Voice-of-Customer-Methods. What is the best source of new-product ideas?
Voice-of-Customer-Methods. What is the best source of new-product ideas?
Dr. Robert G. Cooper, Dr. Angelika Dreher, 2010
38
Winter 2010
Marketing Management
voice
-of-
customer
Methods
What is the best source of new-product ideas?
Marketing Management
Winter
2010
39
Note: This article is the extended version, which was
edited to fit in the Winter 2010 issue of Marketing
Management. The shortened version of this article
can be found in that issue, on pages 38-43.
Blockbuster Product Shortage
The aggressive revenue growth goals of most firms point
to the need for a deliberate, systematic and managed ap
–
proach to generating game-changing new product ideas.
We identify a number of sources of new product ideas, and
then report the results of a survey of 150 firms to identify
which sources are the most popular, and more important,
which sources are the most effective—in terms of generating
robust new product ideas. The results are provocative when
we compare a number of voice-of-customer (VoC) methods
for idea generation against other popular sources of ideas.
In spite of the desire for breakthrough new product
ideas, recent data suggests that quite the opposite is occur
–
ring. For example, the nature of new-product development
portfolios has shifted dramatically in the last 15 years—away
from bolder, larger and more innovative projects to smaller,
lower risk projects. (See chart below.) Clearly, companies
cannot achieve their aggressive product innovation goals if
they continue to focus on small, incremental development
products and projects.
The quest for competitive advantage and achieving
significant increases in sales and profits though product de
–
velopment means that the portfolio of projects must change.
For that to happen will require new, bold and innovative
product ideas—some real game-changers and blockbuster
By Robert G. Cooper and Angelika Dreher
Breakdown of projects in the development portfolio – then and now
Development Project Type
New to world, new to
market – innovations
New product lines to the company
Additions to existing product line in
company
Improvements and modifications to
existing company products
Total
Mid-
1990s
20.4%
38.8%
20.4%
20.4%
100.0%
Now
11.5%
43.7% decrease
20.8% increase
30.1% decrease
80.1% increase
-40%
-60%
-20%
0%
20%
40%
60%
80%
27.1%
24.7%
36.7%
100.0%
% Change
40
Winter 2010
Marketing Management
ideas. Of five best practices identified, idea management has
the strongest impact on the increase in sales by new prod
–
ucts. (See chart above.) Having effective idea management
results in an extra 7.2 percent of sales from new products.
However, a major benchmarking study undertaken by
one of the authors reveals that only 19 percent of businesses
have a proficient ideation front-end to feed their develop
–
ment funnel and only 31 percent of firms have an effective
method for selecting which ideas to invest in. To a certain
extent, the best performing businesses model the way in this
benchmarking study: More than three times as many best
performers boast a well-executed ideation phase when com
–
pared to the poorer performing firms. But even among best
performers, there is much room for improvement. Similarly,
54 percent of best performers have an effective idea screen
–
ing system in place, almost four times as many as for poor
performing firms.
Best Idea Sources
To begin crafting an effective ideation system, identify
potential sources of ideas: Where do the good ideas come
from? And more importantly, where should they be coming
from, and which valuable sources are you missing? Favorite
idea sources may be evi
–
dent in your company, but
there is a lack of substantial
research to reveal the most
effective idea sources.
• Our data on 18 differ
–
ent sources of new product
ideas provide some provoca
–
tive conclusions about the
most popular vs. the most
effective sources of new
product ideas, and how well
voice-of-customer (VoC)
methods fare relative to all
the other approaches. The
idea sources, including eight
VoC methods, are:
• Six “open innovation”
approaches. Note that open
innovation has become a
popular topic in recent years,
and a handful of proponents
have made a strong case for
the approach. Open innova
–
tion (as opposed to closed
innovation) opens the firm’s
doors to ideas, technology
solutions, intellectual prop
–
erty and even fully developed products to those thousands of
people—scientists, private inventors, small businesses—who
lie outside your company, and may very well have your next
new product winner.
• Two strategic approaches including the use of periph
–
eral vision and exploiting disruptive technologies. More on
these strategic methods for comparison later.
• Two other popular methods are very well-known and
need little explanation, namely internal idea generation
(seeking ideas from one’s own employees) and patent map
–
ping and mining (looking at competitive patent activity).
Two key considerations are:
• Popularity, or how extensively each ideation method is
used, and
• management’s perception of the effectiveness of the
method in generating excellent, high-value new product
ideas.
The ideation four-quadrant diagram shown on page 42
reveals the popularity and effectiveness of each of the 18
methods. The popularity is measured by percentage of firms
that extensively use each method, shown on the horizontal
axis. Usage was captured on a 0-10 scale; “extensive users”
are those that checked the top third of this 10-point usage
New-product performance: 5 most important drivers
Idea management
Technology and resource management
Strategic planning
Product development process
Market intelligence
5.5%
.01%
0%
.02%
.03%
.04%
.05%
.06%
.07%
Impact on Sales of New Products – % Increase
7.2%
4.8%
2.4%
6.7%
Source: A.D. Little Innovation Excellence Study, 2005