Defining
Customer Innovation
I often get asked what I mean when
I use the phrase "Customer Innovation". Here's my explanation:
Customer innovation incorporates a
number of emerging concepts and practices that help organisations
address the
challenge of growth in the age of the empowered and active customer
(both
business and consumer). It demands new approaches to innovation and
strategy-making that emphasise rapid capability development, fast
learning,
ongoing experimentation and greater levels of collaboration in
value-creation.
Customer innovation impacts upon all the following activities, functions
and
disciplines:
Marketing strategy and management
Brand strategy and management
Communications strategy
Customer experience design and delivery
Customer relationship management
Customer service design and quality management
Market-sensing and customer learning
Market and customer segmentation
Creativity and knowledge management including market research
Partner and customer collaboration
Organisational alignment and purpose (values, behaviour and beliefs)
Innovation strategy and management
Innovation valuation, measurement and prioritisation
Strategy-making
For me customer innovation is not
only an important perspective on value-creation but a whole new strategy
discipline that organisations must embrace if they are to pursue growth
successfully in the future. Put another way, customer innovation impacts
the
fundamental means by which value is created and growth sustained.
One of the difficulties I encounter
when explaining the concept is that the "Innovation" word is
traditionally associated with products and technology. There is a
section in
The Only Sustainable Edge by Hagel and Seely
Brown that eloquently defines Innovation from a much broader
organisational and
strategic perspective:
We underscore the importance of
innovation but we use the term more broadly than do most executives.
Executives
usually think in terms of product innovation as in generating the next
wave of
products that will strengthen market position. But product-related
change is
only one part of the innovation challenge. Innovation must involve
capabilities; while it can occur at the product and service level, it
can also
involve process innovation and even business model innovation, such as
uniquely
recombining resources, practices and processes to generate new revenue
streams.
For example, Wal-Mart reinvented the retail business model by deploying a
big-box retail format using a sophisticated logistics network so that it
could
deliver goods to rural areas at lower prices.
Innovation can also vary in scope,
ranging from reactive improvements to more fundamental breakthroughs...
One of
the biggest challenges executives face is to know when and how to leap
in
capability innovation and when to move rapidly along a more incremental
path.
Innovation, as we broadly construe it, will reshape the very nature of
the firm
and relationships across firms, leading to a very different business
landscape.
Although Hagel and Seely Brown's
book provides a great analysis of capability-building and new innovation
mechanisms at the edge of organisations (through new dynamic forms of
firm-firm
collaboration) and specialisation, their discussion largely omits the
customer-firm colloboration, open innovation perspective. But, from
Hagel's
most recent post and
article in the
Mckinsey Quarterly, this seems like it could be the subject
of their next book! Here is a quote from the article:
Cocreation is a powerful engine
for innovation: instead of limiting it to what companies can devise
within
their own borders, pull systems throw the process open to many diverse
participants, whose input can take product and service offerings in
unexpected
directions that serve a much broader range of needs. Instant-messaging
networks, for instance, were initially marketed to teens as a way to
communicate more rapidly, but financial traders, among many other
people, now
use them to gain an edge in rapidly moving financial markets.
Example for consumer innovativenss
For example,
based on this
research, Tellis, who has experience launching new products via his past
service as a sales development manager at Johnson & Johnson,
recommended
that businesses employ a “waterfall strategy” (i.e., a
country-to-country tiered
release) versus a “sprinkler strategy” (all at one time) for new
products,
making sure to vary their approach depending on the country and product
category.
Governments can apply this research when introducing new products,
such as
fuel-efficient cars, and services to their citizens. “This study tells
them
whom to target first in which regions,” Tellis said.
Management consultant firm A. T. Kearney funded the study’s data
collection,
while Don Murray, executive chairman of Resources Global Professionals,
provided
the annual grant to the USC
Marshall Center
for Global Innovation, which paid for the data analysis.
