Diffusion of Web-based Product Innovation_cmr

DiffusionofWeb-BasedProductInnovationEmanuelaPrandelliGianmarioVeronaDeborahRaccagniInawidearrayofindustries,customerintegrationleadstoimprovedperformanceofproductdevelopment,intermsofbothbetterfitwithmarketneedsandfastertimetomarket.1Theabilitytoinvolvecustomersinthecreationofnewproductsishighlyrecommendedinboththeoryandpractice.2However,theabsorptionofcustomerknowledgeisnotaneasytask.Aswithanyotherbusinessprocessthatinvolvesimportingknowledgefromoutsidethefirm’sboundaries,itisorganizationallycomplexandexpensive.Customerknowledgeisalsocharacterizedbyidiosyncraticandstickyknow-how,whichmakesitdifficulttobelearnedandtransferred.3Lastly,knowledgetransferrequiresdirectinteractionbetweenfirmsandcustomers,whichentailsconsiderablephysicallimitations.Whilesomefirmshaveoptedtocreateinternalmarketresearchdepartments,thegreatmajorityhaveusuallyreliedondedicatedthirdparties—namely,marketresearchoperators—inordertoabsorbmarketknowledgeforinnovationpurposes.Theadventofinformationandcommunicationtechnologies(andtheInternet,inparticular)hascreatednewopportunitiesforcustomerintegration.Web-basedtoolscansimplifycustomerintegrationandknowledgeabsorptionbyfacilitatingsystematicinteractionswithselectedgroupsofcustomersatalowcost.4TheInternetgreatlyenhancesacompany’scapacitytoobtainmarket109CALIFORNIAMANAGEMENTREVIEWVOL.48,NO.4SUMMER2006TheauthorsacknowledgetheinsightfulconversationsonthetopicwithGiuseppeBertoli,ElyDahan,AlfonsoGambardella,andMohanbirSawhney,aswellascommentsbytwoanonymousreviewers.TheyarealsoindebtedfortheexcellentresearchassistanceprovidedbyDanieleSeveriBruni.Theauthorsassumefullresponsibilityfortheideasitcontains.Earlierversionsofthepaperalsobene-fitedfromthepresentationsatthe2004AOMConference,NewOrleans,andthe2005SMSConfer-ence,Orlando.ThesupportofBocconiUniversitywithfundsfromtheResearch“FromRelationshipMarketingtoCollaborativeMarketing”andoftheResearchDivisionofSDABocconiSchoolofManagementisgratefullyacknowledged.knowledgewithoutathirdpartyandtoregularlyinteractwithabroadercate-goryofconsumersthanjustitsregularcustomerbase.Thiswouldbeimpossibleofflineanditrepresentstherevolutionarypotentialofthewebtosupportthedevelopmentofproductinnovationbyindividualcompanies.Specifically,vari-ousweb-basedtoolshavebeendevelopedovertimetosupportcollaborationwithcustomersateachstageoftheinnovationprocess.5Thequestionis:Towhatextentarecompaniesintegratingthesetoolsintotheirwebsitestosupportcooperationwithconsumersateachinnovationstage?Thisarticlereportsonanempiricalstudythatmapstheweb-basedmech-anismscurrentlysupportingcollaborativeinnovationinfivedifferentsectors—theautomobile,motorcycle,consumerelectronics,foodandbeverages(hereafter,“food”),andtoiletriesindustries.6TheRoleoftheWebatEachStageoftheProductDevelopmentProcessAcompany’scapacitytoabsorbcustomerknowledgeisvitalacrosstheentireproductdevelopmentprocess.Greatemphasishasbeenplacedonthepotentialofthewebasatoolofadaptiveco-developmentofnewproducts,allowingcompaniestosystematicallysolicitconsumersfeedback.7Websitescanalsocontributetoincreasingconsumertrustand,consequently,theconsumer’swillingnesstoshareinformation.8Ofcourse,notallcustomersfeelthesamewayaboutonlineparticipationandtherepresentativenessofweb-basedtoolsisstillbeingtested.However,ithasbeenproventhatcustomersinteractingwiththecompanythroughthewebarethemostinvolvedandinnovative,showingthehighestinteresttowardsexperimentationandtrendsetting.9IdeaGenerationThefirststageofnewproductdevelopmentbenefitsconsiderablyfromtheweb’spotentialtoenhanceconsumerinput.Thesimplestapplicationconsistsofonlinequestionnaires.Whensearchingforsuccessfulnewproductideas,oneshouldaimtoreduceuncertaintybyidentifyingcustomerpreferencesandinter-actingdirectlywiththemtoabsorbnewknowledge.Thequestionnaireusuallyaimstoimproveselectedaspectsofthesite,product,orservice.Toenhancecus-tomerinvolvementintheideagenerationstage,companiescanevenuseonlinesuggestionboxeswhereusersexpresstheirowninnovativeideas.Agoodexam-pleisprovidedbytheBen&Jerrysite,whereuserscancontributenewideasforbothproducts(pre-packagedicecream)andservices(especiallypackaginganddistribution).AdvancedapplicationsofsuchdialoguewindowscanalsobefoundintheProcter&Gamblewebsite.(Inallthesecases,itisessentialtoestablishclearregulationsregardingintellectualpropertyrightssothatthecompanycanusetheinnovativeideassuggestedbyconsumers.)Productorfinancialincentiveshaveproventoimproveideagenerationremarkably.10EvenrewardmechanismscanbeintroducedtoencouragethemostcompetentuserstocompetewitheachotherinfindingnewwaystosolveDiffusionofWeb-BasedProductInnovationUNIVERSITYOFCALIFORNIA,BERKELEYVOL.48,NO.4SUMMER2006110specificcompanyproblems.Remunerationisusuallypaidbythecompanyand,insomecases,canevenexceedonehundredthousanddollars(asintheInno-centive.comsitecreatedbyEliLilly).Itisalsoeasiertohandlecomplaintsonline,bothforthecompanyandforusers.Accurateanalysisofthecomplaintsservestostrengthenexistingproductsandcanevenleadtoradicalchanges.Particu-larlyusefulisthetechniqueof“listeningin,”namely,recordingandanalyzingth