a learning framework for customer integration

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DOI 10.1007/s12087-008-0024-y

A Learning Framework for Customer Integration:Know-How Acquisition, Dissemination and Utilization

Patricia Sandmeier, Pamela D. Morrison

Abstract Successful product innovation has increasingly been recognized as an outcome

of integrating customers in the new product development process. Despite the attention of

this research subject, the comprehension of how to learn from customers is still limited in

scope and in depth. This research investigates learning in the customer integration con-

text and discusses a conceptual framework from learning theory with customer know-how

acquisition, dissemination and utilization as critical steps. The paper reports a compara-

tive case study of new product development projects in a business-to-business context.

The ndings show empirical support for the developed framework and demonstrate theimportance of a differentiated consideration of the three steps. They lead to determinants

for successful customer know-how integration in new product development projects.

Keywords innovation process customer integration learning new product develop-

ment customer know-how development contractors

Introduction

The integration of customers into the development of new products has received increas-

ing interest from researchers in a variety of academic disciplines. Previous studies have

reported that the integration of customer know-how into the development of new prod-

ucts leads to a higher degree of product innovativeness, reduced innovation risks, and

Gabler Verlag 2008

Patricia Sandmeier ()

ABB Switzerland Ltd

Baden, SwitzerlandE-Mail: [email protected]

Pamela D. Morrison

The University of New South Wales, School of Marketing

Sydney, Australia


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more precise resource spending (Kohli and Jaworski 1990, Bacon et al. 1994, Atuahene-

Gima 1995, Grifn and Hauser 1996, Brockhoff 2003). Market research developed and

tested a multitude of customer integration methods, such as conjoint analysis, empathic

design, focus groups, laddering or synectics (van Kleef, van Trijp, and Luning 2005), and

also in the area of R&D management, active customer integration methods, such as theclassic lead user approach (von Hippel 1976; 1988) and subsequent extensions, have been

designed and investigated.

The research on customer integration started from trying to understand customer

needs, and moved on to actively involving customers (Brockhoff 2003). Yet failure rates

of new product development (NPD) remained high, largely because companies are still

unable to respond to the customer requirements which evolve during their project (Lem-

pres 2003), meaning that the factors enabling the understanding of real customer needs at

the right point in time and their implementation in innovation projects remained unclear

(Rothwell 1972; 1974, Zirger and Maidique 1990). Thus, even though there is a generalsense about the integration of customer and user know-how across the various stages of

NPD (Prahalad and Ramaswamy 2004), the comprehension of learning from customers

is still limited in scope and depth and learning has not been specied in this context to

close the gap (Joshi and Sharma 2004). Therefore, the process of learning from customers

by building on their know-how and technical expertise expressed e. g. by their own built

prototypes got back into focus (Hagel and Brown 2005).

In order to overcome the blank spots described, this study investigates the components

of learning from customers: Taking a partner-perspective on customer integration, it fo-

cuses on the ow of customer and user know-how between the development team and thecustomer company and how this know-how is integrated in the new product under devel-

opment. We investigate insights from learning theory in the context of current work on

customer integration into new product development and explore how learning occurs and

how it is embedded in a conceptual framework. By utilizing a comparative case study ap-

proach to examine the relationships and know-how exchange among development teams

and customers in practice, we analyze innovation projects of development teams cooper-

ating with customers in a business-to-business context.

The paper is structured as follows: rst, after introducing the relevant framework from

organizational learning theory, we provide an overview on existing customer integrationresearch from the perspective of the learning theory framework. Second, we introduce

our research methodology for investigating the framework in industrial practice. We then

present the ndings from the case study analysis and discuss determinants with charac-

teristics facilitating customer know-how integration. After the study limitations including

recommendations for further practical and empirical work, we summarize our ndings

with concluding remarks.

Literature

Organizational learning theory is multidisciplinary (Dodgson 1993). In the literature, re-

searchers note the relevance of elds as varied as psychology, organizational theory, inno-

vation management, strategic management, economics, organizational behavior, sociology,


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political science, information systems, anthropology, and production /industrial manage-

ment (Argyris and Schn 1978, Shrivastava 1983, Perrow 1986, Dodgson 1993, Leiben-

stein and Maital 1994). For this research, organizational learning theory is considered from

the perspective of its contribution to the understanding of how companies prot from mar-

ket know-how by integrating customer know-how into their product innovation processes.Organizational learning is dened as the process of improving actions through better

knowledge and understanding (Fiol and Lyles 1985). Individuals are able to learn, and

organizations are composed of such individuals (Kok et al. 2003). The organizational

learning process thus can be described as sequential information processing activities.

