Product development for distant target groups an experimental study for the silver market

In many respects, the so-called "Silver Agers" represent a remote target group, which means that there is a presumed, cognitive distance between the product developers and the target gro

Product Development for Distant Target

Hans Dietmar Bürgel (em.) · Diana Grosse

Cornelius Herstatt · Hans Koller

Christian Lüthje · Martin G Möhrle Hrsg.

Edited by

H D Bürgel (em.), Stuttgart, Germany

D Grosse, Freiberg, Germany

C Herstatt, Hamburg, Germany

H Koller, Hamburg, Germany

C Lüthje, Hamburg, Germany

M G Möhrle, Bremen, Germany

Forschungs-/ Entwicklungs-/ Innovations-Management

Weitere Bände in dieser Reihe http://www.springer.com/series/12195

Die Reihe stellt aus integrierter Sicht von Betriebswirtschaft und Technik Arbeits­ ergebnisse auf den Gebieten Forschung, Entwicklung und Innovation vor Die einzelnen Beiträge sollen dem wissenschaftlichen Fortschritt dienen und die For­ derungen der Praxis auf Umsetzbarkeit erfüllen.

Professor Dr Martin G Möhrle Universität Bremen

Malte Marwede

Product Development for Distant Target Groups

An Experimental Study

for the Silver Market

With a foreword by Univ Prof Dr Cornelius Herstatt

Malte Marwede

Hamburg, Germany

Forschungs­/ Entwicklungs­/ Innovations­Management

DOI 10.1007/978­3­658­18325­7

Library of Congress Control Number: 2017940813

Dissertation Technische Universität Hamburg­Harburg, 2017

Springer Gabler

© Springer Fachmedien Wiesbaden GmbH 2017

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Foreword V

Foreword

Successful product development requires that the target groups' exact customer needs are inscribed in new products and services The share of over 65-year-olds of the total population is growing as a result of demographic changes, for example in the Western world and Japan This entails a shift in the customer base in the respective countries, which presents new challenges and opportunities for product developers In many respects, the so-called "Silver Agers" represent a remote target group, which means that there is a presumed, cognitive distance between the product developers and the target group In consequence, this can lead to suboptimal product and service development outcomes in terms of matching customer needs

Mr Marwede addresses the outlined topics in his doctoral thesis and, with his research, contributes to innovation research that is relevant and valuable in both theoretical and practical terms Mr Marwede examines the presumed influence of different distance dimensions between developers (social and temporal) and the target group with regard

to the idea quality as well as quality in new product development The accentuated target group is the "Silver Market", i.e persons in their third age

The motivation for this work is the frequently stated assumption of authors and practitioners that product development for Silver Agers can only be successfully carried out if the responsible developers are of similar age and sharing similar life experiences to relate well with the needs and wishes of the target group Mr Marwede disproves this assertion based on experimental evidence He bases his empirical research contribution

on a comprehensive, experimental investigation of product and service innovation in the aviation industry

The work of Mr Marwede is, to the best of my knowledge, the first work to empirically investigate cognitive distances at the individual level in the field of product development Furthermore, it enriches the body of knowledge in of user involvement of elderly people

in the early stages of the innovation process

Researchers as well as practitioners in the field of innovation management significantly benefit from reading this dissertation

Hamburg, April 2017 Univ Prof Dr Cornelius Herstatt

I want to acknowledge the many partners in the different phases of the project: the Silver Ager associations Deutsche Seniorenliga e.V Unie KBO and ANBO for supporting and distributing my web-based pre-study to their members; the Senior Research Group of Berlin for providing real first hand insights about Silver Agers' needs, their willingness to conduct several preparatory sessions and for taking part in the experimental workshops; the two industrial partners from the aviation industry for sending developers to the workshops, supplying inspirational locations, challenging the structure and last but not least for covering the costs; Twente University and Frans Jonkman for making this study international and having me host a workshop at their Design Lab Furthermore, I would like to thank the many students who backed my thesis with their research or pragmatically helped to prepare, conduct and wrap-up the workshops, in particular Jia Lui Hew and Hilrike Hildebrandt

I also want to recognize my fellow PhD comrades for their helpfulness and support, in particular André Schorn and Florian Denker for instant problem-solvings, practical help

at the workshops and morale support

Last but not least I am thankful for my family for raising me and helping out, friends for distraction, and mostly for my wife Anna You are everything for me, taking every role from coach, critique, and also for being the loving mother of our children Matteo and Karla

