'Demand and Innovation; how customers preferences shape the innovation process' is a qualitative study to assess that how organizations are using consumers' preferences data in their innovation processes. The report uses qualitative data collected from five case study organizations. It explores number of issues related to the demand and innovation processes e.g. when consumers' preferences data is used in innovation process; how the information is used; and what is the impact of this data on innovation process?
The report consists of 45 pages. It is in PDF File Format and aesthetically sober. The report is of moderate size keeping in view the novelty of topic as the author/s tells us that majority of studies related to innovation and businesses are supply-side driven. So the ground breaking study should be concise. Graphics, tables and graphs lend the study substance.
The method used for research is susceptible to criticism as the authors themselves are not sure what is more appropriate way of dealing such topic i.e. qualitative versus quantitative. However the novelty of subject makes up for this apparent discrepancy.
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The report's main thesis is that though there are number of studies on innovation and business competitiveness but all of them are supply-side factored. There is scarcity of material on the relation between the demand for consumer side factors and innovation processes and procedures.
According to the present report there is growing evidence of awareness among OECD Countries on importance of innovations in business sector for maintaining competitiveness in global economy. But the innovation process is running from companies to the consumers. On the other hand, the companies are ignoring an important factor i.e. the demand from consumers. The reports states "Organizations are missing out on opportunities to involve users early in the innovation process to gain advanced insight from customers and maximize their competitive advantage. (Executive Summary; page 2)
The report is divided into four sections; scene setting, the connection between demand and innovation, Framework and Serendipity of interaction; recommendations and conclusions. The "Scene Setting" tell us about the background of the research. The second section establishes link between demand and innovations. The third section elaborates the framework developed and used for study. In this section, the authors justify the use of framework. The innovations occurring under the influence are either incremental or radical. Five methods of feeding information about user demand into organizations are: Days on shop floor, customer feedback, Bespoke Clients interaction and the blue-sky thinking. The last section presents conclusions and recommends suggestions. The recommendations could be summarized as: allowing more opportunities for innovations in procurement process and educating employees about them, more effort on the part of organization to get precise information about consumer demands and embedding customer/consumer interaction in business culture.
Report Structure and Style:
The sleekly designed title-page is impressive from esthetics point of view. The following pages give executive summary. It elaborates the purpose and scope of study. Then it explains the presentation style of report. Content page has a neat and clear design and makes things easier for a casual reader. Footnotes are aligned side-ways in a colored part. The report has been divided into four sections.
The first section 'Scene setting' prepares the ground for research study. It gives us the background of study and tells us about the usefulness. It is quite brief and takes the reader to the next section without overloading the reader with information. The aim of study is clear in the mind of reader and this section achieves this successfully.
The next section; the connection between demand and innovation is fundamental. It begins with overview of the content dealt in this section. Overview serves the purpose well as this section is quite long and may overwhelm the reader. Overview enlists the important points.
The last section the serendipity of interaction; conclusion and recommendations is succinct and precise. It ends the report with strong conclusions and makes the report balanced. The recommendations and conclusion are given in a box. The latter content explains them.
The only appendix i.e. method for quantitative case studies explains the interview pattern. The interview is 3 layered and depended upon the expertise of interviewee involved. The interview section is quite handy as a neutral interpreter may gauge the appropriateness of the method and questions. The report ends with brief acknowledgement section.
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Overall, the structure of the report does fulfill the purpose well. As the study is almost pioneering in subject matter it should have been in brief format. The report fulfills this criterion as well.
Summary of Section Contents:
The first section makes the basis of study by stating that demand is becoming more important factor for economic growth. The change in economic pattern is result of change in consumer demand in knowledge-based economy. To keep competitive edge; companies should innovate the business procedures and processes. The governments in European and Developed countries are becoming aware about the demand side factor influencing the innovation process. Thus, the report is timely, keeping in view the above study facts. The research tries to explore some questions.
