Guest article by Werner H. Kunz.
This is the first article in a new SERVSIG series we are starting. Every researcher can recall a moment when an idea for an important research project was born. More often than not, an ordinary situation suddenly sparks a eureka moment for an entirely new research project. We are interested in the stories behind your research ideas. We want to learn from your thought processes and share these stories because they are interesting and fun to tell.
I think every Ph.D. student knows how hard it is to determine one’s own Ph.D. project. Having a unique and competitive idea is not easy because good ideas are always scarce. From a young age, I was fascinated by technology. However, in the not-so-technology-prone society of the 80th, I quickly learned that not everyone is as interested in new technology as I am and weighed the pros and cons as I am (being a Nerd was not already cool ;-). Nonetheless, this passion for technology led me as a young researcher to the field of Innovation Management, and I was fascinated by the theories that have been developed in this field (e.g., Schumpeter’s Creative Destruction, Frank Bass’s diffusion model, Clayton Christensen’s Theory of Disruptive Innovation, Everett Rogers’ Diffusion of Innovation).
The Theory Opposing Consumer
The theories I was reading fascinated me and made a lot of sense. The only problem was that there were a lot of ordinary, uneducated consumers out there who didn’t know these theories and didn’t follow them. These consumers say they like new, better solutions (which are innovations by definition), but in the end, they are not competent enough to compare the offerings to choose the superior product. They see themselves as early adopters when, in fact, they have a hard time identifying the truly innovative products in a market. All this confusion leads to a lot of complex and almost irrational consumer behavior that is not easily explained by theory.
A company that was definitely seen as innovative in the early 2000s was Apple. If I had asked people on the street which companies are innovative, Apple would have been clearly at the top of the minds of the majority. If you had asked in the tech scene, the decision would not have been so clear, and there were always heated debates about whether Apple’s products are really new and unique (thus, innovative). My first mobile music player with a hard disk that could hold hundreds of songs was not an iPod (that didn’t exist then). My first internet-capable smartphone with a touch display and no keyboard was not an iPhone (that didn’t exist then). Of course, you can argue that consumers are not sufficiently informed or make decisions based on irrational reasons, but these explanations were not very satisfying for me. So, how come a company like Apple offers no (or at least debatable) innovation but is still unbeatable seen as one of the most innovative companies in the world?
My Eureka Moment
On January 11, 2005, Apple introduced something that was a Eureka moment for me. On this day, they introduced the first iPod Shuffle. It was radically different from the current dominant design of music players. It was just a little white plastic brick with a few buttons to play and stop music and control the volume. Technically, there was no improvement over previous generations of iPods. In fact, the opposite was true. This device could do less than previous generations of iPods. There was no display, no information about what song was playing, no way to control the playlist, and no way to change the order of the songs. Nevertheless, introducing this device had no negative impact on the perception of Apple as a leader in innovation. Quite the opposite, in fact, if consumer reports from the time are to be believed. The company was praised for its forward-thinking perspective and for its genius in removing the display and wheel control button from the original iPod.
If it is possible for a company to be perceived as innovative without introducing truly innovative products, consumers may not necessarily judge a company’s innovativeness based on its product portfolio alone. This is similar to the customer relationship literature, where it is well known that people do not add up all of their individual experiences with a company to make a cumulative satisfaction judgment. Perhaps the perception of a firm’s innovativeness is a more holistic psychological construct that needs to be measured directly from customers’ perceptions. This means that a company can be perceived as innovative without actually offering innovation. This represents a paradigm shift from traditional innovation management, which tends to focus on individual innovations to derive company innovativeness.
On the other hand, it is also possible for a company to have a very innovative R&D department, but still not be perceived as innovative by the market. Good R&D is crucial for new products, but effective marketing to stimulate the market is equally important. Without systematic and comprehensive marketing of the company’s image, innovation management cannot be effective (Kunz 2024).
The Start of a New Research Direction
In my dissertation, I developed the first scale that holistically measures company innovativeness from the customer perspective (PFI scale, Kunz, 2006). Further, I showed in a large cross-industry study that perceived firm innovativeness (PFI) affects customer loyalty via rational and emotional pathways (Kunz, Schmitt, and Meyer 2011). Just recently, Keiningham and colleagues (2024) even showed using cross-industrial longitudinal data from 123 publicly traded firms over five years that perceived firm innovativeness (PFI) can even explain abnormal stock return of companies, which makes it to traditional methods of company innovation rankings.
A big thanks goes out to Tor Andreassen and his team, who believed so strongly in the customer-centric perspective of company innovativeness that he built the Norwegian Innovation Index (NII) on the PFI scale (Kurtmollaiev, Lervik-Olsen, and Andreassen 2022). Further, he convinced multiple colleagues worldwide to also establish company innovation indices in their own countries based on this scale and formed the Innovation Index Coalition (IIC). If you want to know more about the collation and join our research field on a journey toward a new understanding of innovation management, go here. To get an impression of the community, please also read our last workshop review here.
Epilogue
It’s funny what a small white brick with no real function can lead to. If you also have an interesting origin story of one of your research projects, please let me know (werner.kunz@umb.edu), and we hopefully can soon read about your personal eureka moment. Remember, you don’t have to be Archimedes to write in this series; every Eureka moment is personal and unique. We are interested in your thoughts.
Werner Kunz
Professor of Marketing – University of Massachusetts Boston
Director of the digital media lab
REFERENCE
- Kunz, Werner H., (2006), Innovativeness of Companies – Measurement & Processing Mechanism from a Customer Perspective. Munich, Germany, FGM Verlag.
- Kunz, Werner (2024): Company Innovativeness – A Radically New Perspective on an Old Concept, Journal of Service Research, Vol 27. (forthcoming) https://journals.sagepub.com/doi/abs/10.1177/10946705241254744
- Kunz, Werner H., Bernd Schmitt, and Anton Meyer, (2011), “How does perceived firm innovativeness affect the consumer?,” Journal of Business Research, 64 (8), 816-822. https://doi.org/10.1016/j.jbusres.2010.10.005.
- Kurtmollaiev, Seidali, Line Lervik-Olsen, and Tor W. Andreassen, (2022), “Competing through innovation: Let the customer judge!,” Journal of Business Research, 153 (August), 87-101. https://doi.org/10.1016/j.jbusres.2022.08.002.
- Keiningham, Timothy, Lerzan Aksoy, Alexander Buoye, An Yan, Forrest V. Morgeson, Gina Woodall, and Bart Larivière, (2024), “Customer Perceptions of Firm Innovativeness and Market Performance: A Nation-Level, Longitudinal, Cross-Industry Examination,” Journal of Service Research, 0 (June), 1-15. https://doi.org/10.1177/10946705231220463.