Hamburg, April 2017 Malte Marwede

Table of contents IX

Table of contents

Index of figures XIII Index of tables XV List of abbreviations XVII

1 Introduction 1

1.1 Context and relevance 1

1.2 Research questions and objective 4

1.3 Research approach 6

1.4 Structure of dissertation 8

2 Theoretical foundations of silver agers and user involvement 11

2.1 Demographic changes and the establishment of the silver market 11

2.1.1 Ageing societies 11

2.1.2 Characterisation of silver agers 11

2.1.3 Silver agers as a distant target group 15

2.1.4 Age-based innovation for silver agers 15

2.2 User involvement in new product development 16

2.2.1 Innovation management, fuzzy front-end of innovation and idea generation 16

2.2.2 Meeting customer requirements 17

2.2.3 User involvement to meet customer needs 18

2.2.3.1 Development history of user involvement in new product development 18

2.2.3.2 Effects of user involvement 19

2.2.3.3 Typology of user involvement 20

2.2.3.4 Frameworks on the degree of user involvement 24

3 Foundations of research in the field of cognitive distance 33

3.1 Co-citation methodology 33

3.2 Results 36

3.2.1 Cluster distribution 37

3.2.2 Cluster 1 – Cognitive distance and construal level 37

3.2.3 Cluster 2 – Interrelation between four dimensions of cognitive distance 39

3.2.4 Cluster 3 – Spatial distance and construal levels 40

3.2.5 Cluster 4 – Subjective distance and emotional involvement 40

X Table of contents

3.2.6 Cluster 5 – Social distance and focalism 41

3.2.7 Cluster 6 – Temporal distance influencing behaviours and decisions 42

3.2.8 Cluster 7 – Communication between geographically distributed or virtual teams 42

3.2.9 Cluster 8 – Network and organisational proximity 43

3.3 Discussion 44

3.3.1 Cognitive distance – A gap in innovation management 45

3.3.2 Applicability of cognitive distance subcategories in new product development 47

3.3.3 Requirements for cognitive distance subcategory measures 50

3.3.4 Social distance operationalisation through social capital 51

3.4 Conclusion of co-citation analysis 52

4 Research questions and hypotheses for the experimental study 53

4.1 Research gap and research question 53

4.2 Hypotheses development for product development outcomes 54

4.2.1 Hypothesis regarding idea quality 55

4.2.1.1 Cognitive distance 56

4.2.1.2 User involvement 60

4.2.1.3 Cognitive distance and user involvement 65

4.2.2 Hypothesis regarding idea quantity 67

4.2.2.1 Cognitive distance 67

4.2.2.2 User involvement 68

5 Selection of research context for quantitative study 71

5.1 Choice of experimental approach 71

5.2 Classification of experimental approach 73

5.3 Industry context of experimental setting 75

6 Pre-study – Analysis of silver agers’ personal dispositions and air travel customer experiences 77

6.1 Purpose and methodology 77

6.2 Data collection 77

6.2.1 Survey development 77

6.2.2 Structure and constructs 79

6.2.3 Cooperation partners 81

6.2.4 Sample description 82

6.3 Flight patterns and preferences of silver agers 83

Table of contents XI

6.4 Silver-ager characteristics 86

6.4.1 Cognitive age 86

6.4.2 Innovation- and product-related user characteristics 88

6.5 Pain points of air travel customer experience 92

6.6 Interim conclusion 97

7 Distance effects in product development for silver agers 101

7.1 Study methodology/approach 101

7.1.1 Research framework 102

7.1.2 Context and institutional partners 103

7.1.3 Survey for development participants 104

7.1.4 Experimental workshops 105

7.1.4.1 Workshop structure 105

7.1.4.2 Treatments 107

7.1.4.3 Design of ideation session 111

7.1.4.4 Trial runs 113

7.1.4.5 Addressing reliability and validity of experimental design 113

7.1.5 Idea assessment 115

7.1.5.1 Judge selection 116

7.1.5.2 Rating method 117

7.1.5.3 Rating session 118

7.1.6 Operationalisation of constructs 118

7.1.6.1 Independent variables from participant survey 118

7.1.6.2 Independent and dependent variables from experimental workshops 123

7.1.6.3 Dependant variables from idea assessment 124

7.1.7 Data analysis technique 125

7.2 Findings from experimental study 126

7.2.1 Data set for analysis 126

7.2.2 Exemplary ideas generated in workshops 127

7.2.3 Descriptive analysis 129

7.2.3.1 Control variables – Diversity of workshop participants 129

7.2.3.2 Independent variables – Characteristics of participants 131

7.2.3.3 Dependant variables – Ideated output from workshops 134

7.2.3.4 Descriptive analyses of workshop control variables 137

XII Table of contents

7.2.3.5 Interim conclusion of descriptive analyses 143

7.2.4 Multiple regression analysis 144

7.2.5 Study 1 – Effects on idea quality 145

7.2.5.1 Correlation analysis 146

7.2.5.2 Regression model 149

7.2.6 Study 2 – Effects on idea quantity 154

7.2.6.1 Correlation analysis 154

7.2.6.2 Regression model 155

7.2.7 Evaluation of hypotheses of study 1 and study 2 156

8 Discussion and implications 159

8.1 Relevant streams of research on cognitive distance 159

8.2 Cognitive distance and user involvement in ideation 160

8.2.1 Summary of effects on idea quality (study 1) 160

8.2.2 Summary of effects on idea quantity (study 2) 160

8.2.3 Effects of cognitive distance 161

8.2.4 User involvement and moderation of cognitive distance 164

8.2.5 Dyadic co-creation with silver agers 167

8.3 Contribution 169

8.3.1 Academic research 169

8.3.1.1 Implications for cognitive distance research in management research 169

8.3.1.2 Implications for user involvement of silver agers in ideation 170

8.3.2 Managerial implications 171

8.3.3 Limitations and suggestions for further research 174

References 177

Appendix 201

Index of figures XIII

Index of figures

Figure 1: Frame of reference of dissertation project 4

Figure 2: Structure of dissertation 8

Figure 3: Silver-ager consumption 13

Figure 4: Ideas-to-products 16

Figure 5: Morphological box of user-involvement criteria 22

Figure 6: Degrees of user involvement in literature 30

Figure 7: Steps of data collection and co-citation analysis 35

Figure 8: Overview of co-citation network 36

Figure 9: Overview of co-citation clusters 38

Figure 10: Identified clusters by discipline and level of analysis 46

Figure 11: Need and solution knowledge for different types of persons 60

Figure 12: Levels of customer knowledge 62

Figure 13: Questionnaire design process 78

Figure 14: Survey structure 79

Figure 15: Customer flight experience 80

Figure 16: Importance x satisfaction matrix 81

Figure 17: Age distribution 83

Figure 18: Travel reasons, flight duration and frequency 83

Figure 19: Flight frequency per age group 84

Figure 20: First/last flight 85

Figure 21: Limitations of silver agers 86

Figure 22: Differences in cognitive and chronological age 87

Figure 23: Share of active flyers depending on age differences 88

Figure 24: Use experience by age 90

Figure 25: Cognitive empathy 91

Figure 26: Lead-userness GER vs NL 92

Figure 27: Average importance and satisfaction scores 93

Figure 28: Importance x satisfaction of air travel customer experience 94

Figure 29: GER vs NL innovation/satisfaction 96

Figure 30: Data collection steps of main study 101

Figure 31: Research framework 102

Figure 32: Treatment structure 105

Figure 33: Structure of ideation session 112

Figure 34: Judge characteristics 117

XIV Index of figures

Figure 35: Breakdown of data set for analysis 126

Figure 36: Exemplary ideas from experimental workshops 127

Figure 37: Top idea categories 128

Figure 38: Disciplines of participants 129

Figure 39: Development experience 130

Figure 40: Use experience of participants 130

Figure 41: Social proximity 131

Figure 42: Distribution of temporal proximity and group allocation 134

Figure 43: Histogram of idea quality 135

Figure 44: Boxplot and histogram of idea quantity 136

Figure 45: Idea quality per workshop 138

Figure 46: Idea quantity per workshop 139

Figure 47: Idea quality by participant status 140

Figure 48: Idea quantity by participant status 141

Figure 49: Idea quality by idea length 142

Figure 50: Idea quality by idea order 143

Figure 51: Scatter plots and distributions of variables influencing idea quality 149

Figure 52: Interaction effect of social proximity and user involvement 151

Figure 53: Graphical representation of effects on idea quality 160

Figure 54: Graphical representation of effects on idea quantity 161

Figure 55: Effects of cognitive distance subcategories 162

Figure 56: Effects of user involvement 165

Figure 57: Implications for Construal Level Theory 169

Figure 58: Gathering ego-centric networks for measurement of social proximity 202

Figure 59: Cluster 5 – Social distance and focalism 203

Figure 60: Normal distribution, residuals, residual scatter plot and P-P plot of study 1 model 206

Figure 61: Normal distribution, residuals, residual scatter plot and P-P plot of study 2 model 207

Figure 62: Scatter plots and distributions of variables influencing idea quantity 207

Figure 63: Idea length by degree of user involvement 209

Figure 64: Depiction of user involvement treatment 1 210

Figure 65: Extracts of information needs from interviews 211

Index of tables XV

Index of tables

Table 1: Framework of degrees of user involvement 26

Table 2: Subcategories of cognitive distance and applicability for product development 48

Table 3: Correlations of user characteristics 89

Table 4: Descriptives and correlation of social distance measures 132

Table 5: Exploratory factor analysis of social distance 133

Table 6: Descriptives and test for normality of idea quality 135

Table 7: Descriptives and test for normality of idea quantity 137

Table 8: Descriptives of idea quality of different workshops 138

Table 9: Hypotheses for idea quality, source: own analysis 146

Table 10: Correlations, means and standard deviations on idea quality 147

Table 11: Regression results of study 1: effects on idea quality 152

Table 12: Hypotheses for idea quantity 154

Table 13: Correlations, means, standard deviations on idea quantity 155

Table 14: Regression results of study 2: effects on idea quantity 156

Table 15: Evaluation of hypotheses 157

List of abbreviations XVII

1 Introduction

1.1 Context and relevance

The current demographic trend raises the question of how best to cater for the emerging market of elderly consumers with customer preference matching products and services The proportion of silver agers,1 that is, people above 65 years of age, is constantly increasing in the more developed regions of the world, reaching 30% in 2030 (United Nations, 2013) This renders silver agers a key target group for consumer product companies – a point of view shared by the two aviation companies who supported the experimental study component of this dissertation project