The theory in turn builds on the assumption that any process of knowledge socialization

and collective learning is based on relationships that consist of building and sharing. Such

relationships cannot be enacted in the absence of a context of co-participation, which

indicates the importance of creating a cognitive minimum common denominator for all

the individuals and groups participating in knowledge creation. This context promotes thedevelopment of shared values, reciprocity, and mutual trust (Taylor 1987, Sawhney and

Prandelli 2000).

Learning from customers throughout the development of new products implies that the

company learns about its market through a series of sequential information processing

activities undertaken with its customers (Kok et al. 2003). Learning about markets for new

products can be understood as an organizational learning process that involves the acquisi-

tion, dissemination, and utilization of information (Fiol and Lyles 1985, Imai et al. 1985,

Huber 1991, March 1991): rst, acquiring market information consists of the collection of

information about the needs and behavior of customers. Some of this information can beobtained from data banks and the results of past actions, whereas some needs to be col-

lected anew through quantitative (e. g., market surveys) or qualitative (e. g., customer vis-

its) methods (Adams, Day, and Dougherty 1998). For information to be useful, it must be

shared quickly and efciently among the relevant users (Kohli and Jaworski 1990). There-

fore, second, market information has to be disseminated across functions, phases of the

innovation process, geographic boundaries, and organization levels (Adams et al. 1998).

Distribution is not enough. Before information can be used, people must classify, sort, and

simplify it into coherent patternsthat is, make sense of it and turn it into knowledge. Shared

mental models inuence the lessons and insights people extract about their appropriate ac-tions (Porac and Thomas 1990) and can help them process ambiguous, multidimensional,

and ne-grained market data (Adams et al. 1998). Third, using market information occurs

in the process of learning about the market for decision making, the implementation of

decisions, or evaluations of a new product (Menon and Varadarajan 1992).

Acquisition, dissemination and utilization of market information from the learning

perspective are subsequently discussed in the context of customer integration research.

They build a framework of those aspects which constitute the integration of customer

know-how into NPD projects.

Customer Know-How Acquisition

Literature on customer integration emphasizes the choice of the right partner from whom

the required information can be obtained as a core aspect of acquiring customer know-


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how (Gruner and Homburg 2000). Biemans (1992) states that depending on the know-

how required for NPD, the identity of the accessed customers employed typically varies

with the extent and intensity to which the customer is involved, as it does with the stage of

the NPD process. Also studies in relationship marketing showed that partner characteris-

tics have an impact on cooperative outcomes (Ganesan 1994, Doney and Cannon 1997).Going more into detail about valuable customer cooperation partners, Gruner and

Homburg (2000) identied three different types: nancially attractive customers, close

customers, and lead users. First, customers nancial attractiveness relates to their repre-

sentativeness of the target market and their reputation within that market (Ganesan 1994).

The second characteristic is the closeness of the relationship between the developing

company and the customer, including the level of interaction outside the respective in-

novation project and the duration of the business relationship (Doney and Cannon 1997).

Furthermore, lead user characteristics suggested by von Hippel (1986; 1988) are relevant

to be consideredtheir positive impact on NPDs has been demonstrated by several stud-ies (Herstatt and von Hippel 1992, Lilien et al. 2002, Lthje and Herstatt 2004). Lead

users combine two characteristics: they expect attractive innovation-related benets from

a solution to their needs and so are motivated to innovate, and they experience needs for

a given innovation earlier than the majority of the target market. Von Hippel (1986) pro-

posed and Urban and von Hippel (1988) tested the proposition that idea-generation stud-

ies can learn from lead users, both within and well beyond intended target markets lead

users found outside of a target market often encounter even more extreme conditions on

a trend relevant to that target market.

Besides the person of the customer, his or her roles and know-how offers in the NPDproject have been discussed in literature. It was stated that different customer roles and

offers have differential impacts on product innovations. Whereas an integration of lead

users (von Hippel 1986; 1988), launching customers, and innovators (Brockhoff 2003),

as well as customers as co-creators (Lengnick-Hall 1996, Nambisan 2002) contributes in

such a way that the new product solutions have a high degree of newness, an integration

of reference customers, rst orderers (Brockhoff 2003) and customers as users (Leng-

nick-Hall 1996, Nambisan 2002) ensures the applicability of a new product.

From these insights into the acquisition of customer know-how from existing customer

integration literature, we state the following denition: customer know-how acquisition isthe availability of customer know-how based on customers characteristics and position

in the relevant market environment.

Customer Know-How Dissemination

Disseminating customer know-how among the development team members signies shar-

ing the information relevant for NPD, which faces a severe challenge: because customer

know-how related to new products is inherently ambiguous, customers may not be able

to articulate their needs clearly (von Hippel 1986), and their needs may change as theylearn to use the product (Veryzer and Borja de Mozota 2005). Also, empirical research

on decision making shows that customers are frequently unaware of their problem situa-

tions, underlying preferences, problems, and choice criteria (Simonson 1993). This fact


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complicates the dissemination of customer know-how and has therefore to be addressed

in more detail.

