Monday, July 10, 2006

Innovating with rather than for customers

Managing the knowledge an organization receives, shares, and even creates with its customers is salient for sustaining a viable innovation process. Organizations have moved from innovating for customers to innovating with customers (Desouza and Awazu, 2004a, 2004b, 2005). ICTs have played a major role in enabling organizations to better connect with their customers. For example, through the use of data mining algorithms it is possible to study how products and services are being utilized by customers. Latent trends in the marketplace can be uncovered. The use of ICTs has also fostered the development of customer communities. Firms, such as Lilly CCE, have created online communities for their customers to interact with each other in order for them to share knowledge (Erat et al., Forthcoming). In previous research (Desouza and Awazu, 2004a, 2004b, 2005) we identified that organizations need to manage three types of knowledge from customers:

Knowledge about customers: Knowledge about customers mainly consists of the demographic, psychographic, and other indicators that provide the organization with an understanding of who are the customers, what do they like, what is their spending propensity, etc. This knowledge is used to help organizations better target products and services.

Knowledge to support customers: Think customer call centers or virtual help desks! As customers interact with the products and services they might have knowledge needs that need to be addressed, for e.g. how to use a particular feature, why isn’t the product being installed, how to file a complaint, etc. Knowledge use to support customer interactions with the products and services is normally of an operational and procedural nature. Organizations need to leverage each interaction with their customers in order to understand areas for future product developments, service enhancements, etc. In another research study (Jha, Papagari, Desouza, Seo, and Ye, 2006) we examined how handling of customer interactions during the complaint management process can impact one’s intention to repurchase.

Knowledge from the customers: SPSS, among other companies, have begun to host customer workshops, where they bring in the super users of their products and learn from them. Some organizations have product research centers where they monitor subjects as they interact with products and services, so that they can learn from them. It is absolutely essential that an organization tap into knowledge from customers so that they can begin to co-create value with their customers. For example, some software development firms purchase add-ons, scripts, and other artifacts that are created by their customers during the course of using their products. These artifacts are then introduced in future versions of the products and services.

[Summary prepared by: Kevin, Sanjeev, and Yukika]

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