Customer Involvemen

t Into

Service Innovation

Innovation is a process by whichorganizations use their skills to

developnew goods and services or to

developnew production and operating

systemsso that they can better respond the

needs of their customers.

(Hill & Jones 1998)

WRONG!!!

CORRECT!!!

Facing fierce competition from domestic as well

as foreign rivals, service innovation seems to

be the most promising weapon for

practitioners to sustain a competitive

advantage.

Traditional innovation models, however, are

unable to quickly and accurately meet the

needs of customers.

CUSTOMER INVOLVEMENT

In the new economic era, customers play critical roles in the manufacturing or R&D process; corporate should invite customer to the value exchange process, and ultimately treat customers as partners.

For companies in the service sector, customer perception might seriously affect the quality of service delivery; therefore, involving customers into the process of new service development is a necessity

Definition of Customer InvolvementYear Authors Term Definition

1993 Anderson & Crocca

co-development A technology provider, together with users, explores the use of the technology in a specific industry.

1993 Muller, Wildman & White

co-development Customers participate in the development process and play important roles.

1995 Martin & Horne

customer participation

Customers participate in the new service development process directly.

1998 Neale & Corkindale

co-development A technology provider, together with customers, exchanges ideas and participates in the development process.

1998 Kaulio user involvement The interaction between customers and the development process.

1999 Campbell & Cooper

partnership A formal relationship between the customers and the company is established; the customers are then invited to participate in the development process.

2006 Alam customer involvement

Product/service providers and current/potential customers jointly engage in innovation projects, and exchange ideas to anticipate customers’ demands and develop new product/services.

TYPES OF CUSTOMER INVOLVEMENT

We can categorize customer involvement in the new product/service development process into three groups, namely:

lead user, normal user, community members.

Lead user

Lead users have two distinct characteristics:

Lead users face needs that will be the future trend in the marketplace;

In order to fulfill their needs, lead users would actively engage in the innovative process. Von Hippel (1986)

Normal user

Normal user involvement focused on the financial and telecommunication industries because these industries provide a set of standardized product/service to fulfill individual needs.

(Soete & Miozzo, 1998)

Community user

Unlike normal user, community users usually have expertise in a specific field. Community users are interested in technological products and are willing to spend more time on innovations.

Therefore, community users play a very important role in the advance of technologies.

(Tapscott & Williams, 2007)

Customer involvement in new product/service development

Previous studies concerning customer involvement focused on issues such as: management information systems (MIS), total quality management (TQM), and citizen participation in public policy making.

Customer involvement in the new product/service development process is a new area of research

Service production implies that value of service is co-created with the consumers on the basis of value-in-use, rather than being embedded in separated tangible product.

Customers’ participation exists in the whole process of service innovation. Their attitude, behavior and competence affect the innovation markedly.

As customers interact with service production, they are expending their effort, contacting the process and customizing the service offerings.

Classification of customer roles in product development context.

User involvement can be divided into three classes based on what they are influencing:

User involvement in deciding what to design

User involvement in the actual design process of a certain service

User involvement in design in use, after the service has been launched to the market.

User contribution to product development.

Techniques of customer involvement and the style of questioning are relevant issues, because uncertainty in these matters can partly be the reason for controversy around usefulness of customer participation. Hyvönen in 2007, classify interaction methods by three roles that user involvement can play in product development:

Advantages of customer involvement

Year Authors Advantages1993 Anderson &

CroccaTechnology providers can better understand user needs, and users can understand the new technology.

1999 Von Hipple, Thomke, & Sonnack

Create breakthrough products, and reducei ncremental improvement of existing products.

2002 Prahalad & Ramaswamy

In the product development process, users can provide suggestions, and increase the opportunities of new product success.

2002 Alam 1. Superior and differentiated service.2. Reduce cycle time.3. User education.4. Rapid diffusion.5. Long-term relationships.

2003 Magnusson 1. Users involved in a service innovation process seem to produce more original and valuable proposals than professional developers.

2. User involvement could help break the frames which limit the development of new product/service.

2003 Magnusson, Matthing & Kristensson

1. Technical experts can better understand the needs of customers.

2. In the development process, customers can provide suggestions.

3. Reduce cycle time.

2004 Franke & Piller

Designed products can meet customers’ preferences and needs.

Customer involvement into service innovation in Romania

INNOVATION UNION SCOREBOARD 2010

Romanian’s are not willing to try new products

Romanians are very conservative even shopping, only 29% of them are willing to put a new product to cart.

The study took the BBC revealed that novel, the more they age, becoming less open to new things.

55% of young people between 15 and 19 say they choose new products appeared on the market at the expense of those they already know.

Compared with other countries in the region, Romanians are among the most reluctant to try new products.

QUESTIONS?