Initial associations with the idea of the elderly trigger images of people who are partly averse to technology, frail and with decreasing physical or mental capabilities (Nelson, 2004) Thus, specific silver-ager product design aims at regaining autonomy and serves

to compensate for mental and physical decline (Kohlbacher, Herstatt, & Schweisfurth, 2011; Peine, Rollwagen, & Neven, 2014) But does that picture really fit for the majority

of today’s silver-ager generation? First of all, increasing life expectancy, along with the relatively stable retirement age of 60-65 years in Western countries, creates a new life phase compared to previous generations Silver agers stay fit longer and as a consequence can ‘have it all’, all at the same time – time and flexibility as well as high levels of fitness,

at least in the early years of retirement Secondly, compared to the previous generation who were affected by the Second World War, the current retiring baby-boomer generation is financially better off and more keen to consume

So, what differentiates product development for this seemingly attractive target group, compared to other target groups? Bluntly speaking, this target group, like children, is probably not directly represented in corporate product development teams Thus, product developers simply referring to their own needs and preferences would appear to

be insufficient in this case Extant scientific literature presents several explanatory approaches as to why younger developers might struggle to accurately address silver-ager needs First of all, each generation is shaped by the technology designs and user interfaces of their so-called formative period, which they reach in their twenties, as stated

in generation theory (Docampo Rama, Ridder, & Bouma, 2001) Product interfaces and technologies that people are exposed to in this formative period are mastered and

1 For the course of this work, silver, as in ‘silver agers’, does not refer to the precious metal, but rather to elderly customers and users (65 years and above) who represent an emerging customer segment, i.e the

‘silver market’ (Levsen, 2015; Kohlbacher & Herstatt, 2011)

© Springer Fachmedien Wiesbaden GmbH 2017

M Marwede, Product Development for Distant Target Groups,

Forschungs-/ Entwicklungs-/ Innovations-Management,

DOI 10.1007/978-3-658-18325-7_1

2 Introduction perceived as the most coherent and intuitive to use This could result in greater difficulties for silver agers when using state-of-the-art software interfaces which they have not grown up with Secondly, quite apart from usability issues, preferences and needs might differ due to the different roles, socialisations and fashions that silver agers have experienced in their lives Thirdly, people tend to interact more closely with people from their own age cohorts (Adams & Blirszner, 1998) Thus, exchanges between young developers and silver agers are expected to be lower in quantity and depth compared to interchanges with peers of the same age group Subsequently, learning opportunities from interacting with silver agers through personal acquaintanceships are rare In conclusion, scattered evidence reveals potential obstructive effects that product developers face in product development for silver agers

In psychological literature, these effects can be attributed to cognitive distances, also referred to as psychological distances Studies of cognitive distances are grounded in

social psychology As early as the beginning of the nineteenth century, scientists studied the root causes and implications of distance in personal relations, at first predominantly

in the areas of social class and race relations (Bogardus, 1933) Besides these two areas, several other dimensions of cognitive distance were examined Liberman and Trope (1998) experimentally developed a theory, initially called temporal construal theory, which links the level of mental construal to how far in the future a situation is They found that near-future situations are construed more concretely compared to distant-future ones, which were envisioned more abstractly In the following years, this theory also proved to be applicable for other dimensions, such as social distance, spatial distance or the probability of occurrence of certain events It was subsequently renamed Construal

Level Theory (Liberman, Sagristano, & Trope, 2002) Cognitive distance is defined as “the

extent of divergence from direct experience of me, here and now along the dimensions of time, space, social perspective, or hypotheticality [probability]” (Liberman & Trope, 2014,

p 365) All cognitive distances are egocentric, which means they are anchored on the direct experience of the here and now (zero distance point) To move beyond this zero distance point to the past or future, geographically distant places, experiences of other people or hypothetical alternatives to reality involves mental construal (Liberman, Trope,

& Stephan, 2007) The estimation of distance is perceived subjectively rather than being decided by objectively measured units (ibid.)

In an innovation context, the notion of cognitive distance is established by Nooteboom in his earlier work regarding the cognitive theory of the firm according to the constructivist

Context and relevance 3 view of knowledge (Nooteboom, 1992) There, the focus is not on the individual employee but on the relationship and cooperation behaviour between companies Other management-related studies have picked up the concept of cognitive distance in the context of corporate teams, e.g for geographically dispersed virtual teams (Wilson, Boyer O'Leary, Metiu, & Jett, 2008) However, there are no innovation studies linking cognitive distance to meeting user needs in innovation This thesis attempts to fill this gap by exploring different cognitive distance dimensions and their effect on customer-centric product development

User needs are considered in new product development processes in various ways Product design literature has brought forward several means to incorporate users’ wants and needs into product development, e.g through design principles like human-centred, participatory or user-centred design (International Standardization Organization, 2010; Schuler & Namioka, 1993; Veryzer & Borja de Mozota, 2005) Besides these design philosophies, management and innovation research lists tens, if not hundreds, of approaches and methods that aim to bring the customer closer, or literally into the product development process – from market desk research, user surveys and focus groups to the lead-user approach (Hansen, Berente, & Lyytinen, 2009) These approaches can be differentiated by the degree of user involvement (Kaulio, 1998), which is determined by the intensity of how the users are engaged Does the approach just support development for the users or does it contain active in-person interaction with the user? Besides arguments on the benefits of user involvement, there is ample discussion about the right degree of user involvement in product development On the one hand, it is argued that the more and the closer the user is embedded in the development phase, the more successful the resulting products and services will be (Gruner & Homburg, 2000)

On the other hand, some argue that ordinary users are less capable of inventing really radically (Leifer, 2006; Norman, 2005; Norman, 2010; Verganti, 2008) or technologically (Magnusson, 2003) new products As a consequence, user involvement should be kept to

a lower degree

Figure 1: Frame of reference of dissertation project, source: own depiction

In the case of silver agers, this debate is even more sensible: “dramatic professional, age and gender differences between developers and users, rendered developers’ initial assumptions of shared experience [as] rather misplaced (as it did with I-design too), particularly in both technologies for the elderly” (Hyysalo, 2009, p 731) Thus, user involvement seems to be particularly crucial for age-based innovations (Bechtold & Sotoudeh, 2013) On the other hand, age-related decreases in cognitive flexibility and motivation can adversely affect user-involvement success (Reinicke & Blessing, 2007) Thus, the second aim of this study is to contribute to the discussion on the ideal degree of user involvement and find out whether user involvement can potentially mitigate the adverse effects of distance (see Figure 1)

1.2 Research questions and objective

I have described the challenges that product developers are potentially faced with when attempting to develop new products or services for distant target groups like silver agers Both psychological research regarding cognitive or psychological distance and innovation management research via user involvement-research and practice have made significant contributions in their respective fields To the best of my knowledge, no integrated studies exist in either field that explore cognitive distance on the individual level in product development or the potentially confounding effects of user involvement Thus, I acknowledge the accumulated knowledge in the research stream of cognitive distance and user involvement and contribute with this thesis to cognitive distance in innovation research, specifically in ideation settings Here, I explore which dimensions of cognitive distance substantially influence ideation outcomes and determine experimentally how user involvement influences and moderates these outcomes To conclude, the following research questions are answered in this dissertation project:

ƒ Research question 1: What are the schools of thought and relevant streams in inter-disciplinary literature on cognitive distance?

Research questions and objective 5

ƒ Research question 2: Does cognitive distance between product developers and silver agers have an influence on ideation outcomes in new product development?

