Market research : should you always ask your customers ?

A few years ago one word was very trendy : co-creation, a new technique complementing market research efforts.
Companies all over the world suddenly discovered the benefits of involving customers in the development of new products. The co-creation process was everything but new. Eric Von Hippel, now Professor at MIT, already involved professional users in his lead users method back in the 1980’s-1990’s to develop new products.

At that time we reported on the failure of MyStarbucksIdea, a co-creation program that hardly implemented 150 ideas out of 116100 submissions. Yet it was a big communication success.
It took Netflix 3 years to find a winner for its recommendation algorithm challenge. This geek competition eventually delivered a solution that could’t be implemented. Yet, once again, it was an amazing communication success that shed light on Netflix as one of the most attractive tech company to work for.

With so much collective wisdom, how is it possible to fail ? How is it possible to end up with nothing valuable ?

Many firms find it difficult to collaborate with customers

Using collective wisdom is often found to be difficult by firms. In fact this is not really a surprise. It’s already difficult for employees to work together; so imagine what it can give with customers, especially for firms that are not customer-centric (and believe me, most firms aren’t customer-centric).
By and large, studies show that the limitations of working with customers on New Product Development (NPD) are :

• lack of valuable creative ideas
• impossibility to explain clearly their needs
• misalignment between management / firm’s objectives and customers’ interests

Why New Product Development doesn’t work

Four contingency factors have been found to influence the customer participation – NPD performance link (Chang and Taylor 2015) :

• contextual factors
• customer participation design
• relationship factors
• organizational factors

When is it worth collaborating with customers

Astonishingly, it seems that low-tech industries benefit more from customer collaboration in the NPD process than high-tech industries (Chang and Taylor 2015).
In terms of when to collaborate with customers in the product developments, research shows that engagement is more beneficial in the early or late stage of the development. Involvement of customers in the development stage seems to be counterproductive and damages the NPD performance.

Image : Shutterstock