CO-CREATING VALUE IN NEW PRODUCT DEVELOPMENT – CONTRIBUTION OF SERVICEDOMINANT LOGIC FOR SUCCESSFUL INNOVATION MANAGEMENT Markus Schacht and Cornelia Zanger1

SUMMARY

This investigation examines new product development (NPD) in development networks. Many NPD projects fail because internal and external development partners are not satisfied with the results, and development is often not conducted market-oriented. The service-dominant logic (S-D logic) has created a new perspective for NPD. Using S-D logic, it is possible to conduct market-orientated NPD. A framework is developed, in which the new perspective is assigned to NPD. By taking an S-D logic perspective, the development partners become more aware of the importance of information, they exchange information more effectively, and co-create development results to a greater extend. The developed framework helps to conduct more market-orientated NPD and therefore contributes to innovation management. The case study of a real SME-University consortia shows that NPD is conducted more successfully using the developed concept.

Key words: New product development, market orientation, co-creating, flow of information, service-dominant logic

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Markus Schacht is a doctoral candidate in the Department of Marketing at Chemnitz University of Technology. His research focuses on technology transfer, new product development and innovation management. Cornelia Zanger is Professor of Marketing and head of the Department of Marketing at Chemnitz University of Technology. Her research focuses on marketing communication and marketing for SMEs. Address correspondence to: Chemnitz University of Technology, Faculty of Economics and Business Administration, Department of Marketing, Thueringer Weg 7, 09126 Chemnitz, Germany. E-Mail: [email protected].

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INTRODUCTION

The development of new products is a great chance for SME to distinguish themselves from competitors and to grow. At the same time, new product development (NPD) represents a major challenge for companies (Cooper, 1983). These challenges lie in coordinating the participants involved in the development process, exchanging information between participants and aligning product development and customer demands (Cooper, 1983). The challenges become even greater when new high-tech products are to be developed and when multiple external development partners are involved. In this case, the need for information exchange and the difficulty of realizing it in an optimal manner increases (Cooper, 2008; Rindfleisch, Moorman, 2003). A functional information exchange between many participants is necessary to develop products which will ultimately be demanded by customers (Souder, 1988). For a so-called market orientation (Day, 1994), the integration of different skills is needed within the development network. Accordingly, the different value chain partners, interacting in the development process, can even be seen as bidirectional customers (Vargo et al., 2010; Vargo, Lusch, 2011). However, innovations often fail because of non-market-oriented development (Cooper, 1983; Cooper, Kleinschmidt, 1994; Ernst, 2002; Griffin, Hauser, 1993). For innovation management it is therefore necessary to put focus of NPD on market orientation. Furthermore, it is necessary to improve the development partners´ approach to information exchange and, with that, the possible fulfillment of customer wishes (Parry, Song, 1994; Griffin et al., 2009).

Service-dominant logic (S-D logic) is a widely recognized perspective on economic exchange processes, which can also give new impulses to innovation research (Vargo, Lusch 2004, Vargo et al., 2010). This approach enables the NPD process and the proceedings of the engaged stakeholder to be moved toward market-orientation and to work more effectively (Vargo et al., 2010; Vargo, Lusch, 2011). S-D logic makes it possible to move the success factor, i.e. creating value for the customer, to the centre of focus during NPD by enhancing the development partners understanding of how to effectively collaborate. The present investigation sheds light on NPD proceedings with regard to market-oriented co-creation of value. 2

Furthermore, actions can be derived which support NPD regarding efficient communication and feedback (Hoyer et al., 2010; Griffin, Hauser, 1993, Rindfleisch, Moorman, 2001; Vargo et al., 2010). Methods

A change in perspective on collaboration procedures can open up capabilities for successful innovation management (Cooper, 2008; Rindfleisch, Moorman, 2001). Taking the ideas presented by Vargo, the effect of a change of perspective can be illustrated through an example: Man has desired to fly since the beginning of time, just as birds fly. Initially people tried to achieve the necessary ascending force by putting plumage around their arms and flapping them up and down. However, this arm flapping was unsuccessful. Later, humans changed their perspective and began looking at birds wings with regard to their function as airfoil instead of their movement. This change in thinking led to a change in behavior. Humans were now able to build cabins with airfoils, which subsequently enabled man to fly (Vargo, 2009). Such a change is also possible for NPD through S-D logic (Rindfleisch, Moorman, 2001; Lusch et al., 2006; Lusch, 2011; Vargo et al., 2010).

