner in form of a great research group with much knowledge on customization, let me know 🙂

More info on this in the meta call, Call: FP7-KBBE-2012-6.