Bidiversity

A new study from the University of Illinois suggests that business culture steers flow of ideas. While the study finds that companies that focus on technology do better than those who focus on competitors or customer needs, it finds that a diversity of thought that mixes more than one approach will do best.

Though limited in its approach, and not really considering diversity within the workplace, the report finds that firms who focus on their competitors or customers generate more new product suggestions than technology-based companies, but the ideas typically net only subtle advances, such as the slow evolution of wireless reading devices, rather than breakthroughs similar to the shift from compact discs to music downloads.

William Qualls, a U. of I. marketing professor who co-wrote the study said:

“Customer- and competitor-oriented companies are more likely to come up with variations of existing products because they watch their markets closely and react to demands rather than building on breakthrough technology.”

He says the findings suggest that firms are best served by a balanced philosophy that includes all three cultures. While an emphasis on technology bolsters innovation, he said, market-driven firms are more attuned to what consumers want, giving them an edge in commercializing new products.

The study is unique because past research has focused largely on the link between business culture and the success of launched products, rather than probing the idea stage, said Qualls, the interim head of the department of business administration.

Findings are based on an analysis of survey responses from nearly 200 marketing and research managers who work for companies that make household and personal products, from appliances to skin cream.

“Without good ideas, you can’t come up with innovative new products,” Qualls said. “Firms need to know how to generate as many new ideas as possible, and how to screen them so they have the best chance for success.”

He says the findings lend support for a budding business theory known as open innovation, which encourages firms to use external as well as internal input to develop and launch new products.

David Fuller, CEO of marketing agency Pilote Media commented on the findings:

“There is a temptation to look at these findings and use them to advocate a crowd-sourcing model which is popular at the moment. There are many headline examples of consumer products that are using their customers and social media to source new ideas for flavours and product variants. This can be a good PR stunt, but could have long term damaging effects on the perception  of the company and the brand. On the one hand it looks like you are open and willing to listen, on the other it can say – we’ve run out of ideas or we don’t have the expertise in house to fix this so we are asking our customers to help us.”

Diversity of thought is very important. The study shows that the more sources of ideas the better…

“The whole idea of open innovation is that firms need to be able to absorb knowledge from any source, and not just rely on the knowledge it has internally,” Qualls said. “And the more ideas they get, the better the chance that one will click.”

He says the study shows firms that fail to broaden their cultures or seek outside input will lag behind companies that do.

What do you think? Should a company make itself more diverse or look externally for new ideas? As always our comments are open below.