Why Do Some Ideas Get Blocked on the Way?: The Process of Internalizing User Knowledge into the Organization

1. Why Do Some Ideas Get Blocked on the Way?: The Process of Internalizing User Knowledge into the Organization Ayaka Oda School of Business, Yonsei University E-mail: ayakaoda0205@gmail.com

2. Introduction • Importance of knowledge residing outside the firmCummings (2004) empirically tested and found that both intragroup and external knowledge sharing are important for performance in work groups. • Many firms have engaged in collaborative innovation • Some authors have also realized the importance of client co-production for sustainable competitive advantage for IT providers (Bettencourt et al. 2002) • Iteration: If need information is sticky at the site of the potential product user, and if solution information is sticky at the site of the product developer, we may see a pattern in which problem-solving activity shuttles back and forth between these two sites (von Hippel, 1994) • First-hand involvement with consumers stimulates imagination more effectively than abstract market data (Clark and Fujimoto, 1991). • User as an important source of innovation (von Hippel, 1988) Importance of User Innovation

3. Introduction External Knowledge and Boundaries • External knowledge is of no use unless an effort is made to internalize such knowledge. • When we say knowledge, we are mainly concerned with explicit knowledge that is transferable and codifiable (Kogut and Zander 1992, Grant 1996). <-> Tacit knowledge • Codifying existing knowledge into explicit forms and share it via the use of IT tolls will be severely limited in terms of the contribution to innovation (Swan at el. 1999) • To create and transfer knowledge efficiently within an organizational context is the central competitive dimension (Kogut and Zander 1992) • The degree of communication between the firm and its environment is affected by “someone within the firm who is able to communicate both with the technical information sources outside the firm and with end users of information within the firm” (Utterback 1971) • Form of user knowledge: Problem raised by users, WOM, feedbacks, suggestions, reviews • The communication across boundaries is not smooth (Utterback 1971, Carlile 2002).

4. Introduction • Three-step technical innovation process: idea generation, problem solving, and implementation and diffusion (Utterback 1971). • Innovation has mainly taken two perspectives: structural and process.Swan at el. (1999) mention that “innovation should be seen, not simply as a ‘thing’ to be transferred from place to place, but as a complex, time phased, politically-charged design and decision process often involving multiple social groups within organizations.” • It is important to look at the process which produces innovation (Gruner and Homburg, 2000). Process Perspective of Innovation

5. Objective • To study the mechanism how the user knowledge gets internalized within the firm.Basic Assumption:User knowledge does not get fully processed within the firm. • Thus, we are also interested in the reasons why information gets blocked within the firm. • Exploratory case study approach is taken due to the undeveloped topic. Field interviews, follow-up e-mails, and subsequent survey.

6. User Knowledge Internalization Framework Internalization: The process of knowledge being received, assigned and accepted. Reception: The phase that the user knowledge reaches the organization through gatekeeper(s). Assignment: The gatekeeper attempts to bring the user knowledge by assigning it to employee(s) or unit(s) for the internal solution. Acceptance: The assignee accepts to take the user knowledge to be utilized or solved, depending on the characteristics of the user knowledge.

7. User Knowledge in the Form of Problem • Problem Reception: The user knowledge in the form of problem raised by users reaches the gatekeeper(s) of the firm. • Problem Assignment: The gatekeeper attempts to bring the problem by assigning it to employee(s) or unit(s) for the problem to be solvedin the firm. • Problem Acceptance: The assignee accepts to solve the problem. *Problem may not move on to the next stage due to the blocking mechanism in the firm.

8. Model 1 Problem Representation H1 User Value Problem Reception H2 Problem Weight H3 Problem Recognition H4

9. Model 1 • Gatekeepers: Individuals in the communication network who are capable of understanding and translating contrasting coding schemes (Katz and Tushman1980). Internal stars who have a substantial amount of extra- organizational communication (Tushman 1977).Past studies suggest that gatekeepers not only gathered and translated external information, but they also facilitated the external communication of their fellow team members (Utterback 1971, Tushman 1977, Katz and Tushman1980). • Problem Representation: The problem is stated in a way that is easy for the gatekeeper to understand. Syntactical approach of knowledge boundary suggests that a shared syntax or language for individuals to represent their knowledge may ease the difficulties faced with knowledge boundary (Carlile2002). The greater the mismatch in language and cognitive orientation, the greater the difficulties of communicating (Katz and Tushman1980).H1: Problem representation has an impact on problem reception.