The next section begins with the context. The authors state that the UK government is aware of innovation in relation to productivity gap. The authors cite different sources to substantiate it. The knowledge economy is more demand driven than the previous economies that were more supply side driven. In this section under the heading of Box 3, some interesting information about the changing consumer trends and underlying factors make an interesting read. Then authors begin to build their thesis about importance of demand in innovation process. Through FORA's eight stages of innovation process researchers tries to locate where the role of demand emerge in innovation process. Here the questions about the lack of availability of consumer demand data is analyzed. Some examples about the demand-policy intervention in UK and other European countries have been given. Then the authors state the criteria for selecting the case study organization.
In third section the study comes to its zenith. The framework developed through qualitative research has been established. A list of innovation in five selected organization have been listed to draw some results. The questions from where the innovative ideas hit the organization are dealt next. Then authors dig out who are the innovators in the subject organizations. Majority of interviewees told that the consumers are passive in innovation process and they i.e. the employees observe the pattern and come up with new ideas. Here an interesting response would justify the whole study: "
we don't use consumers as a source of ideas. I guess they could filter in form of comments customers make in store, but then they usually highlight something that they could like changing rather than saying what they want. Most ideas for changes in store come from our colleagues. We do ask customers for suggestions for some areas of the business to improve that what we are offering." (Where do ideas for innovation come from? Page 23)
Then the reports find how the information or feedback is fed into the company for innovation purposes. Under five categories some detailed information highlight the mechanism of consumers' response integration in innovation process is scrutinized. Then an interesting question is answered about what makes innovations fail and what is the role of demand in its failure. Finding of analysis are summarized. Consumers' preferences and demands are included in the innovation process in 2 ways:
Incremental innovations responding directly to consumer needs and preferences occur as a result of explicit short-term consumer preferences fed into the organization through days on the shop floor, bespoke client interaction or customer feedback.
Large or radical innovations responding directly to consumer needs and preferences occur as a result of a focus on longer-term consumer trends that feed into the organization through market scanning (either of the consumer or competitors), blue-sky thinking or bespoke client interaction. (Summary of findings, p 31)
In the end the author justify the qualitative method employed and shed some light on the future of study topic.
The last section with interesting name i.e. Serendipity of interaction; conclusions and recommendations, ends the research paper on a stronger note. The overview gives the brief of lessons learnt and way ahead. The conclusions are succinct and precise. The author concludes that the organizations are missing the opportunities to get competitive edge in today's knowledge based economy by ignoring consumer demand in innovation process. Moreover, there is need to educate consumers about how to involve in innovation process. Then researchers suggest three recommendations:
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Establish and proactively manage relational interaction.
Quest for unrevealed, latent preferences and consumer ideas.
Embed demand into the innovation process.
In Appended section i.e. the method for qualitative case study; justify the tool employed for research. The authors argue that qualitative method is more appropriate as compared to quantitative research. Necessary details about interviews and questionnaire is provided here. The questions in interview script are fluid and fluctuated from interview to interview because different levels of expertise of interviewees were involved in the innovation process. Brief explanations or the purpose for the questions in questionnaire make the interview questions quite informative.
The researchers deal with methodology in section 3 and in the appendix. The authors' point of point of view in this regard could be summarized as follow. The quantitative research method is susceptible to biases and inaccuracies therefore the qualitative method is more appropriate. For this purpose the researchers came up with a questionnaire. The questionnaire has 3 layers. The general format is for general interviewees. The questionnaires gets complicated and detailed according to the expertise of persons involved. It also depended upon the time and number of interviewees in a session.
The results were then corroborated with the researched material available on different sources to verify the results. The interviews averaged 1.5 hours each. Though it is not clear how researchers interpreted the results but the evidence and findings are consistent with the current economic situation in knowledge-based economies.
