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Philipson, S., Ph.D., & Wendel, E. M.Sc. Is customer involvement in product development driven by high product complexity and/or high produc8on cost? Abstract This study of the relation between two factors that might explain why the Swedish wood component manufacturing industry use customer involvement in product development to a very small extent, failed to give high complexity and high production cost interesting predictory value in explaining the limited role of customer involvement in product development. In a complementary study, although with a small response rate, of the much more complex machine industry for the wood component industry even indicated that product complexity negatively impact customer involvement. Key words Production cost, product complexity, customer involvement, product development, B2B. Background Capitalism has two opposing tendencies; the general law of competition, driving towards perfect competition and commodities on the one hand and the strive of each individual company to differentiate its products to reap the monopoly rent of monopolistic competition, oligopoly or monopoly; Ricardo (1817), Marx (186Z), Schumpeter (1907) and Sraffa (1960). The fundamental differentiation is innovation and new product development. But why do companies in many industries ”accept” ”commoditization” of their products; not making enough efforts to invent or develop new products? Research has showed that customer involvement is crucial for successful new product development; Von Hippel & Urban (1988), Pitta et al (1996), Matzler & Hinterhuber (1997), Lagrosen (2005). In spite of this many companies refrain from customer involvement. Why? Interviews with key persons in the extremely commoditized Swedish wood component indicated that important factors behind this laxity could be the low product complexity and the low value added. 1(20)

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Philipson,  S.,  Ph.D.,  &  Wendel,  E.  M.Sc.

Is  customer  involvement  in  product  development  driven  by  high  product  complexity  and/or  high  produc8on  cost?

AbstractThis  study  of  the  relation  between  two  factors  that  might  explain  why  the  Swedish  wood  component  manufacturing  industry  use  customer  involvement  in  product  development  to  a  very  small  extent,  failed  to  give  high  complexity  and  high  production  cost  interesting  predictory  value  in  explaining  the  limited  role  of  customer  involvement  in  product  development.  

In  a  complementary  study,  although  with  a  small  response  rate,  of  the  much  more  complex  machine  industry  for  the  wood  component  industry  even  indicated  that  product  complexity  negatively  impact  customer  involvement.

Key  wordsProduction  cost,  product  complexity,  customer  involvement,  product  development,  B2B.

BackgroundCapitalism  has  two  opposing  tendencies;  the  general  law  of  competition,  driving  towards  

perfect  competition  and  commodities  on  the  one  hand  and  the  strive  of  each  individual  

company   to   differentiate   its   products   to   reap   the   monopoly   rent     of   monopolistic  

competition,   oligopoly  or  monopoly;  Ricardo   (1817),  Marx  (186Z),   Schumpeter  (1907)  

and   Sraffa   (1960).   The   fundamental   differentiation   is   innovation   and   new   product  

development.

But  why  do  companies  in  many  industries  ”accept”  ”commoditization”  of  their  products;  

not  making  enough  efforts  to  invent  or  develop  new  products?  

Research  has   showed  that  customer   involvement   is   crucial   for  successful  new   product  

development;   Von   Hippel   &   Urban   (1988),   Pitta   et   al   (1996),   Matzler   &   Hinterhuber  

(1997),   Lagrosen   (2005).   In   spite   of   this   many   companies   refrain   from   customer  

involvement.  Why?  Interviews  with  key  persons  in  the  extremely  commoditized  Swedish  

wood  component   indicated   that   important   factors   behind   this   laxity   could  be   the   low  

product  complexity  and  the  low  value  added.  

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New   product   development   in   the  wood  industry   is   essential.   Organizations  have   been  

created   both   in   Sweden   and   abroad,   to   Zind   ways   to   improve   and   change   product  

development,   Forest   Tech   Europe   (2008),   VINNOVA,   ”Woodwisdom”.   Competitive  

advantage   through   product   development   is   believed   to   end   in   the   wood   product  

industry,  due  to   a  non-­‐moving  market;  but  this  market  stagnation  might  be  just  as  well  

explained  because  there  are  few  real  innovations;  Wood  material  science  &  engineering  

(2008).  

The   relationships   between   Swedish   forest   industry   and   their   suppliers   are   not   well  

developed.   Specialization   often   leads   to   expertise   and   innovation,   but   the   wood  

component  suppliers  are  normally  not   specialized.  Communication  between  companies  

and   suppliers   is   limited   and   ineffective.   In   the   forest   industry   innovations   are   rare,  

Fredriksson   (2003).   The   Swedish   wood   manufacturing   industry   is   facing   intensiZied  

global  competition.  In  many  companies  (especially  smaller  ones,  struggling  for  survival),  

it   is   an   imperative   to   Zind   new   ways   of   development   to   increase   proZit;   Ekberg  

(Technology  University  of  Luleå).  

