The Value of Crowdsourcing: Can Users Really Compete with Professionals in Generating New Product Ideas?

Generating ideas for new products used to be the exclusive domain of marketers, engineers, and/or designers. Users have only recently been recognized as an alternative source of new product ideas. Whereas some have attributed great potential to outsourcing idea generation to the “crowd” of users (“crowdsourcing”), others have clearly been more skeptical. The authors join this debate by presenting a real‐world comparison of ideas actually generated by a firm's professionals with those generated by users in the course of an idea generation contest. Both professionals and users provided ideas to solve an effective and relevant problem in the consumer goods market for baby products. Executives from the underlying company evaluated all ideas (blind to their source) in terms of key quality dimensions including novelty, customer benefit, and feasibility. The study reveals that the crowdsourcing process generated user ideas that score significantly higher in terms of novelty and customer benefit, and somewhat lower in terms of feasibility. However, the average values for feasibility—in sharp contrast to novelty and customer benefit—tended to be relatively high overall, meaning that feasibility did not constitute a narrow bottleneck in this study. Even more interestingly, it is found that user ideas are placed more frequently than expected among the very best in terms of novelty and customer benefit. These findings, which are quite counterintuitive from the perspective of classic new product development (NPD) literature, suggest that, at least under certain conditions, crowdsourcing might constitute a promising method to gather user ideas that can complement those of a firm's professionals at the idea generation stage in NPD.     

An Exploratory Study of the Innovation Evaluation Process

In their search for the keys to successful product innovation, product managers and researchers typically focus on trying to identify the most effective organizational processes, strategies, and structures. Surprisingly, little or no effort is directed toward understanding the process that consumers use for evaluating an innovation. By gaining insight into this evaluation process, a firm can present an innovative product in a more effective manner and thus increase the likelihood that consumers will respond favorably to the innovation. Richard W. Olshavsky and Richard A. Spreng provide insight into this process by describing the results of an experiment in which subjects were asked to evaluate several innovative concepts. From their observations, they develop a model of the detailed information-processing steps that these consumers employed in order to evaluate the new products. Consistent with previous research, they found that judgment was the predominant evaluation strategy, particularly for the most innovative concepts. Various subjects also used a categorization strategy, though none used categorization for more than four of the nine concepts that were evaluated. Contrary to expectations, none of the evaluations relied solely on the manufacturer's reputation or the recommendation of a friend. In a simplified model of the evaluation process, when presented with an innovative concept, consumers first attempt to categorize the product. In other words, an innovation may be rejected simply because consumers somehow link it to an existing category that has a negative connotation. If consumers cannot categorize the product, they then employ a judgment process based on some evaluative criteria. Based on the data collected in this study, this simplified model is extended to include four other cognitive processes that strongly influence the evaluation process: forming evaluative criteria, forming expectations about the innovative concept, assessing satisfaction with an old product, and comparing the new and old products. When faced with a highly innovative concept, consumers may find it difficult to form their own evaluative criteria and expectations concerning that innovation. Consequently, managers may have an opportunity to shape the judgment process by educating consumers about the appropriate evaluative criteria or by clearly communicating the product's attributes, benefits, and appropriate use.     

The effects of crowdsourcing contribution type and temporal consistency on new product development success

Extant literature suggests that individuals contribute to crowdsourcing programs in various ways but offers few insights about whether participants' creative contributions (original new product submissions) or their evaluative contributions (scoring or commenting on others' submissions) have a greater impact on their ability to create commercializable new products. Using a large-scale data set obtained from the crowdsourcing website Threadless.com, our study examines the relative impact of participants' creative and evaluative contributions and the effects of different types of evaluative contributions on submission success (i.e., a participant's ability to generate a commercializable new product). Our findings reveal that submission success is enhanced when participants generate both creative and evaluative contributions. In addition, we find that submission success depends not only on the volume of the creative contributions that a participant makes but also on the temporal consistency with which said contributions are made (i.e., adopting a consistent vs. a sporadic submission pattern). Specifically, our findings show that a participant's creative contribution consistency enhances their submission success, especially when creative contribution volume is high. This research extends the existing crowdsourcing literature by offering new insights about how contribution type and contribution consistency in a crowdsourcing program impact submission success.     