ƒ Research question 3: Can potentially negative distance effects be offset through user involvement in ideation phase of new product development?

Combining concepts from social psychology and innovation management research offers new perspectives on the micro-foundations of ideation and user involvement in general, specifically for the silver-market stream of research

First, I extend Construal Level Theory to the individual product developer setting Here, I explore how cognitive distance affects product development outcomes and which subcategories of cognitive distance influence product development outcomes in particular This finding adds to the growing stream of management literature on Construal Level Theory (Kankanhalli, Ye, & Teo, 2015; Tumasjan, Welpe, & Spörrle, 2013; Wilson et al., 2008; Zhao & Xie, 2011)

Second, I add to user-involvement literature by revealing its effect on ideation outcome depending on different levels of cognitive distance to the target group on the part of the product developer These findings present a unique contribution to literature as I find that user involvement influences ideation outcomes depending on the level of cognitive distance I sketch a nuanced picture separating effects of user involvement on ideation output quality from effects on ideation quantity (productivity)

Third, there are many studies that evaluate the effects of user involvement on performance, measured either in terms of financial success or by the quality of the generated product or service ideas These studies predominantly base their findings either on surveys that include managers’ ratings on the perceived value of the user-involvement measures in different project settings or on embedded longitudinal studies which lack a sufficient number of observations for inferential statements In this dissertation, I apply an experimental approach that allows the drawing of statistical inferences in a controlled setting This approach responds to Witell, Kristensson, Gustafsson, and Löfgren’s (2011) call for studies comparing the effects of different user-involvement techniques in idea generation

Furthermore, I contribute to the growing body of silver-market research in the realm of product development This study explicitly addresses the growing segment of silver-market products or services which focus on customer needs and are not predominantly aimed at compensating for age-specific deficiencies or limitations, which are addressed

6 Introduction

by products such as rollators, special care products or assistive services (Levsen & Herstatt, 2014) Furthermore, I confirm and add to silver-market/gerontological research findings concerning chronological and cognitive age (Cleaver & Muller, 2002; Kohlbacher

& Chéron, 2012; Wellner, 2015) and on the progression of cognitive empathy levels for silver agers These findings directly affect innovating companies aiming at co-creating with silver agers

Methodologically, I respond to a call for more experimental studies in innovation management, which has generally lagged behind other disciplines (Boudreau & Lakhani, 2015)

This research is relevant because it delivers insight into how different cognitive distance dimensions affect idea and product development success for companies addressing distant target groups like silver agers Furthermore, the impact of user involvement is tested experimentally, indicating what companies can do to alleviate potentially negative effects of cognitive distance

1.3 Research approach

My research approach encompasses several methods, of both a quantitative and qualitative nature, in order to exhaustively explore the fields of cognitive distance and user involvement in innovation The research approach qualifies as a mixed-method design (Creswell, 2014) as it employs both qualitative research methods to explore the nascent field of cognitive distance in management studies as well as quantitative and deterministic methods in the experimental study

For the main study, I applied an experimental approach to reproduce product development for silver agers Centred on ideation sessions, the product developers’ task was to ideate solutions based on an exact representation of the target groups’ needs under different user-involvement treatments This experimental approach has several advantages First of all, due to the standardisation of workshop conditions, several confounding effects could be ruled out with a very high degree of confidence Secondly, participants filled in online surveys to control for the individual’s cognitive distance to the target group and other effects influencing ideation performance Therefore, the effects

of cognitive distance and/or user involvement could be empirically tested Prior to the experimental setting, two mock-up workshops were held at the university and at one company’s site to optimise the workshop set-up, content and structure

Research approach 7 Prior to conducting the experiment, a thorough literature search on cognitive distance was conducted Whereas cognitive distance is well established in social psychological research, it just recently found its way into management science, and has not yet been deployed in product development settings One aim of this dissertation is to systematically discover areas of application and schools of thought potentially applicable

in innovation management This is accomplished via a co-citation analysis, which is the examination of frequency, patterns and graphs of citations in articles and books (Rubin, 2010) The experimental study was embedded in the aviation industry, with the generous support of two major aviation companies Prior to the experimental study, an empirical pre-study was conducted for several reasons One aim was to identify the silver-ager target groups’ wants and most pressing pain points in the customer experience of air travel Additionally, the study served to gather silver-ager personal characteristics data

in order to gain insights on potentially age-related deficiencies Furthermore, this scale survey helped to source suitable silver agers for involvement in the experimental workshops In cooperation with German and Dutch senior citizen associations, i.e Deutsche Seniorenliga e.V., ANBO and Unie KBO, more than 1,100 responses were collected via an online survey In preparation for the experimental study, a focus group was conducted with Senior Research Group of Berlin Focus groups consist of a group discussion in order to elicit customer needs (McQuarrie & McIntyre, 1986) Here, specific pain points of the air travel customer experience were discussed by silver agers, steered

large-by two moderators The recording of the session is qualitatively analysed and condensed into a short audio recording to serve the purpose of an experimental treatment in the workshops The experimental workshop itself consists of creativity methods to structure the ideation Here, a storyboard was developed based on adaptions of the creativity methods brainstorming and 6-3-5 methods (Smith, 1998)

In order to link the outcome of the workshop to the degree of user involvement (through different workshop treatments) and individual cognitive distance (measured via the participant survey), the individual participants’ output (generated ideas) is assessed Here, I employ the Consensual Assessment Technique (Amabile, 1983), which is commonly used for idea quality evaluations in innovation management (Franke, Hippel,

& Schreier, 2006; Magnusson, 2009; Poetz & Schreier, 2012; Ramakrishnan, 2012; Riedl, Blohm, Leimeister, & Krcmar, 2013; Walcher, 2007) Practically, a one-day workshop with seven Senior Research Group expert judges was held

8 Introduction

1.4 Structure of dissertation

This dissertation is divided into four parts: the theoretical foundation, an argumentation

of the research questions and the context, a quantitative pre-study and the main experimental study (see columns from left to right in Figure 2) Chapter 2 presents an introduction to past findings on the phenomenon of ageing societies, characteristics of silver agers as described in the literature and a review of user-involvement research in innovation management Here, the concept of different degrees of user involvement is introduced Chapter 3 analyses cognitive distance related literature by applying a co-citation analysis Here, scientific roots from different scientific fields are uncovered qualitatively In chapter 4, the research questions and the research approach are laid out This includes the derivation of hypotheses based on the theoretical background detailed

in the previous chapters Chapter 5 argues for the use of an experimental approach and characterises the chosen methodology along established criteria for experiments Furthermore, the industry setting of the main study is explained and argued for

Research ions & approach

quest-Research gap

Hypothesis development

Experimental approach Industry setting

Research context

Silver-ager acteristics Air travel experience 6

char-Experimental study

Focus erimental setting

group/expe-Conducting workshops

Web-based participant survey

Idea assessment

Analyses and implications 7

x chapter number

Figure 2: Structure of dissertation, source: own depiction

Structure of dissertation 9 Chapter 6 contains the quantitative pre-study conducted in association with the European senior citizen organisations Deutsche Seniorenliga e.V., ANBO and Unie KBO Here, I collected more than 1,100 responses from silver agers in order to discover their preferences and the obstacles they face when travelling by air Furthermore, various personal characteristics in terms of psychological dispositions such as lead-userness, cognitive age or divergent thinking were gathered These characteristics helped to identify and recruit suitable silver-ager candidates for the experimental workshops Chapter 7 covers the main experimental study The methodology and the operational set-

up are described, including the derivation of the three experimental user-involvement treatments which were developed up front Additionally, the methodology of generating personal characteristics data via a web-based participant survey is revealed Furthermore, the idea assessment session is described in order to draw conclusions about the influence of cognitive distance and degree of user involvement on perceived silver-ager use value of the ideation outcomes Statistically, two hierarchical regression models are used, one to test effects of cognitive distance and user involvement on how well customer needs are addressed (dependent variable use value) and one to gain insights on the productivity (idea quantity) of the ideation session Chapter 8 (not shown

in Figure 2) discusses the findings of the regression models and links the results back to the research questions raised at the outset of the dissertation Finally, theoretical as well

as managerial implications are revealed The dissertation closes with an outlook on future research opportunities

