Study Finds Organizations Can Do More to Encourage Customer Suggestions

A new study co-authored by a researcher in the Stanford Technology Ventures Program (STVP) finds that organizations that display a feedback button on their website to invite suggestions from customers frequently struggle to foster thriving online forums for new ideas.

The study looked at just over 23,800 organizations and found that success with the online feedback mechanism varied widely, according to co-author Henning Piezunka, a Ph.D. candidate in management science and engineering at Stanford. His research, conducted with a colleague at the European School of Management and Technology, in Berlin, has been published online by the journal Research Policy.

The types of organizations included in the study represent nearly every sector: public entities ranging from rural towns to national governments, and private companies ranging from small startups to multinational corporations. Whereas prior studies on suggestion solicitation looked at just a handful of organizations, Piezunka said that working with one of the leading software firms in the field of online feedback allowed he and his colleague to conduct a much more comprehensive study.

Why Study Suggestions

The findings have broad implications since businesses and other organizations increasingly turn to the Internet to engage customers and innovate through “crowdsourcing.”

Emboldened by the ability to tap into a global community, organizations are increasingly adopting so-called “open innovation” strategies to harvest ideas. In the first weeks of September alone, organizations ranging from NASA to the National Football League have announced ambitious open-innovation initiatives.

“… the whole topic is important because it has been shown that organizations can innovate if they interact with their customers. But we actually wanted to see how to do it successfully.”

More specifically, the study is in line with STVP’s mission of accelerating entrepreneurship education at Stanford and around the world. “When we study entrepreneurship, we are essentially examining how individuals and organizations identify and explore new ideas,” Piezunka said. “Now, how do you actually get new ideas? One crucial avenue is: You engage with customers.”

He also pointed out that “the whole topic is important because it has been shown that organizations can innovate if they interact with their customers. But we actually wanted to see how to do it successfully.”

Successfully Managing Suggestions

Some organizations underscore the great potential of engaging users. For example, Microsoft’s crowdsourcing campaign for Bing Ads was successful in actively engaging customers to contribute suggestions.

But not all organizations have the legions of customers or instant name recognition of a company like Microsoft. And yet, smaller entrepreneurial organizations can also succeed in eliciting suggestions: Swiftkey, a London-based startup behind the popular screen-based keyboard, was successful in eliciting numerous suggestions from its customers, which ultimately guided its innovation process.

Piezunka says that one of the biggest reasons why most organizations fail to replicate those successes is that outsiders don’t see how much effort actually goes on behind the scenes to make those external-engagement campaigns take off.

“People actually fall victim to the general success of open innovation,” Piezunka said. “Organizations often feel like all they need to do is launch their campaign, and it will just take off. But that is absolutely not how it typically goes.”

Hence, in addition to pointing out the shortcomings of organizations’ outreach efforts, the researchers also present what they found to be the most effective strategies for encouraging suggestions from the public and nurturing engagement. Through their analysis, they identified several actions that organizations must take if they want external contributors to send in their suggestions:

• Proactive attention: Instead of waiting for suggestions, the organization should initiate the conversation with an internally developed suggestion to stimulate debate.
• Reactive attention: Organizations should actively respond to suggestions from external contributors to signal that their thoughts are being heard. The study found this was especially important for newcomers to the discussion.
• Catalyzation: Organizations should focus their efforts on new users and the early stage of their open-innovation effort. In particular, organizations need to be aware of the time, effort and commitment required to nurture a fledgling forum into a thriving discussion. This includes establishing a process for retrieving, reviewing and responding to suggestions — especially those offered up at the outset.

Those may seem like common-sense rules for successful communications. But the reality is that organizations frequently underestimate the investment needed, and often fail to apply such widely understood best practices when it comes to corporate engagement, Piezunka said.

For instance, he paints this scenario: Imagine that you’re sitting in a company meeting and saying, “You know what? We just had five customers send in suggestions, and we want to act on that.”

“But the critical moment to engage is actually when you hear from those first five customers.”

“That’s kind of a hard case to make in a business meeting if you have, say, 100,000 customers. It’s much easier if you can say that all 100,000 customers want something,” Piezunka explained. “But the critical moment to engage is actually when you hear from those first five customers.”

Piezunka knows this first hand. Years ago, he founded a web-design company in his native Germany, which is still in business today. He admits that he wasn’t much of a computer programmer back in those days, but that even then he was a “very, very strong believer that you really need early customer input.”

“Most organizations don’t do enough. They tend to be product-focused when it comes to innovating, but not customer-centric,” said Piezunka, who figures he was on the road 60 to 70 percent of the time for his company. “If organizations actually adopt the strategies of proactive and reaction attention, they can unlock the enormous potential of open innovation.”

The study, “Open to suggestions: How organizations elicit suggestions through proactive and reactive attention,” was co-authored by Linus Dahlander, an associate professor at the European School of Management and Technology. Support for the study was provided by STVP, the Sloan Research Project Grant for the Economics of Knowledge Contribution and Distribution, and the Institute for Research in the Social Sciences at Stanford. More information about Henning Piezunka’s research can be found on www.henningpiezunka.com.