Mullins and Sutherland (1998) pointed out that the inability and unawareness of clients

and users to articulate the required functionality and benets of a proposed new product

creates uncertainty for the marketer trying to bring a new product through the NPD pro-cess. Von Hippel (1994; 1998) demonstrated in a context of technical problem solving,

that a lot of the information useful for NPD is sticky meaning complex to acquire,

transfer, and use in a new location. Information stickiness can also be high because or-

ganizations must typically have or acquire related information and skills to be able to

absorb and understand the new know-how that is benecial and may be transferred to

them (von Hippel 1994).

In this context, the value of early prototypes and working models to facilitate the pro-

cess of transferring customer know-how from the customer to the developer or into the

product under development has been identied (Loch et al. 2001, Terwiesch and Loch2004). Visualization through paper concepts, mock-ups, rapid prototyping, and computer

aided design (CAD) are the most valued tools which help to achieve a holistic perspec-

tive on a NPD project and can help in information sharing and building consensus over

the course of a development project (Veryzer and Borja de Mozota 2005). It involves the

design of rough product mock-ups, simulating a products use in the customer context, of

the transformation of personas (representations of behavioral and motivational aspects

of target users), and of use-scenarios of target customers in a more tangible (product-)

form (Veryzer and Borja de Mozota 2005). These visualization tools represent solutions

to simulate the progress in industrial NPD, even though hardware (as against software)with its inertial materials is involved. Furthermore, physical representation of the prod-

uct under development at different points of the NPD process helps to create a common

understanding of development issues which may arise according to the different vocabu-

laries and environments of involved stakeholders.

Also techniques from the eld of anthropology have been employed to support cus-

tomer integration into product design: ethnography refers to the art and science of de-

scribing a group or culture. A form of cultural anthropology that uses eldwork to observe

a group and derive patterns of behavior, beliefs, and activities (Cagan and Vogel 2002), it

includes observation (physically observing an event or using video and sound recordingfor subsequent analysis), interviews (collecting deep stories that detail the way people

think about products and relate them to their lifestyles), and visual stories (narratives

created through the use of disposable cameras and journals by the target customers, who

record what they think is important in a dened setting). Also, Arnould and Wallendorf

(1994) shaped the notion of market-oriented ethnography which refers to an ethnographic

focus on the behavior of people constituting a market for a product or service. It gives

primacy to systematic data collection and recording of human action in a natural setting.

The data collected through such techniques are shared among all innovation team mem-

bers and provide a better sense of the customers intent from marketing as well as froman R&D perspective.

From these insights into the dissemination of customer know-how from existing cus-

tomer integration literature, we state the following denition: customer know-how dis-


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semination is the detachment of customer know-how to make it understandable and avail-

able for developers in NPD projects.

Customer Know-How Utilization

An NPD process that is capable of utilizing customers know-how is one that builds in

the voice of the customer (Grifn and Hauser 1993), without forcing the development in

a wrong direction early and restraining the customers to their initial inputs. The process

should have the exibility of responding to new information for a larger proportion of

a development cycle (MacCormack et al. 2001), a characteristic which is not provided

by a streamlined NPD process. Sequential and predened approaches such as the Stage-

GateTM model of innovation (Cooper and Kleinschmidt 1986, Cooper 1994) are very use-

ful but have not completely captured the impact of dynamic user-oriented NPD through-

out the NPD process (Veryzer and Borja de Mozota 2005). Rather, the key to fast andsuccessful NPD is building intuition and exible options in order to learn quickly about

market and technology changes and shift with uncertain environments (Eisenhardt and

Tabrizi 1995). Eisenhardt and Tabrizi (1995) propose that the NPD process should more

consist of navigating through the NPD inputs from developers and customers, rather than

planning the whole development at the forefront of the project.

From the experiential perspective, one way to realize exible NPD is through frequent

iterations. Multiple development iterations, complemented by extensive testing, and fre-

quent milestones help to overcome the randomness through missing technological and

customer information (Eisenhardt and Tabrizi 1995, Terwiesch and Loch 2004). Devel-opment based on iteration further suggests a more real-time, hands-on approach to fast

product development, especially in uncertain product settings. Also, Boehm and his col-

leagues (Boehm, Gray, and Seewaldt 1984) found that a such a process often based on

intensive prototyping which allows for changes late in the design process according to

new know-how from and about customers, resulted in products that were not only judged

superior from a customer perspective but also developed with fewer resources.

From these insights into the utilization of customer know-how from existing customer

integration literature, we state the following denition: customer know-how utilization

is the implementation of customer know-how in the NPD project through its translationand conditioning to the specications of the NPD and serves to collectively create know-

how.