The  Swedish  glued  edge  pine  panel   industry  has  decreased.  According  to  Bengt  Friberg  

at   the   Swedish  Wood  &   Furniture  Association  (Trä  &  Möbelförbundet),   the  market  has  

dropped  with  17%  the  1st   half  of  2008  compared  to  2007.  Due   to   foreign  competition,  

the   30   Swedish   companies   in   1995   have   now   become   6.   The   glued   edge   pine   panel  

industry  had  a  stronger  position  a  couple  of  years  ago,  when  the  quality  of  the  Swedish  

wood  was  well   renowned  and  demand  from   international  markets   increased.  However,  

the   quality   of   foreign   competition   has   improved,   and   the   advantage   that   Swedish  

companies   had  have   disappeared.   Friberg   argues   that   the   future   lies   in   raw   material  

processing;   it   is   crucial   to   differentiate:   Specialization,   technical   improvements   and  

design  thinking  can  put  the  Swedish  industry  in  the  lead  again.

Despite  efforts,   a  substantial   part  of  all   product  development  projects   fail;   resulting   in  

the  launch  of  products  not  accepted  by  the  market,  thus  wasting  resources.  Reasons  are  

bad   communication  and   low   customer   involvement.   Product   failure   is   costly   and   time  

consuming;  doing  it  right  the  Zirst  time  can  keep  a  company  alive  and  give  it  competitive  

advantage,  Matzler  &  Hinterhuber  (1997).

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If   customer   involvement   can   affect  product   development   in  a  positive   way,   conditions  

that  affect  the   choice   to   involve  customers   are  of   interest.  Are  product  complexity  and  

the  value-­‐added   important   factors?  The  particularities   of  the   product   dictate   not   only  

the  kind  of  technology  a  company  have,  but  also   the  purchasing  behavior  of  the  buyers;  

Richard   &   Xiaohuba   (2004).   So,   does   product   complexity   and/or   value   added   also  

inZluence  if  the  company  chose  to  involve  customers  in  product  development?

2.  Theory

The  ultimate   test   of   innovation   is   consumer   response;   Pitta  et   al   (1996).   To  meet   the  

need   of   customers,   companies   require   technical   competence,   integration   competence  

and   market/business   knowledge.   Successful   product   development   depends   on  

understanding  the  customer;  Lagrosen  (2005).  Using  customers’  needs  and  wishes  as  a  

starting  point   in  product  development   increases  creativity   in  the  product   development  

process;  Esbri  (2008).  

It  would  consequently  be  of  value  to  investigate  the  drivers  of  customer  involvement  in  

product   development.   Customer   involvement   is   crucial   in   product   development;   Von  

Hippel  &  Urban  (1988),  Lagrosen  (2005),  Pitta  et  al  (1996),  Matzler  &  Hinterhuber  (1997).  

Findings   about   the   product   and   productions   aspects   driving   the   involvement   of  

customers,   would  help  companies   to   know   how   their   competitors   would  use   product  

development   as   a   differentiation   strategy.   It   will  map   how   the  wood   industry   and   its  

suppliers  function  and    might  lead  to  an  awakening  about  the  necessity  to  develop  new  

products.

Little   research   has   been   made   of   the   forest   product   industry.;   Hovgaard   &   Hansen  

(2004).  Not  much  is  known  about  its   innovation  practices  and  its  product  development.  

What  is  known  is  mainly  about  the  furniture  industry;  an  industry  driven  by  fashion  and  

end   customer   preferences.   Product   development   in   industrially   oriented   sectors  may  

differ  and  must   be   investigated   further.  The  future  success  of  forest   industry  products  

ought  to  be  centered  on  new  products,  new  processes  and  the  use  of  new  raw  materials;  

Hovgaard  &  Hansen  (2004).

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2.1  Commodity  products

A   large  portion  of  the   Swedish   forest  products   are  commodities.   A  commodity  has  the  

same   features  as  other  products   in   the  market,   the  difference   lying   in  the   price  of  the  

product.  The  fact  that  buyers  mainly  consider  the  price  of  the  product  leads  to  a  limited  

information   Zlow   between   suppliers   and   customers.   The   lack   of   information   Zlow  

inZluences   the   commodity   producer   negatively.   If   the   needs   and   wants   of   the   Zinal  

customer  do  not  reach  the  supplier,  they  will  probably  not  be  able  to  satisfy  those  needs;  

Johansson   (2004).   Without   innovation,   industrial   markets   risk   ending   up   with  

commodity  products;  McQuiston  (2004).  

2.2  Product  complexity

According   to   Richard  &   Xiaohuba   (2004),   manufacturers   of   complex   products   in   the  

environmental   industry   context,   started  to   realize   that   early   customer   involvement   in  

product   development   effectively   decreases   market   uncertainty,   production   cost   and  

time-­‐to-­‐market.

Eppinger  &  Novak  (2001)  divide  product  complexity  into:

1. The  number  of  product  components  to  specify  and  produce.

2. The  number  of  interactions  to  manage  between  these  components,   named  parts  

coupling.

