POTENTIAL OF SOCIAL MEDIA IN THE CUSTOMER

INTERFACE OF INNOVATION PROCESS

EBRF 2010

10th Annual EBRF “Research Forum to Understand Business in Knowledge Society”

Conference – Co-creation as the way forward

Nokia, Finland

Jari Jussila, Tampere University of Technology

Hannu Kärkkäinen, Tampere University of Technology

Hanna Nordlund, Technology Centre Innopark Ltd

1

Background

• According to a number of so called “success factor studies” of innovation, one of

the most frequently recognized very central drivers (maybe the most commonly

recognized essential individual driver) contributing to the success in innovation

and new product development is the good, in-depth understanding of customer

and market needs (e.g. Barcley, 1992; Rothwell, 1974; Cooper, 1993; Hart et

al., 1999)

• It has been suggested that customers, especially users, are becoming “the

developers” or “the innovators” who can dominate even whole innovation processes

in search for products that fit their needs exactly

• The notion of co-creation is based on idea of working closely with customers. It is

assumed that when a customer is involved as a co-producer, the interaction

between the parties should generate more value in terms of new knowledge and

ideas gained than a traditional transaction process. Co-creation is also expected to

lead to better identification of customer needs.

• Social media can provide novel and useful ways of interacting and collaborating in

innovation, as well as for creating new information and knowledge for innovations

(Barker, 2008; Bernoff & Li, 2008; Cachia et al. 2007), which have not yet been

much investigated because of the novelty of social media concepts and approaches,

and simultaneously, the possibilities of social media are not yet fully understood in

the context of innovation

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Perspective on Innovation

3

Product concept Launch

•Identifying lead users

•On-line communities,

networking employees, users

and customers

•Identifying market trends

•prediction markets

•lead users

•”trend communities”

•User toolkits

• Problem and solution

marketplaces

•Competitions and voting

•Making use of lead users and

online communities

•Testing concepts (for example

on-line communities and virtual

communities, such as Second

Life)

•Voting

•Feedback from new products

(e.g. business intelligence and

data mining techniques)

•User toolkits

•Customization of products

Definition of Social Media and Web 2.0

• Web 2.0 means technologies that enable users to communicate,

create content and share it with each other via communities,

social networks and virtual worlds, making it easier than before,

as well as to have real life experiences in virtual worlds and

to organize content on the internet with content aggregators

(Lehtimäki et al., 2009)

• Social media can be defined as “A group of Internet-based

applications that build on the ideological and technological

foundations of Web 2.0, and that allow the creation and

exchange of user-generated content” (Kaplan & Haenlein, 2009)

• Furthering this, social media is referred to as applications that are

either fully based on user-created content, or in which user-

created content or user activity have a significant role in

increasing the value of the application or the service (Kangas et

al., 2007)

4

Research aims

to study the potential of social media in facilitating the customer

interaction and the creation of customer understanding in the

innovation process

to understand, more specifically,

• how (Finnish) companies perceive the applicability and the

benefits of using social media in the customer interface of

innovation

• how significant opportunities social media is perceived to give

to involving customers in innovation

• how large potential social media is perceived to offer in the

different forms of customer interaction, and

• in which ways social media can support the acquisition of

customer needs related knowledge

5

Research design

• A systematic literature review on social media in innovation

and customer interface contexts was performed

• A questionnaire was designed to study social media potential

and use in the above mentioned context utilizing found

social media related literature, survey- type empirical social

media studies, as well as several social media expert

interviews

• A sample of 1984 Finnish decision makers from companies

with more than 50 employees were surveyed

• Persons working in companies employing more than 50

employees in either research and development or product

design.

• 74 responses were received to the email invitation letter in two

weeks time period, the effective response rate thus being 3.7 %

(74/1984)

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International studies, e.g.

