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Sourcing innovation from your customer: How multinational companies use Web platforms for virtual customer integration

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Integrating the customer in the innovation process is believed to be a powerful means to reduce failure rates and to increase the revenue from new products. Although many companies have launched programmes to enable such integration, the understanding of the mechanisms behind successful programmes remains limited. Furthermore, the benefit of integrating customers in the innovation process has to be weighed against the costs. Virtual customer integration has been discussed as a way to limit these costs and bring the benefits of potentially unlimited scalability. Using a sample of the Euro Stoxx 50 companies, we shed light on the various types of virtual customer integration platforms, their limitations, their benefits and the mechanisms that have to be put in place to make them succeed. Results indicate that only a limited number of platforms go beyond the sourcing of ideas. Especially the integration of the customer in the execution phase of the innovation process remains largely limited to digital goods.
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Sourcing innovation from you customer: How multinational
enterprises use Web platforms for virtual customer integration.
RENÉ ROHRBECK
Technische Universität Berlin, An-Institut Deutsche Telekom Laboratories, Ernst-Reuter-Platz 7
10587 Berlin, Germany
Rene.Rohrbeck@telekom.de
Phone: +49 30 8353 58536, Fax: +49 391 53479290
FEE STEINHOFF
Technische Universität Berlin, An-Institut Deutsche Telekom Laboratories, Ernst-Reuter-Platz 7
10587 Berlin, Germany
Fee.Steinhoff@telekom.de
FELIX PERDER
Technische Universität Berlin, Chair for Innovation and Technology Management, Strasse des 17. Juni 135
10623 Berlin, Germany
Felix.Perder@tu-berlin.de
Integrating the customer in the innovation process is believed to be a powerful means to
reduce failure rates and to increase the revenue from new products. Although many
companies have launched programs to enable such integration, the understanding of the
mechanisms behind successful programs remains limited. Furthermore, the benefit of
integrating customers in the innovation process has to be weighed against the costs.
Virtual customer integration has been discussed as a way to limit these costs and bring
the benefits of potentially unlimited scalability.
Using a sample of the Euro Stoxx 50 companies, we shed light on the various types of
virtual customer integration platforms, their limitations, their benefits and the
mechanisms that have to be put in place to make them succeed. Results indicate that only
a limited number of platforms go beyond the sourcing of ideas. Especially the integration
of the customer in the execution phase of the innovation process remains largely limited
to digital goods.
Keywords: Virtual customer integration, customer-active paradigm, innovation
management, lead user.
1 Introduction
The integration of customers into the innovation process is an important way to
reduce uncertainty (Ernst 2002) The position of the customer has successively
changed over the last 30 years from a passive recipient to an active co-designer in the
creation of value. Successful innovators use competence within an extended network
which particularly includes the competence of customers (Prahalad and Ramaswamy
2000). In this context, the ability to integrate customers is decisive. Iansiti and Clark
understand this to mean the ability to allow information about customers and their
needs to flow into the process of innovation on the basis of mutual learning processes
(Iansiti and Clark 1994). This ability can be seen as a part of the broader network
competence which makes it possible for companies to establish and successfully use
relationships with external partners (including customers) within their innovation
processes (Ritter and Gemunden 2004).
In this study we explore how large companies use the internet for virtual
customer integration. Using the Euro Stoxx 50 companies we analyse where in the
innovation process the virtual customer integration is used, if it is used primarily for
exploration or exploitation purposes and what the major motivation sources exist for
customers to participate in the scheme.
Sourcing innovation from you customer: How multinational enterprises use Web platforms for virtual customer integration
Rohrbeck, R, Steinhoff, F. and F. Perder
Technology Analysis & Strategic Management, Vol. 22, No. 4, pp. 117131, 2010
This is a preprint. The published article can be found at:
http://www.informaworld.com/smpp/content~content=a918948045&db=all
copyright Taylor & Francis
2 Theoretical background
2.1 Cooperation in the innovation process
The so-called MAP-CAP paradigm deals, from a theoretical point of view, with the
interaction between manufacturers and customers in the context of innovation
processes. Until the end of the 1970s the literature was dominated by the
Manufacturer Active Paradigm (MAP) point of view. According to this, it is the
manufacturer's task to identify target groups, discover customer needs and, building
on this, develop and implement promising, innovative ideas. The customer's role
within this paradigm is purely passive, in the sense of "speaking only when spoken
to" (Von Hippel 1978a). Von Hippel developed a different view (Von Hippel 1978a;
von Hippel 1978b) with the Customer Active Paradigm (CAP). According to this
approach, the essential activities at the start of the innovation process are borne by the
customers. The customer generates an idea for a new product, formulates a concept
and implements the innovative idea as a prototype. The customer then transfers their
development and knowledge to a manufacturer, who checks the market potential,
develops a marketable innovation, produces and commercializes it.