3. The  degree  of  product  novelty.  

In  Eppinger  &  Novak  (2001)  it  is  argued  that  product  complexity  is  driven  by  a  number  

of  factors;  choices  in  performance,  technology  and  product  architecture.

2.3  Added  value  and  Production  cost/unit

High   added   value   on   the   product   makes   it   easier   to   put   resources   to   product  

development.   It   is  also   indication  of   the   (potential)  proZit;   it   is   therefore   unlikely   that  

companies   would   answer   direct   questions   about   the   value   added.   However,   in  

commoditized  markets  with   low   complexity   products,   the   value   added   is   low.   Ceteris  

paribus   with   a   comparable   value-­‐added   percentage,   production   cost   would   give  

indication  of  the  absolute  value-­‐added.  We  supposed  that  a  question  about   production  

cost  would  be  less  invasive.  The  production  cost  is  an  important  variable  when  choosing  

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overall  corporate  strategies.  The  cost   of  the  product  dictates  the   lower  boundary  price  

the  product  will  have  and  is  therefore  crucial  to  keep  as  low  as  possible,  Sloman  &  Hinde  

(2007).

2.4  Product  development

According  to  Ulrich  &  Eppinger  (1995,  p.  2),  product  development  is  deZined  as  “...the  set  

of   activities   beginning  with  the  perception  of   a  market   opportunity   and  ending   in  the  

production,  sale  and  delivery  of  a  product.”

According   to   Gounaris   et   al   (2001)   industrial   goods   companies   are   not   as   market  

oriented  as   consumer   goods   companies,   including   less  considering   cultural   needs  and  

general   behavior.   Not  being  market   oriented  is   a   result   of  having   engineers   and   R&D  

oriented  rather  than  marketing  oriented  managers;  Hlavaeck  (1980).  As   a   result,  more  

value  is  given  to  technical  rather  than  selling  aspects.  A  reason  why  industrial  companies  

are   more   sales   oriented   than   market   oriented   could   be   that   buyers   build   long-­‐term  

relations  with   suppliers;   Gounaris  et   al   (2001),   Gansean  (1994).   Industrial   companies  

pay   more   attention   to   product   technology   and  how   to   achieve   competitive   advantage  

through  technological  superiority  than  to   the  product   itself.   The  relation  is  “locking  up”  

the   buyer   with   the   supplier;   the   former   is   not   reevaluating   the   relationship.   To   gain  

competitive   advantage,   companies   ought   to   be   market   oriented,   using   design,  

implementing  market  research  and  strategic  marketing;  Gounaris  et  al  (2001).

Product   development   can   be   either   radical   or   incremental.   Incremental   product  

development   modiZies   already   existing   products   or   adds   features   to   them.   The  

development  process   focuses   on  current  customer  preferences.   Those  preferences  will  

be  the  basis  for  product  modiZication.   It   is   essential   for  companies  working  on  volatile  

markets   to   develop   products   to   compete   with   new   product   lines;   Ulrich   &   Eppinger  

(2000).  Radical  product  development  focuses  on  new  business  through  product  and/or  

processes  that  change  the  economies  of  a  business;  the  target  is  a  new  market,  Ettlie  et  

al  (1984).

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2.5  Process  development

According   to   Pisano   (1994)   the   fundamental   challenges   of   process   development   are  

quite   similar   across   industries;   despite   differences   in   speciZic   activities.   Process  

development  starts  with  the  targets  for  process  performance:  Unit  cost,  capacity,  quality  

levels,  critical  tolerances  or  other  operating  characteristics.  The  goal  is   to  Zind  a  process  

that  either  optimizes  the  efZiciency  or  produces  the  product   to  a  lower  cost.   Integrated  

problem  solving  is  essential  for  successful  process  development.  There  are  three  stages  

in   the   process   development:   Process   research,   pilot   development   and   commercial  

startup.

The  process  research  stage  deZines  the  basic  structure  of  the  process.  The  main  idea  is  to  

describe  the  architecture  and  a  holistic   view   of  the  process  rather  than  explaining  it  in  

detail.  This  stage  would  in  product  development  be  called  concept  development.

In   the   pilot   development   stage   the   process   is   scaled   up   to   some   intermediate   scale,  

selecting   re-­‐creation   parameters,   as   timing,   temperature   and   pressure.   This   would  

optimize   the   efZiciency   of   the   process.   The   stage   relies   on   data   on   how   production  

actually  runs,  rather  than  theories  as  in  the  previous  stage.

The  commercial  start-­‐up,   involves  not  only   scaling  up  the  process   to  a  functional   stage,  

but   also   adapting   it   to   the   plant   where   the   product   will   be   produced.   In   this   phase  

unanticipated  problems  often  arise.  

