Current literature argues that firms should have strong ties to customers to benefit from increas... more Current literature argues that firms should have strong ties to customers to benefit from increased customer retention and loyalty. Strong ties, however, have also shown to prevent innovation, suggesting that firms should also develop weak ties to other customer groups. This paper focuses on the potential for strong ties to facilitate, rather than prohibit, innovation. It is based in a 7-year longitudinal research project with Adidas, a global sporting goods company. From the case, we find that the paradox of tie strength results from an overly simplified view of the nature of company–customer relationships. Contrary to the established literature, we find that strong ties in the Adidas case supported significant innovation. In fact, the involvement resulted in the development of a new product with a radically different product architecture and led to one of the most successful product launches in the company's history. To explain these findings, we introduce the nature of customer participation in a firm's value creation processes as a new dimension of the constitution of firm–customer ties and discuss how such a kind of relationship can develop.
International Journal of Technology Management, 2007
ABSTRACT Many agree that the real option theory is a good instrument to value risky investments. ... more ABSTRACT Many agree that the real option theory is a good instrument to value risky investments. The problem is that it is hard to use and generates non-intuitive results. Instead of getting bogged down in the mathematics, this paper uses the implications of the existing literature to discuss the use of real options in the management of new product development through a combination of the real option theory and the theory of design. It is argued that development processes should be structured as staged investments to allow for flexibility and monitoring of created options in the process, since all subsequent development steps are dependent on the next one. The design of new solutions is then seen as the creation of new options. This is a way to handle risky projects in uncertain environments and create controlled radical change. A single case, from the development of web services in the newspaper industry, is viewed through the 'real option design' lens.
Current literature argues that firms should have strong ties to customers to benefit from increas... more Current literature argues that firms should have strong ties to customers to benefit from increased customer retention and loyalty. Strong ties, however, have also shown to prevent innovation, suggesting that firms should also develop weak ties to other customer groups. This paper focuses on the potential for strong ties to facilitate, rather than prohibit, innovation. It is based in a 7-year longitudinal research project with Adidas, a global sporting goods company. From the case, we find that the paradox of tie strength results from an overly simplified view of the nature of company–customer relationships. Contrary to the established literature, we find that strong ties in the Adidas case supported significant innovation. In fact, the involvement resulted in the development of a new product with a radically different product architecture and led to one of the most successful product launches in the company's history. To explain these findings, we introduce the nature of customer participation in a firm's value creation processes as a new dimension of the constitution of firm–customer ties and discuss how such a kind of relationship can develop.
International Journal of Technology Management, 2007
ABSTRACT Many agree that the real option theory is a good instrument to value risky investments. ... more ABSTRACT Many agree that the real option theory is a good instrument to value risky investments. The problem is that it is hard to use and generates non-intuitive results. Instead of getting bogged down in the mathematics, this paper uses the implications of the existing literature to discuss the use of real options in the management of new product development through a combination of the real option theory and the theory of design. It is argued that development processes should be structured as staged investments to allow for flexibility and monitoring of created options in the process, since all subsequent development steps are dependent on the next one. The design of new solutions is then seen as the creation of new options. This is a way to handle risky projects in uncertain environments and create controlled radical change. A single case, from the development of web services in the newspaper industry, is viewed through the 'real option design' lens.
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