IS CUSTOMERS PARTICIPATION INCREASING EMPLOYEES’ STRESS?

April 21, 2015 Maria Abrantes Leave a comment

Last year I decided to invest on a financial product. I wanted to put in practice some of the finance concepts that I was learning on my masters, so I wasn’t looking for a standardize investment product. However, given my limited knowledge about financial markets and services, I needed professional guidance. Increasingly, firms are viewed as facilitators of the value co-creation process rather than as producers of standardized value (Payne, Storbacka, and Frow 2008), so I contacted my bank and met with an asset manager. Together we setup a portfolio taking into account my profitability and risk goals. I was very satisfied with this service, in part because I had a voice on the portfolio composition, but what about the manager?

I was satisfied to participate in the process of creating the portfolio because I had more control over the product and the outcome met my personal goals and needs. However, this implied that the manager had less power over the portfolio composition and more input uncertainty. In fact, customers’ increased involvement in the service process may shift more power from employees to customers, and thereby increase employee workloads and role conflict (Hsieh, Yen, and Chin 2004; Kelley, Donnelly, and Skinner 1990). Customer participation can increase task difficulty for employees, leading to role ambiguity (Larsson and Bowen 1989) and ultimately job dissatisfaction. So did I increase the asset manager’s job stress?

According to the research study “Is Customer Participation in Value Creation a Double-Edged Sword? Evidence from Professional Financial Services Across Cultures”, (Kimmy Wa Chan, et al.) the answer highly depends on the cultural values of the employee and the customer.

The study analyzed (1) how customer participation drives performance outcomes (e.g. employee’s job stress) through the creation of economic and relational values and (2) how it differs across different cultures. The study used data collected from 349 pairs of customers and service employees in two national groups (Hong Kong and the United States) of a global financial institution.

Conceptual framework — Proposed conceptual framework

Customer Participation can drive service outcomes through the creation of either economic values (the benefit and cost outcomes of the portfolio co-created) or relational values (the emotional bonds between the asset manager and me) for both customers and service employees.

In order to understand how participants’ cultural differences have an impact on the effects of customer participation on value creation, the study analyzed three cultural value orientations: individualism, collectivism and power distance (Hofstede 1980).

The table above explains these cultural values orientations and shows countries in which they are verified.

Hofstede's cultural dimensions — Hofstede’s cultural dimensions

Customer participation may be a double-edged sword. If customers have high collectivist and power distance value orientations, they perceive less economic value and are able to enhance employee’s job satisfaction, through the creation of relational value. However if otherwise they are highly individualists or with a lower power distance value orientation, customer participation can indeed increase employees’ job stress.

Given the increasing globalization of markets, it could be worthwhile to match customers and employees by their cultural values, in order to maximize the benefits and minimize the costs of customer participation.

References

Kimmy Wa Chan, Chi Kin (Bennett) Yim, & Simon S.K. Lam (2010), “Is Customer Participation in Value Creation a Double-Edged Sword? Evidence from Professional Financial Services Across Cultures”, Journal of Marketing, Vol. 74 (May 2010), 48–64

Guerrier, Yvonne and Amel S. Adib (2000), “‘No, We Don’t Provide That Service:’ The Hararssment of Hotel Employees by Customers,” Work Employment Society, 14 (4), 689–704.

Hofstede, Geert H. (1980), Culture’s Consequences: International Differences in Work-Related Values. Newbury Park, CA: Sage Publications.

Hsieh, An T., Chang H. Yen, and Ko C. Chin (2004), “Participative Customers as Partial Employees and Service Provider Work- load,” International Journal of Service Industry Management, 15 (2), 187–99.

Kelley, Scott W., James H. Donnelly Jr., and Steven J. Skinner (1990), “Customer Participation in Service Production and Delivery,” Journal of Retailing, 66 (Fall), 315–35.

Payne, Adrian F., Kaj Storbacka, and Pennie Frow (2008), “Managing the Co-Creation of Value,” Journal of the Academy of Marketing Science, 36 (1), 83–96.

