Posts Tagged ‘Market research’

When it comes to radical innovation, the customer is not always right

March 22, 2013

We are all customers and and we are all essentially conservative at heart. We tend to prefer to stick to what we know and like.  So while listening to your customers is paramount when it comes to incremental improvements of products or services, the existing customer may not be the best when it comes to radical innovation and the introduction of something completely new.

Customer co-creation in service innovation: a matter of  communication? by Anders Gustafsson, Per Kristensson and Lars Witell, Journal of Service Management, 23(2012)3: 311-327. dx.doi.org/10.1108/09564231211248426. 

The paper (available as an Open Access manuscript) reports on the results of a survey among 334 managers who all had experience with innovation in the creation of new products or services. The researchers selected 284 real development projects  divided into two main groups:

  • Incremental innovation: 207 of the projects dealt with minor improvements of products or services.
  • Radical innovation: The remaining 77 projects dealt with development of radically new products or services not previously known to the market.

… The implication for the dysfunctional model is that the communication process – and therefore co-creation – is different for radical innovations than for incremental innovations. The model for radical innovations produced two significant paths (using adjusted t-tests), frequency (0.336, p< 0.05), and content (-0.246, p< 0.05). The results indicate that companies should interact frequently with their customers; this is similar to the findings in the case of incremental innovations. The path coefficient for content is negative, which indicates that customers should not be too highly involved in developing the actual content of radical innovations. …..

…. The results of the present study contribute to a deeper understanding of why new offerings developed through market research techniques based on co-creation with customers are more profitable than those developed with traditional market research techniques. ……

However, the communication process of co-creation for radical innovations seems to behave quite differently in that the four suggested dimensions are not entirely applicable in the same way for radical innovation as they are for incremental innovation. The different dimensions in the communication process behave differently in the two conditions, which suggests that companies must apply different communication strategies in co-creation depending on the degree of innovativeness of a development project. The two dimensions that are significant in radical innovation are frequency (positive) and content (negative). Direction and modality did not have a significant impact on product success. This implies that companies should learn from customers through frequent contact, which is the same as in the case of incremental innovations. However, companies should not be overly concerned with suggestions of the content of a potential new offering. Radical solutions can often be considered unthinkable in advance, which can make radical solutions hard to imagine, but customers know a good idea when they see and use it. Customers create solutions based on their previous experiences of usage of different products or services, which makes it difficult to suggest solutions that are truly radical.

Advertisements

%d bloggers like this: