Criteria for composing product portfolio customer involvement and knowledge exchange

Transcription

1 Compettve paper for the IMP 2007 Conference at Manchester Busness School Crtera for composn product portfolo customer nvolvement and knowlede exchane Krstn Balslev Munksaard PhD student Department of Entrepreneurshp and Relatonshp Manaement Unversty of Southern Denmark Ensten 1 DK-6000 Koldn kbm@sam.sdu.dk Torben Damaard Head of Department Department of Entrepreneurshp and Relatonshp Manaement Unversty of Southern Denmark Ensten 1 DK-6000 Koldn torben@sam.sdu.dk 1

2 Introducton How do we combne and develop the rht portfolo of products satsfyn the needs of our dfferent customers? Marketn and Development Manaer at a Dansh food manufacturer It s extremely mportant for us to nvolve our costumers and et ther opnon on our newly develop products before decdn whch of these wll become part of our product portfolo. Development Manaer at a suppler of nredents to food manufacturers These statements ornate from an on-on research project n the Dansh food ndustry and revolve around the ssue of how to put toether the company product portfolo of newly developed products. The wordn of these statements reveals the convcton that customers nvolved n new product development may have a postve mpact on product portfolo decsons. Thus the focus of ths paper s how knowlede exchane wth nvolved customers wll nfluence crtera for puttn toether the company portfolo of new products. In the food ndustry challenes framn product portfolo crtera are several. One s fast chann consumer trends havn consequences for food-producn companes ablty to detect and act accordn to these. In the wake of ths another challene s retalers placn ncreasn demands for fast renewal of accessble new food products. Relatonshps to retaler are also chann due to expandn use of prvate label; n many nstances makn retal chans both customers and compettors. Yet a challene s ncreasn consumer and customer awareness as well as leslaton related to food hyene and GMO; n some cases leadn companes to seek the help of experts (Mnstry of Food 2003). Standard marketn and stratey textbooks (such as Jobber 2004; Thompson et al. 2005) dscussn product portfolo manaement would recommend companes to buld ther product portfolo on the wshes and demands of customers combned wth sound manaeral stratec analyss, montores of the development on the market and adjusted to the resources of the company. In other words textbooks lke these would advocate and arue how companes must base the manaement of ther product portfolo on the deas athered toether wth customers and users; aln those deas to the technolocal resources of the company and choose those deas that ft the overall stratey of the company (Tdd et al. 2005). However textbooks lke these seldom dscuss how ths can actually be done. Or dscuss mplcatons, possbltes or lmtatons. Rarely do the portfolo models presented address the problem of whch customer to nvolve n product portfolo decsons; when to nvolve customers and how ths may affect the oransaton of the product development process and actvtes. Snce these models do not take the relatonshp wth an nvolved customer nto consderaton we need to look elsewhere n the search to an a reater knowlede on what s on on. Applyn an IMP-approach n dscussn product portfolo decsons n the context of the Dansh food ndustry mples takn a closer look on at least three dmensons (Haakansson and Snehota 1995). One s; whch customer s nvolved. The structure of the food ndustry ental that the fnal consumer n most nstants are not the drect customer of a company. Several ntermedares may stand between a company and the consumer dependn on whether the company s e.. an nredent suppler or a manufacturer of food products. Besdes that a retal-outlet wll n most cases be the fnal lnk between food producn companes and the consumer market. Therefore the nvolved customer n product development havn an mpact on product portfolo decson may be a drect ndustral customer, a retaler as a fnal consumer. A second dmenson s the process and actvtes related to puttn toether the new product portfolo. Whch actvtes are actually formn the process for makn the portfolo decsons and how s the customer nvolved? Thrd and fnal, whch knowlede resources are exchaned between the nvolved customer and the company eneratn a round for usn nformaton and evaluaton nputs from customers when puttn toether the new product portfolo? 2

3 The purpose of ths paper s to analyse and dscuss knowlede resources exchaned; actors nvolved and actvtes formn and developn new product portfolo crtera taken nto consderaton by a focal company. The pvot pont of the dscusson s the knowlede transformaton process on on between a focal company and selected customers. The emprcal bass for the paper s an on-on research project studyn product development actvty n the Dansh food ndustry. The paper outlne s: an ntroducton to the focal company, the nvolved customers and the surroundn network; secton two presents the knowlede transformaton process as the theoretcal locus; the thrd secton concerns methodolocal ssues whereas secton four unfolds the case descrpton. Secton fve dscusses case fndn and secton sx fnalse wth concludn remarks. Formn new product evaluaton crtera n a spce network Ths secton wll ntroduce Spce Inc. a medum-szed Dansh suppler of spce blends and marnades for meat products and the focal actor of our analyss. Spce Inc. uses two dfferent stratees when developn new products for ther varous customers. One s to develop new products on customer requests. Exstn as well as potental customers approach Spce Inc. askn the company to develop recpes and blends for ndustralsed producton, based on customers more or less detaled specfcaton for new products. Some specfcatons may be qute precse vn a fnshed recpe for a prototype that only needs to be developed nto ndustral producton. Other specfcatons are broad and essentally an nvtaton for Spce Inc. to enerate deas and develop prototypes, n some cases under a specfed theme e.. an Asan or Nordc theme and taste. Another part of the product development process at Spce Inc. s to develop ther own portfolo of spce blends and marnades offered to varous customers. Ths portfolo s related to the summer rll season. To prepare for a summer season the company ntates a process of nternally eneratn deas for new products, developn a broad rane of prototypes, present those prototypes to selected mportant customer and ask them to evaluate the prototypes. Based on these customer evaluatons Spce Inc. put toether a product portfolo of both exstn and new products for the comn rll season. Ths product portfolo s later presented to all customers. To analyse and dscuss the crtera that s used for evaluatn new product deas and prototypes as well as to select whch newly developed products that become part of Spce Inc. s product portfolo the follown pararaphs wll present the company as a focal actor n a spce network. The actvtes conducted and knowlede resources utlzed by Spce Inc. and other actors n the process of crtera formulaton are also ntroduced. Fure 1: Process for crtera formulaton at Spce Inc. Internal dea eneraton Customer specfcaton Crtera for prototypn Evaluaton of prototypes Meetn wth customer: customers crtera crtera dscussed Crtera for selectn new products to market Spce Inc. product portfolo Customer product portfolo Fure 1 llustrates the prmary actvtes n the development and evaluaton of new product deas at Spce Inc. Ths process s oransed by Spce Inc. to collate knowlede nput from customers. Ideas for new products may ether be enerated nternally n the development department at Spce Inc. or be based on customer specfcaton. New deas are screened and some are chosen for further development nto prototypes. These prototypes are presented to the customer and based on customers crtera they are 3

4 evaluated. If the process s ntated by customer specfcaton then the process ends by the customer choosn amon these and ncorporates those n ther portfolo. If the process s nternally drven at Spce Inc. customer evaluatons serve as an nput to the fnal composton of the company s product portfolo. Spce Inc. dvdes ther customers nto three roups: Natonal retal chans, local prvate butcher stores and ndustral customers, that s ndustral producers of refned food products. For many years the man customers have been local prvate butcher-stores. For the last couple of years Spce Inc. has been focusn more and more on retalers and ndustral customers. Thus the local butcher-stores are today manly served throuh a dstrbutor. The relatonshp to one retal customer R.E.Taler oes back almost 45 years. However, only recently ths relatonshp has become closer. Ths has partly been due to R.E.Taler s ntroducton of a new convenence concept n ther n-store butcher shops and partly due to Spce Inc. s new stratey openn for an alnment of the partes resources. Spce Inc. does not characterse the relatonshps to other Dansh retal chans as equally close. However, R.E.Taler only produces a selecton of convenence products n ther n-store butcher shops. Other products that only create a lmted added value are produced by ndustral producers of food such as ScanMeat. When producn for R.E.Taler, ScanMeat s condtoned to use the nredents and spces provded by Spce Inc. ScanMeat s another actor n the spce network and consdered an mportant ndustral customer by Spce Inc. ScanMeat uses Spce Inc. s blends and marnades for they own branded products sold to consumers throuh dfferent retal outlets, amon those R.E.Taler. The relatonshp s rather youn. It actually started out based on a request made by R.E.Taler, askn ScanMeat to use the spce blends of Spce Inc. to a producton of a specfc meat product. Snce then collaboraton between ScanMeat and Spce Inc. has expanded and the jont servcn of R.E.Taler s now lmted to a smaller part of ther collaboraton and mutual busness. The trad of Spce Inc., ScanMeat and R.E.Taler consttute the man actors n ths paper wth Spce Inc. as the focal actor. Fure 2 pctures the spce network. Fure 2: Spce Inc. as focal actor n the spce network Suppler of uts Industral Customer A Retal chan A ScanMeat Retal chan B Suppler of packan materal B Suppler of packan materal A Suppler of Spces B Spce Inc. R.E.Taler Local prvate butcher Local prvate butcher Local prvate butcher Local prvate butcher Suppler of Spces A Dstrbutor 4