In the following, after describing the research methodology, the results from investi-

gating the learning framework of acquisition, dissemination and utilization in industrial

NPD projects of four different companies are presented.

Research Methodology

To explore the learning framework of acquisition, dissemination and utilization in prac-

tice and thus obtain new insights about customer know-how integration, we employed

a case study design. This qualitative method appeared appropriate for gaining a thorough

understanding of the system under investigation (Stake 1988, Yin 1994).


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Sample

The research, conducted between 2003 and 2005, consisted of two phases. In the rst

phase a literature analysis was conducted to explore the existing body of knowledge on

product innovation processes and customer integration practices. In parallel, the theoreti-cal insights were validated in expert workshops and contracted research projects with in-

dustrial goods developers in Central Europe in order to nd inconsistencies and further re-

search requirements which are most relevant. The companies are Bayer MaterialSciences,

Buechi Labortechnik, Endress+Hauser, Hilti, IVF Hartmann, Leica Geosystems, Model,

MTU Aero Engines, Philips Lighting, Qiagen, Schindler, Sefar, Siemens Building Tech-

nologies, SIG Combibloc, and Zumtobel. This literature analysis and practical reection

led us to the relevance of the subject.

The second phase attempted to specify the identied learning aspects. To gain such

farther-reaching insights, we carried out an in-depth analysis of selected projects andcompanies (Stake 1988, Eisenhardt 1989a, Yin 1994). According to Eisenhardt (1989a)

between four and ten cases usually work well; so we choose four companies in which

the product innovation process could be studied most comprehensively. The criteria for

selecting rms were based on their potential for learning and on depth rather than repre-

sentativeness and breadth.

In this case, we chose four industrial goods developers: Hilti (Liechtenstein), Buechi

Labortechnik (Switzerland), IDEO (Germany), and Tribecraft (Switzerland). All rms

cover the whole spectrum from low- to high-tech. Hilti was chosen due to its reputation

as a company that successfully practices a lead-user approach. Buechi excels in its close-ness to customers (distributors) and users throughout its product innovation process. Fur-

thermore, as a result of the authors close collaborations with this company in previous

research projects, we could ensure access to sensitive customer information and a broad

data validation process. IDEO broadly investigated in NPD literature and Tribecraft

engaged in very tight collaborations with their customers and have developed product in-

novations that stand out in terms of their degree of newness and superior design.

Whereas Hilti and Buechi are in-house developers, IDEO and Tribecraft represent

professional technical service rms, in the following named development contractors,

that develop product innovations with clients on a project basis. Therefore, IDEO andTribecraft work according to a different industrial product development model than the

in-house developers. This development model has been included in the research to cover

different approaches of customer know-how integration and to ensure that different per-

spectives on the subject are considered. In order to allow for a comparison within the

different development models, the investigation takes place on the level of specic NPD

projects and their practices. An overview of the companies involved stages is shown in

table 1.

Data Collection and Analysis

In the second phase of the research we collected data through personal, face-to-face

interviews, 30 90 minutes in length, with chief technology ofcers, R&D directors,

R&D managers, developers, engineers, and product managers. We recorded a total of


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39 hours of interviews. The selected participants represent different levels of customer

contact and NPD responsibilities. Most interview partners had personally participated

in customer integration activities, and their responses focused on specic projects fromthe preceding 18 months. We also interviewed some informants more than once. We

used an interview guideline to maintain the coherence of the data collection and ana-

lyzed the interviews according to the following aspects: (1) product innovation proc-

esses, (2) customer integration activities at various stages in the process, (3) customers

Table 1 Overview on c ase study companies

Hilti Buechi IDEO Tribecraft

CompanyCharacteristic

sManufacturer with in-

house product develop-ment (therefore referred

to as in-house developer)

Staff 15,000

R&D ratio: 4.5 %

Technology intensity:

whole spectrum, from

low- to high-tech

Manufacturer with in-

house product develop-ment (therefore referred

to as in-house developer)

Staff 300

R&D ratio: 10 %



low- to high-tech

Development contractor

Staff 450

R&D ratio: 85 % (due to

service provider charac-

teristic)



low- to high-tech

Development contractor

Staff 7

R&D ratio: 85 % (due to

service provider charac-

teristic)



low- to high-tech

Products,

Customers,

Markets

Products: expendable

goods in construction in-dustry, premium segment

Direct selling approach

to professional customers

in construction industry

(construction experts,

electricians, tters of

sanitary facilities and

elevators, metal workers,

general developers)