Business Case

The social buying website

April 21, 2015 402446ta Leave a comment

Ever had the experience that you spotted something cool on a social website such as Instagram and Pinterest and you wanted to get it, but more often than not you could not find a shop to buy it from? As a consumption economy we always want new and fancy things in our lives and online shopping has made this much easier.

The website Fancy.com solves this problem by allowing the direct connection between seller and buyer in a social environment. Fancy is the place that allows you to discover and buy amazing things curated by the global community. So how does this business model work?

The website can be compared to many different websites, it allows you to buy high-end things on a website as as good looking as Tumblr/ Pinterst and most importantly as money-driven as Amazon. It is based on a new retail model that allows you to shop by accidentally discover new items instead of you deliberately searching for them. In fact it works much the same way as Pinterest, only the website has a direct purchase button at every product displayed.

It works as followed, you spot something on the internet and save the image because you like it. After that you go to the website and upload the photo of the product including a title, you add a link to the companiy and set it under the correct category. The image is than posted on you Fancy feed and is indexed by the Fancy database. The company is then notified that the product is on the Fancy website and the company can then ad a direct buy link. After this my image, that I uploaded, is visible on my news feed and all my friends are able to buy the product directly on the Fancy website. Fancy business model is taking a 10% commission on each of the products sold,

This business model is such an success that even Pinterest is planning to introduce a “buy” button that would let users purchase some items from inside the online scrapbooking service. This would mean direct competition with a website that already controls a 23% of traffic to e-commerce sites (Business insider, 2015). Furthermore, the approach used by Fancy can create problems in the institutional arrangements, the user generated content has a lingering problem with liability. Especially copyright infringement is a constant threat for the Fancy website, the wrong content can result in a law suit against the website itself.

However, it can be concluded that this new social buying trend is potentially changing the way we shop, this also means that websites such as Amazon need to compete with a new kind of buying behaviour. After all, for most consumers this trend is a welcoming site, it creates new value in the online shopping experience.

Sources:

Fancy.com

Business insider: http://uk.businessinsider.com/pinterest-buy-button-2015-2?r=US

Business Case

How Co-Creation Complements Internal R&D Activities and Drives Innovation: The Nivea Case

April 21, 2015 345791wv Leave a comment

You might have heard of Nivea’s new product: Nivea Invisible for Black and White (check out all the available products: http://www.en.nivea-me.com/products/Deodorants/black-and-white). This ‘revolutionary’ new deodorant is Nivea’s latest co-created product.

Throughout the development process of the deodorant, Nivea has worked with consumers, not against or separate from them. This case is a nice demonstration of how co-creation can become a valuable part of a business’s innovation strategy.

Co-creation process

Source: SlideShare (2015)

The figure shows how Nivea enabled customer empowerment in the development of the deodorant. In addition to the figure, I would argue that there is also a step 0, which is the problem discovery phase, applicable for both the consumer (discover your own need) as well as Nivea (hunt up the customer need and set up the co-creation program). Stage 0 forms the basis for step 1, which is more the translation of consumer needs into user solutions (thus assuming that a consumer knows his/her needs).

The co-creation program shows a niceand Nivea, where the consumer is involved in the new product development. This involvement leads then to the development of better products and at the same time reduction of costs and risks in general if customers in a given domain are willing and able to deliver valuable input. This effect is also amplified because the Internet allows companies to build strong online communities through which Nivea can listen to and integrate thousands of customers from all over the world.

What Can We Learn From Nivea’s Co-Creation Program?

