by Zakiya Moulvi
Based on research by Marion K. Poetz and Martin Schreier from Copenhagen Business School.
In this ferociously competitive business world, innovation is believed to be the cornerstone of success. Businesses require a constant flow of innovative and progressive ideas not only to succeed but also to survive in the marketplace. But where do these smart ideas come from?
Until recently, idea generation for new product development was a prerogative of product managers, engineers, designers and researchers, but with the focus shifting toward a more customer-centric approach, companies are increasingly looking outwards, even to their own audiences, to get new product ideas. This process of gathering creative ideas from the actual users or crowd is known as crowdsourcing.
New methods for idea generation
Ideas are the building blocks of successful products and services. A great idea can change the fortune of a company. Quite often, these ideas are generated internally by engineers and designers. A new idea may be based on the market research reports, or it could be a brainchild of the creative people in the company.
The second and more recent approach of finding new ideas is to take inputs directly from the users. Users may either offer needs-based information (i.e., their unmet demands), or they may go a step ahead and offer solution-based information (i.e., how their demands can be best met). The latter is the case of crowdsourcing.
The ideas generated through various sources are usually rated on three parameters:
- Novelty: Is there a similar product already available in the market?
- Feasibility: How easily can the idea be developed into a successful product?
- Customer benefit: What can the individual expect from the product?
Several successful companies have been able to do wonders in the marketplace with the help of crowdsourcing. Did you know that Apache, maker of the most the most widely used secure Web server software in the world, has relied heavily on customer inputs for product development? And this is not a lone case: Dell, BBC, Boeing, Adidas and several other corporate giants have taken to crowdsourcing for making big leaps in new product development.
Crowdsourcing vs. Internal Innovation
Now the big question: Can the users really contribute ideas that are as good as the ones that come from professionals?
One of the most relevant and conclusive studies in this regard was conducted by Poetz and Schreier from Copenhagen Business School. Published in January 2012, it involved the evaluation of ideas from professionals internal to the company, in comparison to the ones from the firm’s customers. Bamed/MAM group, a leading multinational company in the baby products segment with over 63 patents to its credit, was chosen for the purpose of study.
As a general product development practice, Bamed/MAM would conduct market research to find out unmet needs. The internal team then generated ideas for product development. But for the purpose of research, ideas were invited from the internal team as well as the users. After ideas from both groups were evaluated, some convincing results came to the fore:
- Ideas from users ranked significantly higher in terms of novelty compared to the ones from professionals (of 22 ideas rated highly novel, only six were from professionals)
- The ideas that users submitted promised far higher levels of customer benefit
- Users gave ideas that were less feasible, but with some effort it was possible to develop them
- Of the 6 ideas that were ranked best in terms of feasibility, customer benefit and novelty, the ones from users ranked significantly higher on all parameters except feasibility (though the mean difference was not significantly higher).
- Based on the findings of this study and a review of literature on new product development, here are some pros and cons of using each of two sources of innovative ideas:
| Conventional approach | Crowdsourcing | |
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| Cons |
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Bottom line: user interaction
As the Bamed/MAM group study indicates, users should be actively involved in idea generation for new product development. Crowdsourcing is a great way to generate innovative and valuable ideas for new product development unless you are dealing with a product that is too technical for its own users.