10. Model 1 • User Value: The user who raised the problem is considered as an important user by the gatekeeper.Many marketing studies have looked at the importance of customer value. Butzand Goodstein (1996) define customer value as “the emotional bond established between a customer and a producer after the customer has used a salient product or service produced by that supplier and found the product to provide an added value.” They further mention that customer value often leads to customer satisfaction and trust between the two parties.Also empirical finding shows that closeness of relationship with customer leads to new product success (Gruner and Homburg, 2000).H2: User importance is positively related to problem reception.

11. Model 1 • Problem Weight: The number of users who proposed the problem.We argue that as more users raise the same problem, it is more likely that the problem will be received.H3: Problem Weight is positively related to problem reception. • Problem Recognition: The gatekeeper recognizes the problem raised as important. The problem aligns with the firm's overall goals/direction. (Strategic alignment)The richness of information will reduce equivocality, or ambiguity. Simply providing large amounts of data does not necessarily help information processing (Daft and Lengel, 1986).Firm Failure: Managerial cognition may lead to organizational inertia (Tripsas and Gavetti2000).H4: Problem recognition is positively related to problem reception.

12. Model 2 Problem Fitness to Categorization H5 Problem Assignment Gatekeeper's Knowledge of the Problem H6 H7 Gatekeeper's Knowledge of the Organization

13. Model 2 • Problem Fitness to Categorization: The problem fits to the filtering system that is used to categorize problems.H5: Problem fitness to categorization is positively related to problem assignment. • Gatekeeper's Knowledge of the Problem: The knowledge of the internal organization that the gatekeeper has.When the problem is raised by the game user, there may be terminologies that are specifically used for the particular game. Thus, gatekeeper shall have sufficient knowledge about the game in order to assign the problem. Carlile (2002) mentioned how “knowledge in new product development is localized around particular problems faced in a given practice.”H6: Gatekeeper's knowledge of the problem is positively related to problem assignment. • Gatekeeper's Knowledge of the Organization: The knowledge that the gatekeeper has on the problem raised by the user.Semantic approach to knowledge boundary suggested by Carlile (2002) suggests that the differences and dependencies between functions or groups must be specified.H7: Gatekeeper's knowledge of the organization is positively related to problem assignment.

14. Model 3 Work Motivation H8 Problem Acceptance Capability Concern H9 H10 Control Variables: Recognition of Problem Difficulty Recognition of Problem Importance Past Experience Problem's Relevancy to the Target Market Assignee's Problem-Solving Style Responsibility

15. Model 3 • Work Motivation: The assignee is motivated to put an effort into the work.We found out through interview that there is no such thing as economic incentives at Company 100 Inc.“Intrinsic motivation involves people doing an activity because they find it interesting and derive spontaneous satisfaction from the activity itself. Extrinsic motivation, in contrast, requires an instrumentality between the activity and some separable consequences such as tangible or verbal rewards, so satisfaction comes not from the activity itself but rather from the extrinsic consequences to which the activity leads” (Gagne and Deci 2005).H8: Work motivation is positively related to problem acceptance.

16. Model 3 • Capability Concern: The assignee has capability (enough resources) to solve the problem.It seems reasonable that problems that involve low information transfer costs would tend to be selected preferentially (von Hippel1994). H9: Capability concern has an impact on problem acceptance. • Responsibility: The team unit that received the information about the problem actually finds it necessary to solve the problem. Each worker finds it responsible about the problem. (Free-rider problem)“Social Loafing” – The reduction in motivation and effort when individuals work collectively compared with when they work individually or coactively (Karauand Williams 1993).H10: Responsibility has an impact on problem acceptance.

17. Model 3- Control Variables • Recognition of Problem Difficulty: The assignee sees the problem as difficult to solve.If the assignee perceives the problem as difficult, it may have an impact on the problem acceptance. • Recognition of Problem Importance: The assignee recognizes the problem raised as important.If the assignee considers the problem to be critical, s/he may more likely accept the problem. • Past Experience: The assignee has an experience working with a similar problem in the past. When trying to solve a new problem, knowledge of the assignee, both tacit and explicit, becomes important.Know-how, or tacit knowledge, is defined as “the accumulated practical skill or expertise that allows one to do something smoothly and efficiently” (von Hippel 1988). Thus, we propose that past experience will have a positive impact on problem acceptance.

