Formalizing the fuzzy front end of service innovation
A KPN Consulting case studyRijksuniversiteit Groningen Faculty of Business and Economics
Master Business Administration: Strategy and Innovation Date: 24-8-2012
Author:
Wouter van Gammeren
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First supervisor:
Prof. Dr. W.A. Dolfsma
Second supervisor:
Dr. P.P.M. de Faria
Company supervisor:
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Preface
This thesis is the end result of my time as a business administration student. When I started writing my thesis, about a year ago, I did not have a clue what I could expect. I started with the idea that I was going to write ‘something about open innovation’. I was offered a great opportunity with an internship at KPN Consulting, an innovative company that wanted to explore the opportunities of open innovation. During the process however, the focus of the research shifted and eventually I was writing about formalization in the fuzzy front end of service innovation.
Now, looking back at the process, I think it has been a great experience. I would lie if I said it was fun to write my thesis, but when I got the hang of it, I did write some parts with pleasure.
I would like to thank my supervisor at KPN Consulting, Daan Linden, for supporting me and for giving me the chance to experience what it is like to work in a corporation. My time at KPN Consulting has been both a fun and useful experience. I have visited the impressive experience center, I have visited great events both within the company and outside, for example the Dutch open tennis. And of course I have had the opportunity to participate in some courses which resulted in a Prince2 and an Itil v3 certificate. I would like to thank everyone that was willing to participate in my research, all my interviewees and all the other people that have helped me in a way. Lastly I want to specifically thank Malinda Emmerik for all the help she has given me at every stage of both my internship and research.
At the university I would like to thank Mr. Dolfsma for all the support he has given me during my research. Especially regarding the theoretical part he has been a great help.
Last but not least I want to thank my family and friends for their reviews, support and stimulation. Especially my dad, who was always available for advice.
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Abstract
The fuzzy front end of innovation is, especially for service innovation, a research area that has received relatively little attention. In this study, by looking at fourteen propositions, the need for formalizing the fuzzy front end is addressed. Since activities of the front end of service innovation are overlapping it is hard to decide when formalization of the fuzzy front end should start. To do this, for each activity of the fuzzy front end, the amount of necessary formalization is decided. This is done by conducting a single case study in the Dutch ICT consultancy industry. Results show that each activity of the fuzzy front end requires a different level of formalization.
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Table of Content
1 Introduction ... 7
1.1 Research objective and research question ... 7
1.2 Research structure ... 8
2 Theory ... 9
2.1 Service innovation ... 9
2.1.1 Characteristics of services ... 9
2.1.2 Models for service innovation ... 11
2.2 Fuzzy front end ... 13
2.2.1 Definition & characteristics ... 13
2.2.2 Roles ... 14
2.2.3 Activities ... 15
2.2.4 The fuzzy front end and service innovation ... 15
2.3 Formalization ... 17
2.3.1 Job codifications and the fuzzy front end of service innovation ... 18
2.3.2 Rule observation and the fuzzy front end of service innovation ... 19
2.3.3 Hierarchy of authority and the fuzzy front end of service innovation ... 20
2.4 Formalization of the fuzzy front end activities ... 20
2.4.1 Idea generation ... 21 2.4.2 Service definition ... 23 2.4.3 Project planning ... 23 2.4.4 Executive reviews ... 24 2.5 Research Overview ... 26 3 Methodology ... 27 3.1 Case study ... 27
3.2 Case study research design ... 27
3.3 Research design quality ... 28
3.4 Data collection ... 29
3.5 KPN Consulting case ... 31
3.5.1 Innovation Process ... 32
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4.1 Fuzzy front end ... 34
4.1.1 Activities of the fuzzy front end of service innovation ... 34
4.1.2 Sequence of the activities of the fuzzy front end of service innovation ... 34
4.2 Idea generation ... 35
4.2.1 Idea generation: Job codification ... 35
4.2.2 Idea generation: Hierarchy of authority ... 37
4.2.3 Idea generation: Rule observation ... 37
4.3 Service definition ... 38
4.3.1 Service definition: Job codification ... 38
4.3.2 Service definition: Hierarchy of authority ... 39
4.3.3 Service definition: Rule observation ... 40
4.4 Project planning ... 40
4.4.1 Project planning: Job codification ... 41
4.4.2 Project planning: Hierarchy of authority ... 42
4.4.3 Project planning: Rule observation ... 42
4.5 Executive review ... 43
4.5.1 Executive review: Job codification ... 44
4.5.2 Executive review: Hierarchy of authority ... 44
4.5.3 Executive review: Rule observation ... 45
4.6 Additional findings ... 45
4.6.1 External sources of ideas ... 45
4.6.2 Unknown innovation ... 46
4.7 Summary of findings ... 46
5 Discussion ... 48
5.1 Formalization in the fuzzy front end of service innovation ... 48
5.2 Idea generation and portfolio management ... 49
5.3 Experimentation versus early definition ... 49
5.4 The priority of innovation ... 50
5.5 Gatekeeper decisions ... 51
5.6 Sources of ideas ... 51
6 Conclusion ... 53
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6.2 Implications for theory and practice ... 54
6.3 Limitations ... 55
6.4 Future research ... 55
7 References ... 56
Appendix 1: Interview template ... 60
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1 Introduction
Service innovation is getting increasingly important since the service industry has become the major economic driver in the world, especially in the western industries (Metters and Marucheck, 2007). Contrary to product innovation however, service innovation has been given relatively little attention (Dolfsma, 2004).
Due to the characteristics of services, the service innovation process tends to be informal and ad hoc (e.g. Johne and Storey 1998). However, research has proven that formalizing the service innovation process improves its performance (Dolfsma, 2004).
The informality of service innovation is at its extreme in the front end of the process. Because of uncertainties about customer needs, competitor behavior and technology (Høj Jørgensen et al., 2007) the front end is also called the fuzzy front end. The fuzzy front end is argued to be one of the most important parts of the innovation process(Cooper and Kleinschmidt, 1994). Also it is the part of the process that has probably the most opportunities for improvement (Koen et al., 2001).
Khurana and Rosenthal (1998) have found six activities of the fuzzy front end: service strategy formulation and communication, opportunity identification and assessment, idea generation, service definition, project planning, executive reviews. Even though this is a model for new product
development, because of the similarities with new service development, this model is applicable for this study, as will be further explained in the theoretical part.
Formalizing the fuzzy front end of innovation has many advantages (Kim and Wilemon, 2002). Even though researchers have addressed this topic for product innovation, service innovation lacks research. No studies, as of yet, have been conducted on formalizing the fuzzy front end of service innovation. In this study a closer look will be given to the activities in the fuzzy front end of new service development that can and should be formalized.