5 The shft from servcn smaller local prvate butcher-stores to focusn more on larer retalers and ndustral customers has had an nfluence on Spce Inc. s relatonshps to supplers n lne of new and more advanced demands for e.. qualty documentaton (keepn qualtes, descrptons of content etc.). But, the relatonshps to spce supplers have also developed n terms of dependency related to product development. The Development Manaer at Spce Inc. states As we have nvested n product development, we are less dependent on our supplers today. We are to a hher extent capable ourselves to access the qualty than we were earler on. The Development Manaer s referrn to supplers of spces and marnades, on whom the company has been less dependent after the company started to develop and produce more advanced marnades themselves. Today Spce Inc. themselves specfy the nredents and produce from supplers, thus makn supplers resource nput to product development actvtes much less. Relatonshps to supplers of packan materal and uts are manly based on purchase of and on-ward sale of standard packan materal to smaller customers. Involvn customers n evaluaton of new products a theoretcal foundaton Usn an IMP-approach for dscussn crtera used for evaluatn and composn product portfolo entals the fnal portfolo to be a result of the nteracton between ranes of actors (Haakansson and Waluszewsk 2002, Holmen et.al. 2005, Haakansson et.al. 1999). Each of these actors wll hold crtera reflectn ther own stuaton and nterests. Actors crtera rse from a hstory of routnes and norms and therefore customers crtera can only be but one complementn element n ths process. Throuh the use of a set of crtera the determnaton of actors product portfolos takes place n a network of related actors. Each actor uses dfferent sets of crtera when dscussn new product development elements. Examples of crtera dscussed between actors n the Dansh food ndustry are taste, appearance, packan or prce. If a new product or prototype fals on one or a combnaton of crtera t wll be wthdrawn. Related to actors we must defne who the actors are and how they are related that s to descrbe the bonds between them. Ths s to provde a bass for understandn the nvolved partes expectatons of the potental benefts and effcency of the mutual nteracton. Even thouh the focal company s expectatons and oransaton of the evaluaton of new product deas as a bass for combnn ther product portfolo, customers reasons for partcpatn n ths evaluaton may be drven by qute another aenda. Related to the research focus of ths paper the concept of actvtes wll be focusn on evaluaton of new product deas. Selecton amon new product deas s by Tdd et al. (2005) referred to as the stratec decson of, whch snals to proceed wth, developn a product concept, matchn needs and possbltes wth knowlede unts and stratey. Such actvtes related to the focal company s nternal combnaton of a new product portfolo are drectly lnked to the nvolved customers own development actvtes and some coordnaton between the partes may very well occur (Lndell 1991). Ths coordnaton may mply nvestatn whch knowlede unts the nvolved customers apples or bulds on n a neotaton of evaluaton crtera. Ths neotaton may be drect or ndrect, tact or openly as well as drected and domnated by one of the partes or a potental thrd party. Therefore the oransn of the actvtes n terms of evaluatn new product deas wll play a role n the nformaton and knowlede exchane on on between the focal company and the nvolved customers. Even thouh the basc buldn blocks for a new product portfolo may be prevous and exstn products, the analyss and dscusson evolvn around resources wll be related to use and transformaton of knowlede resources between the focal company and the nvolved customers. In ths dscusson we draw on the conceptual model of Nonaka and Konno (1998). Ths model descrbes a dynamc process of exchann and transformn tact and explct knowlede. The model s used to analyse how a focal company creates and enhance ther knowlede throuh nteracton wth customers provdn a bass for evaluatn and combnn ther new product portfolo. Brefly ntroduced the model pctured n fure 3 presents a knowlede transformaton process wth four phases: 1) Socalzaton where ndvduals are provded the opportunty to share tact knowlede by ben and spendn tme toether. Mutual empathy s an essental foundaton for socalzaton. 5

