Customer Involved Open Innovation: Innovation of New Products with End Users and Customers

Customer Involved Open Innovation: Innovation of New Products with End Users and Customers

Marcel Weber (Altuition BV, The Netherlands) and Simone A.M. Geerts (ABNAMRO, The Netherlands)
DOI: 10.4018/978-1-61520-617-9.ch014
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Abstract

Because of both technological developments on the internet and user preferences, user or customer involvement in NPD is becoming more popular and receives broad attention from both academia and businesses. One of the major advantages of involving the customer in product development is that user needs and preferences can be implemented at an early stage of NPD, therefore enhancing the chance on acceptance and adaptation of the new product in the user market. This advantage leads to firms and companies wanting to involve their customers in the innovation process at every possible moment. But then questions arise on when, in which phases, which customers to involve, and which tools to use to support the involvement. This chapter addresses these questions by providing guidelines for customer involvement in NPD.
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Introduction

Industrial society has changed a lot since the development of the service economy and information technology. We have entered an era in which customers take part in the value creation processes of firms, either on their own initiative or on invitation by these firms, and thus creating and producing their own goods and services. Initiatives from companies like Adidas, LEGO Factory, Starbucks and Dell are only a few of the many examples where consumers are invited by firms to supply ideas for new products and services, sometimes to even co-design and co-develop them, and, in a few cases, co-produce the goods and services. The “co-” in these terms indicates that it concerns activities, conducted by two or more actors together. This togetherness does not necessarily imply that these activities take place in the same time or at the same location; they can be asynchronous and remote. As actors, we mean, in this particular chapter, customers or end users and the firm.

However, there are still a lot of organizations that think that customer involvement is just a fad, a hype. A recent survey among Dutch marketers exhibited that about 70% of researched companies has never made the step to invite customers in co-creation, half of them state they fear to do so, because the company is not ready for the step, but also because of fear of an assertive and empowered customer (Helkema, Vugt, & Bosveld, 2008). Other surveys show that organizations think it is costly to involve customers (Chan & Lee, 2004). And many R&D driven organizations also are reluctant because of IP-breaches or disclosures (West & Gallagher, 2006). These fears and uncertainties can be taken away, when proper guidelines can be provided on how to harness these customers’ potential.

Based on research synthesis (Denyer, Tranfield, & van Aken, 2008) we will explore this phenomenon which is often called co-creation (Prahalad & Ramaswamy, 2003), and will provide guidelines for companies that want to make use of the ‘wisdom’ of their customers in innovation projects. These guidelines are for selecting the customers to involve, identifying the innovation phases or activities that can benefit from customer participation, and applying techniques and tools best suited to support the process of customer involvement in innovations.

Key Terms in this Chapter

Co-Creation: The phenomenon where customers and firms join together in the creation of goods and services, for instance where customers on invitation by firms to supply ideas for new products and services, sometimes to even co-design, co-develop or co-produce the goods and services.

Crowdsourcing: The act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call’ (Howe, 2006). So crowdsourcing stands literally for outsourcing to a crowd.

Online (User) Community: An internet based collaboration between users of a certain product or product category, where they exchange experience, support, and even products among each other. They exist because the users are motivated by needs, empowerment, enjoyment, reputation, and official appreciation, and work well enough to create and sustain complex innovations. By having a loosely-affiliated structure individuals with common interests or values are able to create valuable knowledge, feedback and innovations.

User Innovation: The phenomenon of new products and innovations being developed by customers and end users, for their own benefit, rather than by manufacturers (von Hippel, 1988).

Customer Involvement in Innovation: Is defined as the process where product manufacturers and/or service providers engage with their end users or customers in (parts or phases of) innovation projects with the aim of increasing effectiveness and efficiency of the innovation process. Effectiveness refers to (1) the result of meeting users’ and customers’ needs and demands in a better way; and (2) increasing customer loyalty. Efficiency refers to (1) the reduction of research and development costs; and (2) the reduction of development time.

Mass Customization: Refers to a customer co-design process of products and services that meet the needs of each individual customer with regard to certain product features and where all operations are performed within a fixed solution space, characterized by stable but still flexible and responsive processes.

Open Source: Open source is a set of principles and practices that promote access to the design and production of goods and knowledge. The term is most commonly applied to the source code of software that is available to the general public with relaxed or non-existent intellectual property restrictions. This allows users to create software content through incremental individual effort or through collaboration.

Prosumerism: A composed term from the words producer and consumer, entailing the tendency towards a market where the distinction between producers and consumers decreases, where consumers are producing their own goods and services. A tendency that takes place because of individual, societal, technological and economic changes, particularly caused by the rapid advances in the information technology.

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