Products: laboratory

equipment (partially tofully automated),

medium price range

Selling approach pre-

dominantly via distribu-

tion partners, small own

sales force

Customers: Universities

and research laboratories

as well as pharmaceu-

tical customers with

automated laboratoryprocesses

Products: broad develop-

ment expertise for clientsin various industries,

consulting services, top

price range

NPD projects are sold to

clients, which usually are

manufacturing companies

Products: broad develop-

ment expertise for clientsin various industries, top

price range

NPD projects are sold to

clients, which usually are

manufacturing companies

Organ

izationalstructure

One site for development

and manufacturing, many

subbranches (called

market organizations)

for sales

Matrix organization:

location and 9 business

units according to prod-

ucts. Every business unit

has own R&D

Developers education:

specialists, promoted to

project managers

One site for development

and manufacturing, 6 for

distribution

Functional organization

with two business units

for product conceptuali-

zation and a service divi-

sion for development

Developers educa-tion: more generalists

than specialists. Project

managers are heads of

development departments

8 sites, small teams

(studio system)

Flat organization, matrix:

locations and practices

Developers education:generalists, predominant

background: engineering

One site, small team

(on one oor)

Flat team organization,

located on one oor

Developers education:generalists, predominant

background: engineering


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contributions, and (4) degrees of newness of the resulting products. We augmented the

interview data with desk research, namely, analyses of company publications (inter-

nal journals, annual reports, Internet Web pages), internal memos, and presentations.

Site visits and workshop participation enabled complementary personal observations.

Follow-up sessions with the interview partners ensured the reliability and validity ofthe analysis and conrmed the case study interpretations drawn from the interviews

(Yin 1994).

Findings

This section presents the exploratory ndings from our case studies as they relate to the

three aspects customer know-how acquisition, dissemination and utilization. They ac-

crued throughout the process of analyzing data through data coding and category group-ing (Voss, Tsikriktsis, and Frohlich 2002). The categories used were (1) type and roles

of customers involved in NPD projects (2) customers offers (know-how and /or nancial

attractiveness), (3) stage of customer contact in the innovation process, (4) intensity of

customer integration (number and length of contacts) and (5) activities of visualizing and

transferring intermediary NPD results to customers. As a further category, companies

technology and market position for the development project was included.

The subsequent creation of subcategories according to the learning framework of cus-

tomer know-how acquisition, dissemination and utilization led us to the results shown

subsequently and nally to the determinants of customer know-how integration.

Customer Know-How Acquisition

The existing literature in the context of customer know-how acquisition lead to the fol-

lowing denition (see literature section): customer know-how acquisition is the avail-

ability of customer know-how based on customers characteristics and position in the

relevant market environment. Structured according to the criteria found in literature, we

subsequently present our ndings from the case studies.

Financial attractiveness. Evidence in support of the importance of nancial attrac-tiveness of integrated customers appears in all four cases. The measure of nancial at-

tractiveness that was used is the perceived industry impact and reputation of the selected

customer organization involved in a specic NPD project from the developers perspec-

tive. For example, Buechi strongly focuses on large distribution partners, as well as on

big players in the pharmaceutical industry. Because they lead the laboratory automation

eld, they provide the potential of customers that can cover the entire NPD cost if they

adopt the new product. Hilti also seeks collaboration with construction contractors that

are involved in big, distinguished projects, preferably with the involvement of famous

architects. In the cases of the development contractors, the clients nancial capability isa precondition, because collaboration is possible only at a very high price, especially for

prestigious companies such as IDEO. The development contractors are further interested

in developing new products for companies of good standing to establish their brand in

the market.


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The nancial attractiveness of the individual product users involved in the process

is not relevant in all four cases. For example, Hilti conducts focus groups with users of

a new drilling machine on construction sites and is interested only in their honest feed-

back about the product use situation. In another example, IDEO explicitly considers users

that are distant from the product buyers (IDEOs client) organization for which IDEOdevelops the product. Whether they have the nancial power to buy the new product does

not matter. The companys different consideration of customers nancial attractiveness

highlights the need to use a differentiated customer consideration: the companies in all

four cases employ a conscious differentiation between the product buyer and the product

user when accessing customers know-how.

Closeness to customers. Closeness to customers represents a variable that facilitates

interaction between developers and customers. The closeness measures used were the

geographical distance between the developer and considered customers and the number

of personal contacts between representatives of the developer organization with clientsand users throughout the NPD project. Despite given communication technology today

(Gassmann and von Zedtwitz 2003), the case study data support the value of close, per-

sonal interactions with customers and note the relevance of face-to-face contact, which

allows the developer to capture unarticulated customer contributions that can only be

observed at the customer site. This supports the work by von Hippel (1994; 1998) on

sticky information.

Lead user characteristics. The lead user concept (von Hippel 1976; 1986; 1988) pos-

tulates that lead users can contribute signicantly to NPDs, especially those who (1) ex-

pect attractive innovation-related benets from a solution to their needs and are motivatedto innovate and (2) experience needs for a given innovation before the majority of the

target market. Investigating these lead user characteristics from within the case studies

leads to several new ndings.