1.1 Research objective and research question
The objective of this study is to (1) build on existing literature to define when the fuzzy front end of service innovation has to be formalized and (2) test this in a single case study. The single case object is a large ICT consultancy company in the Netherlands, KPN Consulting.
The following research question will be the basis of this study: Which parts need to be formalized in the front end of the new service development process of a firm?
To answer this question the following sub-questions will have to be answered:
What are the differences between product and service innovation?
What are indicators to measure formalization?
Which parts does the front end exist of?
8 Because of the interrelatedness of activities in new service development (de Jong et al., 2003) the research question cannot be answered with a specific stage gate approach of time within the process, however for the separate activities of the fuzzy front end the necessary degree of formalization will have to be investigated. This will be done by looking at multiple indicators for formalization: job codification, rule observation and authority of hierarchy.
1.2 Research structure
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2 Theory
In this chapter multiple theoretical aspects will be discussed. The first section of the chapter is about service innovation, showing the characteristics of services and models for service innovation. In the second section of this chapter the fuzzy front end is introduced and defined. Following in the third part of the chapter formalization will be addressed and indicators to measure formalization are given. According to the different activities in the fuzzy front end of service innovation and the indicators for formalization, propositions for formalizing the fuzzy front end are established.
2.1 Service innovation
It is important to understand the difference between a service and a product, and its implications for managing new service development. Services are said to differ from products on four dimensions (Easingwood, 1986; de Brentani, 1991). These dimensions are: intangibility, simultaneity, heterogeneity and perishability. In this first section those four dimensions and their consequences for innovation will be elaborated. Following, models for innovation are presented. First a model for product innovation of Booz et al. (1982) is discussed, followed by the stage gate model (Cooper, 2010) and a model for new service development (de Jong et al., 2003).
2.1.1 Characteristics of services
Intangibility
While products are always tangible objects, services are mostly intangible (e.g. de Brentani, 1991). Johne and Storey (1998) state that in contradiction to products, services are more processes than ‘things’. These processes, however, are often accompanied by tangible aspects to facilitate the service (de Jong et al., 2003) This intangibility of services has both a clear advantage and disadvantage. At the one side, development is relatively easy and cheap. In products a tangible product will need to be produced, tested and so on, this of course is not the case with services. The disadvantage of the intangibility aspect is the relative ease of imitation. Since no complicated product is developed and the cost of development are low, it is easy for competitors to imitate the service and implement it in their own company(de Brentani ,1991).
Simultaneity
Simultaneity refers to the simultaneous production and consumption of services. In products there is mostly a standard sequence. First the product is produced, then sold and eventually consumed. In services this is not the case, as the service is produced at the same time as the consumption (de Jong et al., 2003).Given this fact, service production can be seen as an open process.
Heterogeneousness
10 Perishability
Services are perishable since they cannot be stored. This is, as Dolfsma (2004) mentioned, a derivative of the simultaneity and intangibility aspects. A service is intangible and it is consumed at the moment of production and can therefore not be stored.
De Jong et al. (2003) identified seven consequences of the characteristics of services: innovation may not be recognized, new services can be imitated from competitors, termination of NSD projects tends to be easy, it’s regarded as a trial and error process, no natural occasions for review, communication problems may arise and frontline co-workers should be involved. These seven consequences have, in turn, consequences for the organization of the (service) innovation process.
The innovation process in service innovation is less formal than in new product development and is mostly ad hoc (Johne and Storey, 1997).This has been confirmed by multiple other studies which confirm that service innovation often is an informal process where ideas are developed in ad hoc teams (Kelly and Storey, 2000; Sundbo, 1997; de Jong et al., 2003).
These seven consequences of the characteristics of services are:
- Innovation may not be recognized: Because of the close interaction between customer and service provider, services will become customized. It is hard for the service firm to recognize whether a customized service can be used for other customers, therefore service firms are not always able to see whether they actually innovate or just provide a service.
- New services can be imitated from competitors: As already mentioned, because of the intangibility, services are relatively easy to develop. The downside of this is that it is easy for competitors to imitate new services.
- Termination of new service development projects tends to be easy: since services are mostly the consequence of labor only, it is easy to terminate a project.
- It is regarded as a trial-and-error process: Because services cannot be stored and cannot be tested without customer interaction, testing often happens after launch. Customers have an important role in improving the service.
- No natural occasions for review: Because of the direct interaction with customers, and the fact that the service is created together with the customer makes it hard to create evaluation moments. It is hard for management to distinguish between de various stages of the new service development process.
- Communication problems may arise: Because of the intangibility it is harder to develop the service in a team. Because no product can be seen communication problems can arise of what to develop exactly. At the customer level the same problem exists. It is hard for customers to predict what they will get, since they cannot visualize it. A commonly used solution for this is adding a tangible aspect to the service (de Brentani, 1991).
11 Even though difficult, it has been found that companies with a controlled innovation process are more successful (Dolfsma, 2004). Therefore in the next section formal models for the innovation process will be given.
2.1.2 Models for service innovation
Innovation in services has only recently been recognized (Sundbo, 1997). Often called new service development, it is mostly seen as a stepped process (de Jong et al., 2003). One of the most common models for new product development, the model of Booz et al. (1982), is also useful for new service development (de Jong et al. 2003). This model describes six stages that follow each other in the innovation process. A new stage only begins after the completion of the past one. However, in new service development the screening and testing stages are little used (Easingwood, 1986).
New product strategy Identify the strategic business requirements that the new product should satisfy
Idea generation Search for product ideas to meet strategic
Objectives
Screening and evaluation A quick analysis of ideas made against criteria that reflect the objectives of the organisation Business analysis A detailed analysis of the attractiveness of an
idea in business terms
Development Translation of the idea into an actual product for
the market
Testing The commercial experiments necessary to verify
earlier business judgements
Commercialization The when, where, to whom and how decisions of
the launch Table 1: New Service Development stages
Source: Booz et al. (1982), adapted from Johne and Storey (1997)
Stage-gate system
12 The stage-gate system is a process of multiple stages, followed by gates. In the stages information is gathered by cross-functional teams to reduce uncertainty and risks. Furthermore each stage has different objectives, from idea discovery to launch. After each stage a gate follows, in which go/kill decisions are made. The gates consist of three things: deliverables, criteria and outputs. The project team delivers its progress, which is evaluated by criteria it must meet and eventually the go/kill decision is made (Cooper, 2008).
After discovery, generally 5 stages follow: scoping, building business case, development, testing & validation and launch. In addition to the original stage-gate system, two other version are made: the stage-gate XPress and the stage-gate lite. In these versions the stages are adjusted to specific
projects(Cooper, 2008).
Figure 1: Stage-gate model Adapted from: Cooper (2008)
New service development model
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Figure 2: a model for new service development Source: de Jong et al. (2003)
In this model activities such as idea generation, screening and commercial evaluation are able to overlap and therefore ideas can be improved, or entirely new ideas can be generated, during the other activities of the stage. This also applies for the implementation stage, which allows for the trial and error process as discussed earlier.
