Digital Co-creation with Customers

Investing in CRM and Analytics Key to Paradigm Shift in Product Innovation 

SMITH BRAIN TRUST — Lego Ideas, Dell’s IdeaStorm and My Starbucks Idea exemplify how consumers are interacting with firms to innovate. “Creating and nurturing partnerships with key customers and enabling them to customize products and services may be a more effective way to innovate, than by doing customer surveys,” says information systems professor Sunil Mithas at the University of Maryland’s Robert H. Smith School of Business, whose recent research with Terence Saldanha, and M. S. Krishnan underlies the paradigm shift in how companies innovate. 

The research focused on more than 300 manufacturers in such industries as home electronics, pharmaceuticals and telecommunications equipment.

Brands are evolving from approaching customers as survey- and focus-group subjects to treating them more like partners, the researchers argue. But “opening the innovation pipeline to customers and inviting them to contribute ideas for innovation” is just the beginning.

The other part of the equation is to prioritize investing in a CRM (customer relationship management) and analytics systems — “systems that are product-focused and customer-input rich with respect to analytical and relational information processing capabilities,” according to Saldanha, Mithas and Krishnan.

It’s further significant “for C-suite executives to embrace the notion that ‘relevant IT,’ not just ‘more IT’ helps assimilate the customer feedback that drives innovation,” Mithas adds.

And, the payoff isn’t entirely about the finished product. Exercising such product-focused CRM and analytics systems fosters “disciplined autonomy,” by which managers exercise freedom to source outside information while working from standardized IT platforms, Mithas says. “This combination of discipline with autonomy promotes software agility and helps to meet challenges associated with technology changes.”

Read more: “Leveraging Customer Involvement for Fueling Innovation: The Role of Relational and Analytical Information Processing Capabilities” by Terence Saldanha, Washington State University; Sunil Mithas, University of Maryland; and M. S. Krishnan, University of Michigan is published in the March 2017 issue of MIS Quarterly.