2.6  Customer  involvement

Sandén  (2007)  states  the  customer  involvement  can  be  deZined  in  two  ways;

1. Customer  involvement   includes  all   communication  with  the  customer  in  relation  

with  the  product  development  process.

2. The   company   tries   to   identify   needs   which   the   client   is   not   aware   of.   It   also  

attempt   to   investigate  needs  that  are  difZicult  to   concretize.  The  most  important  

advantage  with  customer  involvement  is  to  identify  these  latent  needs.

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Kaulio   (1998)  deZines   three   types   of   customer   involvement;   Product   development   for  

the  customer,  product  development  with  the  customers  and  product  development  by  the  

customers.

Product  development  for  the  customer.This  approach  focuses  on  products  that  are  designed  on  behalf  of  the  customers.  Data  on  

users,   general   theories   and  models   of   customer   behavior   are   used   as   a   basis   for   the  

design.  The  approach  includes  speciZic  studies  of  customers,  such  as  interviews  or  focus  

groups.  The  product  development  process   is  based  on  customer  data.   Quality   function  

deployment   is   a   customer   involvement   method   for   the   customer.   Quality   function  

deployment   is   deZined   as   “A   system   to   secure   that   customer   needs   drive   the   product  

design  and  production  process.”  Customers   are  only   involved   in   the   initial   face   of  the  

product   development   process.   The   thoughts   and   preferences   of   the   customers   are  

interpreted   by   designers   and   put   into   product   characteristics,   Sullivan   (1986).   The  

designer  is  the  driver  of  product  development  and  the  customer  is  only  a  source  of  data.

Product  development  with  the  customers.This   approach   is   focusing   on   the   customer,   using   data   on   customer   preferences,  

requirements   and   needs.   Concepts   and  prototypes   of  solutions   to   customer  needs   are  

presented  to  customers  so  that  they  can  tell  if  it  would  really  be  a  solution  to  their  needs.  

The  approach  uses  a  formal  dialog  with  the  customers.

Concept  testing  is  one  of  the  methods  categorized  under  “product  development  with  the  

customer”.   The   method   involves   the   customer   in   the   early   stages   of   the   product  

development.   It  is  mostly  used  for  consumer  packaged  goods  and  durables,  but  also  for  

industrial   products.   To   facilitate   the   response  of   the   customer   the   presentation   of  the  

product   should   offer   a   realistic   description   of   the   proposed   product,   using   sketches,  

mock-­‐ups  and  prototypes.   To   receive  reactions  on  its   functions  and  features,   customers  

evaluates  product  ideas  and  the  Zirm  implements  changes  needed;  Moore  (1982).

A   second  method   is   beta   testing.   The   beta   test   is   applied   in   the   latter   stages   of   the  

product   development   process   and   aims   at   determining   if   the   product   satisZies  

customers.  The  beta  test  is  commonly  used  in  software  engineering  and  is  a  type  of  Zield  

test,  including  the  collection  of  information,  using  observations  or  historical  studies.  It  is  

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recommended   that   beta   testing   is   not   be   the   only   method   to   get   feedback   from   the  

customers,   as   the   reZlections  of  the   customers  would  be   given   too   late   in   the  product  

development  process;  Dolan  &  Matthews  (1993).

A   third   method   is   user-­‐oriented   development;   it   is   a   human   factors/ergonomics  

engineering  approach  to   product  design.   A   systematic   analysis  of  the   relation  between  

user,   product,   task   and  environment   leads   to   an   initial   problem   analysis.   The   analysis  

focuses  usage  requirements,   rather  than  product  features.   Several  prototypes   are  Zield-­‐

tested  on  customers  and  then  modiZied  by  designers.  The  designer  plays  a  crucial  role  in  

this  method.  The  Zield  of  applications  is  diverse,   including  the  design  of  military  outZits,  

interior  design  and  hand  tools;  Kaulio  (1998).

Product  development  by  the  customers.This   approach  is   focusing   on  customer  participation;   the  customers  do   not   only   share  

their  problems,  needs  and  wants,  but  participate  actively  in  Zinding  solutions.  Customers  

have  a  more  active  role  and  are  engaged  in  the  process  of  developing  solutions  to  their  

needs.   It   is   done   using   small   focus   groups,   not   one-­‐to-­‐one   interviews.   Two   customer  

involvement  methods  included  here  are;

Consumer   idealized   design;   a   method   emphasizing   customer   involvement   in   the  

conceptual  design  stage.   It  is   the  second  stage  of  the  design  process,  where  the  physical  

solutions   have   to   Zit   the   design   speciZications;  Hsu  &  Woo   (1998).   It   focuses   on   early  

customer   involvement,   by   using   an   exercise   similar   to   focus   groups.   Participants   are  

carefully  picked  from  the  target  market.  To  achieve  the  best  result  the  group  should  be  as  

diverse,   as  possible.  The  basic   idea  behind  the  approach  is  to  get  the  customer  to  forget  

existing   products   and   ignore   the   feasibility   of   the   design.   Each  session  begins  with   a  

blank  piece  of  paper.  The  role  of  the  customer  is  to  identify  the  basic   requirements  and  

actively  Zind  new  solutions  to  their  own  needs;  Cincianntelli  &  Magdisson  (1993).

A   second  method  is   the   lead  user  method.   Von  Hippel  &   Urban  (1998)  argue   that   the  

lead-­‐user  method  is   the  best  way  to   get  solution  data.  Lead  users  are  faced  with  needs  

that  often  will  become  general.  Lead-­‐users  face  them  months  or  years  before  the  bulk  of  

the  market.  Lead-­‐users  are  positioned  to  beneZit  massively  by  Zinding  a  solution  of  those  

needs.  The  lead-­‐user  method  is  carried  out  in  a  four-­‐step  process:

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1. Specifying  lead  user  indicators.2. Identifying  lead  user  groups.3. Generating  concepts  or  products  with  lead  users.4. Testing  lead  user  concepts  on  ordinary  users

Figure  1.  Customer  Involvement  Methods,  after  Kaulio  (1998)

Success  in  product  development  through  customer  involvementIf   used   correctly   customer   involvement   give   competitive   advantage.   Alam   (2002)  

describes  the  beneZits  of  customer  involvement  in  product  development  as  follows:

1. Reduced  cycle  time.  To  compete  in  a  fast  moving  market   it  is  often  important  that  the  development  process  is  fast.

2. User  education.  The  user  can  be  educated  about  the  use  of  the  product  and  its  attributes.

3. Rapid   diffusion.   An   early  marketing   push  of   the   product   can   lead   to   earlier  acceptance  on  the  market.

4. Improved   public   relations   can  be   accomplished  before   the   product   hits   the  market.

5. Long-­‐term  relationship  can  be  created  through  producer-­‐user  relationships.6. Superior   and   differentiated   services,   customer   involvement   can   lead   to  

products  with  unique  beneZits  and  better  value  for  the  user.

Negative  aspects  of  customer  involvementCompanies  not  involving  customers,  often  excuses  themselves  by  the  cost;  both  indirect  

and  direct  costs.   The  number  of  clients   is   relevant;  can  a  company  please  all?  Lagrosen  

(1995)  mentions  as  a  reason  given  for  not  using  customer  involvement  is  having  too  few  

clients.

According  to  Alam  (2002)  reasons  for  not  using  customer  involvement  are:

1. The   organizational   structure   and   culture   hamper   customer   involvement  and  make  companies  reluctant  to  its  beneZits.

2. Customer  involvement  is  difZicult  and  complicated.3. Perceived   increased   workload,   demanding   more   resources   in   time   and  

money.4. Perceived   increased   uncertainty   of   the   project;   as   client   behavior   is  

unknown.5. Customers  might  steal  the  product  ideas.6. Customers  do  not  have  the  right  knowledge.  

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Each  company  has  to  weigh  the  positive  and  the  negative  aspects  and  decide  what  is  best  

for   them.   The   aspects   must   be   analyzed   economically   and  weighed   against   increased  

proZits;  Alam  (2002).

2.7  State  of  the  art

Dominating  theory  Many   authors   argue   that   a   successful   product   development   is   accomplished   through  

customer   involvement;   Lagrosen,   (2005),   Kaulio   (1998),   Pitta  et   al   (1996),   Matzler   &    

Hinterhuber   (1997).   Von   Hippel   &   Urban   (1988),   Von   Hippel,   (2001)   states   that  

knowing;  understanding  and  working  with  customers  are  essential  factors  for  successful  

product   development.   Alam   states   6   factors   that   make   product   development   more  

successful   through   involving   customers;   Echeverri   (2005),   Kristensson   (2008),   Trevor  

(2004).

Emerging  theory

In   a   study   examining   the   effects   of   environmental   contexts,   such   as   technological  

turbulence,   Richard  &   Xiaohuba   (2004)   found   that   customer   involvement   in   product  

development   is   positively   predicted   by   product   complexity   and   formalization   and  

negatively  by  decentralization.  The  role  of  product  complexity  and   the  implementation  

of  customer  orientation  have  received   little  attention  in  literature;   Richard  &  Xiaohuba  

(2004),  supported  by  Biligin  (2006)  and  Ngamkroekjoti  (2008).

2.8  Research  Ques=onsThis   article   intend   to   give   validation   to   the   emerging   theory   of   Richard   &   Xiaohuba  

(2004)   and/or   propose   a   new   theory   about   value   added   (here   measured   by   high  

production  cost  and/or  high  product  complexity  and  high  production  cost   combined  as  

variables   positively   predicting   a   higher   degree   of   customer   involvement   in   product  

development.

Model  for  analysisCustomer  involvement  is  known  to  increase  the  chances  for  a  successful  product  

development;  Von  Hippel,  E.  &  Urban,  G.L  (1988),  Lagrosen  (2005),  Pitta  et  al  (1996)  and  

Matzler  &  Hinterhuber  (1997).  