The cooperative model by Gemünden (Gemuenden 1980) represents another
model for interaction in the context of innovation. The core message is that a match
should be achieved between the level of requirements aimed for with the solution and
the degree of interaction between the manufacturer and customer, whereby for a large
innovative step, particularly intensive interaction is to be recommended. While the
idea of working separately is postulated in the CAP, Gemünden (Gemuenden 1980)
prefers the idea of the manufacturer and the customer working together cooperatively.
According to this, a balance between technology and benefits does not come from
activities carried out separately, but rather from a learning process on both sides. This
learning process is not just possible in the development phase but it is also possible,
and makes sense, in the earlier and later phases of the innovation process (Herstatt
1991).
There are conceptual similarities to the "lead user" approach from von Hippel
(von Hippel 1986). Lead users are particularly advanced customers who will
especially benefit from the solution to a particular customer problem that is relevant
for the future. They differ from average customers both in their ability to perceive the
needs of the market at an early stage and in their significant interest in a solution to a
problem, with the associated high motivation for cooperation (von Hippel 1986;
Herstatt, Luthje et al. 2002). The lead-user approach is based on the basic idea of the
CAP paradigm, but presumes a cooperative interaction between the manufacturer and
selected, particularly innovative customers (Gruner and Homburg 2000). Numerous
empirical studies support the CAP paradigm (Lettl, Herstatt et al. 2006), the
cooperative model by Gemünden (Shaw 1985) as well as the lead-user approach
(Lilien, Morrison et al. 2002). The literature thus speaks of a "paradigm shift in
innovation research" in the sense of turning away from an innovation process purely
dominated by the manufacturer (Herstatt 1991; Karle-Komes 1997).
2.2 Integrating the customer
The active use of customer competence via the integration of customers is an essential
characteristic of customer-oriented innovation processes (Lüthje 2000; Steinhoff
2006; Rohrbeck, Hölzle et al. 2009). Customer orientation is a critical factor both for
the success of the company (Singh and Ranchhod 2004) as well as for the success of
the new product (Kahn 2001). Despite this, a lack of customer orientation continues to
be a frequent phenomenon in the process of innovation (Mason and Harris 2005).
Overcoming the bottleneck factor of customer orientation translates into a
need for information. Both the generation of information by innovation market
research as well as the integration of customers into the process of innovation serve to
reduce uncertainty about the market (McDermott and O'Connor 2002). What,
however, is the difference between these two constructs? In literature, the dominant
understanding is that customer integration "is more" than market research (Jeppesen
2005). For example, Ernst differentiates between aligning the innovation to customer
needs (in the sense of innovation market research) and binding the customer as an
active designer in the process of innovation (Ernst 2002). This means that innovation
market research can be viewed as a type of manufacturer-dominated innovation-
process (Von Hippel 1978a). and customer integration can be interpreted as intensive
interaction between customer and manufacturer in the sense of a cooperative model
(Gemünden 1981) or the lead-user approach (von Hippel 1986; Steinhoff 2006).
In this paper, virtual customer integration is accordingly understood as a type
of intensive interaction between manufacturers and customers, which is more than
market research. In other words, selected customers adopt the role of active co-
designers of the process of innovation (Brockhoff 2003).
2.3 Risks and rewards of customer integration
From a commercial point of view, the question is about the relevance of customer
integration to success. Can success of an innovation be sustainably improved by
integrating the customer into the process of innovation? Research into success factors
looks empirically for factors which make the difference between the success and
failure of innovations (Ernst 2001). In the past, the concept of customer integration
has tended to be neglected in widespread studies in comparison to other factors
(Gemünden, Ritter et al. 1996; Millson and Wilemon 2002). Some synopses indicate
the positive influence of customer integration (Kottkamp 1998) or the carrying out of
test activities such as prototype tests (Lüthje 2000). In the literature there are
relatively frequent references to controversial results on customer integration (Ernst
2002; Van der Panne, van Beers et al. 2003). This is also reflected in the meta-
analysis by Henard/Szymanski, where no significant influence due to customer
integration can be determined (Henard and Szymanski 2001).
