past decade, an increasing number of firms have started actively to involve customers, suppliers and other parties in product and process innovation;
innovate with the aid of customers, suppliers, universities, competitors (Kruse, 2012), public research centres, competitors, groups of product users (Duarte and Sarkar, 2011), development
knowledge is generated by the employees, business partner, customers, consultants, competitors business associations, internet sales and service units, internal research and development units and
with other enterprises, universities, public research institutes, suppliers, customers and competitors in the EU-27.
followed by customers (respectively, 17%and 14%of innovative firms), while the least common co-operation occurred with universities and research institutions (9%)(Mention, 2011
dilute the firm†s focus at the expense of its customers. Increased attention to outbound open
Opening the boundaries of a company by incorporating knowledge generated by customers suppliers, education institutions, consulting agencies leads to intellectual capital development
The constant changing needs of the customers pose a significant challenge on firm in their
the firm†s focus at the expense of its customers. Increased attention to outbound open innovation
but customers adopt -ing. †This statement perfectly characterises the shift in mindset that is a hallmark of OI2.
or customers, in the development of innovative solu -tions. An engagement platform provides the necessary environment,
it is customers adopting. †In OI2 there is purposeful effort focused on driving adoption of innovations
gies of the great customers and clients of innovation Forget for a while about the Samuel Morses, Thomas
what customers adopt. †Pia Erkinheimo-Mennander, Head of Innovation Crowdsourcing at Nokia, explains (3:
tagged with RFID smart labels and the customers who volunteered to be participants could use NFC
sense to the customers, who will experience this as an extension of the integrated system of a financial
Hemfrid now has 10 000 regular customers and 1 326 employees, 70%of them born abroad
product to customers It is believed often that novel products †just pop out†of laboratories.
and customers with their needs and aspirations need to be integrated by entrepreneurs who are able to create value
•Lead customers •Expert professors •Mixed team (technicians+MBA /entrepreneurs •Coaches •Business/Management frameworks
Whether as customers, employees, managers financiers, partners, or citizens in communities every stakeholding individual can bring capital to
-vices to their customers. Over time, Onstar has evolved as GM has learned more about the broader
which customers can enjoy personalised co-creation experiences that make driving more entertaining, informative, con
and served customers, there are other key stakeholders such as public/private sector banks, non-banking finance corporations
prove that customers will make them a reality. This is a challenge which Cityzen Sciences and Cityzen
-tial customers is of tremendous value, as it allows market value, size assessment and direct product
an online platform to permit its customers to sell their used Patagonia products to those who might
customers) before the venture even goes to market and in some cases, before the product even goes
of customers already exist. This new mix of the col -lective creative with productive capacity and execu
and active customers to share, combine and renew each other†s resources and capabilities to create
with customers when Intuit customer service teams began experimenting with online support forums moderated by enthusiast employees.
-oration, customers are able to purchase innovative products from a household brand †and with that
services to suit the tastes of the Finnish customers and negotiating on the terms of the how it could be
of customers in a market that was claimed to be impossible †mostly by the traditional, nationally
and appealing to the customers. To continue with the solution however required consents from sev
relations between the company, its customers and advertisers, and all their internal relations, rights and obligations.
sales, all in real life and with real customers. Based upon quantified results, the experiments determine what the strategy will be
increasing interconnectedness of customers (Tidd and Bessant, 2005), companies depend on their ability to innovate in order to achieve competitive advantage
customers and external experts into their innovation processes (Mckinsey, 2008. It has been suggested that this open innovation approach, especially
customers (Tidd and Bessant, 2005; Chesbrough 2007) have supported a paradigm shift toward an open approach to innovation which includes â€oe †the
external relationships with suppliers, customers universities and R&d labs for technology scouting and idea sourcing show a higher innovation
â€oeoften customers come to us with a specific problem and we find an adequate solution for them. â€
â€oeour customers have a lot of good ideas, which is why most of the time they take action
promotions aimed at targeted customers Interviewee 1: â€oewe are actively using our home page to illustrate our products
potential customers about our services. We are very happy about the results we achieve with this tool. â€
customers and to perfectly respond to their needs Not only managers are the driving forces behind the
customers, employees and other corporations are accepted as sources for invention. This study supports theoretical assumptions, which point out
customers by leveraging their partners†or other organizations†different competencies. In other words 11 open innovation creates new business opportunities for SMES
for customers. Several firms faced rapidly increasing commoditization in their product markets and had to find new ways to create value for existing or new customer groups.