Identification of Lead Users for Consumer Products via Virtual Stock Markets*

Newly launched products in the consumer goods and services markets show high failure rates. To reduce the failure rates, companies can integrate innovative and knowledgeable customers, the so‐called lead users, into the new product development process. However, the detection of such lead users is difficult, especially in consumer product markets with very large customer bases. A new and potentially valuable approach toward the identification of lead users involves the use of virtual stock markets, which have been proposed and applied for political and business forecasting but not for the identification of experts such as lead users. The basic concept of virtual stock markets is bringing a group of participants together via the Internet and allowing them to trade shares of virtual stocks. These stocks represent a bet on the outcome of future market situations, and their value depends on the realization of these market situations. In this process, a virtual stock market elicits and aggregates the assessments of its participants concerning future market developments. Virtual stock markets might also serve as a feasible instrument to filter out lead users, primarily for the following two reasons. First, a self‐selection effect might occur because sophisticated consumers with a higher involvement in the product of interest decide to participate in virtual stock markets. Second, a performance effect is likely to arise because well‐performing participants in virtual stock markets show a better understanding of the market than their (already self‐selected) fellow participants. So far, only limited information exists about these two effects and their relation to lead user characteristics. The goal of this paper is to analyze the feasibility of virtual stock markets for the identification of lead users. The results of this empirical study show that virtual stock markets can be an effective instrument to identify lead users in consumer products markets. Furthermore, the results show that not all lead users perform well in virtual stock markets. Hence, virtual stock markets allow identifying lead users with superior abilities to forecast market success.     

Leveraging Social Networks to Develop Radically New Products

In this article, the authors consider the nexus of social networks and radically new products. These new products are so innovative that they forge new product categories, and social networks might be particularly fruitful in their development, dissemination, and help to foster growth and acceptance. Several social networks concepts are brought to bear on these issues, from the class diffusion model, to current considerations of lead users and emerging ideas about crowdsourcing. In particular, the classic diffusion model provides parameters to reflect innovative consumer behavior, and it is suggested that, in complement to studies that seek customer traits to identify innovators, social network concepts and indices of degree, betweenness, and closeness centrality are very well suited in identifying customers embedded in social networks whose relational ties are indicative of their likely influence and stature. Next, lead users are considered in the specific context of health care, and it is suggested that online forums provide numerous benefits to customer patients as well as opportunities to health‐care providers. Next, the dynamics of social networks are considered as they apply to cutting‐edge ideas about crowdsourcing, movements that companies are exploring to be radically open to customer feedback and suggestions. This article closes with an example of a novel appeal that bridges social networks and radically new products—the challenge of solving societal difficulties, from food scarcity, to environmental pollutants, to weather patterns, to discovering treatments for cancer or other medical conditions.     

Product innovation and adoption in market equilibrium: The case of digital cameras

This paper studies the effect of competition on product innovation in the market for digital cameras during the years 1998 to 2001. The analysis is based on a structural dynamic model that is estimated and used to simulate the innovation behavior of firms in counterfactual environments. The model features heterogeneous consumers, who time optimally purchase goods, depending on the expected evolution of the prices and the characteristics of available cameras. On the supply side, firms introduce new camera models and choose their characteristics, accounting for the dynamic value of new products and the optimal dynamic behavior of consumers. The counterfactual simulations imply that an increase in competition in the industry would not have generated better products on average and, depending on the type of competition, would have generated products with lower average quality.     

Implementing the lead user method in a high technology firm: A longitudinal study of intentions versus actions

The customer or user's role in the new product development process is limited or nonexistent in many high technology firms, despite evidence that suggests customers are frequently an excellent source for new product ideas with great market potential. This article examines the implementation of the Lead User method for gathering new product ideas from leading edge customers by an IT firm that had not previously done much customer research during their new product development efforts. This case study follows the decision‐makers of the firm through the process, where the end result is the generation of a number of useful product concepts. Besides the ideas generated, management at the firm is also impressed with the way the method makes their new product development process more cross‐functional and they plan to make it a part of their future new product development practices. Approximately one year later the firm is revisited to find out if the Lead User method has become a permanent part of their new product development process. The authors find, however, that the firm has abandoned research on the customer despite the fact that several of the lead‐user derived product concepts had been successfully implemented. Management explanations for their return to a technology push process for developing new products include personnel turnover and lack of time. Using organizational learning theory to examine the case, the authors suggest that the nontechnology specific product concepts generated by the lead users were seen as ambiguous and hence overly simplistic and less valuable by the new product development personnel. The technical language spoken by the new product personnel also increased the inertia of old technology push development process by making it more prestigious and comfortable to plan new products with their technology suppliers. The fact that the firm was doing well throughout this process also decreased the pressure to change from their established new product development routine. The implications for these finding are that: 1) it is necessary to pressure or reward personnel in order to make permanent changes to established routines, and 2) researchers should be careful at taking managers at their word when asking them about their future intentions.     

