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Löber, Heike: Different Phases of the Innovation Process An Overview of Challenges
and Customer Integration, Hamburg, Anchor Academic Publishing 2015
PDF-eBook-ISBN: 978-3-95489-928-9
Druck/Herstellung: Anchor Academic Publishing, Hamburg, 2015
Additionally: Universität Mannheim, Mannheim, Deutschland
,
Seminararbeit, 2009
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i
Abstract
The innovation process (IP) contains challenges within its different phases, which companies
have to deal with when developing new products. Integrating customers in new product
development (NPD) is a way of managing those difficulties. This paper consequently
addresses the interrelation between the IP and customer integration by having a look at the
specific activities within each phase, followed by a depiction of challenges and an analysis of
how customers can contribute to a more efficient IP. The lead user (LU) and the toolkits
approach as well as virtual costumer environments (VCE) as methods for customer
integration will be considered in detail.
ii
Table of Contents
Abstract ... i
List of Figures ... iii
List of Tables ... iv
List of Abbreviation ... v
1. Customer Integration in the IP ... 1
1.1.
Relevance of the Topic ... 1
1.2.
Purpose and Procedure of the Paper ... 1
2. Definitions
... 2
2.1.
Innovation of Consumer Goods ... 2
2.1.1.
Innovation and the IP
... 2
2.1.2. Innovation of Consumer Goods
... 4
2.2. Customer
Integration
...
4
3. The Phases of the IP ... 6
3.1. Idea
Phase
... 6
3.1.1.
Typical Activities
... 7
3.1.2.
Challenges
... 8
3.1.3.
Customer Integration in the Idea Phase
... 10
3.2. Conception
Phase
...
11
3.2.1.
Typical Activities
... 11
3.2.2.
Challenges
... 12
3.2.3.
Customer Integration in the Conception Phase
... 13
3.3. Implementation
Phase
...
15
3.3.1.
Typical Activities
... 15
3.3.2.
Challenges
... 16
3.3.3.
Customer Integration in the Implementation Phase
... 17
4. Conclusions
... 18
4.1.
Summary of Results ... 18
4.2. Managerial
Implications
...
18
4.3.
Suggestions for Further Research ... 19
Bibliography ... 20
Declaration ... 26
iii
List of Figures
Figure 1: Classification of Innovations ... 2
Figure 2: The Phases of the IP ... 4
iv
List of Tables
Table 1: Classification of Customer Roles according to the three Phases ... 6
v
List of Abbreviation
B2B Business-to-Business
B2C Business-to-Consumer
IP Innovation
Process
LU Lead
User
NPD
New Product Development
VCE
Virtual Customer Environment
1
1.
Customer Integration in the IP
1.1. Relevance of the Topic
NPD is central to a firm's success and prosperity. Companies lacking innovative activities at
regular intervals are not able to survive in a competitive environment (see
Cooper/Kleinschmidt 1993, p.20; Frishammar/Ylinenpää 2007, p.441). Innovation entails
benefits such as improved market position, enhanced profitability and competitiveness (see
Gassmann/Kausch/Enkel 2005, p.1; Lüthje/Herstatt 2004, p.553). Despite the efforts of firms
to meet this demand, there are high failure rates of innovative products in the marketplace,
which apply to industrial products as well as to consumer products (see
Füller/Mühlbacher/Rieder 2004, p.59; Gassmann/Kausch/Enkel 2005, p.). The high risks and
uncertainties involved in innovation activities (see Ernst 2002, p.1), shorter cycles of
innovation as well as new tendencies of the 21
st
century such as globalization (see
Dahan/Hauser 2001, p.1f.) could account for failures and thus have led to a necessary
change (see Griffin 1997, p.430). As a result, the IP which was actually confined to the
company in the traditional view has been opened. Chesbrough (2003, p.37ff.) talked about
the phenomenon "Open Innovation" which implies that in order to be able to carry out NPD
efficiently and effectively, companies need to consider many different kinds of information
including external information from suppliers, customers and competitors in terms of market
orientation (see Jaworski/Kohli 1993, p.63f.). As was found out, especially information of
customers is important as their involvement leads to the success of a new product (see
Piller/Walcher 2006, p.308). What is even more, based on an Arthur D. Little study (see
Arthur D. Little 2005) about best performing industries in NPD rated by their productivity,
Cooper and Edgett (2008, p.48ff.) concluded that customers should be included in all the
phases of the IP as an integral part because they can have a valuable share in some
activities resulting in higher success and decreased failure rates of new products.
