These days, when companies set out to innovate, integrating customer input into the various phases of the process – from idea generation through to implementation – is a must. However, they will choose to focus on ‘proactive’ or ‘reactive’ forms of customer-integration during the different phases of the development process.

Innovation Development: Customer Co-Creation Works Differently at Different Stages

Involving the customer in the process of developing new products and services is likely to improve creative output, and companies are increasingly adopting this strategy. This approach should of course be carefully thought through, as it can also harm innovativeness if a company follows its customers too slavishly – especially when they only manage to come up with old ideas – and so fails to come out with any really new, innovative products and services. Companies therefore need to know at which stage it is appropriate to bring the customer into the process and when they ought to retain full control.  This is the conclusion drawn by Alex da Mota Pedrosa, a researcher at the University of Southern Denmark, after examining four cases (Diesel, Edison, Westinghouse, Einstein) to see how these companies have integrated customer input during the various stages of their service development processes. The three stages identified by Pedrosa are firstly the ‘idea generation’ stage, where a company demonstrates its ability to identify the current and future needs of customers who want more from the company. These needs must be transformed into concrete ideas for creating new services.

Customer orientation: proactive or reactive integration?

Second comes the development phase, which is when an idea is transformed into an innovative concept with the aim of launching it onto the market. The third phase, implementation, provides the opportunity for final testing before launch. The University of Southern Denmark researcher found that ‘proactive’ customer integration during the idea generation phase helped the companies under study to identify latent customer needs. In the development phase customers contributed to refining the concept and testing out the given innovation. In the implementation phase as well customers often helped to point up needs which up to that moment had not been apparent. Sometimes companies even work in joint-venture mode with their customer. This helps to establish a genuine partner relationship as companies commit to working proactively with customers to identify and understand their underlying needs.

Getting employees involved

What Alex da Mota Pedrosa calls ‘reactive’ customer integration means obtaining customers’ assessments of their own needs as filtered through company staff.  This can be very useful during the ideas generation phase, he found.  However, during the actual development stage, the four companies analysed tended to refrain from such ‘reactive’ customer feedback. The reason is simple: customers in general are just not aware of the full potential offered by new technologies. Once into the implementation phase, where testing out the new service is crucial, customers are then more able to assess the strengths and weaknesses of a proposed innovation. However, companies still need to be able to distinguish between needs that must be met now, and those which can be addressed later on.  Pedrosa stresses that it is vital to consult the employees and integrate them into the innovation process at the right moment – especially staff who are in direct contact with customers and are therefore usually aware of customers’ needs – as this will increase the likelihood of success.