Looking forward to the next sections, the search stage could be argued to be to fuzzy front end of the innovation process.
2.2Fuzzy front end
The fuzzy front end is mostly seen as the activities before the start of the formal process (Kim and Wilemon, 2002). In this chapter a definition of the fuzzy front end will be given, followed by general characteristics of this phase. Following the roles of different actors in the fuzzy front end will be given. To be able to research when the innovation process should be formalized in the front end, different activities of the fuzzy front end will be distinguished: service strategy and communication, opportunity identification, idea generation, service definition, service planning and executive reviews. After
distinguishing these activities, for each activity propositions regarding the formalization of these activities are formed.
2.2.1 Definition & characteristics
14 Jørgensen et al., 2007). This uncertainty is the main reason for the characteristics of the fuzzy front end, depicted by Kim and Wilemon (2002).
Factors General characteristics of the FFE phase
State of an idea Probable, fuzzy, easy to change
Features of information for decision-making Qualitative, informal and approximate Outcome (/action) A blueprint (/diminishing ambiguity to decide
whether to make it happen)
With and depth of the focus Broad but thin
Ease of rejecting an idea Easy
Degree of formalization Low
Personnel involvement Individual or small project team
Budget Small/none
Management methods Unstructured, experimental, creativity needed (Visible) damage if abandoned Usually small
Commitment of the CEO None or small
Table 2: General characteristics of the FFE phase Source: Kim and Wilemon (2002, p. 270)
As can be seen in the table, management of the fuzzy front end is generally unstructured, experimental and informal. In new product development this is an exception to the formal innovation process that follows from the front end, in service innovation however it has appeared that the formal process itself often is informal and ad hoc as well (Kelly and Storey, 2000; Sundbo, 1997; de Jong et al., 2003).
2.2.2 Roles
Khurana and Rosenthal (1998) argue that in the fuzzy front end four roles are important in the fuzzy front end, due to the characteristics of services a fifth role is added:
Core team, this is a cross-functional team that is responsible for the key activities in the front end.
Project leader, the project leaders makes the activities of the core team possible and motivates them in the process.
Senior management, provide a general strategy and plans.
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Front line co-workers, because of the nature of services front line play an essential role in the identification of new opportunities (Johne and Storey, 1997; de Jong et al., 2003).
2.2.3 Activities
The fuzzy frond end is the first phase in the innovation process of companies, it is often seen as the activities that happen before an idea enters the actual new service development process. This appears from the definition of Koen et al. (2001) who state that the fuzzy front end consists of all activities before the actual formal new product development process, and also from the definition of Kim and Wilemon (2002, p. 269): ‘the period between an opportunity is first considered and when an idea is judged ready for development’. As mentioned earlier, the fuzzy front end is thus comparative with the search stage of the model of de Jong et al. (2003). In this case activities of the fuzzy front end would be idea generation, screening and commercial evaluation.
Khurana and Rosenthal (1998), in their study, have identified some more activities of the front end of innovation. These activities are: product strategy formulation and communication, opportunity identification and assessment, idea generation, product definition, project planning and executive reviews. Even though this is a model for new product development, there are strong similarities with new service development. Especially in the phase before actual tangible aspects come to order these similarities are strong.
2.2.4 The fuzzy front end and service innovation
The general characteristics of the fuzzy front end as adapted from the study of Kim and Wilemon (2002) are now compared to the consequences of services for innovation.
- In the fuzzy front end ideas are often fuzzy and easy to change. Reason for this is that the idea is an intangible thing, which is not developed very well yet. Services are mostly intangible, which results in a trial and error process in service innovation. In a product innovation process, after the fuzzy front end a tangible product is developed and tangible prototypes can be produced. In service innovation processes, an intangible service is developed. The state of the idea therefore remains fuzzy and subject to change for a much longer period.
- In the fuzzy front end features of information for decision-making are qualitative, informal and approximate. Looking at service innovation, there are no natural occasions for review. In both reviewing is a difficult aspect
- The ease of rejection of an idea in the fuzzy front end of product innovation, remains
throughout the whole service innovation process. In service innovation projects are relatively easily terminated, because the only costs of the project are labor costs.
- The degree of formalization in the fuzzy front end tends to be low. In service innovation, even though it has been proven that a higher level of formalization is recommendable (Dolfsma, 2004), formalization tends to be low as well.
16 commercialization. The need for experimentation in the fuzzy front end of product innovation, exists in the service innovation process as well .
- In the fuzzy front end there is few damage if a project is abandoned. Reason for this is that most of the budget consists of labor costs. As already discussed, in service innovation this is the case in the whole process.
As appears, many of the characteristics of the fuzzy front end (of product innovation) are applicable throughout the whole service innovation process. Because of these similarities, and because scholars like de Jong et al. (2003) also found that product innovation models and service innovation models are strongly comparable, the following proposition is proposed:
Proposition 1a: The Khurana and Rosenthal model of the fuzzy front end for product innovation (1998), is also applicable for service innovation (p1a).
Figure 3: A model for the fuzzy front end Source: Khurana and Rosenthal (1998)
17 Khurana and Rosenthal have distinguished 3 phases in the front end: pre-phase zero, phase zero and phase one. As can be seen in the model, pre-phase zero is an ongoing process. Opportunity
identification and idea generation are thus activities that can happen at any moment. Also strategy formulation is a process that constantly should be revised.
The following proposition is derived from this:
Proposition 1b: Activities in the fuzzy front end of service innovation overlap and are interrelated (p1b).
The separate activities will be further explained in a later part.
2.3 Formalization
Formalization is the main topic of this third paragraph of chapter 2. In this section indicators for
formalization are presented. These indicators are roles, authority relations, communications, norms and sanctions and procedures. However, as will appear, not all these indicators will be used in this study. Being renamed and redefined by Hage and Aiken (1967) the following three indicators will be used: job codifications, hierarchy of authority and rule observation. The consequences of the fuzzy front end of service innovation will be discussed in relation to formalization
Formalization is a widely defined and widely used term. One of the first studies to define formalization is the one of Pugh et al. (1963). In this study formalization is defined as the amount of communications and procedures that are written down and filed. Also ‘Formalization can include (1) statements of procedures, rules, roles (including contracts, agreements, and so on), and (2) operation of procedures, which deal with (a) decision seeking (applications for capital, employment, and so on), (b) conveying of decisions and instructions (plans, minutes, requisitions, and so on), and (c) conveying of information, including feedback’ (Pugh et al. 1963, p. 303).
Aiken and Hage (1966) add to that, that not only rules about job description and task description should not only be made, they should also be enforced.
