Reynolds: E-Business: A Management Perspective

1. Reynolds: E-Business: A Management Perspective Chapter 8: Product and Service Innovation By Dr Malobi Kar

2. Completing this Chapter will enable you to: Develop an insight into the theoretical foundations of innovation Identify different types of innovation involving e-business, including e-product innovation, e-service innovation and open innovation Consider the role of users and user communities in open innovation for e-businesses Identify the distinguishing features of the stages associated with new e-product and e-service development Consider the characteristics and challenges of e-business innovation in the public sector Learning Outcomes

3. Innovation in the context of e-business • The abundance of information creates a pro-innovation environment • An environment which moves at the speed of internet and in ‘real time’ • Creating a two-way communication platform • Flexibility, interconnectedness and collaboration within the organisation • Flat organizational structure Highlights how innovation occurs in organisations where customers are an integral part of the innovation process – (Gustafsson and Johnson, 2003)

4. Idea generation(from customers and employees as well) Validation of the concept(online labs are used to test consumer reactions, using blogs, websites and bulletin boards) Designing the new idea(using toolkits to facilitate the user driven innovation process) Product and market testing(using the virtual community to use and provide feedback on the product) Stages of e-product and e-service innovation

5. Examples of the dimensions of e-service innovation

6. Key characteristics of open innovation • Identify the key consumer attributes which will support the innovative company • Make public announcements and share details about impending innovation projects through pop up windows, online banners • Identify the online community where such consumers will be found • Design the appropriate interaction pattern with the targeted community in order to gain insights This figure demonstrates that an understanding of the relationship between different types of virtual worlds and amount of time spent online will be a key determinant in identifying and recruiting a particular community – Source: Forrester 2007

7. Intensity of interaction (number of participants, frequency and duration) The level of multimedia richness (animations, virtual product presentation) The communication style (formal/informal; one or bi-directional, anonymity of the interacting parties) The offered incentives (notation as co-inventor, monetary compensation, fun factor) The applied tool (toolkits, virtual concept testing, idea competitions or discussion forums) The parameters for effective virtual interaction design

8. E-government & innovation • Involves changes in the characteristics and design of service products and production processes e.g. NHS Direct • Delivery innovations – Involving new and altered ways of solving tasks and delivering services e.g. Newham council • Administrative and organisational innovations – Altered ways of organising activities with supplier e.g. provision for online tax filing • Conceptual innovations involving the introduction of new missions, new world views, objects, strategies and rationales e.g. e-Education AWEDU – Active World Education is an example of innovation in E-Education

9. Unlike the commercial sector, ‘e-business’ effects cannot be measured by using increased market share, profitability, or efficiency gains Citizens are usually more receptive to activities which relate to matters affecting their rights and duties – so usage may be in order to avoid punitive action E-inclusion is an issue owing to the varied levels of e-readiness and digital divide. This might exclude citizens despite the effectiveness of the e-government service – a distorted image of e-government initiatives in such cases Challenges in measuring effectiveness of e-government

10. Long Case 8.1: Habbo Hotel Uniqueness: • Audio visual chat environment for teenagers • No subscription fee • ‘Habbo Way’- Norms of using the site i.e. no swearing or cheating • 4 user groups: Furniture traders, competitive players, VIPs and chatters Facts about Habbo: • In 2008 generated $100 million – 75% from teenage users buying furniture to fit out their private room, rest from advertisers • Nike, Adidas, Nintendo, Kraft etc have been spending to reach Habbo users • Habbo looking to expand global reach to 9 million users Questions: 1. What is the unique characteristic of Habbo Hotel? How is it different from Second Life? 2. To what extent does Habbo Hotel encourage collaborative customer innovation? How can marketers utilise the insights gained from Habbo Hotel?

11. Long Case 8.2: Microsoft Live Anywhere • New platform introduced by Windows to extend the Xbox 360 Live gaming community across Web and wireless • Introduced a new mobile phone to support this platform – gave information & made games available • Could be used by casual users as well as traditional and hard core game players • Mobile phone could be used as remote control to play games once downloaded Questions • Relate the value created from a product like Microsoft Live Anywhere to the concepts of innovation introduced in the chapter • Over three years after Bill gates’ announcement, Live Anywhere has yet to really make its mark. Why?