The conceptual framework is worked out by selecting the foundational premises of S-D logic, which are relevant for innovation management and putting them in the context of NPD. In the following S-D logic and its inherent potential will be explained.

In the most-cited article in the Journal of Marketing since 2000, Vargo and Lusch describe a new perspective for marketing and economical exchange processes (Vargo, Lusch, 2004). The fundamental idea is that service is the central contribution of all products and related transactions. Vargo and Lusch define service as the “application of specialized competences” and services as immaterial goods (Vargo, Lusch, 2008a, p. 26). Service generates services, which form value for the customer. With this perspective S-D logic allows not only a change in perspective on general exchange processes, but also on the relationship and way of interaction of development partnerships.

Vargo and Lusch defined ten foundational premises which constitute S-D logic and reflect the new perspective.

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Fig. 1: Foundational premises of S-D logic with explanations, Source: Vargo, Lusch, 2008b.

The premises one, three and six through nine are considered to be particularly relevant for NPD, because they relate directly to the proceedings of the innovation process. This includes the relationships, flow of information and behavior of the development partners. The mentioned premises will be introduced below (Cooper, 1983; Vargo, Lusch, 2008b).

The first premise expresses that service is the driving force behind every exchange. Service has to be understood as the application of knowledge and skills for the benefit of another party. Service is exchanged for service and builds the core of economic transactional relationships (Vargo, 2004, 2008).

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The ninth premise expresses similar aspects and maintains that all economic and social actors are resource integrators. The term “resource integrator” describes adding economic value by combining production factors with knowledge and skills to generate output. Externally drawn production factors are combined with internal resources and are placed at the disposal of other actors, or resource integrators, disposal. These resource integrators are connected to the network while simultaneously being involved in other networks. Therefore, the creation of value takes place in networks of networks (Vargo et al., 2010; Vargo, Lusch, 2011).

According to the third premise of S-D logic, goods are considered as distribution mechanisms of service. This classification is based on the insight that goods develop their value through the customers’ use, who use the service propositions in their own context (Holbrook, 1999). The seventh premise also addresses the collaboration of the development partners. This premise expresses that companies do not deliver value by themselves, but can only make value propositions. The proposition has to stand the test of the customer, in order to be accepted. Subsequently, this co-creation, helps create (preferably high) value. Similar arguments are found in the sixth premise, which considers the customer as a co-creator of value (Lusch et al., 2006). This premise supports the idea that value is always created interactively, which is already known from consumer research (Holbrook, 1999). The construct of value is inseparably connected with the attitude of the customer.

The eighth premise of S-D logic implies that a service-centered perspective is inherently customer-oriented and relational. This arises from the customer-oriented nature of service (Holbrook, 1999). Something is done for someone else who has an impact on the accomplishment and the result by rendering a reward or not. The S-D viewpoint is service-centered. According to the S-D perspective, the actors involved in NPD are therefore forced, to account for the customer and his needs and to act accordingly. Thus, operators of an S-D perspective have the chance to act market-oriented (Vargo et al., 2010; Vargo, Lusch, 2011).

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FPs Foundational Premise Relevant in NPD context FP1 Service is the fundamental basis of Physical goods are not the main intermediexchange ate results of development, but rather the application of knowledge FP3 Goods are a distribution mechanism for Intermediate results support distributing service provision service FP6 The customer is always a co-creator of (Complex) innovations call for co-creating. value Therefore the customer has to be considered at each step of development FP7 The enterprise cannot deliver value, but Intermediate results are proceeded to next only offer value propositions value-adding steps as value propositions to create value in customer context. Therefore costumer acceptance is crucial FP8 A service-centered view is inherently The relationship to development partners is customer oriented and relational important. The partners are customers, too FP9 All social and economic actors are re- Complex innovations call for knowledge source integrators networks Fig. 2: Foundational premises of S-D logic in the context of NPD as presented by Vargo, Lusch, 2008b.

As described, the premises of S-D logic can be transferred to NPD, as they also apply to exchange processes within NPD (Vargo et al., 2010; Vargo, Lusch, 2011). In the following, the premises of the S-D perspective are compared to approaches in NPD. The changes for advancing the processes for developing innovations by adopting S-D perspective will be derived.