for customers in new ways and to create a more profitable business. The analysis of the business
A business model defines the way companies deliver value to a set of customers at a
ways to create value for customers. Business success comes from satisfying real, although frequently latent customer needs,
existing flavours at reduced costs to customers in the flavour and flagrance market. The value
growing need in Western societies and that customers would be willing to pay a premium for high
considered the value proposal that the company makes to its potential customers. QOD offers customers a new meaning to the product of quilts.
Quilts have always been considered a product that keep people comfortably warm in bed. By their nature,
because the customers were not able to envisage that the properties of a functional quilt such as TEMPRAKON could actually benefit their ability to sleep well.
product to deliver value to customers in a way they could not anticipate themselves Curana (see p 24) is another example that illustrates how developing a new business model is a
what customers might value. Business model innovations start with articulating a customer value proposition 17
managers underlined that creating value for customers is the first and most important element in
developed by questioning existing customers. In many cases, this would be a good recipe for
New offerings can create value for customers in different ways. A company might increase the
the company can offer more convenience to the customers; or the company can reduce costs and thus the price of a product or service.
several of the successful SMES we analysed preferred to offer genuine experiences to their customers
customers. Commoditization makes it increasingly difficult for SMES to operate profitably in established markets where scale and scope economies become the dominant driver to gain and
B†Lite as an ODM for the Accell Group, one of its major customers. Although growth and profitability
producing accessories according to specifications and prices customers set. Moving from an OEM to an ODM allowed Curana to set its own price
customers producing products with a customized design. Being an ODM would not differentia te Curana from other ODMS, however.
Their innovation adds value to customers and helps retailers reduce costs. In fashion, rent is the most important cost factor.
customers could experience shopping and buy fashion in a novel way. Nor is optimized shopping from
customers cannot check whether the clothes they are buying in the shop really coordinate with those
After scanning, customers see themselves on large screens as a virtual, three-dimensional model dressed in clothes from various collections that the
Customers can also be welcomed by a stylist with whom they discuss their personal style, but the software also can make choices for the customer depending in the
and evaluate the clothes the customers selected before they purchase. This process is called †istylingâ€.
Customers experience an additional advantage: purchases are stored in a personal, virtual wardroom, which can be consulted any time.
Moreover, customers can see online at home how they might look in a new collection.
Stylists even guide their customers through a t ransforming or restyling experience subsequently changing, adapting, or upgrading prior dressing habits to professional standards
oriented into more profitable business models based that generate experiences for customers. The role of open innovation is not in business model innovation is discussed not here.
customers and was highly profitable for the company Changes on the demand side, however, are sometimes slow and steady.
and lead-customers. New technologies thus offer opportunities for small firms even in the so-called low-tech industry such as textiles, furniture, bicycles, food, and so on
plastics packaging company that continuously identifies new packaging needs among its customers 33 For many other companies, Segers is preferred a supplier
customers will only buy a technology product when the new technology has been proven, complexity has been reduced,
what customers need from technology that is available from different types of knowledge partners. Small firms are successful as innovation
solve a problem for their customers. Their relational capital is crucial in explaining their success as
what customers might value. Business model innovations start with articulating a customer value proposition ï Creating customer value through game-changing
usually not be developed by questioning existing customers ï Sometimes, the business model is straightforward. In the other cases, conceptualizing and
products for the customers. SMES may also wrap additional services around their product or offer genuine experiences to the customers
ï Turning businesses under the threat of commoditization into genuine experiences for customers is a difficult target for SMES
but it is one of the most profitable strategies in the long term and a way to gain more power in the industry
to customers o Small companies may offer completely new experiences for customers. These radically new ways of offering value for customers takes time to develop and there are
too many unknowns at the outset to guarantee a market big enough to attract big
companies 35 Figure 4: Case Segers & Balcaen 36 37 3 A dynamic view on business model innovation
attention to the role of customers and innovation partners in this process. Finally, several SMES have
The customers (manufacturers) determined the prices, and the company could not add value because the product was easy for other bike accessory manufacturers
of the product and price reverted to Curana based on the premium customers want to pay for a unique
Customers started to realize that Curana was becoming an important partner for their own success. Over the years, Curana
to promote its new ideas among potential customers. In this way, the company r eceived valuable
feedback from potential customers. Realization is the fourth step. For Curana, this step started with
potential customers is delayed until a later stage in the process. Customers are still important, but they
are not driving the company†s innovation strategy. Through this strategy, Curana created bike accessories that were unique to the industry.