Later Hage and Aiken defined formalization as ‘the use of rules in an organization’ (1967 p. 79). To be able to measure formalization Hall, Johnson and Haas (1967: p. 907) have identified 5 indicators for formalization:
A. Roles
1.The degree to which the positions in the organization are concretely defined. 2. The presence or absence of written job descriptions.
B. Authority Relations
1. The degree to which the authority structure is formalized (clear definition of the hierarchy of authority).
18 C. Communications
1. The degree of emphasis on written communications.
2. The degree of emphasis on going through established channels in the communications process. D. Norms and Sanctions
1. The number of written rules and policies.
2.The degree to which penalties for rule violation are clearly stipulated. 3. The extent to which penalties for rule violation are codified in writing. E. Procedures
1. The degree of formalization of orientation programs for new members (systematic socialization for all new entrants).
2. The degree of formalization of in-service training programs for new members (systematic and continuing socialization of new members).
Hage and Aiken (1967) argue that two of these five indicators need to be excluded, because the one was only relevant for few companies and the other had little substantive meaning. The remaining indicators were renamed ‘job codifications’, ‘hierarchy of authority’ and ‘rule observation’.
The characteristics of services, especially in the fuzzy front end, have important implications for the use of formalization. The characteristics of services have, as has been explained in the previous section, some consequences for the innovation process. These consequences have, in turn, implications for the use of formalization in the fuzzy front end of service innovation.
2.3.1 Job codifications and the fuzzy front end of service innovation
Hage and Aiken define job codifications as: ‘the degree to which the job descriptions are specified’ (1967: p. 79). When looking at the identified consequences of the characteristics of services and the characteristics of the fuzzy front end, some of them seem to have a relationship with job codifications. The first is that termination of new service development projects tend to be easy, as well as ideas in the fuzzy front end. Because development of most services is labor intensive, and does not require much technical development, it is relatively easy to terminate the project. When job descriptions are specified well, making individuals responsible for a project, a barrier against termination may arise.
The second is the problem of reviewing. Reviewing is problematic, since stages are interrelated and testing is first possible when performing the service at the customer. Clearly specifying jobs could help improve this. If frontline co-workers, who perform the service, receive instructions to review the service after each service performance, a natural review moment could be created.
The third is the fear that communication problems may arise. Because of the intangibility of services communication problems within the development team may arise since developers don’t know what they are developing exactly. Setting clear job instructions can greatly reduce this problem, since every individual knows his task communication becomes much easier.
19 understands that job.
Formalizing job codifications seems to improve service innovation on multiple facets, however some characteristics of the fuzzy front end make it hard to formalize job codifications. The width and depth of the focus is usually broad but thin in the front end. This means that many options are considered and they are not yet developed very much. Many options often means many people may be involved, which makes job codification harder. Also management methods are usually unstructured, experimental and creativity is needed. Since something ‘new’ is developed it is almost impossible to clearly define strict job codifications in the front end.
Concluding, some aspects of the fuzzy front end could benefit from formalization, other aspects may be hard or even impossible to formalize.
2.3.2 Rule observation and the fuzzy front end of service innovation
Rule observation is: ‘the degree to which job occupants are supervised in conforming to the standards established by job codification’ (Hage and Aiken, 1967: p. 79). This immediately implies that job codification is necessary to be able to observe rules. Some consequences for innovation of the characteristics of services and of the characteristics of the fuzzy front end can be related to rule observation.
At first, because service innovation is often not recognized it is hard to set targets on service innovation and consequently it is very hard to supervise individuals. In the fuzzy front end ideas tend to be fuzzy and easy to change and information for decision-making is often based on qualitative, informal and approximate features. Because of all these uncertain and not measurable aspects, managers are not really able to make rules, let alone enforce rules.
Secondly, the ease of idea rejection in the fuzzy front end is high and termination of projects in service innovation is easy. As jobs can be defined better to decrease project termination, rule observation can further decrease this. The other way around, as long as job codification is not clear, rule observation is not possible to lower project termination. Summarizing, rule observation could decrease project termination in service innovation, however, job codification should be clear.
Services are often regarded as a trial and error process. Especially in the fuzzy front end
experimentation and creativity are necessary. Because of this, it is very hard to observe rules. Accepting that the service innovation process is a trial and error process, implies that errors are accepted. In this case it is almost impossible to make and enforce rules. Furthermore, too much rules might lead to type 1 errors. Good ideas are unjust rejected, because of formalization.
When an idea is abandoned in the fuzzy front end, damage is usually small. It may not be desirable to strictly enforce rules on abandoned ideas that do not damage the company much.
The same applies for the review problem. No natural occasions for review exist, also it hard to observe rules. As discussed in the previous paragraph, job codification could assure such a review at the customer site. When job codification is clear, rules for to encourage reviews can be enforced.
20 Summarizing, it is very hard to observe rules in service innovation. However, clearly defining jobs can make this easier. When jobs are codified, rule observation can add to the service innovation process.
2.3.3 Hierarchy of authority and the fuzzy front end of service innovation
Hierarchy of authority is defined as: ‘decisions involving the work associated with each social position’ (Hage and Aiken, 1967: p. 78).
Some of the characteristics of services and of the fuzzy front end can be related to hierarchy of authority.
In the fuzzy front end personnel involvement tends to be individual or in small teams. Also CEO
commitment is, if even present, very small. Both these things imply that hierarchy of authority is usually very low in the fuzzy front end. Furthermore the need of experimentation and creativity diminishes the need for hierarchy.
The general characteristics of service innovation also have consequences for hierarchy of authority. The first of these is the ease of termination of a service innovation project. Because service innovation is mostly labor intensive, the costs of terminating a project are relatively low. Hierarchy of authority can make sure the project is not terminated. When a higher level manager is able to set rules and enforce them, the manager has opportunities to prevent project termination.
The second is the possibility that communication problems may arise. Reason for this is that, because of the intangibility of services, the development team does not know what to develop exactly. Hierarchy of authority can reduce this problem. A higher level manager could coordinate the project and clarify ambiguities in the service innovation process.
The last is the necessity of involving frontline co-workers. Since frontline co-workers have direct contact with the customer and, because of the simultaneous character of the process , for a big part develop the new service, it is important to involve these individuals in the service innovation process. Hierarchy of authority, by providing a higher level manager, makes sure an individual is able to oversee the whole project, being able to recognize the importance of involving frontline co-workers.
Formalizing by making authority hierarchical can thus improve the service innovation process.
2.4 Formalization of the fuzzy front end activities
The results of the effect of formalization in innovation processes differ among different studies. Some studies have proven that formalization has negative effects on innovation. Formalization could lead to entanglement of professionals (Kanungo, 1979), or role conflicts (Kahn et al., 1964). Also formalization has been proven to be decreasing cross-functional information sharing (Hage and Aiken, 1971) and individual innovativeness (Hage and Aiken, 1967).