• McKinsey Global Survey ”Building the Web2.0 Enterprise” 2008, 2009

• Forrester ”The Social Technographics of Business Buyers” 2009

• Social Media Today “The Coming Change in Social Media Business

Applications” 2009

• Social Media marketing industry report “How Marketers Are Using Social

Media to Grow Their Businesses” 2009

• Carabiner Communications “Social Media: How B2B Companies can

connect” 2009

• Emarketer “B2B Marketing on Social Networks: Engaging the Business

Audience”

• …

Completely or mostly lacking innovation perspective, customer knowledge

creation perspective or B2B-perspective

0% 10% 20% 30% 40% 50% 60%

Weak signals

Trends

Visionary and radically new product concepts

Customer needs and requirements

New product attributes

Feedback from preliminary product concepts thathave not been launched

User experiences from launched products

How significantly can social media support the acquisition of the following types of customer need –related information?

Little or very little

Moderately

Much or very much

Potential of social media in the

acquisition of different types of customer

need –related information

8

Future- orientation of

related customer knowledge

N = 74

0% 10% 20% 30% 40% 50% 60%

Passing product or service marketingrelated information to customers

Collecting customer information tosupport product development

The company's and it's customersmutual interaction

The company's and the customercommunities mutual interaction

Offering products and services tocustomers for them to develop

products themselves

Little or very little

Moderately

Much or very much

Potential of social media in different

types of customer interaction

9

N = 74

Depth of

customer interaction

Prerequisites for Social Media Use in

B2B Companies

10

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

My company has skilled staff to support social media use

My company has social media guidelines

Training has been provided for social media use

The use of social media is allowed in my company

Prerequisites for Social Media Use in B2B Companies

agree or completely agree neither agree or disagree disagree or completely disagree

in the studied B2B companies almost half, 44.0 % expressed that the use of social media was allowed in their companies

Social Media Use in B2B Companies

11

0,0 % 10,0 % 20,0 % 30,0 % 40,0 % 50,0 %

Social Media Use in B2B Companies

completely agree

agree

neither agree or disagree

disagree

completely disagree

11.0 % of B2B companies agreed (either completely agreed or agreed) that social media was used in their companies

Social Media Use vs. Potential in

Innovation Process Phases

0% 20% 40% 60% 80% 100%

Social media use in collaborationwith other outside organizations

Social media use in collaborationwith product development /

innovation partners

Social media use in collaborationwith customers

Social media use in internalinnovation

Social media use in innovation

rather much or very much somewhat rather little or very little

12

0% 20% 40% 60% 80%

Launch/commercializationphase

The product development phase

The front-end phase

Potential of Social Media in Innovation Process Phases in

B2B Companies

rather much or very much somewhat rather little or very little

0% 20% 40% 60% 80% 100%

Social media offers significant newopportunities to develop the

organizations activities in general

Social media offers significant newopportunities to develop innovation

activity

Social media offers significant newopportunities in discovering

customer demands

Social Media Opportunies in Development of B2B Companies

significant or very significant moderately significant

of little significance or unsignificant

Social Media Use vs. Opportunities in

Development

0% 20% 40% 60% 80% 100%

Social media use in collaborationwith other outside organizations

Social media use in collaborationwith product development /

innovation partners

Social media use in collaborationwith customers

Social media use in internalinnovation

Social media use in innovation

rather much or very much somewhat rather little or very little

13

Social Media Use vs. Innovation Results

0% 20% 40% 60% 80% 100%

Social media use in collaborationwith other outside organizations

Social media use in collaborationwith product development /

innovation partners

Social media use in collaborationwith customers

Social media use in internalinnovation

Social media use in innovation

rather much or very much somewhat rather little or very little

14

0,0 % 20,0 %40,0 %60,0 %80,0 %100,0 %

Social media can save costs

Product development time can beshortened with the help of social

media

Social media can be used to increasecustomer orientation

Social media can help in improvingquality

Social Media in Improving Results of Innovation Activity in B2B

Companies

rather much or very much somewhat rather little or very little

0 10 20 30 40 50 60 70 80

Failed experiments or bad experiences

Inadequate financial resources

Difficulties in integrating to existing information systems

Inadequate time resources

Difficulties in applying to current innovation process

Inadequate personnel resources

Security issues

Lack of case evidence

Difficulties in adopting new mental models and practices

Difficulties in assessing financial gains

Lack of understanding of the possibilities of social media in innovation

Challenges of Adopting Social Media in

Innovation Activity

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