Virtual Customer Integration in New Product Development Guido Lang University of Bern, Switzerland, guido.lang@iwi.unibe.ch Marc Fetscherin Rollins College, USA, mfetscherin@rollins.edu Christoph Lattemann University of Potsdam, Germany, christoph.lattemann@uni-potsdam.de International Academy of E-Business 8th Annual Conference, March 20-23, 2008

Introduction Cf. Füller et al. (2004), Sawhney et al. (2003), Leonard-Barton (1993), von Hippel (1988). Virtual Worlds May impact the way businesses interact with customers Market is constantly changing and evolving Second Life (SL) encountered widespread public attention SL is entirely built and owned by its residents New Product Development Innovation is key for competitive advantage External knowledge to succesfully launch new products Integration of customers into the product development process Different development stages and integration forms If and how are companies using Virtual Worlds for customer integration in new product development?

Virtual Worlds

May impact the way businesses interact with customers

Market is constantly changing and evolving

Second Life (SL) encountered widespread public attention

SL is entirely built and owned by its residents

New Product Development

Innovation is key for competitive advantage

External knowledge to succesfully launch new products

Integration of customers into the product development process

Different development stages and integration forms

If and how are companies using Virtual Worlds for customer integration in new product development?

Literature Review Various authors conceptualized the new product development process using stage models Lengnick-Hall (1996) described distinct roles for customer contributions in the value-creating process

Various authors conceptualized the new product development process using stage models

Lengnick-Hall (1996) described distinct roles for customer contributions in the value-creating process

Methodology Focus on Second Life, as no other Virtual World attracted comparable amount of companies to establish presences Case study approach due to explorative-qualitative nature Three-step data collection and analysis List of companies in Second Life (n=130) Public announcements of companies‘ activities Qualitative content analysis of public announcements Categorization of each case Cross-case analysis Cf. Yin (2003).

Focus on Second Life, as no other Virtual World attracted comparable amount of companies to establish presences

Case study approach due to explorative-qualitative nature

Three-step data collection and analysis

List of companies in Second Life (n=130)

Public announcements of companies‘ activities

Qualitative content analysis of public announcements

Categorization of each case

Cross-case analysis

Results Data collection until October 2007 First company, BBC Radio 1, in May 2006 Since then monthly average of 10 companies entering Peak in March 2007 (23 companies) Prominent examples include IBM, Sun Microsystems, GM, Dell, NBC Universal, Mercedes Benz, AMD, Microsoft, etc. Cross-case analysis revealed similarities/differences Core product Main objective Competitive contribution Ongoing development

Data collection until October 2007

First company, BBC Radio 1, in May 2006

Since then monthly average of 10 companies entering

Peak in March 2007 (23 companies)

Prominent examples include IBM, Sun Microsystems, GM, Dell, NBC Universal, Mercedes Benz, AMD, Microsoft, etc.

Cross-case analysis revealed similarities/differences

Core product

Main objective

Competitive contribution

Ongoing development

Results continued Vgl. bspw. Festinger/Katz (1965), Bortz & Döring (2003).

Conclusion Only 17 percent of companies in Second Life use it for customer integration in new product development Development of new core products mainly in later stages If used during concept and design or product testing, this tends to be the main objective Companies organize competitive contributions when customers are integrated in the concept and design phase Most companies plan their activities as an ongoing development effort - not as a one-time event Limitations Qualitative-explorative, hence no statistical generalization Public announcements often only intention to act Study conducted at an early development stage

Only 17 percent of companies in Second Life use it for customer integration in new product development

Development of new core products mainly in later stages

If used during concept and design or product testing, this tends to be the main objective

Companies organize competitive contributions when customers are integrated in the concept and design phase

Most companies plan their activities as an ongoing development effort - not as a one-time event

Limitations

Qualitative-explorative, hence no statistical generalization

Public announcements often only intention to act

Study conducted at an early development stage

References Dahan, E., Hauser, J. (2002). The Virtual Customer, Journal of Product Innovation Management, Vol. 19, Issue 5, pp. 332-353. Enkel, E., Perez-Freije, J., Gassmann, O. (2005). Minimizing Market Risks Through Customer Integration in New Product Development: Learning from Bad Practice, Creativity and Innovation Management, Vol. 14, Isssue 4, pp.425-437. Füller, J., Bartl, M, Ernst, H., Mühlbacher, H. (2004). Community Based Innovation. Proceedings of the 37th Hawaii International Conference on System Sciences. Füller, J., Matzler, K. (2007). Virtual Product Experience and Customer Participation – A Chance for Customer-Centred, Really New Products. Technovation, Vol. 27, pp. 378-387. Lengnick-Hall, C. A. (1996). Customer Contributions to Quality: A Different View of the Customer-Oriented Firm. Academy of Management Review, Vol. 21, No. 3, pp. 791-824. Leonard-Barton, D. (1993). Developer-User Interaction and User Satisfaction in Internal Technology Transfer, Academy of Management Journal, Vol. 36, Issue 5, pp.1125-1140. Nambisan, S. (2002). Designing Virtual Customer Environments for New Product Development: Toward a Theory. Academy of Management Review, Vol. 27, No. 3, pp. 392-413. Sawhney, M., Prandelli, E., Verona, G. (2003). The Power of Innomediation. MIT Sloan Management Review, Vol. 44, No. 2, pp. 77-82. von Hippel, E. (1988). The Sources of Innovation. New York: Oxford University Press. Yin, R. K. (2003). Case Study Research. 3rd Ed., Thousand Oaks: Sage Publications.