First, the case data support the rst lead user criterion, namely, that users expect in-

novation-related benets that a new product solution could yield. However, the second

criterion does not apply in all cases. The development contractors in particular acquire

highly innovative know-how from typical users, not only from the leading edge, be-

cause users from the mass market often face needs at the same time as inventive users.

This nding has also been reported by Lettl and Herstatt (2004) in their study of leaduser characteristics in the medical technology eld, in which context the only difference

between typical and lead users was lead users ability to generate their own solutions

according to their needs, whereas typical users required the support of a professional

developer to realize the same needs.

Second, the Hilti and Buechi cases demonstrate that users who truly contribute to NPD

projects come from the same industry as the new product being developed. For the con-

struction industry, customers from other industries cannot yield the necessary know-how,

because they do not have the specic technical expertise required to provide qualied

feedback for high-tech devices. This evidence does not support the ndings of severalstudies on lead user integration that explicitly note the relevance of industry-external lead

users (Lilien et al. 2002). In the slow-moving construction industry, radically new appli-

cations inspired by lead users from other industries would not be adopted by customers

within the industry. Hiltis most valuable contributors are those who are only one innova-


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tion cycle ahead of the rest of the market. For Buechi, the customers considered lead users

represent the same industry as Buechi but also work within large pharmaceuticals and

use highly automated laboratory equipment. However, NPDs in the eld of automation

must be carefully adjusted to the relevant segment of typical users to dene appropriate

automation applications that have not yet been overengineered for laboratories with lessautomated processes. Consequently, the relevance of lead user input always gets veried

by testing it with typical users that have less access to automation. This test of lead user

input is also a standard practice at Hilti, such as the broad interview surveys at the end of

the concept phase.

With regard to the aspect of integrating users with both positive and negative attitudes

toward a new product under development, only Buechi considers users with a negative

attitude throughout the NPD process. The value of this measure is supported by Morrison,

Roberts, and Midgley (2004), and Buechi attains broader and more critical evaluations of

a product concepts relevance.For IDEO and Tribecraft, lead users are explicitly sought outside the industry for which

the product is being developed. However, in the case of the development contractors, the

consideration of typical users is necessary to guarantee the compatibility of the NPD

with the practices and values of a high-prot customer segment. Therefore, in addition to

identifying leading-edge product applications, the company considers typical use situa-

tions throughout the NPD process. However, IDEO integrates extreme and average users,

whereas Tribecraft differentiates between professional and amateur users. Tribecraft even

brings professional and amateur users together in workshops to make the differences in

the use situations as explicit as possible. By considering lead and typical users, the de-gree of newness of lead users know-how does not drop but simply is contrasted with the

know-how of typical users. As a result, differences become more explicit, which offers

further insights into the development of the NPD.

Taken together the ndings on customer know-how acquisition, the case study data

support the relevance of closeness, nancial attractiveness, and lead user characteristics

but that the latter two require renement. Financial attractiveness is not considered if

feedback from the specic use situation is sought. Focusing on the know-how from lead

users, also the value of an early involvement of other than lead users, namely typical us-

ers, has to be mentioned: they seem to leverage the lead user know-how by making the in-novation potentials explicit that lie in the discrepancies between lead and typical users.

Customer Know-How Dissemination

The existing literature in the context of customer know-how dissemination lead to the

following denition (see literature section): customer know-how dissemination is the de-

tachment of customer know-how to make it understandable and available for developers

in NPD projects. In this context, the literature has shown the relevance of visualizing

intermediary NPD results through working models, mock-ups, and early prototypes. Tomeasure the degree of use of intermediary result visualizations by the case companies, we

analyzed the number of physical visualizations (which include very simple and approxi-

mate prototypes). Furthermore, the start of physical visualizations in the NPD process has

been investigated:


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development contractors together with selected product users. Figure 1 provides a sum-

marized cross-case overview on the four companies NPD process and their activities of

customer know-how integration, which will further be explained subsequently.Because the potential of inuencing NPD goals (in terms of development cost, per-

formance, and time) decreases during the NPD process, the customer know-how utiliza-

tion measures that take place at the beginning of the project have the most impact on

the overall course of the project. Therefore, IDEO absorbs product clients and users

know-how as early as possible in the NPD process. Furthermore, both development con-

tractors focus on implementing rst those product functions and features that matter most

to product buyers and users. At IDEO, for example, the team members create a list of

possible product features based on insights from the human factors study with users. On

the basis of this list, the developer identies and prioritizes the make or break features,

which are fundamental for the realization of the product in terms of a risk assessment,

together with the product buyer. After such a decision, IDEO can continue with its de-

velopment according to the product buyers priorities. As a result, the innovation project

progresses through the implementation of product functions and features, and developers

Figure 1 Cross-case overview on customer know-how integration in NPD processes


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continually make decisions with the product buyers about their sequence and adoption.