Information on how customers use development results

According to the S-D perspective goods derive their value through use, which relates to the intangible dimension of value. Customers define the value and the necessary quality of the goods and signal acceptance through buying or not buying (Lusch et al., 2006; Vargo et al., 2010). Thus, to be able to understand how value emerges while a customer uses the intermediate result, additional relevant information about use and subsequent processing are necessary. For many years, value was understood as an inherent quality of goods, i.e. inbuilt. Vargo and Lusch describe this as part of the old goods-dominant logic perspective (Lusch et al., 2006; Vargo et al., 2008, 2010; Vargo, Lusch, 2011). In this perspective, value is considered „tangible“, which is propagated by the specialization acquired through degrees in engineering, which focuses on the physical effects of physical elements. This perception supports 6

an „input-perspective“, which considers value as physical object that is later enhanced through additional processing and then put through to the next stage in the value chain as input. Implementing this input- perspective means that producers focus on components and activities in the value creating process which do not create value from the customers point of view. Changing to a service-oriented perspective can help counteract this (Souder, 1988; Moenaert et al., 1995; Song, Parry, 1997).

The S-D perspective dictates that the value creating partners implement all of their knowledge and skills when creating a value proposition (Vargo et al. 2010). In addition to applying direct knowledge, which is necessary for completing the obvious task, enhanced knowledge is also required for completing the task with a greater benefit for the development partner (Lusch et al., 2006; Vargo et al. 2011). The supplier of intermediate development results is therefore prompted to request further information from his development partners quickly to be able to exploit his full potential in creating the value proposition (Vargo, Lusch, 2008; Vargo et al. 2010).

The development process includes companies, research centers and additional institutions which also maintain economic exchange relationships when a basis technology should be committed, an intermediate product designed or the end product produced. The novel idea now is not to focus on physical goods within product development process, but to recognize the additional and external knowledge and skills which are transported through intermediate development results. For example, a sensor stitched into plastic as a physical intermediate result should not be seen as the main part of the transaction, but rather the specialized knowhow which was able to apply the sensor in such a way that the sensor is able to deliver correct data even in extreme situations.

As described above, the initial, intermediate, and end products, which emerge from an idea to a final product, also convey a combination of knowledge, skills and physical items to the next value-added step. They contain value the moment the development partner or customer implements or convert them. This perspective on value creation is important for the actors involved in NPD, if they are interested in a sustainable customer relationship, which is based on valuable propositions (Vargo et al., 2010).

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In economical supplier relations, fulfillment is determined depending on whether the specifications from the order list are fulfilled. In the sense of Goods-Dominant logic, the physical end product, which should display the properties the client has ordered, is the aim of the transaction (Lusch et al., 2006; Vargo et al., 2008). This perspective makes it difficult that the supplier can conceptualize the product (and possibly improves it). Instead, in the development process, the supplier only uses the skills necessary for fulfilling the immediate task. Further, the accordant marketing capacities, which can support information exchange, are often limited in SMEs (Cooper, Kleinschmidt, 1994; Song, Parry, 1997). In this case, the supplier’s potential cannot fully be exploited. This leads to problems when the customer intends to implement the ordered product in manner respectively quality different from what the supplier was aware of or could produce. The development partner’s knowledge and skills can therefore be better implemented, if the buyer’s complementary knowledge is conveyed so he can further consider the product according to his competencies and possibly improve it (Hagedoorn, 1993; Moenaert et al., 1995; Vargo et al., 2008; Zahay et al., 2004).

Expanding the view to include knowledge and skills which need to be brought in to creating a value proposition afford the chance to conduct product development more effectively. A greater understanding of particular value contributions helps to better exploit the potentials of the development partners (Carlile, 2002; Esper et al., 2010).

Co-creating value propositions in new product development

The S-D perspective points to collaborative and interactive value creation, which is not successful until the result of the co-creating is accepted by the customer and is useful for him in further stages of development (Vargo et al., 2010). Therefore, the interactional relationship is relational and waiting for and being open to the customer reaction. It is suggested to expand the process of value creation to the collaboration in value creation and to those steps to incorporate customer feedback (Esper et al., 2010; Vargo et al., 2010).

Due to the common uncertainty about the functionality of individual components, interacting development can determine success. Indeed co-creating value propositions is partially realized in current NPD projects, such as though techniques like simultaneous engineering, in which the customer is involved in development procedures. However, the idea of co-creating is not fully integrated in innovation management processes. In NPD models, the process 8

phase of one actor ends typically with the delivery of the produced good. Feedback is partially possible, but the focus is on moving to the next value-added step (Cooper 1983, 2008). Through that inside-perspective, the chance of improving one’s own value creation is limited, because there are no capacities for incorporating customer feedback. Considering the opinions of downstream value-adding partners is difficult according to these models. These indirect relationships exist particularly in network projects (Cooper, 2008; Moenaert et al., 1995). From waiting for up to receiving acknowledgement from the customer (including customer feedback), additional learning is possible if the appropriate feedback information flow is implemented. Additionally, because of various indirect relationships, there is great learning potential and chances to advance the quality of co-creating the value proposition (Vargo et al., 2010).