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Many  Zirms  do  not  involve  customers  in  their  product  development.  Why?  Can  it  be  

shown  that  high  customer  involvement  is  driven  by  high  product  complexity  and  high  

production  cost?  

The  model  demonstrates  the  possible  effect  of  product  complexity  and/or  production  

cost  and  the  variables  combined  could  have  on  customer  involvement  in  product  

development.  The  success  of  product  development  will  not  be  investigated  in  this  thesis,  

but  is  the  intended  end-­‐result  of  using  customer  involvement.  

HypothesisH1:  High  product  complexity,  CO,  positively  predicts  the  use  of  high  customer  involvement,  

CI,  in  the  product  development;  CI=a*CO+z.

H2:   High   value-­added   (production   cost),   VA,   positively  predicts  the   use   of  high   customer  involvement  in  the  product  development;  CI=b*VA+x.

H3:  High  production  cost  and  high  product  complexity  together  positively  predicts  the  use  of  high  customer  involvement;  CI=a*CO+b*VA+y.

Figure  2.  Research  Model.  

3.  MethodThe  study  was  made  with  surveys  sent  per  e-­‐mail.  Most  respondents  where  contacted  by  

phone.  The  investigated  population  are  the  Swedish  wood  component  suppliers.  

3.1  Sampling/selec=onThe  Swedish  Wood  and  Furniture  Association  (Trä  och  möbelförbundet,)  have  63  wood  

component  suppliers  registered  today;  excluding  packing,  pallets  and  wood  carpentries’  

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suppliers.  We  also  excluded  companies  mostly  selling  end  products  to  end  consumers.  Of  

these  63  companies  we  have  spoken  to  55  on  the  phone,   to  which  the  survey  was  sent.  

The  remaining  8  was  not  reached.  We  received  36  surveys.  However  the  internal  losses  

where  important;  only  50%  of  the  surveys  where  testable.

3.2  Pre-­‐studyWe  made  a  pre-­‐study,   interviewing  some  industry   representa4ves,   to  get  a  deeper   insight  

into   how   the   companies   conduct   product   development   and   to   be9er   understand   the  

concepts  involved.  One  of  the  interviews  was  with  Per  and  Johan  Andersson  at  Thomas  Frick  

AB,  a  wood  machine  supplier.  The  second  interview  was  conducted  with  a  wood  component  

supplier,   ESS   ENN.   To   ensure   that   the   survey   ques4ons   were   properly   phrased   and  

understood,   we   tested   them   in   these   interviews.   The   interviews   gave   informa4on   on  

different   types  of  suppliers,  which  would  improve  the  understanding  of  the  answers  to  the  

survey.

To  obtain   informa4on  about   the  current   situa4on  on   the  Swedish  glued   edge  pine  panel  

market,  we  also  made  a  telephone  interview  with   Bengt   Friberg   at   the  Swedish  Wood  &  

Furniture  Associa4on.  

3.3  Opera=onaliza=on

Customer  involvementCustomer   involvement   is   clearly   important.   The   main   ques4on   is   whether   customer  

involvement  is  used  in  product  development.  It  is  important  to  know  as  it  is  a  building  stone  

of  the  hypotheses.  Sub-­‐ques4ons  1.3   and  1.5   are  based  on  the  theory  of  Alam  (2002).   The  

reasons  why   companies  use   or   do   not   use  customer   involvement   are   important   for   the  

analysis.   It   could  tell  us  how  the  companies  think  about  customer   involvement   in  product  

development.   Sub-­‐ques4on   1.1   refers   to   the   five   different   methods   of   customer  

involvement.  

To  operationalize  customer  involvement,  we  used  Kaulio’s  (1998)  categories:  

1.  None.  

The  company  does  not  use  customer  involvement  in  product  development.

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2.  Product  development  for  the  customer.

This  approach  focuses  on  products  designed  on  behalf  of  the  customers  and  not  letting  

the  customer  inZluence  the  actual  product  development  in  an  active  way.  Customer  visits,  

product   customization,   conversations   and   consultations   fall   under   the   product  

development  for  the  customer  approach.

3.  Product  development  with  the  customer  

This   approach   is   focusing   on   the   customer,   using   data   on   customer   preferences,  

requirements   and  needs.  Concepts  and  prototypes   of  customer  needs   are  presented  so  

customers   can   tell   if   they  would   be   solutions   to   their   needs.   The  approach   is   used   to  

keep  a  formal  dialog  with  customers.  Product  testing  and  product  development  meetings  

are  categorized  under  product  development  with  the  customer  approach.

4.  Product  development  by  the  customer.  

The  approach  is  focusing  customer  participation;  the  customers  do  not  only  share  their  

problems,  needs  and  wants,  but  participate  actively  in  Zinding  a  solution.  Customers  have  

a  more  active  role  and  are  engaged  in  the  process  of  developing  solutions  to  their  needs.