A significant reason for this can be suspected in that customer integration, in
the areas of uncertainty, resources and turnover, is not just associated with
objectives/benefits, but in addition with problems/risks (Kirchmann 1996). Relating to
the uncertainty dimension, benefits are listed in the literature such as a better market
understanding, higher product quality and more-innovative products (Campbell and
Cooper 1999; Enkel, Kausch et al. 2005). In contrast, the disadvantages of customer
integration related to uncertainty concern potential problems in identifying suitable
customers, internal barriers to acceptance and conflict during interactions (Athaide
and Stump 1999; Brockhoff 2003; Jeppesen 2005). Aspects concerned with resources
can be advantageous; such as access to missing resources, faster product development
and potential cost reductions (Enkel, Kausch et al. 2005; Bitzer, Schrettl et al. 2007).
At the same time they can also be disadvantageous, such as the high costs of customer
integration, inefficient product development and opportunistic customer behaviour
(Athaide and Stump 1999; Brockhoff 2003; Jeppesen 2005). The literature also
mentions turnover-related aspects of customer integration. This includes advantages
such as a higher product advantage, higher customer loyalty and potential multiplier
effects through reference customers (Athaide and Stump 1999) and potential risks of
excessive orientation towards a niche and negative image effects (Karle-Komes 1997;
Alam 2006).
Customer integration should thus not be assessed as completely positive; it
rather requires taking a more considered view (Ernst 2001). Some studies point out,
that specific design options of customer integration can affect how successfully the
construct can be applied. On the one hand, it is apparent that the affect of customer
integration on success depends upon the intensity and the continuity of the customer
integration. Successful innovation projects are thus distinguished by customers being
intensively included in the very early (idea generation and concept creation) and very
late phases (prototype testing and market introduction; Gruner & Homburg, 2000) or
the customer integration ranges over the entire process of innovation (Millson and
Wilemon 2002). On the other hand, empirical findings indicate that certain
characteristics of integrated customers are relevant for success. Apart from lead-user
characteristics, the customer being very commercially attractive and the closeness of
the commercial relationship prove to be factors for success. To date, no significant
influence could be attributed to the characteristic of technical attractiveness (Gruner
and Homburg 2000; Lilien, Morrison et al. 2002).
2.4 Innovation process
In the literature there are many models for the process of innovation, which vary in
the terminology used by the number of process phases, by the diversity of the
structuring and presumptions about activities being sequential or in parallel.
Generically and thus largely independently of the sector or situation, one can
discriminate between the phases for the generation, selection, execution and
commercialisation of ideas (Verworn and Herstatt 2002; Trommsdorff and Steinhoff
2007):
1) The idea generation relates to the search for ideas for innovations as well as
any initial pre-selection. For market-pull innovations, demand presents the
starting point for innovation, while technology-push innovations are initiated
by technical ideas or inventions, which then result in a search for an
application (Chidamber and Kon 1994). Creativity is required, which can be
supported by creativity techniques, whereby apart from internal sources
especially external sources such as customers come into question.
2) In the second phase, selection, the investigation of the feasibility and the
return on investment of the innovation in the marketplace take priority.
Selection means that ideas for innovations are reduced to those which could
potentially be successful. To assess the commercial feasibility, particular care
must be taken to see if and when the innovation will be accepted by the target
customers (Ram 1989). The investment decision comes at the end of this
phase; whether to further pursue the idea or whether to cancel the initiative.
This decision is usually based on a business plan or a well-formulated concept.
3) In the execution phase, the emphasis is on development activities, which is
generally dominated by the production and test of prototypes (Gruner and
Homburg 2000). Iterative and parallel alternative paths are frequently pursued
in order to solve a technical problem. The goal is to settle the essential
functions of the innovation, the product benefits and the customer segment(s)
to aim for. This phase is usually left, when the so-called "design freeze" is
reached, which means that all important product functions and the marketing
concept have been decided.
4) The commercialization covers the introduction of the innovation to the market.
As a rule, the product has already been successfully tested in pilot
installations, so that in this phase the emphasis is on addressing the wider
market. In the interests of designing the operational processes as efficiently as
possible, product changes are now only marginal in nature. During the
introduction, the marketing mix must be implemented referring to the strategy
followed with the innovation. Communication takes a particularly prominent
role here. Only when the product advantages are perceived by the target
customers and are understood as beneficial, can the innovation succeed in the
market (Rogers 2003).
