Consumers as Co-Developers Learning and innovation outside the firm

This study describes a process in which a firm relies on an external consumer community for innovation. While it has been recognized that users may sometimes innovate, little is known about what commercial firms can do to motivate and capture such innovations and their related benefits. We contribute to the strategy literature by suggesting that learning and innovation efforts from which a firm may benefit need not necessarily be located within the organization, but may well reside in the consumer environment. We also contribute to the existing theory on “user-driven innovation” by showing what firms purposively can do to generate consumer innovation efforts. An explorative case study shows that consumer innovation can be structured, motivated, and partly organized by a commercial firm that lays out the infrastructure for interactive learning by consumers in a public online domain.

Introduction: In contrast to internal corporate ventures (von Hippel, 1977; Burgelman, 1983), innovation and product development in the computer games industry depend upon external online consumer communities. This turns the idea of core competencies (Prahalad and Hamel, 1990) and non-imitability (Dierickx and Cool, 1989) on its head since a major share of the competencies in effect are public and reside outside the firm. Computer game consumers participate in online communities where they communicate, exchange ideas and software that extend the game from its original shape. Hence, in this setting, strategy formation is not just about creating and placing a product in the market; it also demands skills to frame and generate a consumer community external to the firm that co-develops and extends the product life.

Author: Lars Bo Jeppesen, Måns J. Molin

Source: Copenhagen Business School

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