customers) further by switching to a proactive innovation strategy. This change in strategy gave the
company more degrees of freedom to act (customers were no longer taking the initiative) and resulted
spent significant energy educating customers about how to make the fries tasty and crispy in an
essentially, customers had to learn to fry again because hot air frying differs from frying in
customers via its My Kitchen Web site, different customers are already experimenting with new ingredients, meals, and so on.
and the Airfryer, explaining to customers how they could optimize the device for several frozen snacks
The food separator allows customers to fry an entire me al and can inspire snack producers to develop different combinations with the same frying time as a ready-to
Air Technology present only emerged after customers started to use the device and when other
customers. The most interesting example in this respect is Curana. Although the company changed significantly in the last decade, it has always been focusing on providing solutions for bike
including its customers. Outside that open innovation network, the company cannot rely on its reputation and it has to start from scratch to build its network
of partners and customers 27 Open innovation networks thus enable a company to deliver value in
completely new ways to its customers. They also, however, keep the company tied to the existing
innovation partners and customers. In a phrase, innovation networks enable, but they also bind Devan also shows a similar pattern of moving from one product category to another.
of customers and applications. Furthermore, the innovation partners were involved in long-term contracts and formed a stable network of trusted partners that had known one another for years or
partners or customers. In several cases, the innovation network is one of the factors that limit the
granted to European companies that use design to create added value for their customers and know
customers, and partners ï Open innovation networks enable a company to deliver value in a completely new ways to its
customers, but they also keep the company tied to the existing innovation partners and customers.
Innovation networks enable, but they also bind ï Small companies must use relatively inexpensive but credible ways to develop a reputation or
Examples†as we have seen in Chapter 2†are reducing costs for customers (e g.,, Isobionics increasing time efficiency, solving problems (e g.,
innovation adventure with a new concept about how to serve customers better. In some cases
customers identified a problem themselves; in other cases, the entrepreneur devised a new concept More radical innovations require more new partners to be introduced into the network.
strong bonds with suppliers, the designer community, knowledge centers, and customers Working with external partners over the length of the value chain (from design to production and sales
which it could transform into extraordinary solutions for its customers. The network was a powerful tool
PROF members (Patient Room of the Future)( see p 59) jointly created value for customers in yet
or services for specific customers 33 PROF is different: It starts from the patient†s room as customer
customers on the other hand is essential for understanding how the company can continue to make profits in this way.
offer customers the experience of a healthy sleep by adding new functionalities. They started with the
-radiators appeal to some customers because they reduce the carbon-footprint of heating houses and buildings.
because some customers value a nicely designed radiator such as the Heatwave (see figure 6). This radiator is developed by an artist
difficult because customers make a clear distinction between companies that offer the authentic experience and those that are copying it 34.
customers. Visiting the showroom has the additional advantage that potential customers can invite different manufacturers at the same time.
In the patient room, products were combined into broader solutions. It is thus necessary to look at the function or role of each product in the context of the room
of the price increase to its customers. †In an innovation network, partners are interconnected and
company grants exclusive designs or products to its customers. In this case, the innovation partners must abide by the exclusivity rules
If direct customers are the target customer, then the innovation network will most likely be small and easy to manage.
customers profoundly ï The combination of different fields of expertise to develop a new offering can lead to attractive
demonstrated to potential customers. The manager of the small company decided to license the technology to large companies active in the kitchen appliances industry that could leverage their
Most customers and health authorities perceive that the Airfryer is a highly innovative product that
which the company brings to potential customers (not necessarily existing ones). A radically new value proposition may offer customers new meaning to the product or service offering
The network of partners: Common in all cases is that the SMES establish a network of external
suppliers of equipment (i), customers (ii), competitors and other firms with similar activities (iii), commercial
Isobionics†customers, notably food manufacturers, can use Biovalenceneâ¢--the first commercialized flavour by Isobionics†to create natural
customers, Harpercollings Publishers, New york Chapter 3 23 See previous chapter for a more detailed description how Curana developed the B†Lite.