Looking at how co-creation can shape an organization’s internal processes and can foster innovation, it is important to note that much of the value lies in the co-creation process, rather than the end results. When companies aim to integrate co-creation ambitions, they should set up strong team-based responsibilities and metrics for the process instead of the outcomes. Moreover, incentives tied to both the process and the results should then foster innovation through trial and error. Co-creation is not necessarily the best way of product development, but it surely adds value in many ways, most of them tied the process in which consumers are involved in the product development:

Better advertising interpretation
Consumers’ understanding of the companies’ decision making
Identifying lead users to influence the online communities
Products that better reflect consumer needs
Increasing (post) word-of-mouth

In the case of Nivea, consumers had full empowerment. In both the generation of ideas and solutions as well as the selection of the best ideas, consumers were put in charge. Additionally, consumers were given the opportunity to provide improvements of the ideas and raise questions or concerns about the ideas. From a methodological perspective co-creation with consumers proved to be most effective when qualitative and quantitative techniques are applied in alternating sessions for ideation and for evaluation and selection.

Key Take-Away

In the end, co-creation needs to be considered as a programmatic approach that aligns internal R&D capabilities and external knowledge and creativity beyond single projects.

References

http://blog.hbs.edu/dighbs/some-thoughts-on-netnography-and-digital-co-creation/

http://www.ideaconnection.com/open-innovation-success/Nivea-Co-Creates-with-the-Crowd-to-Eliminate-Stain-Pr-00365.html

http://www.slideshare.net/HYVE/2011-0228-nivea-invisible-for-black-white-deodorant

http://www.michaelbartl.com/article/getting-closer-to-the-consumer-how-nivea-co-creates-new-products/

Articles

Social Networks and the Diffusion of User-Generated Content: Evidence from YouTube

April 21, 2015 ling122120216 Leave a comment

With the popularization of the social computing, people cannot really live without social network. in the past few decades, there is a huge growth on the social network and user-generated content (Peck et al. 2008).

Given the ease of creating a personal page or channel on YouTube, a user can engage his videos himself for the self-expression (Raymond 2001) and the peer recognition (Resnick et al. 2000) social interaction with each other. A channel on YouTube is used to display content that users uploaded, the videos form other users, the favorite videos of the channel, also with the friends and subscribers. In this case, this function of channel has blurred the boundaries between creators and consumers. On the other hand, the friend network on the YouTube is the result of mutual agreement, which can be seemed as an undirected network. A friend relationship on YouTube can be initiated from one to another by an invitation and this would need the confirmation from the user who accept the invitation.

in this article, Susarla et al. (2012) are motivated by the success of YouTube, which is attractive to meet the satisfaction of both creator and corporation for rapidly broadcast its digital content to the public. It is obvious that the interaction between poster and viewer on the YouTube and the variation of categories about the successful videos posted online has led to the significant effect on social influence. Base on the data set of video information and the information about the user which collected from the YouTube, Susarla et al. (2012) found out that the social influence effects not only on deciding which one becomes popular, but also on the magnitude of that impact. To be more specific, to whom the video would effect and how long it would effect. On the other hand, some evidence has pointed out the dynamics of digital content diffusion structured through a network, namely a preference for conformity and homophily, and the role of social networks in guiding viewer search and discover the videos.

As a result, Susaria et al. (2012) have proved that channels from YouTube that are central in the subscriber network and local friend network both have a significant impact on the rate of diffusion. Moreover, a channel’s centrality in the incoming subscriber network and local friend network both have a significant positive impact on the rate of diffusion in the initial phase of content diffusion as well.

In conclusion, the results offer the distinguish between the different types of information transmission in various types of social interaction. Additionally, it demonstrates that social network impact the economic outcomes by structuring different information to different actors, and this would have a great impact on others’ decisions, perceptions, and behavior.

Reference:

Susarla A, Oh J H, Tan Y. Social networks and the diffusion of user-generated content: Evidence from YouTube[J]. Information Systems Research, 2012, 23(1): 23-41.

Raymond, E. 2001. The Cathedral and the Bazaar. O’Reilly, Sebastopol, CA.

Peck, R. S., L. Y. Zhou, V. B. Anthony, K. Madhukar. 2008. Con- sumer Internet, Bear Stearns equity research report. Bear Stearns, New York.

Resnick, P., R. Zeckhauser, E. Friedman, K. Kuwabara. 2000. Repu- tation systems. Comm. ACM 43(12) 45–48.