Potential of social media in the customer interface of innovation process presentation at EBRF 2010 conference. Authors: Jari Jussila, Hannu Kärkkäinen, Hanna Nordlund

1. 1
POTENTIAL OF SOCIAL MEDIA IN THE CUSTOMER
INTERFACE OF INNOVATION PROCESS
EBRF 2010
10th Annual EBRF “Research Forum to Understand Business in Knowledge Society”
Conference – Co-creation as the way forward
Nokia, Finland
Jari Jussila, Tampere University of Technology
Hannu Kärkkäinen, Tampere University of Technology
Hanna Nordlund, Technology Centre Innopark Ltd

2. 2
Background
• According to a number of so called “success factor studies” of innovation, one of
the most frequently recognized very central drivers (maybe the most commonly
recognized essential individual driver) contributing to the success in innovation
and new product development is the good, in-depth understanding of customer
and market needs (e.g. Barcley, 1992; Rothwell, 1974; Cooper, 1993; Hart et
al., 1999)
• It has been suggested that customers, especially users, are becoming “the
developers” or “the innovators” who can dominate even whole innovation processes
in search for products that fit their needs exactly
• The notion of co-creation is based on idea of working closely with customers. It is
assumed that when a customer is involved as a co-producer, the interaction
between the parties should generate more value in terms of new knowledge and
ideas gained than a traditional transaction process. Co-creation is also expected to
lead to better identification of customer needs.
• Social media can provide novel and useful ways of interacting and collaborating in
innovation, as well as for creating new information and knowledge for innovations
(Barker, 2008; Bernoff & Li, 2008; Cachia et al. 2007), which have not yet been
much investigated because of the novelty of social media concepts and approaches,
and simultaneously, the possibilities of social media are not yet fully understood in
the context of innovation

3. 3
Perspective on Innovation
Product concept Launch
•Identifying lead users •Making use of lead users and •Feedback from new products
•On-line communities, online communities (e.g. business intelligence and
networking employees, users •Testing concepts (for example data mining techniques)
and customers on-line communities and virtual •User toolkits
•Identifying market trends communities, such as Second •Customization of products
•prediction markets Life)
•lead users •Voting
•”trend communities”
•User toolkits
• Problem and solution
marketplaces
•Competitions and voting

4. 4
Definition of Social Media and Web 2.0
• Web 2.0 means technologies that enable users to communicate,
create content and share it with each other via communities,
social networks and virtual worlds, making it easier than before,
as well as to have real life experiences in virtual worlds and
to organize content on the internet with content aggregators
(Lehtimäki et al., 2009)
• Social media can be defined as “A group of Internet-based
applications that build on the ideological and technological
foundations of Web 2.0, and that allow the creation and
exchange of user-generated content” (Kaplan & Haenlein, 2009)
• Furthering this, social media is referred to as applications that are
either fully based on user-created content, or in which user-
created content or user activity have a significant role in
increasing the value of the application or the service (Kangas et
al., 2007)

5. 5
Research aims
to study the potential of social media in facilitating the customer
interaction and the creation of customer understanding in the
innovation process
to understand, more specifically,
• how (Finnish) companies perceive the applicability and the
benefits of using social media in the customer interface of
innovation
• how significant opportunities social media is perceived to give
to involving customers in innovation
• how large potential social media is perceived to offer in the
different forms of customer interaction, and
• in which ways social media can support the acquisition of
customer needs related knowledge

6. 6
Research design
• A systematic literature review on social media in innovation
and customer interface contexts was performed
• A questionnaire was designed to study social media potential
and use in the above mentioned context utilizing found
social media related literature, survey- type empirical social
media studies, as well as several social media expert
interviews
• A sample of 1984 Finnish decision makers from companies
with more than 50 employees were surveyed
• Persons working in companies employing more than 50
employees in either research and development or product
design.
• 74 responses were received to the email invitation letter in two
weeks time period, the effective response rate thus being 3.7 %
(74/1984)