According to S-D perspective, value creation occurs relationally in networks of networks. Consortia network activities are especially then visible when developing complex high-tech products. Propositions are developed together with numerous partners from science and economy. The companies are linked together directly and indirectly and integrate their resources. Furthermore, the network thought stands for openness and integration of further development partners (Chesbrough, 2003; Vargo et al., 2008; 2010) When a closed circle of NPD process participants exists in conventional NPE-networks, this can be critical to success if actors are missing who can significantly contribute to increasing the value proposition (Esper et al., 2010). Information about contributions of potential value-adding partners is often lacking. S-D logic accents the agility of service-oriented actors, which also includes the proactive search for additional value-adding partners. Thus it opens up potential in the dimensions of quality, time and turnover (Vargo et al., 2010).

Therefore, the active preparation, distribution and sharing of information has a positive influence on NPD. Together with the co-creating of value propositions through the development partners, this contributes to a more market-oriented process and subsequently increases innovation success. In the following figure, the left half shows actions on the way to developing new products without using the S-D perspective. In contrast, the right half shows actions and effects which are possible through adopting an S-D perspective.

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Fig. 3: NPD without and with S-D perspective

NPD without S-D perspective

bilateral

SME 1a No feedback loop

 hardly co-creating

SME 1a

 distinctive co-creating

insufficient SME results

Feedback loop

RI 1a communication

NPD with S-D perspective

marketvalue orientet results proposition

2b

customer

RI 1a

customer multilateral communication

SME 2b

SME 3b

Legend: RI = research institute, SME = small and medium-sized enterprise, 1..n = numeration of development partners, a..n = indexation of (sub-) development projects

This clearly depicts that in NPD-processes without S-D logic, self-contained process steps dominate and their output is passed on to the next step without integrating conscious and regular feedback. Communication between the development partners is more bilateral and is not designed to incorporate information from additional developing partners who are not directly connected to the project. Interdependencies with later value-adding steps and feedback cannot be adequately incorporated. The flow of information is limited to contact direction, quantity, and intensity. Subsequently, co-creation is limited or non-existent. The mentioned points of criticism are additional aspects of insufficient market-orientation. This leads to deficient results mentioned in innovation research (Parry, Song, 1994). On the other hand, if NPD is conducted using S-D perspective, the process and its partners are moved to co-create the value proposition. The companies and science partners communicate with each other and with partners from outside the direct NPD network with a higher intensity (see “SME3b” in fig. 3). Furthermore, communication is multilateral, which means in both directions with more partners concerning the same topic. The value proposition is therefore more market-orientated and the success of the NPD projects is greater. The relevant customers are integrated in the NPD process and the end customer is involved in the process

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steps. Corresponding information flows are ensured and feedback loops are assimilated (Esper et al., 2010; Griffin et al., 2009). To be able to take the chance to upgrade the NPD it is crucial that the actors’ increase their awareness of the importance of information, improve bilateral information flow, and integrate information of customers of the customer (Carlile, 2002; Griffin et al., 2009; Vargo et al., 2010).

An SME university consortium, which was created to execute multiple NPD projects, is the subject of a case. The aim of the case study is to understand the processes within the NPD and to further develop the innovative approach of S-D in NPD in order to improve innovation management.

Case study: co-creating value in NPD of an SME university network

It is possible for us to accompany a network of research centers and business partners on their way to developing high-tech industrial goods. The consortium consists of over 20 companies and four research centers. The firms in this network can be described as heterogeneous, because they are involved in different steps of the value chain, are different in size and organizational structure, and serve markets in different manners. Even the structure of the participating research centers is heterogeneous. The scientific partners cover a wide range of areas from basic research over applied research to development. The consortium partners are currently conducting development projects and analyzing projects, which were of varied success. The first projects were initiated before 2007 and were still conducted together, in part, up to 2010. Therefore, the development partners have gained crucial experience in strategic and operative NPD. The development projects concerned divergent products and involved different numbers and types of partners. At the same time, the development projects were based on a common technology platform.