2 Theoretical foundations of silver agers and user involvement

2.1 Demographic changes and the establishment of the silver market

2.1.1 Ageing societies

Most countries, and Western countries in particular, are experiencing the demographic ageing that results from increased life expectancy and/or decreased fertility rates This trend poses a challenge for societies on many levels First of all, the share of the population who are in the active workforce will decrease under the current retirement legislation This leads to a projected increase in dependency ratio in Europe from 42 retirees above 65 years per 100 workers to 65 in 2060 (Samuel, 2016) Dependency ratio

is the ratio of the number of people claiming retirement benefits versus the number of people paying income tax Furthermore, governments have to bear the higher social healthcare costs of an ageing population Higher pension obligations and healthcare costs put pressure on taxation levels for the remaining working population, i.e income tax payers Another controversial issue is the impact of demographic ageing on the supply of skilled workers A widely held position is that without significant immigration, companies will face a shortage of workers (‘Fachkräftemangel’, Allmendinger & Ebner, 2006) Others argue that technological progress, e.g through the digitisation trend, will make some work activities obsolete, reducing the need for labour (Hank & Meck, 2016)

Despite these challenges, an economic opportunity is emerging The new target group can

be addressed by both consumer products and services, including age-based, specialised designs, such as rollators, and universal products marketed specifically to silver agers, such as travel offerings Due to longer life expectancy and more active lifestyles, in combination with sufficient purchasing power, this silver-ager generation sets itself apart from previous generations Thus, silver agers present an attractive target group and business opportunity for consumer product or service companies The detailed characteristics of silver agers are elaborated in the next section

2.1.2 Characterisation of silver agers

Attempting to draw a unitary picture of the silver ager is difficult as they are a very heterogeneous group (Kohlbacher et al., 2011) Instead, this chapter aims to look at silver

agers from different perspectives Silver agers is not the only term for this target group of elderly consumers They are also known as Generation 55+, Best Agers or Golden Agers

Besides different names, there are also different approaches to delineate this market segment Chronological age is the most obvious method of segmentation Here, a

© Springer Fachmedien Wiesbaden GmbH 2017

M Marwede, Product Development for Distant Target Groups,

Forschungs-/ Entwicklungs-/ Innovations-Management,

DOI 10.1007/978-3-658-18325-7_2

12 Theoretical foundations of silver agers and user involvement frequently applied threshold is the retirement age, which is between 60 and 67 years in most countries Retiring imposes significant changes on peoples’ personal lives It marks

a transformation from a period of maturity, earning and responsibility (dubbed ‘second age’) to a phase of more individualistic personal achievement and fulfilment, called ‘third age’, followed by a ‘fourth age’ of dependency and decrepitude (Laslett, 1987) The historian Laslett (1987) introduced the idea of this so-called third age, which emerged in the 1950s after life expectancy rose far above retirement age However, Laslett does not provide fixed chronological age thresholds for the commencement of the third age or silver age For several reasons, age thresholds are not undisputed First of all, people age

at different speeds Thus, the older people are chronologically, the more varied the spread

in ‘real’ age terms This raises the issue of cognitive age versus chronological age The concept of cognitive age challenges the ‘predictive power’ of chronological age to accurately describe elderly people (Barak & Schiffman, 1981; Eastman & Iyer, 2005) Cognitive age represents self-perceived age in terms of the subcategories of emotions, biological status, societal perception and intellectual capabilities (Barak, 2009) and has been shown to explain the behaviour of older consumers (Kohlbacher & Chéron, 2012) Older people tend to perceive themselves as eight to fifteen years younger than they chronologically are (Cleaver & Muller, 2002) Nevertheless, as cognitive age is non-observable, marketers face difficulties in addressing silver agers by cognitive age segmentation Thus, for the course of this study, I acknowledge the limitations of silver-ager target group delineation by chronological age but define silver agers as being above

65 years for reasons of simplicity

Silver agers are an attractive customer group Demographic ageing in the developed world is increasing the number of silver agers By 2030, the share of silver agers aged 65 and above will almost double, from 18% in 2000 to 30% in 2030 (United Nations, 2013) Whereas demographic ageing started years ago in the developed world, it is now also gathering pace in less developed regions (ibid.) Silver agers are considered to be financially well situated, making them a good target for consumer product companies This is borne out by statistics showing that disposable income peaks right before retirement due to steadily increasing incomes and relatively low housing costs (e.g more than 50% of over-65s own a mortgage-free house, compared to 26% on average (Foster, 2015)) However, income equality is greatest for silver agers (Crystal & Shea, 1990) On average, silver-ager households had a private consumption spending level of €26,779 per household in Germany in 2013 (Statistisches Bundesamt, 2013) This is 91% of the average household income in Germany (not shown), which can be attributed to the lower

Demographic changes and the establishment of the silver market 13 average number of persons per household (1.5 for silver agers vs 2.0 on average for all households) Thirty-eight per cent of this consumption spend can be attributed to Living, which includes housing costs (see Figure 3) Food (13%), Leisure & Entertainment (11%) and Mobility (11%) are the next subcategories, in descending order

Share of spend vs average household

Share of consumption spend

Silver-ager households, 65+ years of age in Germany

Figure 3: Silver-ager consumption, source: own depiction based on Statistisches Bundesamt (2013)

The right-hand side of Figure 3 shows the differences in consumption between silver agers and average households (adjusted to total consumption) As expected, healthcare spending is 170% of the average household spend; this includes both goods and services Interestingly, Leisure & Entertainment is higher than for average households (105%) Therein, the largest subcategory is all-inclusive holidays, whose share is 140% of average household consumption At the lower end are Interior fittings (92%), Mobility (76%) and Clothing (72%) Thus, it can be concluded that, per capita, silver agers have significant consumption wealth at their command, which is spent selectively As most silver agers receive retirement benefits, their consumption behaviour is less dependent on economic cyclicality (Pompe, 2011)

Silver agers are exposed to physiological changes over time This results in a perceived and actual physical, cognitive and mental health decline (Peine et al., 2014) Cognitive decline can lead to lowered cognitive flexibility, problem-solving abilities and motivation (Reinicke & Blessing, 2007) This is caused by an increase in crystalline intelligence and

a decrease in fluid intelligence, which is associated with deductive reasoning and the ability to solve problems (Anderson, Funke, & Plata, 2007) In product development, this

14 Theoretical foundations of silver agers and user involvement

is reflected through the approaches of biological gerontology and human factor research, which results in product development guidelines and recommendations taking into account lower ability/strength levels in new product development (Fisk, 2009; Howard

& Howard, 1997) Product philosophies such as inclusive or universal design (Demirbilek