The Predictive Power of Internet-Based Product Concept Testing Using Visual Depiction and Animation

One critical step in new product development is selecting from among multiple possible product concepts the one that the firm will carry forward into the marketplace. There is a need for low‐cost, parallel testing of the appeal of new product concepts, the results of which closely mirror ultimate market performance. In this article, the authors first describe an Internet‐based product concept testing method they developed that incorporates virtual prototypes of new product concepts, substituting them for physical prototypes. The method can be used with either static representations of the products or with dynamic representations that demonstrate how the product works through a simulated video clip of its operation. The objective of this method is to allow design teams to select the best of several new concepts within a product category with which to proceed, without having to develop physical prototypes. The authors then provide a rigorous test of both virtual prototype methods against tests using both physical prototypes and attribute‐only (i.e., no visuals), full‐profile conjoint analysis. Nine concepts compete against two actual products in the tests. Market shares from the test using the physical prototypes are defined as the “actual” market shares. Predicted market shares for the attribute‐only, full‐profile conjoint analysis and each of the two virtual prototype methods are compared to those obtained for the physical prototypes. Both static and animated virtual prototype tests produced market shares that closely mirrored those obtained with the physical products, outperforming the set of predictions across the full range of products produced in the attribute‐only conjoint analysis. Interestingly, the attribute‐only conjoint analysis identified the top three products, in correct order. It was unable to differentiate performance below these top three products. Furthermore, it predicted market shares for the top three products to be well below those achieved using physical prototypes. As virtual prototypes cost considerably less to build and test than their physical counterparts, design teams using Internet‐based product concept research may be able to afford to explore a much larger number of concepts. Virtual prototypes and the testing methods associated with them may help reduce the uncertainty and cost of new product introductions by allowing more ideas to be concept tested in parallel with target consumers.     

Competition reform and household welfare: A microsimulation analysis of the telecommunication sector in Ethiopia

This paper presents a novel simulation method for estimating the likely welfare effects of policy reforms aimed at increasing competition in strategic economic sectors such as mobile phone services. The proposed method relies on a partial equilibrium simulation approach and estimates the welfare impacts on current consumers and the potential welfare effects among new consumers brought into the market by changes in prices due to competition. This approach is applied to the information and communication technology (ICT) sector in Ethiopia, one of the three countries in the world with a monopoly in the market for mobile phone services. Based on household budget survey data for 2015/16 and departing from a baseline reform scenario that dilutes the market share of the state-owned monopoly to 45 percent, the simulation model estimates a 25.3 percent reduction in the price of mobile services and an increase in 5.7 million new users of mobile services. The predicted drop in prices and increased users would generate a combined relative welfare gain of 1.18 percent (1.09 percent among current users and 0.09 percent among new users), that could be translated into a 0.31 percentage point decline in the national poverty rate and equivalent to lifting about 275,000 people out of poverty. Alternative reform scenarios that dilute the market share of the monopoly to 75 percent and to 30 percent are expected to reduce poverty rate in 0.13 and 0.52 percentage points, respectively. The method proposed in this study represents a useful tool for promoting competition reforms in developing countries, particularly in sectors known for excluding significant segments of the population because of high consumer prices.     

Enhancing Concept Test Validity by Using Expert Consumers

In standard concept testing practice, consumers may be invited to participate in a test if they use or possess the product. However, merely using or possessing a product is no guarantee that a consumer has the level of product knowledge that is necessary for judging the concept. Conducting a concept test with consumers who lack the necessary product knowledge may jeopardize the validity of the test results. That is, the results of such a concept test may not accurately indicate how consumers will evaluate the real product. To ensure the validity of concept test results, Jan Schoormans, Roland Ortt, and Cees de Bont suggest that consumers who are invited to participate in a concept test should possess a degree of product knowledge. When a consumer is asked to evaluate a concept, their product expertise allows them to understand product information faster, fill in missing information, and learn more easily. Consumers with product expertise are better able to discriminate between important and unimportant aspects of a product. They are also better able to infer benefits from a product's physical attributes. To explore the effects of consumer expertise on the quality of the evaluations provided by concept tests, the authors conducted two experiments, both of which resemble actual concept tests. The first experiment examines the effect of consumer expertise on the results of a concept test for a major innovation, Videotext. This experiment tests the hypothesis that the similarity between the evaluations of a concept and an actual product will be greater for consumers with a high level of product-category expertise than for consumers with low product-category expertise. The results of the experiment clearly support the idea that product-category expertise enhances a respondent's ability to evaluate concepts in a test of major innovations. From this, it is concluded that only respondents with high product-category expertise should be used for concept tests of major innovations. The second experiment explores the effects of product expertise on consumers' evaluations of a minor innovation, a redesigned coffee maker. This experiment tests two hypotheses. First, it is proposed that consumers with high product expertise give more consistent evaluations in a concept test than consumers with low product expertise. Second, it is suggested that consumers with product expertise generate more stable evaluations over time than consumers without product expertise. The results of this experiment clearly indicate that using consumers with moderate to high levels of product expertise is beneficial to the validity of the results from concept tests of minor innovations.     