By interviewing the persons in charge of the consortium partners, it was possible to gain new insights into proceedings and activities within the projects. The insights in the NPD-processes relate to organizational proceedings as well activities at strategic and operative levels as well as their results. Currently, 14 interviews have been analyzed. Nine were carried out with the head of the participating companies and five with the main person responsible for the re11

search centers. In addition, 16 talks were conducted with the operative acting developers in the SME and the scientific institutions. The talks were conducted on several days to be able to set different points of emphasis. The questions concerned challenges in the innovation projects at the company and network levels, the cause and handling of challenges and achievements which occurred while conducting the projects and thereafter. The interviews and talks confirmed well-known challenges in innovation management and additional insights were gained. It is established that crossing into new technological frontiers and the complexity of the technology are challenging for the developers. In addition, limited resources and time restrictions, as well as human resistance are additional challenges. A more in-depth analysis of the interviews and talks has revealed that there were several reasons why the information flow between the participants of the development projects was crucial for their success. The critical information concerned developmental steps of the direct project partners, but most notably it related to information on the use of partial results in subsequent steps of adding value and the use of intermediate results by the buyers within the value network as well as the end customer.

Moreover, the following conditions and processes were observed within the NPD process: All partners of the development network were connected through the common technology platform, which therefore influenced all projects directly and indirectly. In every NPD project, there were sub-projects and intermediate results influencing main projects. The intermediate results were of a tangible nature in the form of classical semi-finished goods and intangible in the form of information. Intermediate results were picked up from value network partners in the next value-adding steps and were processed further. By co-creating intermediate results, tangible results were transferred from companies to research centers, from the acting scientists to the processing companies, and from the research centers to the companies. In addition, the transfer of results occurred between the sub-units of the research centers and the companies and their sub-units. SME and research centers and their acting persons were therefore carriers of tangible and intangible initial development results. SME and research centers respectively their acting persons are therefore carrier of tangible and results. For example, if the goal is to develop a function-integrated plastic bracket with lightweight technology, then several information and material flows are interrelated. The scientists have to compare notes with stitchery companies which prepare the three-dimensional conductor, which later should be placed in the plastic. The plastic fabricator has to compare notes with the stitchery companies and the scientists, that the integration of the materials becomes possible. 12

At that time the development steps of a Tier-2 supplier of automotive industry depends on these results if the function-integrated und structure strengthened bracket is to be delivered to an OEM in the future. Important information from the Tier-2 supplier to the application of the bracket is therefore relevant for the scientists and the stitchery companies, who develop the initial result of the three-dimensional enhancement-structure. It is clear that despite apparently independent sub-projects of individual development partners, there is a high interdependency on the other projects and value network partners. Particularly due to the great complexity of high-tech NPD and the high number of development partners, information flow upstream and downstream from value-adding steps are of high relevance for the success of the intended innovation.

Figure 4 illustrates the structures, relationships and information flows in an NPD network. Besides information flows, streams of tangible development pre-results are also displayed, in addition to the direction of transfer and the strength of the flows. Before the awareness for market-oriented product development was strengthened, the observed consortium acted similar to the abstract model of following figure.

Fig. 4: Interaction within an NPD network

RI 2b

SME 4b

SME 1a SME 3b

RI 1a

SME 5c

SME 2a Interaction within an NPD network Legend: RI = research institute, SME = small and medium-sized enterprise, 1..n = numeration of development partners, a..n = indexation of (sub-) development projects, = direction of transfer of tangible intermediate-results, = direction of transfer and shape of information flow

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RESULTS

The SMEs and the research centers which were the subjects of this investigation, had already worked together in innovation projects. The first projects were only successful to a limited extent. Defined turnover could not be reached and some projects were completely disliked by the market. Therefore it was worthwhile to develop an approach, with which the success of further NPD projects can be enhanced. This approach has been worked out on the basis of SD logic (Vargo et al., 2010). The concept contains measures for communication and feedback as well as enabling the co-creation of the value proposition. In iterative analytic slopes, the approach was developed further and implemented step by step in current NPD projects of the consortium. The conceptual framework delivers a contribution to research in the field of innovation management, and a new perspective on collaborating in NPD has been developed to enable the development of more market-oriented products.