18. Model 3- Control Variables • Problem's Relevancy to the Target Market: The problem is related to major users.We are interested in the amount of resource the firm allocates to the problem. If the firm is too concerned for the major customers/ high-end market, it may be a problem because destructive innovation may come from the low-end market. Thus, we propose that the problem is more likely to be accepted when the problem is relevant to the target market. • Assignee's Problem-Solving Style: The assignee's tendency to whether s/he searches for new ideas (explorative) or puts emphasis on existing issues.Spatial myopia, temporal myopia, and failure myopia (Levinthaland March 1993).Exploration vs exploitation (March 1991).Assignee’s problem-solving characteristics may also have an impact on the problem acceptance.

19. Research Setting Interview - Company 100, Inc. Date: 11/18/2011 Time: 17:00-18:00 The company was founded in May 2008, and the firm plans, designs, and develops mobile technologies and services. (Source: http://www.company100.net/)

20. Research Setting Buddy Rush Buddy Rush is a cross-platform, single-player, action role-playing game (RPG) developed for Facebook. Facebook data shows that there are 180,000 monthly active users. Buddy Rush BG

21. Research Setting Game Development Team (Planning Team) [1] Buddy Rush Team at Company 100 Inc. Users Facebook (http://www.facebook.com/buddyrush) / E-mails Q&A Team [1] Service Team[4, but 1-FB, 1-Cy] Cyworld건의사항(http://club.cyworld.com/sollmo) Client Development Team [1] Sends out Daily Report via e-mail Game Server-Platform Team [4] *Note: The number in brackets are the number of people who are in charged.

22. Research Setting http://www.facebook.com/buddyrush

23. Research Setting http://club.cyworld.com/sollmo

24. Research Setting • Currently Available DataDaily Reports: 10/13/2011 - 11/21/2011Original E-mails: 5/2/2011 – 11/22/2011 • On 11/16/2011, there were total of 59 e-mails coming from facebook to the company. • However, the daily report for facebook showed the following: [버디러시-Facebook] 버그 / 건의 Daily Report (11/16)특별 사항 없었습니다.감사합니다. We can see that the problem was not processed from the problem reception stage to problem assignment stage.

25. Data Collection • Unit of Analysis: Problem • Survey Method will be used.Survey will be collected for each type of problems. The questions related to problem reception and assignment will be answered by the gatekeeper, and those related to problem acceptance will be answered by the assignee(s). • 7-point Likert scale ranging from “strongly agree” to “strongly disagree” will be used except for questions that can be answered by Yes/No.

26. Measures – Model 1

27. Measures – Model 2

28. Measures – Model 3

29. Data Analysis Method • Regression analysis will be used to test three of the hypothesized models.

30. Contribution • Academic- This study is one of the first research to look at the micro mechanism of why external ideas (user knowledge) get blocked within the firm.- Also, this study has defined new roles of the gatekeepers. • Managerial- As a start-up firm, Company 100 Inc. shall have a lot to learn from the research findings.- Managers in other firms may also consider the importance of user knowledge, and find out what are the blocking mechanisms that such knowledge gets blocked during the internalization process. - They may also realize the important role that gatekeepers play in internalizing user knowledge.

31. Limitations • Since the study was done in a particular context, out study’s results may not be generalized beyond the game industry. Further research should consider testing the model for other industries for replications. • Number of gatekeepers may be related to the problem reception when applied to different settings. • The internalization process may be more complex when the problem needs to be solved by more than one unit. (Leadership issue)

32. Future Research Direction • In this study, we look at how the problem raised by users gets internalized in the firm. In other words, we look at how the problem is received, assigned, and accepted in the firm. However, we may also take a step further and look at whether the internalized problem actually gets solved. Also, another interesting phase to look at is whether the problem that was solved gets processed in the organization at a different level, both spatial and time wise. • Also, in this study, we look at how external idea gets processed. We may also compare the process differences between external and internal idea. The person who raises idea may more likely have raised it assuming that s/he can solve it easily.

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34. THANK YOU!ANY QUESTIONS?