This practice can be regarded as a collaborative dynamic development prioritization of

product features and functions by developers and product buyers, in which the input of

users is deeply integrated.

This practice of dynamic product feature and function prioritization also can be par-tially observed among the development practices of in-house developers. Whereas IDEO

and Tribecraft involve the product buyer and users in prioritizing product features and

functions during the whole NPD process, Buechi only applies feature and function pri-

oritization in the early concept stage and Hilti only in the late concept stage and solely

to adjust design and handling aspects. However, even though Hilti considers its product

buyers for feature prioritization only during the late concept stage, it successfully prac-

tices dynamic product planning aspects through its formalized stage-gate process. This

practice supports the relevance of continuous and iterative planning, as conducted by

IDEO and Tribecraft. Although at Hilti, the rough project parameters are set at the projectstart, detailed planning is carried out at any gate only for the sequencing development

stage, not for the whole project. Overall, the data suggest an iterative planning approach

for the next development stage that focuses on product functions and features for which

required development information is available.

Taken together, the separate focus on customer know-how utilization leads to the fol-

lowing result: our data suggests an iterative planning approach for the next development

stage, focusing on product functions and features for which the required development

information is available and approved to be relevant. Hereby emphasized is the value of

practices which rst focus on implementing those product functions and features whichmatter most to client and users, in order to build the future product on its most important

attributes.

Determinants of Customer Know-How Integration

We analyzed a learning framework in the context of customer integration in NPD, consist-

ing of customer know-how acquisition, dissemination and utilization as critical steps. We

then investigated the framework in a setting of four companies in a business-to-businessenvironment. In the following section, we derive determinants from our ndings that can

serve as propositions for subsequent research or as a guideline for the effective integra-

tion of customer know-how in NPD projects.

Product buyer and user consideration. The cross-case analysis highlighted the rel-

evance of differentiating the product buyer from the product user: integrating customer

know-how comprehends the consideration of the person within the customer organization

who is responsible for the investment decision (referred to as the product buyer), as well

specic product users to get in-depth feedback about the specications and requirements

the new product must fulll. Whereas the product user contributes by providing spe-cic know-how about the practical product use situation or technological expertise, the

product buyer helps set product parameters. As a result, customer know-how integration

requires from the development team an awareness of the specic role of the product buyer

or user, which enables the team to approach that contributor in a way that will best acquire


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his or her know-how. The rst organizational determinant, derived from the frameworks

acquisition component, therefore refers to product buyer and user consideration. This

determinant ranges from undifferentiated to differentiated, where a tendency toward

differentiated has a positive impact on leaning from customers.

Leading and typical user consideration. The cross-case analysis highlights the rel-evance of integrating lead users as well as typical users throughout the NPD process.

Because the denition of lead users in the companies analyzed does not fully meet the

classical lead user denition, but considers other relevant criteria (e. g., lead users must

come from the same industry and must not be more than one innovation cycle ahead of

the industry average), these users are referred to as leading users to avoid an inappropri-

ate comparison to the lead user concept (von Hippel 1986; 1988).

In the four cases analyzed, both leading and typical users are considered throughout

the NPD process. Whereas inspiration from leading users is sought mainly at the project

start, typical users are considered on a regular basis to validate the relevance of the newproduct on a broad scale. The second organizational determinant within the component

of customer know-how acquisition therefore is the leading user and typical user consid-

eration. In this case, the determinant ranges from occasional to continual, where a

tendency toward continual positively inuences understanding customers.

Prototyping. The case studies showed that the dissemination of customer know-how

within NPD projects induces a partitioning of customer know-how, such that customer

input and know-how is concentrated on a specic development issue that must be solved.

The more easily a customers needs can be partitioned, prioritized, and therefore under-

stood and continually integrated in the form of single functions and features, the betterthis customer know-how can be disseminated into the NPD project. The development

contractors cases in particular demonstrate how customer know-how can be focused on

specic development aspects to progress the project in a focused way. This partitioning

of customer know-how occurs through physical visualizations of intermediary project

results. Therefore, the determinant within the step of customer contribution dissemination

is the prototyping practice during the NPD project. The determinant ranges from inte-

gral to modular, where a tendency toward modular positively inuences customer

know-how integration.

