The Interplay of Customer and Product Innovation Dynamics: An Exploratory Study

Abstract

The challenges of successfully developing radical or really new products have received considerable attention from a variety of marketing, strategic, and organizational perspectives. Previous research has stressed the importance of a market‐driven customer orientation, the resolution of market and technological uncertainty, and organizational processes such as cross‐functional teams and organizational learning. However, several fundamental issues have not been addressed. From a customer's perspective, a more innovative product tends to have uncertain benefits and requires customers to learn new behaviors. Customer preferences can, therefore, change as product experience and learning increase. From a firm's perspective, it is unclear how to be customer‐oriented under such dynamic preferences, and product strategies using evolving technologies will tend to interact with how customers learn about an innovation. This research focuses on identifying unresolved issues about these customer and product innovation dynamics. A conceptual framework and series of propositions are presented that relate both changing technology and customer learning to a firm's strategic decisions in developing and launching really new products. The framework is based on in‐depth interviews with high‐tech product managers across several sectors, focusing on the business‐to‐business context. The propositions resulting from the framework highlight the need to consider relevant customer dynamics as integral to a firm's product innovation process. Successful innovation strategies and future research challenges are discussed, and applications to better understanding customer needs and theories of disruptive innovation are examined. Several key insights for innovation success hinge on a broad, downstream orientation to customer needs and product innovation dynamics. To be effective innovators, firms must know their customers' customers and competitors as well as or better than their immediate customers do. Market research must extend downstream for a comprehensive understanding of customer needs dynamics. In the context of disruptive innovation, new dimensions of customer needs may become more valuable based on perceived downstream customer trends. Firms may also innovate on secondary needs because mainstream customers do not always give firms the design freedom to radically innovate on primary features. Understanding customer commitments and how they develop under evolving needs can help firms focus resources on innovative efforts more likely to be accepted by customers.

Social Functions of Anger: A Competitive Mediation Model of New Product Reviews

“…Product innovativeness is an everlasting interest of innovation diffusion literature (Bohlmann, Spanjol, Qualls, and Rosa, 2013). Will angry reviews influence the diffusion of really new products and incrementally new products distinctively?…”

Social media and Web 2.0 for knowledge sharing in product design

“…IT resources create IT-enabled capabilities, defined as the extent to which a team is aware of what IT functionalities and tools it has to offer, and can effectively utilise those functionalities and tools to share knowledge (Pavlou and El Sawy, 2006). Recently, firms have been using IT in the form of social media and Web 2.0 to allow 'manyto-many' communication and knowledge sharing (Kietzmann et al 2011;Naylor et al, 2012;Aral et al, 2013), and co-develop new products with customers (Prahalad and Ramaswamy, 2004;Hoyer et al, 2010;Sigala, 2012;Bohlman et al, 2013). The role of social media/web2.0 is discussed in the next section.…”

Novel product innovation in project-based firms: explaining innovation where interdependent firms deliver complex system-level outcomes

“…Also, market intelligence provided by suppliers may hurt innovation performance (Song & Thieme, 2009). However, these insights are based on observations of innovation diffusion problems for manufactured goods, and regard the problems associated with market uncertainty and shifting customer needs and preference associated with those realms (Bohlmann, Spanjol, Qualls, & Rosa, 2013). Thus, these insights are perhaps not directly applicable to limited and well-defined markets that characterise CoPS-related novel products (Hobday, 1988).…”

“…Close working relationships with customers within projects help to facilitate the implementation of novel products by providing continual guidance to the focal firm throughout the innovation development process (Manley, 2008). Having a deep intimate knowledge of customers' activities stemming from embeddedness will improve the likelihood that a successful new product will be developed, because intimacy confers important details and tacit knowledge surrounding the customer's desires, preferences, and operations (Bohlmann et al, 2013).…”

“…Embeddedness with customers allows firms to adapt to the inevitable changes in customer preferences, and thus adapt their innovation activities accordingly to improve chances of success (Barrett & Sexton, 2006;Bohlmann et al, 2013;Wagner, 2010).…”