Cinematch) at predicting which movies customers will like based on their past preferences. Crowdsourcing contests are also possible for smaller companies †although most likely in smaller, more focused
suppliers, customers, complementors (Nalebuff and Brandenburger, 1996) and other actors in the value system. Moreover, many SMES are active in medium-or low-tech
Customers, employees and other firms are the most common sources of new ideas, but the use of venture capital, outsourcing of R&d and
commercialization costs and by accelerating involving customers into the product development and commercialization process (Gales and Mansour-Cole, 1995.
customers prefer possible future characteristics of products. However, conventional market research methods may not work well in the instance of many industrial goods
Not only customers but also firms'employees can contribute to a firm's overall innovative performance. Both in closed and open innovation paradigms, individual
) Additionally, interaction with suppliers & customers can provide missing external inputs into the learning process
-organizational networks, the involvement of employees and that of customers in the innovation processes seems to be equally feasible for both small and large SMES, the
To address the role of customers, respondents were asked to which degree customers were involved in the innovation process, for instance by
doing active market research, deploying new products which were specified by customers themselves, or producing new products based upon inventions by
customers of users. The survey data contained a summary variable indicating customer involvement, i e. a dummy coded 1
if firms used input from their customers in recent innovation processes To measure the role of employees,
respondents had to indicate to which degree employees were stimulated to contribute to innovation processes, e g. by investing in
public knowledge centers (e g. universities), customers, suppliers, and investors (e g banks, venture capital firms 20 Finally, we looked at the degree firms participate by equity investments in new
of network partners, customers and employees in innovation processes is fairly 21 common among Dutch SMES.
the involvement of network partners, customers and employees in their innovation processes. Some of them also rely on outsourcing of R&d,
customers, increase growth and/or market share Utilization*Optimal use of talents, qualities, and ideas of current employees
with customers. In this case, employee involvement is a valuable source of knowledge in the innovation process
-tion may also include ï nance, human capital, legal advice administrative services, etc. Previous open innovation
customers and evaluating what may be learned from general product development External networking is another important dimension
Directly involving customers in your innovation processes, for example by active market research to check their needs,
rely on the involvement of employees and customers, and external networking, features which are shared with cluster 1
-tion, but even here a majority of ï rms involves customers in their innovation processes.
developments, customers, increase growth and/or market share 3 13 Utilization Optimal use of talents, knowledge
most SMES somehow try to involve their customers in innovation processes by tracking their modiï cations in
innovation practices at the same time to serve customers effectively or to open up new markets, with higher-order objectives to secure revenues and to maintain growth.
-tion may also include ï nance, human capital, legal advice administrative services, etc. Previous open innovation
customers and evaluating what may be learned from general product development External networking is another important dimension
Directly involving customers in your innovation processes, for example by active market research to check their needs,
rely on the involvement of employees and customers, and external networking, features which are shared with cluster 1
-tion, but even here a majority of ï rms involves customers in their innovation processes.
developments, customers, increase growth and/or market share 3 13 Utilization Optimal use of talents, knowledge
most SMES somehow try to involve their customers in innovation processes by tracking their modiï cations in
innovation practices at the same time to serve customers effectively or to open up new markets, with higher-order objectives to secure revenues and to maintain growth.
customers by leveraging their partners†or other organizations†different competencies. In other words 11 open innovation creates new business opportunities for SMES
for customers. Several firms faced rapidly increasing commoditization in their product markets and had to find new ways to create value for existing or new customer groups.
for customers in new ways and to create a more profitable business. The analysis of the business
A business model defines the way companies deliver value to a set of customers at a
ways to create value for customers. Business success comes from satisfying real, although frequently latent customer needs,
existing flavours at reduced costs to customers in the flavour and flagrance market. The value
growing need in Western societies and that customers would be willing to pay a premium for high
considered the value proposal that the company makes to its potential customers. QOD offers customers a new meaning to the product of quilts.