Compulsive Consumption Consumer
O'Guinn
& Faber (1989:148) defined compulsive consumption as “a response to
an
uncontrollable drive or desire to obtain, use or experience a feeling,
substance or activity that leads an individual to repetitively engage in
a
behaviour that will ultimately cause harm to the individual and/or
others.”
Research has been carried out to provide a phenomenological description
to
determine whether compulsive buying is a part of compulsive consumption
or not.
The conclusion reached after analysing both qualitative and quantitative
data
stated that compulsive buying resembles many other compulsive
consumption
behaviours like compulsive gambling, kleptomania and eating disorders
(O' Guinn
& Faber, 1989:147). Hassay & Smith (1996) hold a similar view
and refer
to compulsive buying as a form of compulsive consumption as well.
Besides
personality traits, motivational factors also play a significant role in
determining the similarities between compulsive buyers and normal
consumers.
According to O'Guinn & Faber (1989:150), if compulsive buying is
similar to
other compulsive behaviours it should be motivated by “alleviation of
anxiety
or tension through changes in arousal level or enhanced self-esteem,
rather
than the desire for material acquisition.” Hassay & Smith (1996)
also agree
with the above inference and concluded from their research that
“compulsive
buying is motivated by acquisition rather than accumulation.”
Example Compulsive
Consumption Consumer
Examples include uncontrollable shopping, gambling, drug addition,
alcoholism
and various food and eating disorders. It is distinctively different
from
impulsive buying which is a temporary phase and centers on a specific
product
at a particular moment. In contrast compulsive buying is enduring
behaviour
that centers on the process of buying, not the purchases themselves.
Consumer Ethnocentrism
is
derived from the more general psychological
concept of
ethnocentrism.
Basically, ethnocentric individuals tend to view
their group as superior to others. As such, they view other groups from
the
perspective of their own, and reject those that are different and accept
those
that are similar (Netemeyer et al., 1991; Shimp & Sharma, 1987).
This, in
turn, derives from earlier sociological theories of in-groups and
out-groups
(Shimp & Sharma, 1987). Ethnocentrism, it is consistently found, is
normal
for an in-group to an out-group (Jones, 1997; Ryan & Bogart, 1997).
Consumer ethnocentrism specifically refers to
ethnocentric views held by consumer in one country, the in-group,
towards
products from another country, the out-group (Shimp & Sharma, 1987).
Consumers may believe that it is not appropriate, and possibly even
immoral, to
buy products from other countries.
Purchasing foreign products may be viewed as
improper because it costs domestic jobs and hurts the economy. The
purchase of
foreign products may even be seen as simply unpatriotic (Klein, 2002;
Netemeyer
et al., 1991; Sharma, Shimp, & Shin, 1995; Shimp & Sharma,
1987).
Example for
consumer ethnocentrism
For example,
according to Burton
(2002) and Quellet (2007), consumers are concerned with their cultural,
national and ethnic identities increasingly in more interconnected
world. Some
consumer researches determined that people make their purchasing
decisions on
information cues. Information cues can be intrinsic (e.g., product
design) and
extrinsic (e.g.,brand name, price)(Olson, 1977; Jacoby ,1972). But
extrinsic
cues are likely to be used in the absence of intrinsic cues or when
their
assessment is not possible(Jacoby, Olson and Haddock, 1971 ; Olson,
1977;
Jacoby, 1972 ; Jacoby, Szybillo and Busato-Schach, 1977 ; Gerstner,
1985).
Also, according
to some researches, it was thought that there is
a relationship between attitudes toward foreign retailers’ products and
some
demographics characteristics such as gender, education, income and age.
When doing this
research, it was aimed at determining consumer
attitudes towards foreign retailers’ products. The research starts with a
literature review which includes international retailing in Turkey,
attitudes towards purchasing foreign retailers’ products (general
review),
effects of age and education level on attitudes, influence of consumer
ethnocentrism on attitudes towards foreign retailers’ products
respectively.
Secondly, methodology part that has explanations about how this research
was
conducted, was presented. Then, findings which derived from
questionnaire
results and its SPSS analyses, are presented. At the last stage of the
research, discussion, limitations and future researches are discussed.