Production  cost

The  question  is  asked  to  see  the  total  cost  of  the  product.  It  is  crucial  for  hypothesis  2  as  

it   predicts   that   production  cost   per   unit   is   a   variable   for   choosing   customer   involved  

product   development.   The   question   is   based  on  Anderson’s   (2008)  the   theory  of   cost  

price.  We  have  operationalized  production  cost  in  an  interval  scale.

The  different  production  costs  were  be  classiZied  accordingly:•Group  1:  ≤10  SEK•Group  2:  11-­‐100  SEK•Group  3:  101-­‐1000  SEK•Group  4:  1001-­‐10.000  SEK•Group  5:  10001-­‐100.000  SEK•Group  6:  100.001–1.000.000  SEK•Group  7:  ≥1.000.00  SE

Product  complexity1.1    How  many  components  does  this  product  consist  of?

1.2  When  was  this  product  launched?

1.3  How  many  work  operations  are  need  to  complete  the  production  process?

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These  three  questions  have  a  common  purpose  to  determine  the  product  complexity.  

Product  complexity  is  the  main  theory  and  basis  for  hypothesis  1.  The  questions  are  

composed  according  to  the  deZinition  made  by  Eppinger  &  Novak  (2001).  How  many  

work  operations  that  are  needed,  is  asked  to  Zind  out  the  interrelation  of  the  

components;  a  crucial  factor  in  measuring  product  complexity,  Eppinger  &  Novak  

(2001).

Product  complexity  is  divided  into  three  parts,  Eppinger  &  Novak  (2001):

1.    The  number  of  product  components  to  specify  and  produce.

2.  The  number  of  interactions  to  manage  between  these  components,  named  parts  

coupling.

3.  The  degree  of  product  novelty.  The  third  question  is  substituted  with  the  development  

pace  of  products  within  the  company.

We  have  categorized  product  complexity  in  the  following  way:  

Low  complexity

The  product  consists  of:  1-­‐10  components.The  manufacturing  process  consists  of:  1-­‐25  work  operations.Number  of  developed  products  the  last  10  years:  0-­‐25  products

Medium  complexity

The  product  consists  of:  1-­‐10  components.The  manufacturing  process  consists  of:  1-­‐25  work  operations.Number  of  developed  products  the  last  10  years:  ≥  26  products.The  product  consists  of:  11-­‐100  components.The  manufacturing  process  consists  of:  1-­‐25  work  operations.Number  of  developed  products  the  last  10  years:  0-­‐5  products.

High  complexity

The  product  consists  of:  11-­‐100  components.The  manufacturing  process  consists  of:  1-­‐25  work  operations.Number  of  developed  products  the  last  10  years:  ≥6  products.The  product  consists  of:  101-­‐1000  components.The  manufacturing  process  consists  of:  0-­‐10  work  operations.Number  of  developed  products  the  last  10  years:  0-­‐50  products.

Very  high  Complexity

The  product  consists  of:  ≥  101  components.

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The  manufacturing  process  consists  of:  ≥  0-­‐10  work  operations.Number  of  developed  products  the  last  10  years:  ≥  51  products.

Based  on  the  theory  of  product  complexity  by  Eppinger  &  Novak  (2001),  we  

operationalize  complexity  based  on  a  classiZication  of  the  information  on  the  number  of  

produced  products,  work  operations  and  components.  The  combinations  of  these  three  

variables  are  used  to  distinguish  three  levels  of  complexity  as  visualized  in  the  following  

matrix.

Number of components 1-10Number of components 1-10 Number of components 11-100operations 0-10 operations 11-25 operations 0-10

Number of new products 0-5 19 3 1Number of new products 6-25 6 3 1Number of new products 26-50 1   1

Low complexity

Medium complexity

High complexity

Figure  3.  Complexity,  number  of  Xirms

4.  Empirical  data

4.1  Survey  results      36  Zirms,  57,1%  of  a  population  of  63  wood  component  manufacturers  in  Sweden,  

answered  our  survey.  Of  the  respondents,  87.5%  have  some  kind  of  product  

development.  

Wood   component   suppliers   are   likely   to   perceive   themselves   as   customer   focused  

companies.  If  the  company’s  perception  is  the  same  as  the  perception  of  their  customers’  

is  not  known.

Customer  involvementMost  wood  component  suppliers  perceive  themselves  as  actively  involving  customers  in  

the  product  development.  17.2%  of  the  wood  component  suppliers  do  not  use  customer  

involvement.  

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Knowing  what   kind  of  customer   involvement   the  suppliers  use  demonstrate  the  way   they  

perceive  “ac4ve  customer  involvement”  and  “customer  involvement  to  some  extent”.  For  the  

wood   component   companies   “product   development   for   the   customers”   is   the   most  

common.  