Other studies found that a lack of formalization leads to an increase of role ambiguity (Rizzo et al., 1970) and higher quality and quantity of information flows (Ruekert and Walker, 1987). Gupta et al. (1986) state that formalization is a facilitator as well as a barrier to innovation. Baker et al. (1980) discussed that the effect of formalization on organizational effectiveness is curvilinear, which means that some formalization increases effectiveness, but too much formalization decreases organizational
21 formalization the fuzzy front end, as well.
Formalization in the fuzzy front end is generally low (Kim and Wilemon, 2002). However within the different activities of the fuzzy front end, different levels of formality might be necessary. In order to find out when the innovation process in the fuzzy front end should be formalized, in this section formalization will be linked with each separate activity as identified by Khurana and Rosenthal (1998), however since this study is about service innovation rather than product innovation the terms will be adjusted accordingly. These activities are:
Service strategy formulation and communication
Opportunity identification and assessment
Idea generation Service definition Project planning Executive reviews
Propositions will be composed for idea generation, service definition, project planning and executive reviews. Service strategy formulation and communication and opportunity identification and assessment are left out. Both these activities are performed by senior management (Khurana and Rosenthal, 1998), and are thus already formalized to a great degree.
2.4.1 Idea generation
An idea is, at its first, ‘a hypothetical suggestion which links a potential bundle of attributes with a potential market’ (Baker and Hart, 2007, p. 221).
This definition clearly depicts the state of the idea, as also defined for the fuzzy front end: probable and fuzzy. In this phase, ideas are first generated and are still easy to change. As many ideas are generated, it is usually easy to reject ideas.
Also the depth of the ideas is still thin. Since many ideas are generated, only few are at a later stage researched further. The width of the ideas however is quite broad, which also appears from the ease to change ideas. A logical following of this broadness is that many actors can be involved in the process. Especially for services, in which customer involvement is essential.
Many researchers stress the importance of outside sources for ideas. An example of this is the open innovation work of Chesbrough(2003), who stressed that external sources are becoming increasingly important. Reasons for this are: the growing mobility of highly experienced and skilled people, the growing amount of private venture capital and the need to speed up the time to market (Chesbrough, 2003). But also ‘the increasing globalisation of research, technologies and innovation, new information and communication technologies as well as new organisational forms and business models’ potential’ (Gassmann and Enkel, 2004, p. 1).
Johne and Storey (1998) found that development is best to be market driven. Other studies proved the necessity of market orientation for services specifically, furthermore this market orientation is
22 involvement in service innovation is defined as those processes, deeds and interactions where a service provider collaborates with current (or potential) customers at the program and/or project level of service development, to anticipate customers’ latent needs and develop new services accordingly’ (Matthing et al., 2004, 487).This is confirmed by de Brentani (1991), who found that service companies that are market driven are superior on both sales and performance dimension.
Since it is important to involve customers in the idea generation process, the matter of how to do that should be addressed.
In service innovation the frontline co-workers are the ones that have direct contact with the customer and consequently the ones that are first to recognize customer needs, these frontline co-workers should come up with new service ideas (de Jong et al., 2003). Even though most new ideas might be expected to come from these frontline co-workers, other employees might come up with new ideas as well. For the same reasoning as was the case with opportunity identification, idea generation can and should be done by anyone in the organization. Also, as anyone should be able to generate ideas, there can be no hierarchical authority in the generation process.
This is confirmed by the network theory for the fuzzy front end of Kijkuit and van den Ende (2007). In their study they conclude that in the idea generation phase many ideas should be generated and that the use of many weak ties leads to better performance in the search for knowledge. Strength of weak ties theory assumes that people with strong ties have more or less the same ideas because they share the same interests or work at the same things, people with weak ties do not share as much and think in other contexts.
CEO involvement in the fuzzy front end tends to be small. Kijkuit and van den Ende (2007) found this to be a good thing. They found that decision maker involvement in the idea generation phase should be low. Higher management involvement has shown to be ineffective in this phase (Benner and Tushman, 2003). In an experiment about customer involvement of Matting et al. (2004) it appeared that unique ideas are produced at unexpected times, customers were often triggered by unexpected events. Regarding this, the trend to use unstructured management methods in the fuzzy front end , in which experimentation and creativity are argued to be necessary, seems to be right.
Summarizing, because of the width of the focus many actors may be involved in the process of
generating new ideas. Also, ideas are fuzzy, easy to change and often rejected. To even generate ideas, much creativity and experimentation is necessary. Lastly, senior management involvement has proven to be ineffective when generating new ideas. Ideas are mostly generated at unexpected times. This implies that job codification and rule observation are almost impossible in the idea generation phase. Also authority relations should be minimized.
This leads to the following propositions:
Proposition 2a: In the process of idea generation, jobs should not be codified (p2a).
Proposition 2b: In the process of idea generation, authority relations should be minimized (p2b).
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2.4.2 Service definition
The next activity in the model of Khurana and Rosenthal (1998) is product definition. Product definition involves ‘assessments of customer and user needs, of competitive product offerings, of technological risks and opportunities, and of the regulatory environment into which the product will be delivered’ (Bacon et al., 1994, 33). To do this information of multiple divisions is needed, for example engineering, marketing and manufacturing. Cooper and Kleinsmidt (1993) argue that the product definition consists of a definition of the target market, a description of the product concept and the benefits, delineation of the positioning strategy and a list of the product features and requirements. Cooper and Kleinsmidt furthermore argue that early and sharp definition greatly increases the chance of product success. Reasons for this are that early definition explicitly brings more attention on the pre-development, more attention to different departments is provided, improving both communication and commitment and it provides a clear set of objectives for the development team to work towards.
This study, of course, is about service innovation and therefore the definition is not about product definition but about service definition. Service definition, mostly called service concept, is critical before and during the design and development of services (Goldstein et al., 2002). In service innovation the service concept is both a description of the customer needs that will be satisfied and a design of how that is to be done. ‘The service concept is a detailed description of what is to be done for the customer (= what needs and wishes are to be satisfied) and how this is to be achieved (= the service offer)’ (Edvardsson and Olsson, 1996, 149).
In the fuzzy front end, the state of an idea is mostly fuzzy and probable. Service definition tries to decrease the fuzziness of the idea. However, in the fuzzy front end features of information are
qualitative, informal and approximate, making it hard to define the service well. Especially in the fuzzy front end of service innovation service definition is an even more fuzzy process, because of the intangibility of services.
Despite these difficulties in the formalization of service definition, when addressing the service concept, it is stated that the organizational structure should clearly define tasks and authority relations. The people responsible for each separate activity should be clear, as well as the authority relations
(Edvardsson and Olsson, 1996). Since responsibilities should be divided to activities, it is relatively easy to recognize individuals not performing their activity properly.