Quilts have always been considered a product that keep people comfortably warm in bed. By their nature,
because the customers were not able to envisage that the properties of a functional quilt such as TEMPRAKON could actually benefit their ability to sleep well.
product to deliver value to customers in a way they could not anticipate themselves Curana (see p 24) is another example that illustrates how developing a new business model is a
what customers might value. Business model innovations start with articulating a customer value proposition 17
managers underlined that creating value for customers is the first and most important element in
developed by questioning existing customers. In many cases, this would be a good recipe for
New offerings can create value for customers in different ways. A company might increase the
the company can offer more convenience to the customers; or the company can reduce costs and thus the price of a product or service.
several of the successful SMES we analysed preferred to offer genuine experiences to their customers
customers. Commoditization makes it increasingly difficult for SMES to operate profitably in established markets where scale and scope economies become the dominant driver to gain and
B†Lite as an ODM for the Accell Group, one of its major customers. Although growth and profitability
producing accessories according to specifications and prices customers set. Moving from an OEM to an ODM allowed Curana to set its own price
customers producing products with a customized design. Being an ODM would not differentia te Curana from other ODMS, however.
Their innovation adds value to customers and helps retailers reduce costs. In fashion, rent is the most important cost factor.
customers could experience shopping and buy fashion in a novel way. Nor is optimized shopping from
customers cannot check whether the clothes they are buying in the shop really coordinate with those
After scanning, customers see themselves on large screens as a virtual, three-dimensional model dressed in clothes from various collections that the
Customers can also be welcomed by a stylist with whom they discuss their personal style, but the software also can make choices for the customer depending in the
and evaluate the clothes the customers selected before they purchase. This process is called †istylingâ€.
Customers experience an additional advantage: purchases are stored in a personal, virtual wardroom, which can be consulted any time.
Moreover, customers can see online at home how they might look in a new collection.
Stylists even guide their customers through a t ransforming or restyling experience subsequently changing, adapting, or upgrading prior dressing habits to professional standards
oriented into more profitable business models based that generate experiences for customers. The role of open innovation is not in business model innovation is discussed not here.
customers and was highly profitable for the company Changes on the demand side, however, are sometimes slow and steady.
and lead-customers. New technologies thus offer opportunities for small firms even in the so-called low-tech industry such as textiles, furniture, bicycles, food, and so on
plastics packaging company that continuously identifies new packaging needs among its customers 33 For many other companies, Segers is preferred a supplier
customers will only buy a technology product when the new technology has been proven, complexity has been reduced,
what customers need from technology that is available from different types of knowledge partners. Small firms are successful as innovation
solve a problem for their customers. Their relational capital is crucial in explaining their success as
what customers might value. Business model innovations start with articulating a customer value proposition ï Creating customer value through game-changing
usually not be developed by questioning existing customers ï Sometimes, the business model is straightforward. In the other cases, conceptualizing and
products for the customers. SMES may also wrap additional services around their product or offer genuine experiences to the customers
ï Turning businesses under the threat of commoditization into genuine experiences for customers is a difficult target for SMES
but it is one of the most profitable strategies in the long term and a way to gain more power in the industry
to customers o Small companies may offer completely new experiences for customers. These radically new ways of offering value for customers takes time to develop and there are
too many unknowns at the outset to guarantee a market big enough to attract big
companies 35 Figure 4: Case Segers & Balcaen 36 37 3 A dynamic view on business model innovation
attention to the role of customers and innovation partners in this process. Finally, several SMES have
The customers (manufacturers) determined the prices, and the company could not add value because the product was easy for other bike accessory manufacturers
of the product and price reverted to Curana based on the premium customers want to pay for a unique
Customers started to realize that Curana was becoming an important partner for their own success. Over the years, Curana
to promote its new ideas among potential customers. In this way, the company r eceived valuable
feedback from potential customers. Realization is the fourth step. For Curana, this step started with
potential customers is delayed until a later stage in the process. Customers are still important, but they
are not driving the company†s innovation strategy. Through this strategy, Curana created bike accessories that were unique to the industry.