2.5 Customer integration into the innovation process
During the various phases of the innovation, customers can take up differing roles and
functions (Herstatt 1991; Alam 2006). Customers who initiate an innovation project,
so-called initiators, provide active input to an innovation project in that they formulate
concrete needs or problems during the phase of ideas generation, or are actively
inventive. In the selection phase customers might take the role of advisor, formulate
concrete requirements on the design of the innovation, or act as assessors of
innovation concepts. The most intensive form of interaction consists in the function of
the customer as a partner. Here, customers actively help to shape the process of
innovation in that they participate during the execution phase in the design and
development or act as a prototype tester (Herstatt 1991). For example, user toolkits
for innovation (von Hippel 2001; Thomke and von Hippel 2002) enable customers to
develop and test tailor-made products themselves. After all, during the
commercialization, so-called marketers promote the acceptance of the innovation in
the market through their function as pilot and/or reference customers (Herstatt 1991).
Especially in the context of innovation with a high degree of innovation, it is
necessary to reduce the resistance to innovation in the market (Ram 1989; Sandberg
and Hansén 2004).
2.6 Virtual customer integration
In virtual customer integration (VCI) approaches the internet is used as the prime
communication channel. Such communication can be unidirectional, e.g. the customer
can post ideas for new products, or bidirectional, allowing for discussions between the
customer and a development engineer. Also the level of richness can vary from simple
text communication to multi-modal interfaces or user-innovation toolkits, where the
customer can manipulate the final product. The internet supports peer-to-peer
communication which makes company-to-customer communication as well as
customer-to-customer communication easier. VCI tools can address customers
individually or via online communities (Füller 2007). Such communities allow
companies to learn about the wants and needs of specific customer segments (Dahan
and Hauser 2002).
VCI platforms are expected to yield multiple benefits for companies. Using
the internet companies can interact in a less costly manner with their customers and
bypass intermediaries such as market-research firms (Ernst 2004); they can in-source
creativity by enabling users to create and evaluate products (Füller, Bartl et al. 2006;
Füller 2007); and through a VCI platform theoretically an unlimited number of
customers can be integrated, resulting in a broader decision base for product
development (Füller and Matzler 2007). Integrating real customers into the product
development has also been argued to be preferable to using mere representative
customer segments, enhancing the richness of feedback (Pruitt and Adlin 2006).
2.7 Motivation sources of participating customers
From open-source software development projects, we have learned that the prime
reasons for participation are non-monetary. These motivation sources can be
differentiated into social and hedonistic on the one hand and target-oriented, like
reputation and learning, on the other (Shah 2006; Wu, Gerlach et al. 2007). Füller
showed that virtual participants in innovation processes are driven by similar drivers,
and identified 10 different motivation sources (Füller 2007). For this study we
integrated Füller’s sources into four clusters:
Entertainment and curiosity is the motivation source that builds on pure
enjoyment of the interaction itself. VCI tools might allow customers to interact
with a wide spectrum of multimedia impressions, offering detailed information
about a new or potential product. The tool itself might thereby satisfy the
customers need for entertainment and curiosity. Users perceive participation
in such VCI activities as an enjoyable activity which is seen as intrinsically
rewarding (Füller 2007).
Social recognition has proven to be the prime driver of participation especially
in the field of open-source software development (Bitzer, Schrettl et al. 2007).
People identify themselves with a social network in which they act
altruistically and follow the rules of the community for the sake of being part
of the group and being recognized by their peers (Piller 2003; Wu, Gerlach et
al. 2007).
Personal need and product usage are motivation sources identified by von
Hippel in lead users(von Hippel 1986). Such users participate in order to solve
a specific problem or meet a specific need (Füller 2007) and they benefit
directly from the output (e.g. software) by being able to use the new or
enhanced product.
Monetary incentives can be immediate as well as delayed payoffs, for example
when a product enhancement has proven meaningful for other users or a
product idea has been taken up by product development (Füller 2007).
Another potential motivation source identified in open-source software development
is the development of professional skills and the signalling of personal competencies
to potential employers (Bitzer, Schrettl et al. 2007; Wu, Gerlach et al. 2007). For our
study these motivation sources were excluded because none of the VCI tools could be
associated with this aim.
3 Research approach
3.1 Research strategy
Past research has identified different kinds of VCI platforms, their value contribution
along the innovation process (Ernst 2004) and different motivation sources for
participation (Füller 2007). With our study we want to extend this knowledge by
creating a typology of VCI platforms and pave the way for quantitative research. To
allow a cross-industry comparison and ensure consistency we used the Euro Stoxx 50
companies as our sample. We address three major research questions:
1) To what extent do the Euro Stoxx 50 companies use VCI (within the
innovation-process phases and with what intensity)?
2) What are the means by which customers are motivated to participate?
3) What possible extensions and enhancements of VCI practices exist (building
on the best-practice cases)?