Appropriateness of methodology:
The author admit they had problems in formulating generalized question as they were unsure who are going to answer them, as the interviewees differed in experience, knowledge and executive power. From this angle the method used becomes quite doubtful. However the authors argue that qualitative method is more appropriate as compared to quantitative method which is more generalized and fast. As the latter may fall victim to biases and inaccuracies. The authors don't give any substantial evidence to prove how it may alter the results. The quantitative method gives more generalized data and result deduction is fairly easy. The researchers may have used it unintentionally when they begin to interpret data (in section 3) accumulated after lengthy research process. For example in table we see some evidence of quantitative method. The study would have become more consolidated if planned fool proof quantitative method had been used or combination of both e.g. qualitative and quantitative. In the current study, the authors seem to present their own point of view, as we don't know how they interpreted the data. The current method may have fallen victim to the biases of researchers.
Moreover, the author admit that they questionnaire were not uniform in content and the content or questions differed from person to person and organization to organization. "The interviews were semi-structured and followed the discussion guides below. In order to extract the best data from each interviewee, the exact questions asked varied across interviewees. Therefore the questions below should be read as a guide, not as an interview script. Definitions of size, type, and success of innovations were determined by interviewees during data collection, and later checked by
Our research team to ensure alignmentâ€¦.. "(Technical Appendix: Method for qualitative case study, p 38)
Similarly, the very topic of research i.e. Innovation and Demand; was quite novel to the participants. They failed to give any example of using it in their business communication or activities. "We don't use the word 'innovation'. We just always want to do things better; that's a given. We have a program of large change and we make small changes, but I've never thought that we innovate. Now we're talking about it I think we can say that we do innovate. What we do matches what you're describing, but it's not a term we use hereâ€¦" (ASDA; Section 3: Framework; p 30)
"We don't have procedures for innovation. We are always looking for ways that we can do things better. All our employees are constantly striving to improve things for their clients. It's just a given. We never talk about innovation." (PwC; Section 3: Framework; p 30)
However on the positive side the study is ground breaking and duly timed. If we agree with the authors about the method employed the justification used is quite convincing. In the case of all social sciences the empirical or hard evidence is difficult to gather as there is no method to date that can give 100 per cent results.
The questions formulated were informative and were considered for different managerial, expertise and innovation participation level. The researchers were cautious not to use the phrase innovations and demand in the beginning as they didn't want to direct interviewees to the desired answer. The questions were objective and probing at the same time.
Serendipity of conclusions:
The research method could be debated but the conclusions are conclusive. The conclusions are the crux of the study. The evidence found through research does corroborate with the findings and current situation.
The interviewed personnel from the case study organization revealed we don't use the phrase innovation but we try to make things better. This very statement tells the whole story. The main emphasis of the study as mentioned at different places (organizations are missing out opportunities for advanced insight to maximize their competitive advantage; Section 4; overview, p 34, 35) throughout study does fit well with the findings.
Similarly, all case study companies whether small or big, had a much underestimated view of consumers' role in innovation process. "We don't use consumers as a source of ideas. I guess they could filter in from comments customers make in store, but then they usually highlight something that they would like changing rather than saying what they want. Most ideas for changes in store come from our colleagues. We do ask customers for suggestions for some areas of the business to improve what we are offering." (Section 3, p 23)
3. The ignored factor:
The most important thing overlooked in the study was the fact that (though the researchers themselves say that almost all the studies about innovations are supply side driven) the study is again supply-factored. It overlooks the consumers in the sense that businesses were asked to participate in the research and no consumer or consumer body was integrated in the process.
It is correct as the interviewees cited that customers are not mature and expressive in their demands. But educated consumer or consumer representative body's participation would have made the research more useful.
4. Ethical and Logical Issue: the study is too focused on developed countries e.g. OECD Countries. It overlooks the under-developed and developing economies. Even if we ignore the poor economies on the argument that their economies are not knowledge-based, this exclusion doesn't seem appropriate in the case of fast growing economies e.g. China, Brazil and India etc. The study may seem bias and the author should include some explanation as why they ignored the emerging economies. The logical problem is that the real threat in terms of competition and market share is from these fast growing economies. All these countries are grabbing more and more market share of Knowledge-based economy.
The report is balanced. The weakness caused by the apparent uncertainty in choosing proper research method is balanced by the accurate findings and effective recommendations. The interpretative sectioned could have been more descriptive.