1.2. Purpose and Procedure of the Paper
On the basis of the relevance, the paper's objective is to show how the integration of
customers can improve NPD. Firstly, there will be an elaboration of challenges in the
different phases of the IP; after that, customer integration methods and how they can be
deployed will be shown. To accomplish its objective, the paper will start with defining basic
concepts and then pass into the main part which will consist of describing the specific
activities of each phase. This will be followed by depicting challenges and possible customer
contribution. One possible method of customer integration will be illustrated in more detail in
2
each phase. The rest of the paper contains a summary of results, managerial implications as
well as suggestions for future research.
2.
Definitions
2.1. Innovation of Consumer Goods
In the following section, the conceptual foundation concerning the innovation of consumer
goods will be pointed out. In doing so, innovation per se will be explained. This will be
followed by a definition of the IP in general and the underlying IP of this paper. Subsequently,
consumer goods and the specifics concerning their innovation will be described.
2.1.1. Innovation and the IP
There is no single distinct definition of the term innovation; it rather depends on the context in
which it is found. In this paper, the term is used for the development of new consumer
products and is defined as "a process by which a firm transforms knowledge [...] into new
products" (see Madhavan/Grover 1998, p.2). The element of being new is crucial in speaking
about innovation. It can function as a means of classifying new products because they can
be categorized in terms of their newness to the company and to the marketplace (see
Booz/Allen/Hamilton 1982, p.8). The following figure shows all kinds of innovation ranging
from the one extreme "cost reductions", which are products with only slight changes but
which provide cost reduction, to the opposite extreme "new-to-the-world products" with the
highest degree of newness in both dimensions.
Figure 1: Classification of Innovations
Source: On the basis of Booz/Allen/Hamilton (1982, p.9)
The process of innovation, also termed NPD contains all phases ranging from idea
generation to the actual production of the new or altered product. In the existing literature
and in practice, these phases are shown in different ways and vary as far as details are
HIGH
LOW
Newness to
Company
Newness to Market
LOW HIGH
Repositioning
Cost Reductions
Additions to
Existing Product
Lines
Improvements/
Revisions to
Existing
Products
New-To-World
Products
New Product
Lines
3
concerned (see Füller/Mühlbacher/Rieder 2004, p.61). As Hauser/Tellis/Griffin (2006, p.700)
explain: "The emerging view [...] is of product development as an end-to-end process that
draws on marketing, engineering, manufacturing, and organizational development."
In the past, different approaches for structuring the whole process have been made. Those
can either be categorized as sequential and linear with stages following each other in series
or as a non-sequential process with spiral or overlapping stages and an iterative nature (see
Hauser/Tellis/Griffin 2006, p.700f.). A famous model for the first approach is the Stage-Gate
process by Cooper (see Cooper/Kleinschmidt 1986, p.71ff.) with linear running stages
separated by gates where go/no decisions are taken concerning the pursuing of the activities
of each preceding stage. A similar model called the Development Funnel was developed by
Wheelwright and Clark (1992, p.35ff.). Here the innovation process is displayed as a funnel
with the thought that analogous to the picture of the funnel, in the beginning of the process
there are many ideas which will end up in one final product. In contrast to those models is
Koen's (2002, p.8ff.) New Concept Development Model, a model for the first phases of the
innovation process. This is not a linear process, but has a circular form suggesting that there
is no actual starting point of activities within the stages. Instead, stages can be passed
through without a fixed order. This corresponds to the second category of structuring the
innovation process.
In order to explain customer integration and its benefits, the IP in the context of this paper will
be described as a three-stage process consisting of the following phases: idea phase,
conception phase and implementation phase. In the idea phase, being the start of the IP, a
main part consists of identifying opportunities and then finding appropriate and convincing
ideas for new products. This then leads to the next phase were the best ideas are turned into
concepts and prototypes are designed, which can first of all be tested and then further
transferred into final products at the last stage. The reason for that choice is the fact that
customers can be integrated in each stage (see Füller/Mühlbacher/Rieder 2004, p.61ff.). The
following graphic illustrates all phases of the IP including main elements.
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