Product and process innovation generates major revenue for European companies. It is often their customers’ ideas that inspire them to launch new products.

Innovation: Companies Increasingly Involving their Customers

Are European companies setting a good example when it comes to product innovation? The answer, according to a recently published report by the Finnish public authority for statistics, is yes. Surveying a sample of enterprises in the manufacturing sectors and in certain services with at least ten employees, Statistics Finland found that 15% of their total turnover in 2010 came from product innovations which had been launched on the market during the 2008-2010 period. During that same period, 46% of the enterprises polled had engaged in innovation activity related to products and processes. And what is perhaps most interesting is that, according to the survey, the companies’ customers were one of the main drivers of innovation. The findings reveal that more and more companies are drawing on information from their customers on their needs in order to bring new products and services to market faster. The vast majority of those enterprises which had engaged in innovation activity reported that they had incorporated user information or users’ product ideas into their innovation activities and creation of innovative products.

Healthcare and social work too

The report reveals that as an enterprise grows in size, it starts to draw more and more on information from customer feedback systems, market surveys or studies of user needs, etc, and to engage in joint development with users. However, the integration into production of products modified or developed by users is nearly equally widespread irrespective of company size. This survey looked for the first time at innovation activity in the fields of healthcare and social work. It found that the proportion of enterprises in these fields that had made product or process innovations during the period was 44%, i.e. almost the same as the average for other industries. However these enterprises reported engaging in activities such as outsourcing of expertise and training related to innovation activity more frequently than companies in other sectors. In all, companies in the health and social work fields reported expenditure on innovation activity totalling €80 million in 2010.

Launching new products

Taken together, the companies surveyed reported innovation expenditure totalling €7.3 billion in 2010. Nearly half said they had adopted marketing or organisational innovations and 57% had engaged in broadly-defined innovation activity. However, between 2008 and 2010, the general characteristics of innovation activity relating to products and services remained unchanged from the 2006-2008 period, the survey indicated. A third of the companies had launched product innovations on the market and 60% of these enterprises had brought out products that were new to their market, with one enterprise in six that had made product innovations claiming to have brought to market an innovation with characteristics that were a worldwide ‘first’.