A Risk-Benefit Perspective on Early Customer Integration (eBook)

Foreword by Prof. Dr. Oliver Gassmann 7
Foreword by Prof. Dr. Tom Sommerlatte 8
Acknowledgements 12
Contents 14
1 Introduction 18
1.1 Relevance of the topic 18
1.1.1 Relevance of customer integration 18
1.1.2 Relevance of the early innovation phase 19
1.1.3 Relevance of a risk-benefit perspective 20
1.2 Shortcomings of existing research 22
1.2.1 Conceptual research gap 22
1.2.2 Empirical research gap 23
1.3 Research concept 25
1.3.1 Research question 25
1.3.2 Research approach 26
1.3.3 Research methodology 27
1.3.4 Research design 29
1.3.5 Thesis outline 31
2 Literature review of key issues 34
2.1 Innovation 34
2.2 Early innovation phase 35
2.2.1 Temporal delimitation and character 35
2.2.2 Various structure models 36
2.3 Customer integration 43
2.3.1 Customers 43
2.3.2 Integration 46
2.4 Benefits and risks 66
2.4.1 Benefits 66
2.4.2 Risks 68
2.4.3 Risk-benefit balance 72
2.5 Knowledge creation 76
2.5.1 Definition of knowledge 76
2.5.2 Knowledge creation 77
2.5.3 Absorptive capacity 78
2.6 Summary 82
3 Development of an analysis model for a riskbenefit balance 84
3.1 General outlook on the analysis model 84
3.2 Tasks 88
3.2.1 Task description 88
3.2.2 Potential customer contribution 97
3.3 Assets 104
3.3.1 Benefits in the various tasks 104
3.3.2 Benefit-increasing factors 108
3.4 Liabilities 111
3.4.1 Risks in the various tasks 111
3.4.2 Risk-reducing measures 115
3.5 Propositions summary 116
4 Case studies on early customer integration 118
4.1 Selection and structure 118
4.2 Customer integration at Gallus 120
4.2.1 Company profile 120
4.2.2 Innovation process at Gallus 123
4.2.3 Innovation project: Concept for industrializing narrowweb printing 124
4.2.4 Company assessment of the innovation project 128
4.2.5 Company assessment of customer integration 129
4.3 Customer integration at Schindler 130
4.3.1 Company profile 130
4.3.2 Innovation process at Schindler 131
4.3.3 Innovation project: European trends in the elevator branch 136
4.3.4 Company assessment of the innovation project 138
4.3.5 Company assessment of customer integration 139
4.4 Customer integration at Schurter 140
4.4.1 Company profile 140
4.4.2 Innovation process at Schurter 142
4.4.3 Innovation project: Identification via Customer Application Talks 145
4.4.4 Company assessment of the innovation project 149
4.4.5 Company assessment of customer integration 150
4.5 Customer integration at Zimmer 151
4.5.1 Company profile 151
4.5.2 Innovation process at Zimmer 152
4.5.3 Innovation project: Opportunities for the “female empowered patient” 156
4.5.4 Company assessment of the innovation project 161
4.5.5 Company assessment of customer integration 162
5 Characteristics of successful early customer integration 164
5.1 Cross-case analysis 164
5.1.1 General advisability of customer integration 165
5.1.2 Tasks 168
5.1.3 Benefit-increasing factors 172
5.1.4 Risk-reducing measures 175
5.2 Determinants for successful customer integration 176
5.2.1 Size of the integrating company 177
5.2.2 Identical selection criteria as determinants 178
5.2.3 Contingency factor of dependence on customers 179
5.3 Conceptualization of advisable customer integration 183
5.3.1 Overview of the Resource Dependence Theory 183
5.3.2 Linking Resource Dependence Theory with customer integration 185
5.3.3 Conceptual model of successful customer integration 188
6 Managerial recommendations for advisable envisaged customer integration 192
6.1 Innovation task and potential customer contribution 192
6.2 Benefits and risks of the envisaged customer integration 194
6.2.1 Benefits for the concrete project 194
6.2.2 Risks for the concrete project 195
6.3 Modification of benefits and risks 196
6.3.1 Benefit-increasing factors 196
6.3.2 Risk-reducing measures 197
6.4 Quantification of benefits, risks, and their modifications 205
6.4.1 Basic considerations 206
6.4.2 Quantifying benefits and risks 207
6.4.3 Quantifying benefit-increasing factors and risk-reducing measures 209
6.5 Towards a formal decision model 213
7 Conclusion 218
7.1 Results 218
7.1.1 Is customer integration in the early innovation phase advisable? 218
7.1.2 Can customer integration be investigated irrespective of different individual process structures? 219
7.1.3 Which possible effects of customer integration have to be taken into account? 220
7.1.4 Can the potential success of customer integration be predicted? 222
7.1.5 Summary of hypotheses 223
7.2 Implications for management practice 224
7.3 Implications for management theory 226
7.4 Suggestions for further research 230
8 Appendix 232
A Special innovation tools 232
B List of abbreviations 236
References 238