The following propositions regarding service definition are proposed:
Proposition 3a: In the service definition process jobs should be clearly defined (p3a).
Proposition 3b: In the service definition process, authority relations should be clearly defined (p3b).
Proposition 3c: In the service definition process, rules should be observed (p3c).
2.4.3 Project planning
24 to formally plan the development of new services. The reason for this is the contradiction between creativity and planning and control. Furthermore Edvardsson et al. believe that service innovation needs some elements of improvisation, anarchy and internal competition, and that therefore new service development needs a contingency approach which must be both a planned process and a happening. This especially applies for the fuzzy front end, where creativity and experimentation are encouraged. Also since features of information are approximate, no exact estimates can be made and some form of guessing cannot be excluded. The state of the idea in the front end is fuzzy and will probably change over time. All these aspects make planning both hard and necessary.
Moreover, when the planning process happens after the service definition process, the state of the idea is much more certain. As the service is defined, changing the idea will not be easy anymore.
Based on work of Salomo, Weise and Gemünden (2007), Zippel-Schultz and Schultz (2011) have identified two different types of planning: business planning and project planning. Business planning refers to the selection of innovative ideas, and is therefore a more strategic type of planning. Project planning is about describing what is expected from team members to accomplish the project. This assures team members have a better task understanding which improves the coordination of activities and avoidance of conflicts. ‘Project planning describes the rules for communication and guides the dissemination of knowledge. It clarifies the goals and can be used to co-ordinate necessary actions of team members within an innovation project’ (Zippel-Schultz and Schultz, 2011, p. 298).
The need for creativity and improvisation in service innovation is recognized. The planning of the project however takes places after the most creative and fuzzy part of the innovation process, since the service is already defined. Therefore it is possible to plan and control the project without hindering creativity too much. As a matter of fact, multiple studies see formal planning of the innovation project as an essential condition for project success (e.g. Pinto and Prescott, 1988). More recently, Kleinschmidt, de Brentani and Salomo (2007) found that formalized planning creates the needed structure for managing innovation projects and coordinating contributions of actors within the project that need to deal with the innovation’s uncertainties and risks. This implies that both jobs should be codified and authority relations are important.
As planning should be formalized, all aspects of formalization should be accounted for. This leads to the following three propositions:
Proposition 4a: In the project planning process, jobs should be codified (p4a).
Proposition 4b: In the project planning process, authority relations should be clearly defined (p4b).
Proposition 4c: In the project planning process, rules should be enforced (p4c).
2.4.4 Executive reviews
25 gates in the stage gate model of Cooper (2008). In this paper it is argued that a gate consists of
deliverables, criteria and outputs.
Deliverables are the visible output of the past stage, in this case of the front end. Criteria are necessary to judge progress. Some criteria are necessary to accept progress.
Output of the gate is the decision whether to continue and an action plan for continuation, including a list of deliverables for the next phase and a planning.
In the fuzzy frontend, especially of service innovation, deliverables are often not visible. Even though defined, most of the service will still be intangible. Features of information for decision making are qualitative, informal and approximate. This means that judgment of criteria is always subjective. Also, because damage by abandoning is usually small in the fuzzy front end of service innovation, the ease of rejection is high. The informality of the features of information and the small damage by abandoning suggest that high formalization is not necessary.
Theory, however, suggests that tasks are well defined in this activity. The executive review committee provides the go/no-go decision and establishes expectations (Khurana and Rosenthal, 1998), while the project leader and the team provide the committee with deliverables (Cooper, 2008).
Since decision making is done by the executive review committee it also seems clear that authority relations are well defined.
Since executives make decisions, sanctioning during this activity is hard. This while gatekeepers, or the committee, are argued to behave badly from time to time. Cooper (2008) enumerates some of these behaviors, for example last minute cancelling of meetings because members are unavailable, not making decisions in the meeting, not delegating authority when being absent or making decisions based on opinions instead of facts. Cooper (2008) argues that within the role of gatekeeper, seniors are no longer in the role of functional boss but rather in the role of decision making team. This suggests that is
possible, and necessary, to enforce rules in this activity.
Even though research of Easingwood (1986) proved that only 26% of service companies claimed that their review procedures for innovation are formal, theory suggest that it should ideally be fairly formal. This leads to the following three propositions:
Proposition 5a: In the executive review process, jobs should be well codified (p5a).
Proposition 5b: In the executive review process, authority relations should be well defined (p5b).
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2.5 Research Overview
In this section, all above discussed activities and their propositions are summarized. For each activity of the fuzzy front end, according to three indicators for formalization, propositions on formalization of that activity are formulated. In table 3 all propositions, with their most important aspects, are depicted.
Activity of the FFE Indicator Formalization Proposition
Idea generation Tasks Not formalized P2a
Authority relations Not formalized P2b
Sanctions Not formalized P2c
Service definition Tasks Formalized P3a
Authority relations Formalized P3b
Sanctions Formalized P3c
Project planning Tasks Formalized P4a
Authority relations Formalized P4b
Sanctions Formalized P4c
Executive reviews Tasks Formalized P5a
Authority relations Formalized P5b
Sanctions Formalized P5c
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3 Methodology
In this section the research methodology will be explained. Since a case study approach is used, this will be explained. Data collection methods are reviewed as for the way data was analyzed. Next the quality of the research design will be proved and lastly a description of the case company, KPN Consulting, will be provided.
3.1 Case study
A case study is usually the preferred way to answer questions with in a how or why style, when the focus is on contemporary events and when there is no necessity to control on behavioral events(Yin, 2003). Even though the main question of this research is not a how or why question, ‘Which parts need to be formalized in the front end of the new service development process of a firm?’, it can be argued that this is derived from how and why questions. To be able to decide which parts of the fuzzy front end must be formalized, first it is necessary to research why to formalize.
A case study can be defined as ‘an empirical inquiry that investigates a contemporary phenomenon within its real life context, especially when the boundaries between phenomenon and context are not clearly evident. … The case study inquiry copes with the technically distinctive situation in which will be many more variables of interest than data points, and as one result relies on multiple sources of evidence, with data needing to converge in a triangulating fashion, and as another result benefits from the prior development of theoretical propositions to guide data collection and analysis’ (Yin, 2003: 13-14).
As will appear from this chapter, this research satisfies to this definition.
The type of case study that will be conducted is a single case study. Five rationales for single case studies exist. One of those rationales is the representative or typical case. In these cases the objective of the study is to capture circumstances and conditions in a day to day environment (Yin, 2003). Since the case study object, KPN Consulting, is representative for its industry, this rationale for a single case study can be accepted.