FROM EXPERIENCE: Developing New Product Concepts Via the Lead User Method: A Case Study in a "Low-Tech" Field

Conventional market research methods do not work well in the instance of many industrial goods and services, and yet, accurate understanding of user need is essential for successful product innovation. Cornelius Herstatt and Eric von Hippel report on a successful field application of a "lead user" method for developing concepts for needed new products. This method is built around the idea that the richest understanding of needed new products is held by just a few users. It is possible to identify these "lead users" and then draw them into a process of joint development of new product concepts with manufacturer personnel. In the application described, the lead user method was found to be much faster than traditional ways of identifying promising new product concepts as well as less costly. It also was judged to provide better outcomes by the firm participating in the case. The article includes practical detail on the steps that were used to implement the method at Hilti AG, a leading manufacturer of products and materials used in construction.     

New Product Development 2.0: Preference Markets—How Scalable Securities Markets Identify Winning Product Concepts and Attributes*

Preference markets address the need for scalable, fast, and engaging market research in new product development. The Web 2.0 paradigm, in which users contribute numerous ideas that may lead to new products, requires new methods of screening those ideas for their marketability, and preference markets offer just such a mechanism. For faster new product development decisions, a flexible prioritization methodology is implemented for product features and concepts, one that scales up in the number of testable alternatives, limited only by the number of participants. New product preferences for concepts, attributes, and attribute levels are measured by trading stocks whose prices are based upon share of choice of new products and features. A conceptual model of scalable preference markets is developed and tested experimentally. Benefits of the methodology are found to include speed (less than one hour per trading experiment), scalability (question capacity grows linearly in the number of traders), flexibility (features and concepts can be tested simultaneously), and respondent enthusiasm for the method.     

Narrative Transportation in Concept Tests for Really New Products: The Moderating Effect of Reader–Protagonist Similarity

The authors investigate the benefits of using a narrative (i.e., a storyline featuring a protagonist) to convey product information in the evaluation of really new product concepts by consumers. In the context of early product evaluation, the imagination of consumers can be guided by a narrative about a protagonist who uses the new product in a series of actions and events. In this way, a narrative can present information about the new product concept in a way that is evocative and relevant. The authors build on narratives research and study the implications of different protagonist focal characters. Further, the role of a protagonist focal character in facilitating consumer evaluations is examined, and evaluation formats (narrative versus attribute/benefit listings) are compared. Utilizing three empirical studies, this research looks at the potential effects of protagonist (dis)similarity with the reader on transportation and new product evaluation both in narrative and bulleted list evaluation formats. Study 1 shows an interactive effect of reader–protagonist similarity and evaluation format on transportation and product evaluation. The results from this study show that reader–protagonist similarity is needed for a narrative to be effective. Studies 2 and 3 provide further understanding of the effects of reader–protagonist (dis)similarity. Study 2 shows that the negative impact of a dissimilar protagonist can be mitigated by explicitly instructing the readers to imagine themselves as the protagonist, thus enabling them to fully experience the storyline. Study 3 decomposes the reader–protagonist dissimilarity and shows that not all protagonists dissimilar to the reader deliver a negative outcome. A dissimilar protagonist that is not from a dissociative out‐group for the reader effectuates a positive result. Finally, the underlying process for the observed effects is demonstrated: narrative transportation is shown to mediate the observed effects in all three studies. With these studies, the authors advance narrative transportation and social identity theory. Furthermore, the research provides practical guidelines for how narratives should be constructed and utilized to obtain consumer evaluations of product concepts in the new product development process.     