4 Case studies on early customer integration (p. 101-102)

As mentioned in the empirical research gap in Chapter 1 and deepened in the review of key problems in Chapter 2, a combined outlook on activities of customer integration and their resulting effects on the outcome of an innovation project has not been the focus of empirical research so far. This thesis therefore resorts to case studies that provide an insight on the relevant aspects of customer integration in the context of practical application, considering as much as possible the issues that were raised in Chapter 3.

4.1 Selection and structure

The cases were selected with the intention of identifying patterns and schemes for successful customer integration and pertinent risk management in the early innovation phase. The predominant selection criterion was the fundamental comparability of the companies’ innovative power and the involvement of customers in the innovation process.

The selected companies are all innovation leaders in their respective market and strive hard to maintain this position. A leadership strategy differs considerably from a "follower" strategy, which more or less copies the leaders’ results. Leaders, on the other hand, rely on innovative customers as an essential source of information (Schewe 2005, Specht and Zörgiebel 1985). With respect to the industry, all chosen companies are manufacturers because in this way the characteristics of R&D are comparable. Another important selection criterion was the companies’ activities in the business-to-business (B2B) market, which means that the customers, too, are companies and not end consumers (the data on those is from other sources). The B2B markets are characterized by the fact that the main buying decisions are made by professionals (cf. Backhaus 2003), the result is a bigger impact on most aspects of customer integration. The geographic location played an important role as well. The innovative output of Switzerland led to the selection of Swiss or Swiss-based companies only. With an R&D intensity of 2.57 % of GDP the country is well ahead of the surrounding EU 15 with 1.91% of GDP or the total OECD with 2.26% of GDP (OECD 2006). The chosen companies, however, all have international contacts and experience. All case study participants are homogeneous in their business fields. With regard to size, they were expressly selected among big and medium-sized companies.

In summary, the four companies described in the case studies were chosen according to the following criteria:

• Innovation leaders in their market shares
• Manufacturing companies
• Business to business (B2B) companies
• Swiss-based companies
• Homogeneous companies

While these criteria guarantee comparability, the companies’ divergent individual branches - printing machines, moving equipment, electrical components, and medical implants - and their different sizes achieve the necessary differentiation for triangulation.

With the express focus on the advisability of customer integration for individual innovation projects and not in general, the case studies each describe a concrete innovation project, termed pilot project, with integrated customers instead of depicting how the companies usually deal with the concept of customer integration. In addition to this main focus, the research also pertains to basic organizational structures that enable the identification of characteristics regarding the assessment of risks and benefits.

Accordingly, the case studies concentrate on the company profile with special regard to customers, on the structure of the innovation process which is the basis for answering several issues in Chapter 3, on the pilot project as central unit of analysis, and on the companies’ ex post evaluation of both the pilot project and the value added by customer integration.