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Customers as Innovators: A New Way to Create Value PowerPoint PPT Presentation

Customers as Innovators: A New Way to Create Value By: Stefan Thomke and Eric von Hippel Presented by: Michael Bench and Micheal Justice Costly Problem and Radical Solution

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Customers as innovators a new way to create value l.jpg

Customers as Innovators: A New Way to Create Value

By: Stefan Thomke and Eric von Hippel

Presented by: Michael Bench and Micheal Justice

Michael Bench & Micheal Justice


Costly problem and radical solution l.jpg

Costly Problem and Radical Solution

Traditional approach: “Listen carefully to what your customers want and then respond with new products that meet or exceed their needs.” – Very costly

Counterintuitive approach: Tool kit for customer innovation – Let them design and develop their own products

Michael Bench & Micheal Justice


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Tool Kit Capabilities

  • Complete design cycles

  • User-friendly

  • Libraries of pre-tested components & modules

  • Information about capabilities and limitations of process that are useful

Michael Bench & Micheal Justice


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An Industry Transformed

  • Tradition: Development engineers held all knowledge

  • New era: Customer Tool Kits based on gate-array technology

Michael Bench & Micheal Justice


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Customers know what they need

Designed faster

1st time manufacturing

Small customers

Serve large customers better

Change in mind-set

Loss of competitive advantage

Evolve sales and marketing functions

Example: GE Plastics

Benefits Challenges

Michael Bench & Micheal Justice


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A Pattern of Migration

  • Company must continually reposition itself to capture value.

  • Loss of leverage by customers

  • One long-term result: Manufacturers lose a portion of the value they have traditionally delivered

Michael Bench & Micheal Justice


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Questions of Value

  • B2B spreading to B2C

  • Product configurators

    • Examples:

  • Danger to software companies, but not all

    • Example:

  • Outsource innovation task to customers

Michael Bench & Micheal Justice


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When Customer Innovation Makes Sense

  • Market segments are shrinking and increase in customized products

  • Many iterations before a solution. You restrict customization. Erodes loyalty

  • Computer production process to manufacture custom products

Michael Bench & Micheal Justice


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Five Steps

1. Develop a user friendly tool kit

2. Increase flexibility of production processes

3. Carefully select the first customers to use it

4. Evolve continually and rapidly to satisfy leading-edge customers

5. Adapt your business practices accordingly

Michael Bench & Micheal Justice


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Mass Customization

  • R&D Problem ( how to design specialized products efficiently)

    • Cost of manufacturing has dropped, but not the cost of designing such items

  • Production problem

    • Example:

Michael Bench & Micheal Justice


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