Why co‐creation experience matters? Creative experience and its impact on the quantity and quality of creative contributions

This article introduces ‘virtual design competitions’ as a new means of opening up the innovation process and enriching the companies, ‘design‐ideas’ by utilizing the creativity of a multiplicity of external designers and enthused consumers all over the world. The ‘Swarovski Enlightened^? jewellery design competition’, explored in this study, demonstrates the enormous potential of virtual co‐creation platforms. It further highlights the importance of the co‐creation experience and its impact on the quantity and quality of designs submitted. First, we introduce the idea of virtual co‐creation platforms and the requirements on the design of such a platform. Second, we explore the impact of the co‐creation experience on the content contributed by participants. Our study shows that co‐creation experience significantly impacts the number of contributions by consumers as well as the quality of submitted designs. Our paper contributes to a better theoretic understanding of the impact of a participant's perceived autonomous, enjoyable, and competent experience, as well as participants' perceived sense of community on their experience. From a managerial perspective, it provides guidance in designing successful idea and design competitions. While innovation managers may be interested in creative contributions, for participants, it is the experience which matters. Fully featured community platforms rather than single idea submission websites are required to attract creative users to submit their ideas and designs.     

Work with and implementation of new concepts for management of product development—experiences for the Swedish Manufacturing Industry

Extensive organizational changes in the management of product development work of industrial companies are currently taking place. Speediness (time-based competition) and/or 'high' quality (total quality) are emphasized and for this purpose concepts such as simultaneous, concurrent or integrated product development have been introduced. This paper describes a study of the importance of these concepts in 29 large Swedish manufacturing companies and how these companies deal with the implementation of the new product development concepts. In addition, three in-depth studies have been carried out to enable a more detailed study to be made of the effects of the product development work on time and quality variables.     

服装设计“众包”案例分析及其启示

本文以美国在线T恤厂商www.threadless.com的T恤衫设计"众包"为例,并结合中国SWS创意社www.swser.com的相关发展,在介绍"众包"的概念、发展和特点的基础上,着重分析"众包"模式给服装设计和产品推广带来的新变化,并探究和构想在"众包"影响下服装这个传统行业出现的新的公司组织模式、新型商业模式及其带来的启示。     

Determinants of idea sharing in crowdsourcing: evidence from the automotive industry

Drawing on external ideas through crowdsourcing has become common practice for firms that seek to improve and extend their product portfolios. As these initiatives often address the users of products, it is essential for firms to recognize those attributes that determine these individuals' willingness to share their ideas. This study takes the example of the automotive industry to examine how three attributes of car drivers determine their sharing behavior – that is, altruism, psychological ownership of ideas, and trust in car manufacturers. Our findings suggest that trust and altruism strengthen idea sharing, while psychological ownership weakens it. Furthermore, we find that car drivers' perception of sharing‐related risk acts as an important boundary condition for these relationships.     

“Am I Getting It or Not?” The Practices Involved in “Trying to Consume” a New Technology

In recent years, high rates of failure of technology‐based products have spurred interest in understanding the psychological and sociological barriers to consumer learning of technological innovations. The main focus of this research was to examine the learning process and consumers’ coping mechanisms when they encounter technological innovations. A study was designed to understand the learning process in real time as consumers engaged in a set of activities associated with the novel interface. The goal was to investigate how consumers cope with high levels of complexity during their initial interactions with a technology‐based product and how their coping strategies may hinder the learning process. Verbal protocol measures were used in order to understand the consumer's learning process as he or she interacts with a technology‐based product in real time. They were told that they would have to think aloud while performing certain tasks and that their thoughts would be recorded for further analysis. The personal digital assistant (PDA) with handwriting recognition as its interface was chosen for this study. The main task for the participants was to learn how to use Graffiti writing—i.e., the product's handwriting recognition software. We proceeded to a thematic analysis in which interpretations were generated by the researchers going back and forth between the transcribed texts, the developing interpretation, the new interface itself, and also the relevant literature. The results suggest that the new product's interface serves to structure the consumer's learning process even as he or she responds in relatively unstructured ways. The findings identify three basic factors that interfere with the learning process during consumers’ initial interactions with a technological innovation: interface and functionality practices, social influence, and causal attributions. Specifically, the results suggest that in designing technology‐based products there is a gap between the levels of know‐how between the manufacturer and the user. The challenge for manufacturers is to understand the consumer's learning experience and coping strategies and provide mechanisms that would make the transition easy and intuitive. This could be achieved by incorporating into the new interface some degree of flexibility that will allow consumers to modify tasks based on their preferences, or by including indicators that will provide feedback to the user. Furthermore, in the context of communication strategies, in order to minimize the negative impact that prior knowledge and social influence may have on learning, marketers could communicate specific steps describing how to use the new interface.