7. International studies, e.g.
• McKinsey Global Survey ”Building the Web2.0 Enterprise” 2008, 2009
• Forrester ”The Social Technographics of Business Buyers” 2009
• Social Media Today “The Coming Change in Social Media Business
Applications” 2009
• Social Media marketing industry report “How Marketers Are Using Social
Media to Grow Their Businesses” 2009
• Carabiner Communications “Social Media: How B2B Companies can
connect” 2009
• Emarketer “B2B Marketing on Social Networks: Engaging the Business
Audience”
• …
Completely or mostly lacking innovation perspective, customer knowledge
creation perspective or B2B-perspective

8. Potential of social media in the 8
acquisition of different types of customer
need –related information
Future- orientation of How significantly can social media support the acquisition of
related customer knowledge
the following types of customer need –related information?
User experiences from launched products
Feedback from preliminary product concepts that
have not been launched
New product attributes
Little or very little
Customer needs and requirements Moderately
Much or very much
Visionary and radically new product concepts
Trends
Weak signals
0% 10% 20% 30% 40% 50% 60%
N = 74

9. 9
Potential of social media in different
types of customer interaction
Depth of
customer interaction
Offering products and services to
customers for them to develop
products themselves
The company's and the customer
communities mutual interaction
Little or very little
The company's and it's customers
mutual interaction Moderately
Much or very much
Collecting customer information to
support product development
Passing product or service marketing
related information to customers
0% 10% 20% 30% 40% 50% 60%
N = 74

10. 10
Prerequisites for Social Media Use in
B2B Companies
Prerequisites for Social Media Use in B2B
Companies
The use of social media is allowed in my company
Training has been provided for social media use
My company has social media guidelines
My company has skilled staff to support social media use
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
agree or completely agree neither agree or disagree disagree or completely disagree
in the studied B2B companies almost half, 44.0 % expressed that the use of social media was allowed in their companies

11. 11
Social Media Use in B2B Companies
Social Media Use in B2B Companies
completely agree
agree
neither agree or disagree
disagree
completely disagree
0,0 % 10,0 % 20,0 % 30,0 % 40,0 % 50,0 %
11.0 % of B2B companies agreed (either completely agreed or agreed) that social media was used in their companies

12. 12
Social Media Use vs. Potential in
Innovation Process Phases
Social media use in innovation Potential of Social Media in
Innovation Process Phases in
B2B Companies
Social media use in internal
innovation
The front-end phase
Social media use in collaboration
with customers
Social media use in collaboration The product development phase
with product development /
innovation partners
Social media use in collaboration Launch/commercialization
with other outside organizations phase
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80%
rather much or very much somewhat rather little or very little rather much or very much somewhat rather little or very little

13. 13
Social Media Use vs. Opportunities in
Development
Social media use in innovation Social Media Opportunies in
Development of B2B Companies
Social media use in internal
innovation
Social media offers significant new
opportunities in discovering
customer demands
Social media use in collaboration
with customers
Social media offers significant new
opportunities to develop innovation
Social media use in collaboration activity
with product development /
innovation partners
Social media offers significant new
opportunities to develop the
Social media use in collaboration organizations activities in general
with other outside organizations
0% 20% 40% 60% 80% 100%
0% 20% 40% 60% 80% 100%
significant or very significant moderately significant
rather much or very much somewhat rather little or very little of little significance or unsignificant

14. 14
Social Media Use vs. Innovation Results
Social Media in Improving Results
Social media use in innovation of Innovation Activity in B2B
Companies
Social media use in internal
innovation Social media can help in improving
quality
Social media use in collaboration Social media can be used to increase
with customers customer orientation
Social media use in collaboration Product development time can be
with product development / shortened with the help of social
innovation partners media
Social media can save costs
Social media use in collaboration
with other outside organizations
0,0 % 20,0 % 40,0 % 60,0 % 80,0 %100,0 %
0% 20% 40% 60% 80% 100%
rather much or very much somewhat rather little or very little
rather much or very much somewhat rather little or very little

15. Challenges of Adopting Social Media in 15
Innovation Activity
Lack of understanding of the possibilities of social media in innovation
1
Difficulties in assessing financial gains
3
Difficulties in adopting new mental models and practices
4
Lack of case evidence
Security issues
Inadequate personnel resources
Difficulties in applying to current innovation process
Inadequate time resources
Difficulties in integrating to existing information systems
Inadequate financial resources
Failed experiments or bad experiences
0 10 20 30 40 50 60 70 80