3.2 Case study research design
According to Yin (2003) in a research design for case studies, five aspects are of great importance: - The studies research questions
- The propositions - Its unit of analysis
- The logic linking of data to the propositions - The criteria for interpreting the findings The research questions
28 The propositions
The propositions draw attention to relevant subjects within the scope of the research. Propositions make sure that the research goes in the right direction.
In the theoretical part of this study, fourteen propositions were presented. These propositions address all six activities of the front end and the indicators for formalization within those activities. This way the proposition direct to all relevant aspects within the scope of this study.
The unit of analysis
Yin stresses that it is important to define the unit of analysis correctly. Often in studies, mistakes in the decision of what is the unit of analysis are made. It seems hard to determine the exact unit of analysis. In this study the unit of analysis is defined as the company KPN Consulting. Even though this study is mainly about the innovation process of the company, innovation has a companywide focus at KPN Consulting. Each employee is able to contribute to the innovation process. Furthermore, at KPN Consulting there is no such thing as an innovation department. For these reasons the unit of analysis is determined as the whole company.
Linking data to the propositions& The criteria for interpreting the study’s findings
The last two aspects of case study research design are taken together since, as Yin (2003) stresses, these are the least developed aspects and foreshadow the data analysis steps.
The way data is linked to the propositions is through pattern matching as described by Campbell (1975). In pattern matching, data is related to the propositions to decide in how far they match. This directly gives a problem for deciding criteria for interpreting the study’s findings, since there is no statistical test possible. ‘Currently, there is no precise way of setting the criteria for interpreting these types of findings (Yin, 2003: 27).
3.3 Research design quality
The quality of the research design can be judged according to four tests: construct validity, external validity, internal validity and reliability (Yin, 2003).
Construct validity refers to ‘establishing correct operational measures for the concepts being studied’ (Yin, 2003: 34), and construct validity consists of three aspects:
Multiple sources of evidence
Establish chain of evidence
Key informants review draft of case study report
As will become clearer in the next paragraph, multiple sources of evidence have been used: interviews, documentation, archival records and direct observation. This use of multiple sources of evidence has led to a triangulation of data sources. Also a chain of evidence was maintained and the draft versions were reviewed by key informants.
Internal validity is only a concern for causal case studies, and is out of the scope of this study.
29 the case study. Also, the next paragraph will make clear how theory is used in this study.
Reliability is increased by maintaining a chain of evidence (Yin, 2003).
3.4 Data collection
Multiple ways of collecting data have been used. To start, a thorough literature research has been conducted to set up a research framework. By proposing a total of eighteen propositions a research model is made, which is the basis of the case study. By doing this, external validity is assured. In this literature research, as much as possible, literature of A rated papers have been used.
Secondly internal KPN Consulting papers, documents and archival records (Yin, 2003), have been used to analyze the situation at hand and to get insight in the situation. Full access to the electronic knowledge base of KPN Consulting was provided.
Thirdly, since the research was combined with an internship, day to day activities were observed for seven months. This included meetings with the executive review committee, and much contact with people heavily involved in the innovation process. These observations are another type of evidence: direct observation (Yin, 2003).
Fourthly, both unstructured and semi-structured interviews have been held. The unstructured interviews where mainly to structure the research and also to get better insight in the company. The interviewees of the unstructured interviews also functioned as informants, not only providing information but also suggestions for other sources of information. Being ‘one of the most important sources of case study information’ (Yin, 2003: p89), semi-structured interviews were held to gather most of the research data. These different types of evidence assure the construct validity of the research. For the semi-structured interviews, people with key roles in the innovation process were selected. These roles are already addressed in the theoretical section as: core team, project leader, senior management and the executive review team (Khurana and Rosenthal, 1998) and frontline co-workers (Johne and Storey, 1997; de Jong et al., 2003). All five roles were represented by the interviewees, however some interviewees appeared to have two or more of these roles at the same time.
30
interviewee Function Date Type of interview Duration Recorded
Alberda, Jan Peter (JA) BUD* Business support - 1 February 2012 - 14 February 2012 - 22 February 2012 - Unstructured - Unstructured - Semi-structured - 0,5h - 1h - 1h - No - No - Yes Jacobs - Austerman, Wendy Program manager innovation and co-creation (of KPN Corporate Market) - 29 November 2011 - Unstructured - 1h - No Emmerik, Malinda (ME)
Project leader - 19 October 2011 - 22 February 2012 - Unstructured - Semi-structured - 1h - 1h - No - Yes Geertman, Joris (JG) Director of innovation
- 5 March 2012 - Semi-structured - 1h - Yes
Linden, Daan (DL) BUD consultancy of Government and education - 19 September 2011 - 12 October 2011 - 27 February 2012 - 27 March 2012 - Unstructured - Unstructured - Semi-structured - Unstructured - 1h - 0,5h - 1h - 1h - No - No - Yes - No Niezink, Jurjen (JN)
BUD delivery and consultancy ofNoordOost - 24 February 2012 - Semi-structured - 1h - Yes Ouwerkerk, Jan Paul Consultant - 1 November 2011 - Unstructured - 1h - No Paulo Tomé, Cristiaan (CT)
Business consultant - 21 February 2012
- Semi-structured - 1h - Yes
van de Ruit, Douwe (DR)
Technical consultant - 23 March 2012
- Semi-structured - 1h - Yes
31
Kees(KV) innovation February2012
Table 4: interview overview * Business Unit Director
To be able to analyze the data, the recordings of the interviews were transcribed.
3.5 KPN Consulting case
KPN Consulting is a company that is part of KPN Corporate Market, which is in turn a part of KPN. KPN Consulting has about 1200 employees in the Netherlands, which makes it the largest ICT consultancy company in the Netherlands. In 2011, KPN Consulting has been voted ‘number one ICT consultancy company' (Computable, 2011).
KPN Consulting aspires to be opinion leader in leading IT standards and is giving counsel to the top of Dutch organizations about implementing innovative information technology. KPN Consulting strives to help customers improve their performance by improving and optimizing the deployment of IT (KPN Consulting, 2012 a).
In recent history KPN Consulting has reorganized, mainly to be able to operate closer to the market (KPN Consulting, 2012b).
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Figure 4: Organogram KPN Consulting Source: KPN Consulting, 2012c 3.5.1 Innovation Process
The innovation process of KPN Consulting has recently been changed from a centralized process to a decentralized process. The philosophy of the current process is that 1200 men have more knowledge, and are probably more innovative, than 12 men. The process consists globally of 6 steps:
Step one: Ideas are generated by all employees of KPN Consulting. Idea generation of employees is stimulated by a central innovation board.
Step two: Ideas are presented to the innovation board by filling in an idea sheet (Appendix 2). The innovation board judges the idea by looking at multiple variables, among others expected market value and added value to the portfolio. If the innovation board gives a ‘go’, a business case is made.
Step three: The business case is made including an extensive analysis of the market potential and with technical, operational and financial aspects.
