The business culture that companies emphasize has an effect on new
product ideas that bubble back up from the workforce, a University of
Illinois marketing study found.
Groundbreaking ideas spring most from companies that stress
technology, rather than customer needs or staying ahead of competitors,
according to research that will appear in the Journal of Product
Innovation Management.
Firms that focus on their competitors or customers generate
more new product suggestions than technology-based companies, the study
found. But the ideas typically net only subtle advances, such as the
slow evolution of wireless reading devices, rather than breakthroughs
similar to the shift from compact discs to music downloads.
“Customer- and competitor-oriented companies are more likely
to come up with variations of existing products because they watch their
markets closely and react to demands rather than building on
breakthrough technology,” said William Qualls, a University of Illinois marketing
professor.
He says the findings suggest that firms are best served by a
balanced philosophy that includes all three cultures. While an emphasis
on technology bolsters innovation, he says, market-driven firms are more
attuned to what consumers want, giving them an edge in commercializing
new products.
History is littered with technological leaps that sputtered
for lack of effective marketing, says Qualls, who co-wrote the study
with Jelena Spanjol, then a University of Illinois doctoral student and now a
marketing professor at the University of Illinois at Chicago, and Jose
Antonio Rosa, a former University of Illinois marketing professor now at the
University of Wyoming.
AT&T developed its Picturephone in the 1960s, but not a
market for it, Qualls says. Motorola is behind many advances in
cell-phone technology, but failed to become an industry leader because
the company focused on innovation at the expense of marketing.
“If innovation and marketing don’t get equal attention, good
ideas might never reach the marketplace or firms could sink millions of
dollars into innovations that will ultimately have no appeal to
consumers,” he said.
The study is unique because past research has focused largely
on the link between business culture and the success of launched
products, rather than probing the idea stage, says Qualls, the interim
head of the department of business administration.
Findings are based on an analysis of survey responses from
nearly 200 marketing and research managers who work for companies that
make household and personal products, from appliances to skin cream.
“Without good ideas, you can’t come up with innovative new
products,” Qualls said. “Firms need to know how to generate as many new
ideas as possible, and how to screen them so they have the best chance
for success.”
He says the findings lend support for a budding business
theory known as open innovation, which encourages firms to use external
as well as internal input to develop and launch new products.
Companies that lack resources to generate more ideas by
instilling new technology or market-based cultures can instead partner
with outside organizations, universities or even solicit suggestions
from consumers, Qualls says.
Intel Corp. and Proctor & Gamble Co. are among firms that
have bolstered product development through outside alliances, he says.
Others are pulling consumers into the mix, including Netflix, which
offered US$1 million to anyone who comes up with a better system for
delivering movies.
“The whole idea of open innovation is that firms need to be
able to absorb knowledge from any source, and not just rely on the
knowledge it has internally,” Qualls said. “And the more ideas they get,
the better the chance that one will click.”
He says the study shows firms that fail to broaden their
cultures or seek outside input will lag behind companies that do.
“It’s not impossible, but companies are tying their hands
behind their backs if they don’t change,” Qualls said. “Innovation can
happen by accident. Post-It Notes and Velcro were accidents. But you
can’t run a company hoping for potentially successful accidents.”
(Story provided by the University of Illinois)