& Demirkan, 2004; Farage, Miller, Ajayi, & Hutchins, 2012) aim to incorporate potential customer limitations in order to increase the potential reach of new products or services Inclusive design is defined as “the design of mainstream products and/or services that are accessible to, and usable by, as many people as reasonably possible without the need for special adaption or specialised design” (British Standards Institute, 2005) However, the potential issue with these physical and/or mental ability centred approaches is that they give a simplified picture of customer needs by excluding wants and wishes that are not related to physical decline

Silver agers or elderly persons are assigned with typical characteristics or behaviour patterns which can be subsumed as stereotypes; these can have positive as well as negative attributes In the latter case, a recall of elderly people’s characteristics is solely focused on negative, deficiency centred attributes This is referred to as ageism

(Minichiello, Browne, & Kendig, 2000) With the Ageing Semantic Differential, there is

even a validated scale to assess the stereotypical attitudes young people have towards older adults (Gonzales, Tan, & Morrow-Howell, 2010) These include, of course, an impression of mental and physical limitations, but also reluctance to learn, which was also found for product developers (Hummert, 1994) They are also perceived to be ‘quickly overburdened’, lacking the ability to ‘think conceptually’ and as giving ‘please-me answers’ as opposed to their real opinion (Neven, 2011) Experimental studies proved that young people have negative associations with the idea of being old (Perdue & Gurtman, 1990)

In conclusion, the silver-ager market provides ample opportunity for consumer product and service companies The silver-ager target group appears to be highly heterogeneous, and this has to be taken into account in product development, including, for instance, ageing-related declining physical and mental abilities Ageism and stereotypical views are widespread Universal and inclusive design are design philosophies that include silver agers as product and service consumers However, focusing on customer limitations would seem to be short-sighted, as silver agers perceive themselves, on average, as younger than they are, which implies with fewer limitations

Demographic changes and the establishment of the silver market 15

2.1.3 Silver agers as a distant target group

Silver agers are adduced as an example of a distant target in this study Here, the question emerges as to what creates this distance Studies on the reasons for distance between people emerged as early as the beginning of the nineteenth century Bogardus (1933) developed a scale for the measurement of social distance and attitudes towards different races, jobs and religions The underlying principle behind the Bogardus scale is that the more prejudiced an individual is against a particular group, the less that person will wish

to interact with members of that group (Dawes, 1972; Geisinger, 2010) As discussed

above, ageism is a widespread phenomenon that is potentially associated with social

distance In addition to the above-mentioned factors, social class and nationality dimensions were also found to be determinants of social distance eventually leading to prejudice (Triandis & Triandis, 1960) Generally, attributes of members of social groups are memorised less well if they are distant, i.e not perceived as an in-group member (Park

& Rothbart, 1982) in any dimension, which includes age

Silver agers are defined as being above 65 years of age for the course of this study The effective retirement age in Germany is 62.7 (OECD, 2014) Thus, silver agers are unlikely

to still be part of the workforce, and product developers are unlikely to have them as colleagues

2.1.4 Age-based innovation for silver agers

Innovation by definition connotes an element of newness (Rogers, 2003; Van de Ven, 1986) and refers to new products, services, software or processes Successful innovations create value, i.e providing a solution for a customer need (Terwiesch & Ulrich, 2009) An innovation comprises of an invention, as innovating means establishing inventions on the market (Gaubinger, Rabl, Swan, & Werani, 2015) Age-based innovation delineates itself

as the market focus is on older people, which does not automatically exclude other target groups (Iffländer, Levsen, Lorscheid, Pakur, & Wellner, 2012) In the light of the physical

or mental limitations of the silver-ager target group, Kohlbacher et al (2011) stress the fact that this target group’s customer needs differ from the wants of younger customer

groups Thus, they put forth the overarching theme of need for autonomy that is satisfied

with age-based innovations (ibid.) One example would be an innovation in the area of luggage trolleys at airports, which would allow potentially weaker silver agers to be able

to travel independently For the course of this study, age-based innovation is not limited

to autonomy regaining facets of innovation as this would implicitly exclude innovations that solely aim to increase general customer value for silver agers, irrespective of any

16 Theoretical foundations of silver agers and user involvement limitations they might be exposed to Thus, ‘age-based’ is defined as “products and services developed and marketed taking into account needs and preferences of people of old age” (Iffländer et al., 2012, p 13)

2.2 User involvement in new product development

This section introduces and defines the central terms related to new corporate product development and gives an introduction to user-involvement activities and approaches

2.2.1 Innovation management, fuzzy front-end of innovation and idea generation

New product development and portfolio management is paramount for company success (Cooper, Edgett, & Kleinschmidt, 2001) Hence, balanced product portfolios should contain a certain share of new products Innovation comprises the development and implementation of new ideas by people in organisations (Van de Ven, 1986) Innovation

is the process of bringing inventions (new products or services) to the market; this emphasises its commercial and operational character (Gaubinger et al., 2015) There are many approaches to structuring innovation in organisations, and different concepts have evolved over time (Rothwell, 1994) One renowned process model is the Stage-Gate process by Cooper (1990) This process consists of several stages, in which innovation activities take place, and gates, in which go/no-go decisions on the follow-up of ideas or projects are made It requires the generation or acquisition of valuable ideas, concepts or prototypes and the pursuit of them up until market introduction (see Figure 4)

Concept develop- ment

Fuzzy

front-end

Detailed develop- ment

Commer-Figure 4: Ideas-to-products, source: own depiction

The initial stage is often referred to as the fuzzy front-end of innovation, due to the high degree of uncertainty in this early phase of development Improvements at this stage are

User involvement in new product development 17 associated with the highest benefits concerning overall innovation success (Cooper & Kleinschmidt, 1994; Khurana & Rosenthal, 1998) It is characterised through product strategy formulation, opportunity identification and assessment, idea generation, product definition and project planning (ibid.) It closes with an executive review (‘gate’), which dismisses unpromising initiatives The concept development phase and the detail development phase follow (see Figure 4) and also close with go/no-go decision gates The fuzzy front-end of innovation revolves around two central activities: generating new ideas and concepts and selecting the most promising ones to be pursued further (O'Hern

& Rindfleisch, 2009) Idea generation in this context can be characterised as the systematic search for new product ideas If these appropriately address customer needs,2they are a critical success factor for the future financial success of the product (Cooper & Kleinschmidt, 1987) Both idea generation and assessment are in focus of this dissertation

2.2.2 Meeting customer requirements

Innovating companies are urged to integrate the ‘voice of the customer’ into new product development (Griffin & Hauser, 1993), i.e to translate specific customer needs into product specifications Failure to meet customer needs, i.e to build products or services

on false assumptions, can result in dramatic losses A classic case of not meeting customer demands and the resulting failure is the introduction of the Ford Motor Company’s Edsel model in 1957 Although market research and sales measures were undertaken, the model did not sell The cause was that company managers overlooked the fact that consumer preferences had shifted towards more lifestyle orientation (Brooks, 2014; Drucker, 2014) Production was stopped two years later and, as a result, Ford’s losses increased to the level that, for every car sold, they made an additional loss equivalent to the sale price of that car (Brooks, 2014)

The process of creating an accurate customer-centric representation in ideation involves the internalisation of customer needs This empathising process does not take place in a vacuum but depends on existing customer knowledge, individual life experience paths and cognition Identified needs, in conjunction with adequate customer representation, are reflected in new products or services that are supposed to cater for these needs in the best possible manner From this perspective, the resulting products and services can be regarded as physical or virtual materialisations based on these individual customer