3.2 Data collection
Different search strategies were utilized in order to find VCI tools within the Euro
Stoxx 50 sample. Firstly, the company’s website was searched for any elements that
offered users’ interaction with the company. Secondly, the company’s website as well
as the annual report was scanned for innovation activities, awards or customer
integration programs. Thirdly, the corporate website was searched for the keyword
‘feedback’. Fourthly, a query in an internet search engine was executed which
contained company and brand name and the keywords ‘customer integration’,
‘crowdsourcing’, ‘open innovation’ and ‘feedback’.
In addition to the Euro Stoxx 50 companies we identified and assessed 15 best
practice cases to define the set of criteria for assessment of the level of proficiency of
Euro Stoxx 50 companies. The best practice cases were also used for a cluster
analysis to identify generic typologies of VCI platforms.
3.3 Data filtering
In order to qualify a customer integration initiative to be a VCI platform three criteria
had to apply:
1) The tool had to address customers from outside the company. Excluding
initiatives that refer exclusively to the company’s own employees (e.g. the
“ideas to success” project by Allianz) were out of scope, as they do not aim at
integrating customers.
2) The tool had to enable systematic collection, evaluation and channelling
customer input into the innovation process. For example pure product-
configuration platformssuch as offered by car manufactures—which allow
customers to customize their product (von Hippel and Katz 2002), have been
excluded, because they lack the objective to use the information in the
innovation process.
3) The tool had to permit a rich virtual interaction. The provision of an e-mail-
address or feedback forms, were considered as substitutes for paper-based
communication and excluded.
3.4 Data interpretation
In order to analyze differences in the virtual integration platforms, we differentiated
the identified platforms concerning the relevant phase of the innovation process and
applied motivation sources.
3.4.1 Innovation-process phases
As described in detail in the chapter ‘innovation process’, we used a four-phase-
model to systemize the innovation process: idea generation, selection, execution and
commercialization.
In each phase, we specified constitutive items (i.e. functions) that had to be
present in order to classify the cases into the different phases. For the first phase the
items include e.g. the possibility to post and read ideas posted by other customers. For
the second phase functions such as the possibility to comment on ideas of others (e.g.
in blogs or forums) and the request to select or rate given ideas were searched. For the
execution phase a tool had to allow users to actively contribute their own solution or
even fabricate prototypes by themselves. For the commercialization phase we looked
for functions that request opinions on existing or upcoming prototypes, allow the user
to commercialize their own prototypes or engage the user in marketing or distribution
activities.
3.4.2 Motivation sources for participation
In our study, four categories of motivation sources were differentiated, as described in
the chapter ‘motivation sources of participating customers’: Entertainment and
curiosity, social recognition, personal needs and product usage and monetary
incentives.
In order to identify the motivation source category that was used primarily in
the VCI tools we searched for predefined characteristics. For entertainment and
curiosity we searched for multimedia elements and the easiness of access. A tool was
judged as entertaining when it had a playful task or a trial-and-error functionality. It
was scored as sparking curiosity when it was related either to customers’ potential
free-time activities or to their private everyday life. The characteristics for social
recognition were awards, support of communication and interaction among users, any
kind of rankings (e.g. based on page hits, number of contributions, ratings, etc.) as
well as platforms that create a feeling of belonging. The motivation source personal
needs and product usage was perceived to be relevant when customers can use the
product or service they helped to develop. A monetary driver can be the payment
either in real money, in virtual money, by a voucher or by the offering of free goods,
such as free software for a developer community.
3.4.3 Intensity of interaction
In addition to assess the VCI platforms concerning step in the innovation process and
source of motivation, we aimed at establishing an understanding about the intensity of
interaction. To do so the best-practices were analysed and a set of three to five criteria
was defined for each dimensions of analysis (i.e. the innovation-process phases and
the motivation sources for participation). For scoring three-point scale (0=no
interaction to 3=maximum interaction) was used. This allowed measuring the
intensity in a transparent and objective way.
3.4.4 Cluster analysis
To enhance the understanding of goals and impact of the different platforms a cluster
analysis was used to identify generic types of platforms. A cluster analysis is ideally
suited for defining groups of objects with maximal homogeneity within the groups,
while also having maximum heterogeneity between the groups. In consequence the
cluster analysis determines the most similar groups that are also most different from
each other. As input data for the cluster analysis we used the innovation process phase
and the motivation sources including their intensity. For the choice of algorithm we
have chosen a hierarchical clustering methods following Bühl’s argumentation that
hierarchical methods are best suited for small sample sizes (Bühl 2006).
3.5 Data validation
For both, tool classification and intensity rating, we used two iterations by two
researchers: In the first iteration the classification and rating were carried out, and in
the second iteration a different researcher validated the first classification and ratings.