The investigation showed that the success of several projects was obstructed or even failed, because the development of intermediate results did not reach the desired quality standard due to collaboration deficits. For example, one development partner processed a combination of new materials with a technology which he should have better adjusted to the new material mixture. This could have been done by the actor through acknowledgement of the intended application and he could have converted this relatively easily, which was ascertained later. There was no sufficient communication or feedback. The processed materials were unable to be used for the further development. The co-creation of the value proposition by the development partners would have been crucial.

Moreover, projects failed because the end product did not comply with the needs of the customers. The development project was technologically well-engineered and functional. However, the product properties were missing, which were not necessarily compelling, but which were requested by the customer.

After analyzing and aligning the results of the investigation, as well as validating them, deeper insights could be revealed. Several project partners did not have sufficient knowledge of the necessary quantitative processing for the next value adding steps. Therefore these development partners conducted steps which were inadequate, omitted important work, or disre14

garded specific environmental influences. At the same time, the partners’ know-how would have enabled this if there had been stronger co-creating. Furthermore, the project partners were not aware of the intended application of the product through the (end-) customers to an adequate degree. That led to the missing of development steps which could have been completed relatively easily through better communication and feedback.

Figure 5 illustrates the progressing information exchange in a co-creating network and displays and presents a recommendation for advancing innovation management. Greater effectiveness of NPD can be achieved through the co-creation of value.

Fig. 5: Recommendation for co-creating value in an NPD network

RI 2b

SME 4b

SME 1a SME 3b RI 1a

SME 5c

SME 2a

Co-creating in an NPD network

Legend: RI = research institute, SME = small and medium-sized enterprise, 1..n = numeration of development partners, a..n = indexation of (sub-) development projects, = direction of transfer of tangible intermediate-results, = direction of transfer and shape of information flow, = common exchange through workshops and assessments

Figure 5 illustrates that adopting the S-D perspective, partial steps of NPD and NPD as a whole were seen through the perspective of co-creating. Information was edited more effectively: What has to be known by the development partner to be able to advance his value proposition? Communication and feedback are integrated through workshops and assessments, among others.

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S-D logic allows us to see correlations within an NPD network. The division of information and physical goods is especially then important in complex NPD networks, as well as the fair co-creation of value (Vargo et al., 2010).

By implementing assessments, bilateral and multilateral talks, as well as workshops, it was possible to apply the new mindset to the value network. Participants of the workshops and talks made sure the new mindset and behavior were transmitted appropriately into their units and working groups. Feedback from different acting persons shows that the new perspective on project development helped these to be conducted more effectively and that the derived measures brought market-orientation to processes and activities. It can be concluded from the results of the investigation that the S-D perspective lead to more awareness about the importance of information in the development partners. Furthermore they were better able to distribute information to the value network partners and conducted market-oriented NPD.

From the gained experiences which were collected and explicated through the interviews, an innovative perspective on NPD projects has been developed which is being implemented in new and current projects. The persons in charge of the development network acknowledge the positive effects on in-formation behavior, flow and intensity. Furthermore, the actors report that the change in perspective to S-D point of view plays an important role in increasing co-creation throughout the network. The exchange processes of the development partners with regard to the development of initial-results can now be viewed from this perspective, which puts value creation for the customer in the middle of NPD. To be able to convert value creation effectively, the information flow to upstream and downstream customers has to be reconsidered, adjusted and established. The changed way of thinking and interacting should be achieved through different practices of information exchange. The advanced information processing and the more intense way of co-creating value lead to more successful new products (Griffin et al., 2009; Rindfleisch, Moorman, 2001).

In conclusion, the positive effects of a change in perspective in NPD towards an S-D perspective can be described as follows: Information is actively obtained and delivered from upstream and downstream value network partners. This is caused by an increased awareness of the importance of information, which S-D logic dictates. Furthermore, the additional information relations are accelerated through the sustainable justification of value proposition creation, which is implied by co-creation. Co-creating those value propositions should also be 16

beneficial for the customer, in that the customer can effectively create value for his customers from the value proposition. Understanding how value is created for the customer and the customer’s customers increases and can be observed in several parts of the process. This is reached due to the ability to rely on an expanded information basis concerning the wants of the customer. Using S-D logic, the perspective of co-creating value within a network by the development partners is achieved by focusing on value creation for all customers, instead of only focusing on the customer of the next value-adding step. Measures can be derived based on S-D logic with which NPD in networks can be conducted more effectively. This comprises measures which contain the information flow, its direction, intensity and connection. By adopting this approach, new information exchange relations between development partners are formed and existing relationships are intensified. Using advanced information flows, a more market-oriented NPD can be carried out.

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