Project planning. The case studies showed that customer know-how utilization willinduce iterative NPD planning based on the collaborative and dynamic prioritization of

product features and functions by developers and product buyers and considering the

know-how of users. The cases surrounding the development contractors illustrate that

planning exibility enables understanding and implementation of customer know-how

into the project. The development contractors planning practices rely on an iterative ap-

proach: project parameters are set anew after each presentation of intermediary results

to the customer in the form of early prototypes. The iterative planning practices contrast

with a typical upfront planning model, as is adopted by many in-house developers, in

which know-how from customers disturb the project plan and lead to delayed projectdeadlines. The determinant within the component of customer know-how utilization

therefore is the project planning practice of the NPD project. This determinant ranges

from sequential to iterative, where a tendency toward iterative positively inuences

understanding customers.


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As a summary, gure 2 presents an overview of the determinants and characteris-

tics for improved customer know-how integration. It displays that tendencies toward the

specications at the outer range of the determinants positively inuence customer know-

how integration, and therefore the effect of customer integration activities: successful

customer know-how integration is facilitated when product buyers and users are con-

sidered in a differentiated rather than undifferentiated manner, when leading and typical

users are considered continuously throughout the innovation project instead of occasion-

ally, when prototyping takes place in a modular way of multiple prototypes instead of

providing few integral prototypes, and when project planning occurs iteratively insteadof upfront. The determinants do not claim that customer know-how integration can be

successful only if a developer adopts the characteristics on the outer range in gure 2,

but according to our ndings from the case studies they facilitate the process of customer

know-how integration.

Limitations

There are several limitations to our study. First, by choosing to focus on a very limited

set of industrial NPD, the results by necessity do not consider NPD projects with other

characteristics. The fact that only two in-house developers and two development contrac-

tors were investigated represents a major limitation, but helped to analyze opposed ends

of the spectrum from the very beginning of this research project. The result can only be

Figure 2 Determinants and characteristics of customer know-how integration


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applied to other in-house developers and development contractors with similar innova-

tion processes, and extensions to other industries than those of the cases studied must be

made carefully. An area for future research is the replication of the study in other industry

settings, whereas consumer goods pose a different problem than industrial goods.

Second, our analysis has been restricted to a Central European context. Although inthe design of the study no aspects were incorporated that are specic to Central Europe,

an international replication study could yield interesting results. Thus, a closer and dif-

ferentiated analysis of geographies and specic industry structures could be a rewarding

subject for additional investigations.

Generally, an empirical investigation of the research questions and development and

testing of research hypotheses on a broader scale should better assess customer know-how

acquisition, dissemination and utilization as well as their underlying customer contribu-

tions and customer participation. Also, research propositions and hypotheses should be

examined to identify and analyze further dimensions contributing to successful customerknow-how integration.

Concluding Remarks

The presented analysis contributes to customer integration research by providing an un-

derstanding for how learning from customers works. It gives some directions about deter-

minants and characteristics that positively inuence the process of customer know-how

integration and therefore the success of learning from customers in NPD projects.Even though our paper is descriptive in nature, ndings could be drawn at the fol-

lowing levels: rst, even though existing research has addressed aspects in the areas of

customer know-how acquisition, dissemination and utilization in NPD projects it has not

explicitly differentiated between the three steps which were found in learning theory:

while acquisition points at the personal characteristics and the know-how that can be

obtained from customers, dissemination focuses on how this know-how is made avail-

able for developers. Utilization nally is the concrete and selective implementation of the

know-how that could be acquired and disseminated.

Second, and focusing on the determinants we derived from the cases studied, sev-eral characteristics facilitate successful customer know-how integration. In the context

of know-how acquisition, we investigated the application of the lead user method in the

NPD process (von Hippel 1986; 1988). Our cases support the value of contributions from

lead users in their NPD projects. However, we found that the early involvement of typi-

cal users at a very early stage can leverage the know-how from lead users by making the

innovation potentials explicit that lie in the discrepancies between lead and typical users.

Pointing at our ndings for the other relevant customer and user characteristics, product

buyers (people within the client company taking the investment decision) as well as prod-

uct users should be considered at an early stage of the NPD project to understand differentperspectives, motives and contributions from customers.

In the context of know-how dissemination and utilization, the case studies demon-

strated the value of extensive prototyping and an iterative NPD planning approach.

Starting with gaining an understanding of the product attributes which matter most to


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clients and users an evolutionary implementation in the NPD process through continu-

ous evaluation of further functions and features, providing incremental guidance, was

found valuable.

Also, the study demonstrated that NPD and customer integration practices of the in-

house developers signicantly vary from those of the development contractors. Due toless formalization and extensive prototyping practices our investigated development con-

tractors have superior customer know-how acquisition and utilization capacities, which

leads to a better understanding of customer needs and, as a consequence, to new products

with a higher degree of newness. This nding could lead into research directions where

new organizational forms for NPD should be explored that enable companies to respond

to new opportunities discovered throughout a development project itself in a more dy-

namic manner.

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