customers) further by switching to a proactive innovation strategy. This change in strategy gave the
company more degrees of freedom to act (customers were no longer taking the initiative) and resulted
spent significant energy educating customers about how to make the fries tasty and crispy in an
essentially, customers had to learn to fry again because hot air frying differs from frying in
customers via its My Kitchen Web site, different customers are already experimenting with new ingredients, meals, and so on.
and the Airfryer, explaining to customers how they could optimize the device for several frozen snacks
The food separator allows customers to fry an entire me al and can inspire snack producers to develop different combinations with the same frying time as a ready-to
Air Technology present only emerged after customers started to use the device and when other
customers. The most interesting example in this respect is Curana. Although the company changed significantly in the last decade, it has always been focusing on providing solutions for bike
including its customers. Outside that open innovation network, the company cannot rely on its reputation and it has to start from scratch to build its network
of partners and customers 27 Open innovation networks thus enable a company to deliver value in
completely new ways to its customers. They also, however, keep the company tied to the existing
innovation partners and customers. In a phrase, innovation networks enable, but they also bind Devan also shows a similar pattern of moving from one product category to another.
of customers and applications. Furthermore, the innovation partners were involved in long-term contracts and formed a stable network of trusted partners that had known one another for years or
partners or customers. In several cases, the innovation network is one of the factors that limit the
granted to European companies that use design to create added value for their customers and know
customers, and partners ï Open innovation networks enable a company to deliver value in a completely new ways to its
customers, but they also keep the company tied to the existing innovation partners and customers.
Innovation networks enable, but they also bind ï Small companies must use relatively inexpensive but credible ways to develop a reputation or
Examples†as we have seen in Chapter 2†are reducing costs for customers (e g.,, Isobionics increasing time efficiency, solving problems (e g.,
innovation adventure with a new concept about how to serve customers better. In some cases
customers identified a problem themselves; in other cases, the entrepreneur devised a new concept More radical innovations require more new partners to be introduced into the network.
strong bonds with suppliers, the designer community, knowledge centers, and customers Working with external partners over the length of the value chain (from design to production and sales
which it could transform into extraordinary solutions for its customers. The network was a powerful tool
PROF members (Patient Room of the Future)( see p 59) jointly created value for customers in yet
or services for specific customers 33 PROF is different: It starts from the patient†s room as customer
customers on the other hand is essential for understanding how the company can continue to make profits in this way.
offer customers the experience of a healthy sleep by adding new functionalities. They started with the
-radiators appeal to some customers because they reduce the carbon-footprint of heating houses and buildings.
because some customers value a nicely designed radiator such as the Heatwave (see figure 6). This radiator is developed by an artist
difficult because customers make a clear distinction between companies that offer the authentic experience and those that are copying it 34.
customers. Visiting the showroom has the additional advantage that potential customers can invite different manufacturers at the same time.
In the patient room, products were combined into broader solutions. It is thus necessary to look at the function or role of each product in the context of the room
of the price increase to its customers. †In an innovation network, partners are interconnected and
company grants exclusive designs or products to its customers. In this case, the innovation partners must abide by the exclusivity rules
If direct customers are the target customer, then the innovation network will most likely be small and easy to manage.
customers profoundly ï The combination of different fields of expertise to develop a new offering can lead to attractive
demonstrated to potential customers. The manager of the small company decided to license the technology to large companies active in the kitchen appliances industry that could leverage their
Most customers and health authorities perceive that the Airfryer is a highly innovative product that
which the company brings to potential customers (not necessarily existing ones). A radically new value proposition may offer customers new meaning to the product or service offering
The network of partners: Common in all cases is that the SMES establish a network of external
suppliers of equipment (i), customers (ii), competitors and other firms with similar activities (iii), commercial
Isobionics†customers, notably food manufacturers, can use Biovalenceneâ¢--the first commercialized flavour by Isobionics†to create natural
customers, Harpercollings Publishers, New york Chapter 3 23 See previous chapter for a more detailed description how Curana developed the B†Lite.
Cinematch) at predicting which movies customers will like based on their past preferences. Crowdsourcing contests are also possible for smaller companies †although most likely in smaller, more focused
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