2 Customer needs/requirements are used interchangeably in this dissertation

18 Theoretical foundations of silver agers and user involvement representations Needless to say, the materialisation in the design can deviate from the actual needs, e.g through initial misperception of needs leading to wrong user representations or through imprecise translation into the actual product Additionally, developers embed a specific usability pattern, i.e how they envision the customer using the product, into the design (the so-called ‘script’) (Akrich, 1992), which may or may not fit the actual usability preference of the user In conclusion, the correctness of the user representation has a significant impact on customer-centric new product designs, leading

to product innovation success or failure

2.2.3 User involvement to meet customer needs

User involvement is defined as systematic approaches or interactions with users in order

to provide user-need knowledge for use in new product development Innovation literature in this field lacks conceptual clarity in the definition of central terms, e.g user involvement and co-creation are partially used interchangeably (Gemser & Perks, 2015) For the course of this work, I define co-creation as a specific form of user involvement, i.e

as a user-involvement approach in which the user actively contributes to the creation and

selection of new product or service offerings (O'Hern & Rindfleisch, 2009) In contrast, analysing collected customer data for new product development, such as complaints, represents a form of passive, non-co-creating user involvement (Brockhoff, 2003) User involvement leads to interactions with users in the fuzzy front-end of the process and can help to reduce the fuzziness in corporate innovation processes (Alam, 2006) Projects conducted with a high intensity of user involvement in ideation have a significantly increased chance of project success (Gruner & Homburg, 2000) From an individual product developer’s perspective, user involvement supports the creation of accurate representations of users through the accumulation of knowledge on customer needs

2.2.3.1 Development history of user involvement in new product development

User involvement has been practised for several decades As early as the 1970s, Hippel (1976) reports of users of scientific instruments contributing to new product development Apart from in industries with highly specialised products or services, user involvement, in terms of user input into the product development process, was barely evident until the 1960s (Rothwell, 1994) New product development processes were structured linearly, like manufacturing belts, satisfying soaring product demand in the years after World War II By the 1970s, when the years of supply shortages were finally over, the consumer product markets shifted to a more demand-driven state in which

User involvement in new product development 19 there was an excess of product supply, giving consumers a choice as to which product to buy Thus, rivalry increased, leading to producers competing for market share by addressing customer needs more precisely with their products As a consequence, product variety greatly increased In parallel, this change was mirrored in corporate innovation practice as ‘market pull’ and iterative new product development processes were introduced (Rothwell, 1994), emphasising customer focus Furthermore, user-involvement practice evolved in terms of the stage of the new product development process at which user input was sought, from user tests right before market launch to user involvement in the early phases of product development Until then, it had been implicit practice that integrating the voice of the customer into new product development was left to the product developers (McDonagh-Philp & Formosa, 2011) With increasing product variety and increased research and development efforts, reducing the number of market failures was of preeminent importance Subsequently, prototype and concept testing with users prior to market launch were intensified Supported by concepts like user-centred design, user-involvement practice was gradually shifted into earlier phases

of new product development process, including the fuzzy front-end, e.g through creation in ideation (ibid.) Nowadays, user involvement is practised in all phases of innovation (Kaulio, 1998), from product (Gruner & Homburg, 2000) and service innovation (Alam, 2002) to business-to-business (Herstatt & Hippel, 1992) and business-to-consumer settings (Franke & Shah, 2003)

co-2.2.3.2 Effects of user involvement

The effects of user involvement are well conceptualised in theory, but a literature screening showed that empirical evidence is fragmentary Generally, user involvement is positively linked to success measures like project success (Gruner & Homburg, 2000) or product market performance (Lau, Tang, & Yam, 2010) It also helps to increase the effectiveness and efficiency of the innovation process (Enkel, Perez-Freije, & Gassmann, 2005), especially for highly innovative products (Salomo, Steinhoff, & Trommsdorff, 2003), and reduces the risk of failure (Chesbrough, 2003) Additionally, user involvement

is related to user satisfaction (Kujala, 2003) Further objectives include support of the market acceptance and diffusion process, strengthening long-term relations with key customers, user education and improved public relations prior to market launch (Alam, 2002)

Against these positive attributes of user involvement, a stream of literature criticises the use of customers in product development, specifically in the fuzzy front-end of

20 Theoretical foundations of silver agers and user involvement

innovation So-called design-driven innovation literature claims that expert designers

should lead and make the decisions in product development (Verganti, 2008) In this paradigm, experts supply the solutions to the customer rather than co-designing them with users, which grants the designer interpretational sovereignty of what will be needed

by the customer This view is especially evident in the case of radical innovation design,

in which the non-experts are not expected to be able to look beyond the horizon of established solutions and usability patterns of currently existing products, which could lead to a stalemate (Bennett & Cooper, 1981) and a disincentive for established companies to embark on the exploration of technologies outside their current frame of reference (Christensen & Bower, 1996)

To conclude, this thesis takes a customer-pull perspective, adopted by many innovation scholars (Hippel, 1978), in which customers take an active role in innovation, because the focus of this study is on exploring the antecedents of what influences the accurate representation of current users

2.2.3.3 Typology of user involvement

User involvement’s theoretical foundation is an eclectic mix of several streams of literature Ives and Olson (1984) note its grounding in the theory and research of organisational behaviour, specifically in-group problem-solving, interpersonal behaviour and individual motivation Nonetheless, this association was made from a management information systems literature perspective in which the object of study is, for example, the introduction of a new enterprise software system Thus, both producer (e.g IT engineer) and user (e.g., ordinary employee using the system) are within the boundary of the same organisation Here, the individual user’s behaviour is bound to organisational conditions, motives and incentives Thus, these theories are hardly applicable to the focus

of this dissertation, which characterises the user-producer relationship as an organisational boundary spanning interaction

Innovation management literature has frequently viewed user involvement from a theoretical knowledge perspective (Hippel, 1994; Lüthje & Herstatt, 2004; Magnusson, 2009) Here, knowledge is treated as a resource which is not equally available or distributed between product users and corporate developers Innovation-related knowledge is segmented into need and solution components Need knowledge refers to insight into what users or customers want and desire in products and services and is highly related to use experience This knowledge typically resides with the user Solution knowledge is linked to product realisation, i.e how to technically implement product or

User involvement in new product development 21 service innovations and subsequently bring them to the market (Piller, Ihl, & Vossen, 2011) Thus, user involvement in corporate product innovation serves to augment the innovating company’s stock of knowledge with critical need knowledge In between these (theoretical) extreme cases of knowledge allocation, i.e all need knowledge with users and all solution knowledge with the manufacturer, extant literature paints a more nuanced picture, e.g in the frequently cited example of lead users (Herstatt & Hippel, 1992) and embedded lead users (Schweisfurth & Raasch, 2015), who are users with solution knowledge and corporate developers with a high level of need knowledge For the course of this study, user involvement is defined as all means to incorporate the

‘voice of the customer’ into corporate product development processes This includes user innovations, i.e solutions created by non-professional users (Lüthje, Herstatt, & Hippel, 2005)

User involvement and the literature thereof is discussed in a plethora of ways (see Figure 5) and is influenced by different fields of study, such as innovation management, information systems, marketing, engineering and design studies Some characteristics relevant for the course of this study are discussed in the following paragraph

