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Journal ArticleDOI

Shifting Innovation to Users Via Toolkits

TL;DR: In the traditional new product development process, manufacturers first explore user needs and then develop responsive products as discussed by the authors, and the traditional approach is coming under increasing strain as user needs change more rapidly, and as firms increasingly seek to serve "markets of one." Toolkits for user innovation is an emerging alternative approach in which manufacturers actually abandon the attempt to understand user needs in detail in favor of transferring needrelated aspects of product and service development to users.
Abstract: In the traditional new product development process, manufacturers first explore user needs and then develop responsive products. Developing an accurate understanding of user needs is not simple or fast or cheap however, and the traditional approach is coming under increasing strain as user needs change more rapidly, and as firms increasingly seek to serve "markets of one." Toolkits for user innovation is an emerging alternative approach in which manufacturers actually abandon the attempt to understand user needs in detail in favor of transferring need-related aspects of product and service development to users. Experience in fields where the toolkit approach has been pioneered show custom products being developed much more quickly and at a lower cost. In this paper we explore toolkits for user innovation and explain why and how they work.

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Citations
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Journal ArticleDOI
TL;DR: This work conceptualizes a firm's business model as a system of interdependent activities that transcends the focal firm and spans its boundaries and suggests two sets of parameters that activity systems designers need to consider: design elements and design themes that describe the architecture of an activity system.

2,404 citations

01 Jan 2003
TL;DR: In this article, the authors focus on the design of an organization's set of boundary-spanning transactions and ask how business model design affects the performance of entrepreneurial firms and propose hypotheses about the impact of efficiency-centered and novelty-centered business models on the performance.
Abstract: We focus on the design of an organization's set of boundary-spanning transactions---business model design---and ask how business model design affects the performance of entrepreneurial firms. By extending and integrating theoretical perspectives that inform the study of boundary-spanning organization design, we propose hypotheses about the impact of efficiency-centered and novelty-centered business model design on the performance of entrepreneurial firms. To test these hypotheses, we developed and analyzed a unique data set of 190 entrepreneurial firms that were publicly listed on U.S. and European stock exchanges. The empirical results show that novelty-centered business model design matters to the performance of entrepreneurial firms. Our analysis also shows that this positive relationship is remarkably stable across time, even under varying environmental regimes. Additionally, we find indications of potential diseconomies of scope in design; that is, entrepreneurs' attempts to incorporate both efficiency-and novelty-centered design elements into their business models may be counterproductive.

1,209 citations

Journal ArticleDOI
TL;DR: In this paper, a conceptual framework that focuses on the degree of consumer cocreation in new product development (NPD) is presented. And the authors examine the major stimulators and impediments to this process, as well as the impact of cocreations at each stage of the NPD process.
Abstract: The area of consumer cocreation is in its infancy and many aspects are not well understood. In this article, we outline and discuss a conceptual framework that focuses on the degree of consumer cocreation in new product development (NPD). The authors examine (a) the major stimulators and impediments to this process, (b) the impact of cocreation at each stage of the NPD process, and (c) the various firm-related and consumer-related outcomes. A number of areas for future research are suggested.

1,186 citations

Journal ArticleDOI
TL;DR: In this article, the authors examine the activity of firms in open source software to support their innovation strategies and identify four strategies firms employ to address the three key challenges of open innovation: finding creative ways to exploit internal innovation, incorporating external innovation into internal development and motivating outsiders to supply an ongoing stream of external innovations.
Abstract: Open innovation is a powerful framework encompassing the generation, capture, and employment of intellectual property at the firm level. We identify three fundamental challenges for firms in applying the concept of open innovation: finding creative ways to exploit internal innovation, incorporating external innovation into internal development, and motivating outsiders to supply an ongoing stream of external innovations. This latter challenge involves a paradox, why would firms spend money on R&D efforts if the results of these efforts are available to rival firms? To explore these challenges, we examine the activity of firms in open source software to support their innovation strategies. Firms involved in open source software often make investments that will be shared with real and potential rivals. We identify four strategies firms employ — pooled R&D/product development, spinouts, selling complements and attracting donated complements — and discuss how they address the three key challenges of open innovation. We conclude with suggestions for how similar strategies may apply in other industries and offer some possible avenues for future research on open innovation.