Differences in rating were discussed and a joint rating was made. This approach was
used to enhance the objectivity and ensure consistency of scoring.
4 Research findings
Within the sample of Euro Stoxx 50 companies, 13 had introduced a VCI platform. Of
these four companies had even deployed multiple VCI platforms for specific
purposes. All of these platforms have been analyzed by scoring the intensity
concerning the innovation phase/-s and the motivations sources.
4.1 Usage of VCI tools within the Euro Stoxx 50
4.1.1 Focus on idea generation
From previous studies it was expected that the usage of VCI tools along the
innovation process would vary (Reichwald and Piller 2005) and that the focus would
be on the idea-generation phase (Ernst 2004). Dahan and Hauser noted: “While
virtual customer methods may be used at every stage of product development, not
every method will be used at every stage” (Dahan and Hauser 2002).
Figure 1: Usage of VCI tools along the innovation process
This hypothesis was sustained by our study which shows a significantly higher
number of VCI platforms that are active in the idea generation phase than in the
others (see Fig. 1). In all VCI platforms the sourcing of ideas is intended, although the
functionalities have a varying degree of intensity. In the selection phase, 7 out of 13
VCI platforms showed significant functionalities. Tools that support the execution
phase allow the customers to contribute or comment regarding the development of the
product. 4 out of 13 companies run platforms that support such functions. The
integration of customers in the commercialization phase can be used for comments on
the products and/or collaborative product marketing. 5 out of 13 cases proved to offer
functions in this respect.
4.1.2 Non-monetary motivation sources make it work
From empirical evidence from the open-source software development and previous
research on VCI it was expected that little emphasis will be on monetary incentives
(Füller 2007; Wu, Gerlach et al. 2007). Concerning the non-monetary motivation
sources, little knowledge existed on what source might be dominant.
6
3
1
4
3
Idea
generation
2
2
Selection
1
2
Execution
3
2
Commercialization
Low
Medium
High
Figure 2: Motivation sources for participation in VCI
In consensus with previous findings, platforms in our sample used little monetary
incentives to motivate the participation of customers (see Figure 2). Only two out of
13 companies used monetary incentives to motivate customers to participate. In both
of these cases the monetary incentives were accompanied by non-monetary ones. In
the group of the non-monetary incentives, entertainment & curiosity is the strongest
with ten companies out of 13 scoring high or medium on the intensity scale. Social
recognition which is the strongest in open-source software development (Wu, Gerlach
et al. 2007) has also been used by nine out of the 13 companies. Product usage &
personal need is the key driver in two companies and an additional six companies use
it to a medium and low degree.
4.2 Platform Typology
In order to better understand the commonalities and differences in the identified VCI
platforms a cluster analysis was used to develop a typology of VCI platforms. The
resulting four clusters are described in Table 1.
Table 1 Typology of VCI Platforms
Type Innovation-process phases Motivation sources
Open
Innovator
All phases
High intensity
Non-monetary (emphasis on curiosity
and product usage)
Outsourcer
Idea generation and execution
phase
Medium to high intensity
Monetary (and in some cases also
product usage)
Idea Seeker Idea generation and selection
High intensity
Non-monetary (emphasis on
entertainment, curiosity and product
usage)
Experimenter Various phases
Low intensity.
Non-monetary (emphasis on product
usage and entertainment)
2
5
4
2
4
Product usage &
personal need
Monetary
incentive
Low
Medium
High
6
Entertainment
& curiosity
4
Social
recognition
2
2
4.2.1 Open Innovator
Open Innovators are platforms that support all phases of the innovation process with
an overall high intensity. For example, Vodafone’s ‘βvine’ portal consists of the three
sections: ‘Play’, ‘Develop’ and ‘Interact’. The section ‘Interact’ contains forums
where consumers can post ideas for future applications. In the ‘Develop’ section, a
variety of resources is offered to professional and non-professional application
developers. In the ‘Play’ area, these applications can be installed, tested and further
developed by other users. Therefore, βvine’ is a platform that supports idea
generation, by allowing users to post ideas; selection, by using explicit customer
feedback and download numbers of the new application; execution, by providing a
developer toolkit where new applications can be developed; and to a certain extent
also commercialization, by allowing users to purchase the new applications and
services from Vodafone.
Open Innovator platforms use primarily non-monetary motivation sources.
Entertainment, curiosity and product usage are the dominant ones. Testing software
offered on ‘βvine’ is expected to have a strong entertainment aspect, while for
example the ‘BrowserVodafone’ for mobile phones has a high product-usage value.
