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Who Says Customers Can't Help Create Major Innovation?

CHICAGO, Nov. 20, 2012 /PRNewswire-USNewswire/ -- Conventional wisdom suggests that customers cannot easily contribute to the creation of major innovation and new product development (NPD) should proceed in defined stages. This research finds otherwise.

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Every marketer involved with NPD knows: 1) they should listen to the voice of the customer, and 2) they should involve customers at certain development stages. However, are customers simply subjects for research and product testing? Does a stage approach really help firms trying to push technological frontiers? To explore these issues, we studied how customers participate in NPD for major innovation, comparing projects that succeeded and failed. We examined small technology firms because this context allowed for rich insight to what customers actually do during NPD.

What did we find? Two approaches to NPD and ten ways that customers participate in creating major innovation.  The successful innovators pursued an atypical process: "almost ready, fire, do a bit more, re-fire." They had no conventional market assessment and made very early sales of a not-nearly-ready technology. These firms were not customer-centered. Rather, they treated customers as co-innovators, mobilizing a mix of present and potential downstream customers for trial-and-error learning. Customers were sometimes lead-users but often, they were simply keen to play with new technology. Critically, they were active in most of the roles we identified, and in every NPD activity. In clear contrast, the firms with MI failure took a more traditional approach to NPD. They followed clear stages of development where customer participation was limited to certain activities and very few roles.

The analysis appears in the November 2012 issue of the American Marketing Association's Journal of Marketing (Vol. 76, pages 87-104).

"Any firm new to major innovation is dealing with 'newness' because the technology and market is so unknown. As a result, we think even large firms can learn from our study, if they are willing to break-out of the step-by-step and risk-averse models learned in business school." [ Nicole Coviello].

Our results suggest that to succeed with major innovation, a firm should NOT follow an analysis-driven stage model. Instead, they should cultivate an iterative approach to NPD, continuously involving customers in different ways. This means being willing to: (1) share in knowledge generation and (2) share technology early. This entrepreneurial approach to co-creation helps mitigate risk through early buy-in to the innovation, early market access and rapid development of a market position.

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