1,051 citations

07 Jul 2004
TL;DR: In this paper, the authors identified three core open innovation processes: (1) the outside-in process: Enriching a company's own knowledge base through the integration of suppliers, customers, and external knowledge sourcing can increase the company's innovativeness; (2) the inside-out process: The external exploitation of ideas in different markets, selling IP and multiplying technology by channelling ideas to the external environment.
Abstract: Open Innovation is a phenomenon that has become increasingly important for both practice and theory over the last few years. The reasons are to be found in shorter innovation cycles, industrial research and development's escalating costs as well as in the dearth of resources. Subsequently, the open source phenomenon has attracted innovation researchers and practitioners. The recent era of open innovation started when practitioners realised that companies that wished to commercialise both their own ideas as well as other firms' innovation should seek new ways to bring their in-house ideas to market. They need to deploy pathways outside their current businesses and should realise that the locus where knowledge is created does not necessarily always equal the locus of innovation - they need not both be found within the company. Experience has furthermore shown that neither the locus of innovation nor exploitation need lie within companies' own boundaries. However, emulation of the open innovation approach transforms a company's solid boundaries into a semi-permeable membrane that enables innovation to move more easily between the external environment and the company's internal innovation process. How far the open innovation approach is implemented in practice and whether there are identifiable patterns were the questions we investigated with our empirical study. Based on our empirical database of 124 companies, we identified three core open innovation processes: (1) The outside-in process: Enriching a company's own knowledge base through the integration of suppliers, customers, and external knowledge sourcing can increase a company's innovativeness. (2) The inside-out process: The external exploitation of ideas in different markets, selling IP and multiplying technology by channelling ideas to the external environment. (3) The coupled process: Linking outside-in and inside-out by working in alliances with complementary companies during which give and take are crucial for success. Consequent thinking along the whole value chain and new business models enable this core process.

1,018 citations

References
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Journal ArticleDOI
TL;DR: In this paper, the authors argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities.
Abstract: In this paper, we argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. We label this capability a firm's absorptive capacity and suggest that it is largely a function of the firm's level of prior related knowledge. The discussion focuses first on the cognitive basis for an individual's absorptive capacity including, in particular, prior related knowledge and diversity of background. We then characterize the factors that influence absorptive capacity at the organizational level, how an organization's absorptive capacity differs from that of its individual members, and the role of diversity of expertise within an organization. We argue that the development of absorptive capacity, and, in turn, innovative performance are history- or path-dependent and argue how lack of investment in an area of expertise early on may foreclose the future development of a technical capability in that area. We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry. Discussion focuses on the implications of absorptive capacity for the analysis of other related innovative activities, including basic research, the adoption and diffusion of innovations, and decisions to participate in cooperative R&D ventures. **

31,623 citations

Book ChapterDOI
TL;DR: In this article, the determination of optimal resource allocation for invention will depend on the technological characteristics of the invention process and the nature of the market for knowledge, which is interpreted broadly as the production of knowledge.
Abstract: Invention is here interpreted broadly as the production of knowledge. From the viewpoint of welfare economics, the determination of optimal resource allocation for invention will depend on the technological characteristics of the invention process and the nature of the market for knowledge.

7,747 citations

Journal ArticleDOI
TL;DR: The impact of information stickiness on the locus of innovation-related problem solving is explored and it is found that when sticky information needed by problem solvers is held at one site only, problem solving will be carried out at that locus, other things being equal.
Abstract: To solve a problem, needed information and problem-solving capabilities must be brought together. Often the information used in technical problem solving is costly to acquire, transfer, and use in a new location-is, in our terms, "sticky." In this paper we explore the impact of information stickiness on the locus of innovation-related problem solving. We find, first, that when sticky information needed by problem solvers is held at one site only, problem solving will be carried out at that locus, other things being equal. Second, when more than one locus of sticky information is called upon by problem solvers, the locus of problem solving may iterate among these sites as problem solving proceeds. When the costs of such iteration are high, then, third, problems that draw upon multiple sites of sticky information will sometimes be "task partitioned" into subproblems that each draw on only one such locus, and/or, fourth, investments will be made to reduce the stickiness of information at some locations. Information stickiness appears to affect a number of issues of importance to researchers and practitioners. Among these are patterns in the diffusion of information, the specialization of firms, the locus of innovation, and the nature of problems selected by problem solvers.

3,828 citations

Posted Content
TL;DR: In this paper, the authors discuss and promote Karl Marx's influential method of studying technology as the result of interrelated social processes, emphasizing the mutual interaction between technology and the economy, and conclude that scientific progress is heavily influenced by technological considerations that are, in turn, shaped by industry and economics.
Abstract: Explores how technological innovation has shaped and been shaped by science, industry, and economics in the twentieth century. Technological change and specific technologies have impacted productivity, the learning process, technology transfer and technology policies. Starting with a summary of historical literature on technical progress, the book goes on to discuss and promote Karl Marx's influential method of studying technology as the result of interrelated social processes -- especially emphasizing the mutual interaction between technology and the economy. Analysis of current empirical studies shows the need for an enlarged framework for understanding the relation between the economy and technical change. Technological interdependence in the American economy is analyzed, and later expanded to encompass international business. High-tech industries are discussed as particularly reliant upon scientific research. The commercial aircraft industry from 1925-75 is also examined, as an exemplary instance in which technological innovation and government support and regulation allowed for economic success. The book concludes that scientific progress is heavily influenced by technological considerations that are, in turn, shaped by industry and economics. Thus, decisions made in the private and public sectors should affect both supply and demand, favoring the creative, mutually advantageous connection between science and technology. (CJC)

3,181 citations

Book
Suresh Kotha1
01 Oct 1992
TL;DR: The authors reviewed the book "Mass Customization: The New Frontier in Business Competition" by B. Joseph Pine II and found it to be a good introduction to the field of customization.
Abstract: The article reviews the book “Mass Customization: The New Frontier in Business Competition,” by B. Joseph Pine II.

2,805 citations