4.2.2 Outsourcer
Platforms that are categorized as outsourcers integrate their users into the idea-
generation phase as well as the execution phase, while excluding them from the
selection phase.
On ‘Forum Nokia’, software developers can find resources and technical
services required for programming software that is compatible to Nokia devices. In
addition, developers can share their ideas and post their questions in multiple online
communities such as discussion boards, wikis and blogs. In contrast to Vodafone’s
βvine’, ‘Forum Nokia’ does not allow users to rate or comment on applications and
thus is not supporting the selection phase, but the support for the commercialization
phase is much more pronounced by the ‘Go To Market’ section of the portal, where
developers can find information and advice about bringing their applications to the
market.
Participants of outsourcers obtain their motivation from more tangible sources
such as monetary-participation schemes. To a smaller extent, improving a product
according to customers’ individual requirements can be judged as motivating in the
sense of our product-usage-motivation source.
4.2.3 Idea Seeker
Idea-seeker platforms involve customers intensively in the idea generation and the
selection phase of the innovation process. The applicability of usersinput can vary
from platforms in which the customer offers a concrete product idea (e.g. submission
of t-shirt layouts in Threadless) to platforms which generate very broad ideas (e.g.
Philips Electronics’ discussion platform ‘Live Simplicity’). The motivation sources
are a combination of the customers’ wish for a new or a better product and the overall
interest of the product and its environment.
A good example for the efficient combination of the generation and selection
of ideas is Dell’s ‘IdeaStorm’. Customers are invited to post and discuss ideas for new
Dell products or services. An easy-to-use ranking system allows users to rank these
ideas as positive or negative. In this way, Dell not only obtains customer ideas for
new products or product improvements, but they get valuable support for selecting the
most promising ideas. Users do not receive any monetary reward for registration and
sharing their ideas, therefore product usage is expected to be the prime motivation
source for participating. In addition, rating ideas is expected to motivate to a certain
extent in terms of curiosity.
4.2.4 Experimenter
Experimenters are VCI platforms that support various phases of the innovation
process with only a low intensity. These platforms are generally motivated by non-
monetary sources, such as entertainment or product usage.
Within the group of experimenters no clear patter to explain the low intensity
of activities has emerged, hence the name, referencing to the perception that the VCI
activities have experimental character and are merely the first step for the
establishment of a VCI platform. One example is Deutsche Börse’s (German Stock
exchange) ‘Börse Frankfurt-Weblog’. Within this Webpage customers can post
thoughts and ideas which can be commented by anyone. The blog does not contain
any multimedia elements and the only form of interaction with the customer is his or
her textual comment. Implementing a blog can be done without much effort and can
therefore be an appropriate starting point for VCI activities. The company gains
experience about the quantity and quality of customers’ interaction and their interest
and needs for interaction. Simultaneously, the customers get accustomed to being
involved with the company and experiment with the influence which they can have on
the company’s process innovations.
5 Discussion and conclusion
5.1 Limitations and Future Research
When interpreting the results of this study, some limitations should be considered.
Although the sample of Euro Stoxx 50 companies has its strength in its transparency,
it also has a weakness in terms of consistency over time, as the Euro Stoxx 50 is
subject to change, and in consequence the reliability of the findings is subject to a
certain limitation.
Furthermore, the process of finding VCI platforms has a limited reliability as
some companies run their platforms under a different name or brand, resulting in them
not being identified by our study. This limitation could be reduced by establishing
direct contact with the companies or sending out questionnaires.
An interesting extension for further research would be to differentiate the
degree of innovation, which results from virtual customer integration. Platforms such
as ‘IdeaStorm’ by Dell might suggest that incremental innovation is the mayor target,
while Philips Electronics’ platform ‘Live Simplicity’ targets more-radical innovations
by engaging the customer into discussion on long-term, social-economic
developments.
5.2 Implications
There are several managerial implications which can be derived from our results:
Further development potential for VCI tools. Our study showed that currently
only 26% of the Euro Stoxx 50 companies use VCI platforms. Therefore, there
is still a potential for 74% to use VCI platforms for improving the innovation
process. Our study also suggests that there is not a limitation to certain
industries, as even companies from industrial areas such as the financial sector
have successfully introduced some VCI functions.
Understanding the motivation sources of the users is key. Beyond the Euro
Stoxx 50 sample, best-practice cases exist that created highly frequented VCI
platforms. For instance “BBC Have Your Say” or the InnoCentive Inc., have
more than 135,000 registered participants. In comparison, most platforms from
the Euro Stoxx 50 sample have not mastered the creation of a functioning, i.e.
highly frequented, platform with active users. It is expected that it takes
multiple iterations and platform improvements in order to understand the
needs of users as well as their preferences in terms of interaction functions and
content of the VCI platform.