Step four: The idea is developed, this process is monitored and controlled by the Business Support PMO. Their involvement differs per project.
Step five: The innovation is tested with a launching customer. Finance &
Healthcare
34
4 Findings
In this chapter the findings of the case study are presented. Through direct observations, internal documents and both unstructured and semi structured interviews, data was collected. Data is presented and interpreted in this chapter, analysis however can be found in the next chapter. Findings are
supported by quotes that were made during the semi structured interviews, the first letter of the first name and of the surname of the interviewee that was quoted are given behind the quote. This way individual answers can be distinguished. These abbreviations can be found in table 4 on page 28. The structure of this chapter is somewhat equal to chapter two, where the theoretical framework is presented. However some additional findings are presented as well. First data involving the service innovation process are shown. Second findings regarding the fuzzy front end are presented. Thirdly all stages of the fuzzy front end are sequentially are presented, in the same sequence as used in chapter 2. Within these stages some additional aspects are mentioned. 60 quotes are used to underpin the findings.
4.1 Fuzzy front end
Regarding the fuzzy front end model of Khurana and Rosenthal (1998), two propositions have been made. One concerning the activities of the model, the other concerning the sequence of those activities.
4.1.1 Activities of the fuzzy front end of service innovation
Respondents were asked whether or not they recognized the activities of the fuzzy front end model of Khurana and Rosenthal (1998). Even though satisfaction of how these activities are performed in the company varied, all respondents recognized the activities are used in the innovation process of KPN Consulting (CT, JA, JN, ME, DL). Only the last activity, executive reviews and go/no go decision, was called differently: innovation board meeting. Even though the name is different, the process is the same and also this activity was recognized.
Summarizing, at KPN Consulting all activities of the Khurana and Rosenthal (1998) model of the fuzzy front end of product innovation are present in the innovation process of KPN Consulting. Also
respondents recognized the activities to be necessary. Proposition 1a (P1a) is therefore supported, the models of the fuzzy front end (Khurana and Rosenthal, 1998) is also applicable for the fuzzy front end of service innovation.
4.1.2 Sequence of the activities of the fuzzy front end of service innovation
The second proposition concerns the sequence of these activities. As appeared in chapter two, in the model of Khurana and Rosenthal (1998) the activities are interrelated instead of linear.
Both in internal documents (KPN Consulting 2012b) and interviews it followed that strategy formulation and opportunity identification partly overlap. Opportunity identification consists of the identification of pointers for innovation (DL, JN). These pointers for innovation in turn are the main part of the
innovation strategy (KPN Consulting 2012b).
35 responsible for accompanying employees throughout the innovation process, argued that the go/no go decision happens before service definition and project planning (ME). This is supported by both direct observation and other interviews. In innovation board meetings often a go is given to further define the deliverables of the new service. These observations are supported by a study of Cooper (2010). In the traditional state-gate model (Cooper, 2001), a gate exists before building the business case is built. Two quotes further support these findings:
- ‘Often a go is only given for part of the project (…) There should, especially for the bigger projects, be an extra go/no go moment in the model’. (Respondent JN).
- ‘We recently started to divide projects in two parts, first half of the projects needs to be finished to get a go for the other half’. (Respondent JA).
Also the point in time of service definition is fuzzy. The first time the service is (partly) defined is by filling in the idea sheet (JN, DL), a document that is used to present an idea to the innovation board. In the innovation board meeting, a discussion about the idea makes the service definition a little more complete (ME, DR, JN). After a go is given for the project the actual service definition takes place (ME). Service definition is thus a process that overlaps at least one other activity, the executive review process. This is supported by the following quote.
- ‘by means of filling in the idea sheet it becomes somewhat clear what the idea exactly is, it gives a global definition and points out what the idea delivers. That is the first step. During the
innovation board meeting individuals have to further explain their idea, and the innovation board is able to add things they find important. If the meeting results in a go, the actual service definition takes place’. (Respondent ME).
Multiple activities of the fuzzy front end do overlap and are interrelated, proposition 1b (P1b) is consequently supported. This matches the characteristics of the fuzzy front end (Kim and Wilemon 2002) and also the of service innovation, in which activities tent to overlap as well (de Jong et al., 2003).
4.2 Idea generation
The next activity of the fuzzy front end of innovation model of Khurana and Rosenthal (1998) is idea generation. Idea generation at KPN Consulting is a decentralized process in which whole of the company participates. Propositions for formalization of idea generation have been developed regarding the following three concepts:
- Job codification - Hierarchy of authority - Rule observation
4.2.1 Idea generation: Job codification
36 good development in the company. Theoretical work proves this (e.g. Kijkuit and van den Ende, 2007). The statements that all employees can participate in this, and that respondents think that is also should be this way is supported by the following quotes:
- ‘Innovation is a companywide thing’ (Respondent JN).
- ‘My manager facilitates innovation, he does not demand it’ (Respondent CT).
- ‘Everyone in the organization should know that all individuals are allowed to generate ideas’ (Respondent ME).
- ‘I think we should challenge every employee to come up with ideas to innovate’ (Respondent JN). Since KPN Consulting is a service company, making it possible for employees to generate ideas for innovation themselves increases the possibility to profit from customers in the innovation process. Being a consultancy company, employees often work at the company of the customer. Therefore they are able to learn from the customer and generate ideas that really meet customer needs (JN, DL). This is in line with de Jong et al. (2003) who state that frontline co-workers should be involved in the process.
- ‘We don’t look a lot at competitors, fortunately we do look a lot at customers. In the end innovation needs to be sold to the customer’ (Respondent JN).
- ‘I do look at competitors, whether they already have something. Looking at customers is more important, in the end they pay the bill’ (Respondent CT).
- ‘We both generate ideas from a technology push perspective and a market pull perspective’ (Respondent ME).
- ‘Idea generation is both a push and a pull thing. We have technicians that innovate by creating new things and we have market units who monitor the market and can anticipate on those needs’ (Respondent CT).
- ‘Ideas mainly, and that is the advantage of using the employee for it, arise when the employee is working for the customer. Employees see what goes wrong at customers and see the opportunity to make a service of that’ (Respondent DL).
As these quotes also depict, ideas are not only generated by looking at the customer, ideas are also pushed a lot. The following quote supports that actually even more ideas are pushed than pulled.
- ‘I think ideas are more pushed than pulled’ (Respondent JG).
In the end it is questionable whether this way of idea generation is desirable. One respondent was happy with the ideas generated, since they are mostly in line of what the company is trying to
accomplish (DL). Another respondent, who is closely involved in the execution of the innovation process, signaled that a lot of ideas are not in line with the companies innovation strategy. Reason for this is that the innovation strategy is not totally clear.
- ‘We receive a lot of ideas, and they are more or less in line with what we want to accomplish’ (Respondent JG).
