Recent management wisdom has advocated a shift from dedicated R&D within firms to more open forms of innovation where external knowledge is solicited for innovation. Among the external knowledge sources for innovation, users or consumers are often cited as important sources. Why is this so? As firms may incur significant costs in innovation and suffer from innovation blocks, involving users can be an attractive way to create innovations at lower costs – especially since users can bring in diverse ideas and first-hand knowledge of their requirements, or even carry out the entire innovation by themselves. At the same time, user innovation could help improve new service acceptance as user innovators serve as test markets for other consumers. These potential benefits are why we are seeing increasing instances of user innovation in many areas such as banking, consumer products, telecom, and mobile services.
Particularly interesting is the example of mobile service innovations or mobile applications as many prefer to call them. Apple and Google have provided access to the iOS and Android platforms for users to create applications for all kinds of services such as mobile banking, gaming, news, mapping, location-based services, and internet surfing. Indeed, the market for mobile services is growing rapidly with revenues expected to hit US $70 billion by 2017. In fact, mobile data revenues surpassed voice revenues during the first quarter of 2014.
Overall, this creates a highly competitive marketplace for mobile applications that, all the more, necessitates continuous innovation. However, user innovators often drop out from innovation platforms or switch to other platform. These challenges motivated us to study two things: (1) how to stem the attrition of user innovators, and (2) how to influence potential user innovators to start innovating, in order to ensure the sustainability of mobile platform ecosystems.
While a company would know who its user innovators are (e.g., non-professional developers on Google Play or customers contributing ideas on MyStarbucksIdea.com), how could it figure out who its potential user innovators are? In the case of mobile applications, we identified potential user innovators as those users who have basic programming skills and some needs in creating mobile application innovations in the future, but who have not yet done so. This distinguishes them from pure users who have low or no interest in innovation and actual user innovators who have both higher needs and the necessary skills by virtue of having carried out such innovation in the past. Trend leadership is a defining characteristic of user innovators where they experience certain needs ahead of the rest of the market.
While it is important for companies to attract both groups of user innovators, our study shows that the two groups differ in their drivers for innovation. Thus, firms hosting innovation platforms or communities cannot treat all user innovators identically and must cater to the distinct needs of the two groups (i.e., potential and actual user innovators). Our findings suggest that firms should differentiate their strategies in attracting potential user innovators to start innovating and in encouraging actual user innovators to innovate again.
Particularly, we found that potential user innovators value both the enjoyment and extrinsic rewards that they expect to get from the innovation activity, but place less importance on possible extrinsic rewards. In other words potential innovators being more psychologically distant from the innovation activity, think of it in a more idealized way and look more for intrinsic (e.g., enjoyment) rewards rather than extrinsic (e.g., monetary) rewards from it. A firm could use these findings to influence potential user innovators to start innovating. A possible approach could be through providing try-out sessions where potential user innovators could experience first-hand the enjoyment of developing innovations.
For actual user innovators, our findings indicate that they could be encouraged to continue innovating by the lure of extrinsic rewards, recognition, and by innovation tool support. Firms could increase their expectation of obtaining extrinsic rewards by guiding user innovators on how best to leverage the commercialization mechanisms available and highlighting success stories of monetary rewards and career opportunities obtained by other user innovators. Recognition expectations could be enhanced by making user innovators’ success visible to their peers, other users, and professional developers on the innovation platform.
Further, firms can improve the functionality of innovation tools both for innovation idea exploration and easing development effort. When the innovation tools are effective, this provides the additional benefit of allowing actual user innovators to enjoy the innovation process. Last, our study suggests that the trend leadership of both groups can be enhanced in order to increase their likelihood of innovating in future (e.g., through increasing the product knowledge of the user innovators).
While it is challenging for firms to encourage users to contribute towards innovation, our study offers suggestions both to motivate existing user innovators to continue innovating and potential users to start innovating on firm innovation and crowdsourcing platforms.
Table 1: Results for Comparison
|Drivers of Innovation||Trend Leadership||Enjoyment||Extrinsic Reward||Recognition||Tool Support|
|Actual User Innovators||Yes||No||Yes||Yes||Yes|
|Potential User Innovators||Yes||Yes||Yes, but less important than enjoyment||No||No|
- This article is based on the authors’ paper Comparing Potential and Actual Innovators: An Empirical Study of Mobile Data Services Innovation, MIS Quarterly, 39(3), 667-682 (2015).
- This post gives the views of its authors, and not the position of LSE Business Review or the London School of Economics.
- Featured image credit: Independent app developers Metropolitan Transportation Authority of the State of New York CC-BY-2.0
Atreyi Kankanhalli is Associate Professor of Information Systems at the National University of Singapore (NUS). Prior to joining academics, she has considerable experience in industrial R & D and has consulted for organizations including World Bank and Bosch SEA. She conducts research in the areas of knowledge management, online communities, and IT innovation (particularly in public and healthcare sectors). She heads the Service Systems Innovation Research laboratory at NUS.
Hock-Hai Teo is a Professor of Information Systems at National University of Singapore. His research interests are in the areas of IT innovation adoption, assimilation and impacts, information privacy, electronic market institutions, and virtual communities. He has published broadly in academic journals. He has won numerous best conference paper awards. He is serving/has served on several editorial boards and program committees. He won the MIS Quarterly Reviewer of the Year (2004) award and was awarded the AIS Fellow in 2014 by the Association of Information Systems.
Hua (Jonathan) Ye is a professor at the School of Management, Harbin Institute of Technology, China. He has a PhD in information systems from National University of Singapore. He is interested in studying IT-enabled open innovation, service innovation, and crowdsourcing.