The   reasons   for   involving   customers   or   not   are   important   for   the   analysis.   The   most  

important   for   the  wood  component   suppliers,   is  to  create  long-­‐term  rela4onship  with   the  

customers;   28.6%.   Crea4ng  new  ideas  is  also   seen  as  important.   Many   wood   component  

suppliers  see  customer  involvement  as  a  way  to  cut  produc4on  4me.  The  “Others”   column  

includes:  educa4ng  the  customer,  11.8%,  be9er  PR,  4.1%.  To  secure  direct  demand  from  the  

customer   and   receive   customer   point-­‐of-­‐view   each   receive   answers   from   1%   of   the  

respondents.   25%  of  the  companies   that  do  not  use  customer  involvement  believe  it   is  

too  difZicult  and  complex.  

5.  AnalysisThe  Hypotheses  were  tested  with  regression  analysis.  

Hypothesis  1,  Complexity:  CI=+0,149*CO+0,511.  The  explanatory  value  is  only  5%,  The  

signiZicance  0,362.

Hypothesis  2,  Cost:CI=0,169*VA  +  0,238.  The  explanatory  value  is  low,  only  12%.  The  

signiZicance  is  only  0,155.

Hypothesis  3,  Cost  &  Complexity:  CI=-­‐0,137*CO+0,163*VA+0,306.  The  explanatory  value  

of  the  model  is  small,  only  17%.  Of  course,  because  of  the  small  sample  size  the  

signiZicance  is  only  0,256.

6.  ConclusionsBack  to  the  drawing  table.  Not  only  is  the  response  frequency  too  low,  but  the  

explanatory  value  is  low  and  the  relationship  between  product  complexity  seems  to  be  

negative,  contrary  to  our  hypothesis.  Why  is  that?  We  don’t  think  our  operationalizations  

are  wrong  or  bad.  Rather  the  study,  although  limited,  indicates  that  the  emerging  

theories  we  based  our  hypothesis  on  where  of  limited  value  or  even  incorrect.

Future  research

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We  also  tried  to  study  European  and  US  manufacturers  of  machines  for  the  wood  

component  industry;  an  industry  with  much  more  complex  products.  However,  we  only  

got  answers  from  18  firms  of  a  popula4on  of  80,  22.5%.  The  answers  indicate  that  the  

relation  might  be  much  more  complicated.  As  complexity  grows,  the  involvement  of  

customers  seem  to  decrease  again;  possibly  as  their  knowledge  becomes  less  relative  

that  of  the  manufacturers.

7.  References

7.1  LiteratureAndersson,  J.  (2008),  Kalkyler  som  Beslutsunderlag.  Studentlitteratur,  6th  edition.Archer,  T.,  Kristensson,  P.  &  Gustafsson,  A.  (2004),  Harnessing  the  Creative  Potential  among  Users,  Journal  of  Product  Innovation  Management,  21:4  –  14.

Alam,  I.  (2002),  An  Exploratory  Investigation  of  User  Involvement  in  New  ServiceDevelopment,  Journal  of  the  Academy  of  Marketing  Science,  Vol.  30  No.  3  pp.  250-­‐263

Avlonitis,  G.J.  &  Papastathopoulous,  P.  (2001),  The  Development  Activities  of  Innovative  and  Non-­‐Innovative  New  Retail  Financial  Products:  Implication  for  Success,  Journal  of  Marketing  Management,  Vol.  17,  pp.  705-­‐738.

Beskow,  C.  &  Ritzèn,  S.  (2000),  Performing  changes  in  Product  development:  A  framework  with  Keys  for  Industrial  Application,  Research  in  Engineering  Design,  Vol.  12,  p.p.  172-­‐190.

Bilgin,  M.  (2006),  On  civilized  plurality:  mapping  the  clash  of  civilizations  within  the  market,  Futures  (UK),  Emerald  Management  Reviews,  vol  38,  No  3.  

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7.2  Internethttp://www.ensisjv.com  (011208)http://www.woodwisdom.Zi/en  (011208)http://www.vinnova.se/Verksamhet/Produktframtagning/Wood-­‐Material-­‐Science-­‐and-­‐Engineering/Programbeskrivning  (011208)http://www.forest-­‐tech.net  (011208)http://www.vinnova.se  (011208)http://www.esbri.se/artikel_visa.asp?id=227  (011208)

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http://www.ft.com  (Marketing:  The  need  to  get  under  the  skin  of  the  consumer)http://www.ltu.se/arb/d1691/d1752/d3669/1.2490  (Technology  university  of  Luleå)https://www.ltu.se/forskning/1.16009?l=en&pureId=196688&pureFamily=dk.atira.pure.families.publication.shared.model.Publication  (Ekberg,  K.  (2005),  Design  investments  in  small  wood  manufacturing  companies  :  problems  and  possibilities  of  using  design  expertise  in  product  development,  Technology  university  of  Luleå.)

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