Valuable contribution to the innovation process for low costs. Particularly the
best-practice cases show that there is value to be extracted from VCI activities.
Dells ‘IdeaStorm’ has a pool of almost 9,000 user-generated ideas with around
67,000 comments. Popular ideas are rated up to 18,000 times. In consequence
Dell gains a very clear picture of customers’ needs at a much lower cost than
through traditional market research or even employing R&D staff to generate,
formulate and rate the ideas themselves.
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7 Appendix A: Referenced VCI Tools
Full list of identified VCI tools in alphabetical order.
Company Name Tool Name URL
Alcatel S.A. Xtreme Innovation
Contest
see http://www.sys-con.com/read/448446.htm
Allianz SE Dialogcenter https://fachmann.allianz.de/dialog_app/intranet/dialog/start.html
ArcelorMittal S.A. Nouv. WebTV http://www.arcelormittal.tv
BBC Have Your Say http://news.bbc.co.uk/2/hi/talking_point/default.stm
BMW Customer Innovation
Labs
http://www.hyve-special.de/bmw/index1.php
Daimler AG Daimler Blog http://blog.daimler.de
Dell IdeaStorm http://www.dellideastorm.com
Deutsche Börse AG Weblog http://weblog.boerse-frankfurt.com
Deutsche Telekom AG betaBuzz http://www.betabuzz.de
Helios http://developer.telekom.de
France Télècom lab’Orange http://www.laborange.fr
FRoSTA Blog http://www.frostablog.de/blog
Groupe DANONE S.A. Danone-et-Vous http://www.danoneetvous.com
Henkel KGaA Womensnet http://www.womensnet.de
Kraft Foods Innovate With Kraft http://www.kraftfoods.com/innovatewithkraft/default.aspx
The LEGO Group LEGO.com Factory http://factory.lego.com
Microsoft Corp. Codezone http://www.codezone.de/Homepage.Codezone
Nokia Corp. Forum Nokia http://www.forum.nokia.com
O'Neill Design Your Sneaker http://www.oneill-action.com/designyoursneaker
PSA Peugeot Citroën Peugeot Design
Contest
http://www.peugeot-concours-design.com
Philips Electronics N.V. Live Simplicity http://livesimplicity.net
Procter & Gamble Corp. connect + develop https://secure3.verticali.net/pg-connection-
portal/ctx/noauth/PortalHome.do
Procter & Gamble Corp. VocalPoint http://site.vocalpoint.com/guest/index.html
Repsol YPF S.A. Foros y Comunidades http://www.repsolypf.com/SA/ventajas/foros/consulta/categorylist.
aspx
sprd.net AG Spreadshirt http://www.spreadshirt.com
skinnyCorp LLC Threadless http://threadless.com
Telefónica S.A. Sociedad de la
información
http://www.telefonica.es/sociedaddelainformacion
Unilever N.V. Knorr Treff http://www.knorr.de
VISS Haushaltstipps http://www.vissumfrage.de/?referrer=3
Vodafone βvine http://www.vodafonebetavine.net
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Various research studies have shown that a market orientation and interdepartmental integration can positively influence product development performance. Addressed in this article is whether market orientation and interdepartmental integration both equally influence product development performance, whether one of these constructs is more influential than the other, and whether such influence is dependent on the type of department being examined? Analyzing survey data from 156 marketing, manufacturing, and R&D managers, the tentative results suggest that a market orientation and interdepartmental integration correlate to improved product development and product management performance in varying degrees across these three manager sets. It appears that a positive relationship between market orientation and product development performance is likely to be reflected by the marketing department, while marketing and manufacturing departments are likely to reflect a positive relationship between the general c onstruct of market orientation and product management performance. Manufacturing managers also reflect a positive relationship between interdepartmental integration and product development and product management performance. Further analyses involving the elements of a market orientation and interdepartmental integration find that a customer orientation appears important to performance in the case of marketing managers, and that collaboration is important to performance in the case of manufacturing managers. R&D managers did not reflect any statistically significant relationships between market orientation, interdepartmental integration, their constructs, and performance. These results should not be taken as refuting the claim of an important relationship between market orientation and product development performance, however. The present results refine our understanding of market orientation to consider department-specific effects, as well as temper the claims that implementing a market orientation will readily lead to improved product development performance across all departments in an organization. This may or may not be the case, depending on the focal department.
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Manufacturers must recognize and understand the role of customer initiatives.