A Risk-Benefit Perspective on Early Customer Integration (Contributions to Management Science)

Customer integration in the early innovation phase has been considered the method of choice in theory and practice. Growing experience with the concept has shown unexpected side effects that may even outweigh its recognized advantages. Therefore, management needs to be able to assess in advance whether the involvement of customers will add overall value to each particular innovation project. To support but not to replace the final managerial decision, a mathematical formula is developed. It can be applied to all kinds of process structures, takes into account the risks and benefits contingent on a company's situation as well as risk-reducing and benefit-increasing measures and translates them into numerical values. The resulting figure indicates the prospective value of customer integration in a specific project.