22 Theoretical foundations of silver agers and user involvement

Characteristics User-involvement criteria

Concept Prototype

Process quality

User relationships

Observation Focus groups Market

Feedback Extensive

consultation Participatory

design Ethnography

(Co-) developer active

front- vice quality Interviews

Inventor Incremental ideas

Figure 5: Morphological box of user-involvement criteria, source: own depiction

A widely discussed characteristic of user involvement is whether users and their input are included by active participation or passively (Prahalad & Ramaswamy, 2000; Walcher, 2007) Although all approaches share the goal of increasing customer centricity

in product development, how the actual user is approached by the innovating company

differs strongly Passive user involvement can be characterised as listening to the user

(Bosch-Sijtsema & Bosch, 2015), which does not require the user to be proactive Passive user involvement is facilitated in several ways, e.g by means of observation, surveys or desk research (Janssen & Dankbaar, 2008) In contrast, active user involvement includes

an explicit collaboration with the user (Bosch-Sijtsema & Bosch, 2015), e.g in co-design

(Pals, Steen, Langley, & Kort, 2008) As a result, users are fully represented in the product

development process (Alam, 2002) The terms degree or intensity of user involvement describe this continuum of approaches from passive to active user involvement Its effect

is described in the next section in more detail

The locus of innovation refers to the place where innovation and value are actually created – from only at corporate grounds to innovations that can originate by customers

as well This is framed by the paradigmatic shift from manufacturer- to customer-active

User involvement in new product development 23 paradigm as the source of innovation (Hippel, 1978) Along these lines, high degrees of user involvement present ways for companies to appropriate value from user innovativeness Prahalad and Ramaswamy (2004) advance this perspective by individualising the user experience in value creation and extraction from market offerings of companies which can be co-created uniquely by the users

User involvement is realised by the application of various formal and non-formal methods These range from traditional methods like sole need elicitation approaches such

as focus groups (McDonagh-Philp & Langford, 2003) to user innovation sourcing user approaches (Herstatt & Hippel, 1992) to virtual or web-based approaches (Dahan & Hauser, 2002) These originate from different areas or schools of thought (Pals et al., 2008; Sanders & Stappers, 2008) and have an emphasis on different aspects, e.g on democratic participation (participatory design) or usability (user-centred design) (Kujala, 2003)

lead-Companies’ objectives when they engage in user-involvement activities encompass manifold goals Primarily, these activities can increase the effectiveness and efficiency of the innovation process, as found by Enkel et al (2005) in a meta-study, as they result in superior and differentiated solutions and reduced development cycle times Further objectives include support of the market acceptance and diffusion process, strengthening long-term relations with key customers and user education and improved public relations prior to market launch (Alam, 2002)

Studies of user involvement are predominantly reported in business-to-business settings (Kristensson & Magnusson, 2010), e.g for scientific instruments (Hippel, 1976) Nevertheless, there are also business-to-consumer user-involvement cases, e.g equipment for various outdoor sports such as snowboarding, kayaking, mountain biking and kiting (e.g Franke & Shah, 2003; Lüthje, Herstatt, & von Hippel, 2005; Hienerth, 2006) or in the development of new computer games (Jeppesen & Molin, 2003) Notably, the specificity of solutions due to the potential number of customers differs between business-to-consumer and business-to-business settings This influences user-involvement practice and choice of approach as solutions have to fit, for example, one million potential customers compared to just one customer in an individual business-to-business user-involvement setting

Finally, the impact of the stage at which user involvement takes place should be elaborated here User involvement differs significantly throughout the stages of the

24 Theoretical foundations of silver agers and user involvement development process (cf Figure 4) due to the purpose of each stage (e.g generating product ideas, selecting promising projects, customising products) and the inherent specificity of the idea/product (from unspecific in the fuzzy front-end to very specific prior to market launch) Therefore, user-involvement approaches in the early phases tend

to be rather need driven, i.e aiming to identify rather abstract customer needs, independent of particular references to products or services These approaches tend to produce more open and unconstrained, but less actionable, results Product-driven user involvement involves stimulus-based approaches, e.g discussing a certain product (prototype) in focus groups These yield more tangible needs that are more easily picked

up by developers, albeit at the expense of potentially blocking out-of-the-box needs or thoughts through fixation on an existing product or service Product-driven user-involvement approaches are predominantly used in the later stages of the product development cycle or after market launch (e.g mass customisation efforts with the help

of tool kits (Piller & Walcher, 2006; van Kleef, van Trijp, & Luning, 2005)

This paragraph delineates the major classification criteria of user-involvement research The user-involvement approach of this study can be anchored in the fuzzy front-end of innovation, specifically in the idea generation phase and the first idea screening in a business-to-consumer setting Thus, user involvement is considered more for the sake of innovation than for customisation (Kristensson, Gustafsson, & Archer, 2004) The purpose of this study’s user-involvement application is to maximise the customer value ideas that can potentially be followed up The locus of innovation is on the manufacturer’s side as the effect of user involvement is measured through the individual developer, i.e the output of the developer is measured One main variable in the experimental study is the effect of the degree of user involvement, i.e whether higher user involvement leads

to different outcomes than lower user involvement

2.2.3.4 Frameworks on the degree of user involvement

After the analysis of the major dimensions of user-involvement research in the previous section, here the degree of user involvement will be dissected in more detail The degree

of user involvement can be characterised as a continuum from passive user participation

to participative decision-making (Alam, 2002) and becomes apparent in the application

of certain user-involvement approaches Passive user-participation approaches are characterised by the analysis of distant, mostly large-quantity data sets of user input (e.g complaints data or secondary market research data) Approaches incorporating participative decision-making facilitate close interaction with the user, providing specific

User involvement in new product development 25 input for new product development processes (e.g co-design activities or the lead-user method)

The aim of this section is to analyse current findings on the scientific application of different degrees of user involvement and to use this as a basis for the experimental main study of this dissertation Therefore, a thorough search of extant literature was conducted for contributions covering more than one degree or intensity of user involvement; journal papers covering only one level of user involvement (e.g high involvement by means of lead-user method) have not been considered

Degrees or intensity of user involvement have been studied and discussed in extant scientific literature in various ways As early as the 1980s, authors started to conceptualise different degrees of user involvement Ives and Olson (1984) use a six-item

categorisation of user-involvement degrees, from no involvement to involvement by doing/strong control However, these first studies have a strong IT system

implementation focus, with customers from inside the same organisation, which is why they are not included in the following framework Relevant current studies differ in terms

of the structural user-involvement dimensions analysed, industry/methodological context, the specific measurement of the degree of user involvement and the analysis level of degrees of user involvement (see Table 1)

The structural dimensions in most studies differentiate user involvement based on the

stage or phase of the innovation process – from fuzzy front-end to prototype or market launch phase Fuchs and Schreier (2011) analyse user involvement both in the idea creation and idea selection phases, and measure the effects of perceived customer orientation on the whole company Similarly, Gruner and Homburg (2000) analyse top/flop projects by new product success, distinguishing between six stages of product development Pals et al (2008) link three user-involvement approaches to different development goals that occur in different stages of new product development Most other studies build frameworks, mapping user-involvement approaches, among other user-involvement characteristics, to different stages (Alam, 2002; Bosch-Sijtsema & Bosch, 2015; Hemetsberger & Füller, 2009; Kaulio, 1998; Piller et al., 2011; Sawhney, Verona, & Prandelli, 2005) Thus, it can be concluded that both the applicability of user-involvement approaches (Piller et al., 2011) and the success of using user involvement (Gruner

& Homburg, 2000) highly depend on the stage of new product development Different to these papers, other authors focus solely on degrees of user involvement in the fuzzy front-end (Kristensson et al., 2004; Witell et al., 2011)

26 Theoretical foundations of silver agers and user involvement