6 2) Externalzaton tact knowlede are converted and made accessble for others throuh artculaton and daloue. 3) Combnaton the converted knowlede are nterated nto more complex sets of explct knowlede that s dffused and documented n the oransaton. 4) Internalzaton when the new knowlede becomes tact throuh makn the explct knowlede part of daly actons and learnn-by-don. Fure 3: The knowlede transformaton process Tact knowlede Tact knowlede Socalzaton Tact knowlede Externalzaton Explct knowlede Tact knowlede o Internalzaton Explct knowlede o Combnaton Explct knowlede Explct knowlede : ndvdual : roup o: oransaton Source: Nonaka and Konno (1998) The knowlede exchane and process of transformaton as conceptualsed n the Nonaka and Konno (1998) model s n ths paper consdered essental when a focal company s seekn to develop ther knowlede of crtera used by mportant customers when evaluatn new product deas. Wth the model we see that the process of dssemnatn and nternalsn knowlede from customers has an mportant nfluental effect on the crtera used for composn a product portfolo. It s a two way nteracton and often appears as jont learnn or nteractve learnn, but here we emphasse, that the model pont to dfferent ways of learnn from a customer. When the suppler and customer spend tme n vsts and meetns the suppler learns about the fnal customers throuh the experences expressed by the customer. At dfferent occasons the deas and crtera are expressed more drectly. When new product deas and prototypes are presented n dscussons, on paper or as prototypes the knowlede becomes more explct. The knowlede s externalsed. The externalzed knowlede from the meetns between ndvduals representn customers, supplers and others can be handled accordn to experences wth other stuatons related to the product dea or crtera. The ndvduals can ether man or act n related stuatons as producton, cleann, lostcs etc. stuatons. In ths sense knowlede s combned n combnaton processes. From the dfferent stuatons ndvduals partcpate n they wll learn dfferent thns dependn on ther ntentons and stuatonal context. The knowlede becomes nternalzed. In the follown pararaphs ths qute domatc use of the knowlede transformaton process wll be nterated n an actvty, actor and resource perspectve from the IMP tradton. 6

7 Methodolocal consderatons Case studes are consdered valuable for nvestatn dynamc or complex condtons n oransatonal settns (e.. Yn 2003). Ths qualtatve method provdes the opportunty to explore and an nshts of the process of transformn crtera for evaluatn and combnn the product portfolo of a focal company n collaboraton wth selected customers. Ths means that we use the case study as pont of departure for descrbn the actvtes oransed and coordnated between a trad of actors and thus analysn how the nteracton nfluence the transformaton of knowlede related to puttn toether product portfolos. Usn a trad n the case analyss provde a bass for dscussn not only the nteracton between the focal company and the ndvdual customers but also the mplcatons derved from the nteracton between the two customers on the focal company. The case study conssts of one perod related to the seasonal product development process at the focal company Spce Inc., thus follown the company from eneratn deas for new products to the fnal composton of the new product portfolo. The emprcal bass of the paper s data from an onon research project of customer nvolvement n product development n the Dansh food ndustry. Data has been collected throuh ntervews and partcpant observaton n a medum-szed suppler and manufacturer of nredents to food products as well as n two selected customers nvolved n the company s product development and playn a central part n developn and combnn the product portfolo of the focal company. Observatons on meetns between the busness actors have been completed focusn on lnks, bonds and tes wth a specal focus on knowlede nteracton. Sem-structured ntervews have been conducted wth every personnel drectly partcpatn on these meetns. Several nformants have been ntervewed both before and after meetns. Intervews have focused on clarfyn the crtera consdered related to the evaluaton and composton of company s product portfolo. The follown pararaphs descrbe the process at Spce Inc. of developn new products for ther portfolo s n more detals (as pctured n fure 1) as well as present the companes n the trad and the relatonshps between them. The focus wll naturally be centred on the actvtes and resources connected to developn new products. Actvtes related to nvtn selected and mportant customers to evaluate the new product deas are presented. These actvtes are provdn the round for Spce Inc. to put toether ther product portfolo for the up-comn rll season. The process s descrbed to provde a detaled pcture of how the selected customers knowlede and evaluaton crtera are potentally nfluencn the crtera for puttn toether the fnal portfolo. Case descrpton The development of new seasonal products at Spce Inc. bens almost a year before the rll season, where the products are ntroduced to end-consumers. Ths relatvely lon tme horzon s not only due to the actual development and producton of new spce blends and marnades. In the nternal process of development actvtes Spce Inc. also has to take nto consderaton the sequental development process on on at customers. Dependn on the poston of ther customers n the delvery chan Spce Inc. has to offer ther new products n due tme for the customer to prepare ther offern of new products to ther customers. Frstly, Spce Inc. presents ther prototypes of new products to the ndustral customer ScanMeat snce Spce Inc. s products work as an nput for dea eneraton at ths customer that as well has to prepare ther own product portfolo to present to ther customers. Secondly Spce Inc. presents ther prototypes to the retal customer R.E.Taler. Idea eneraton Returnn to the development preparaton at Spce Inc. the frst nternal actvty s carred out by the marketn assstant drawn up a lne of current and comn food trends n a report. The report reflects overall food trends e.. a trend of a reater focus on the local ktchen that s a focus on Toscana nstead of on the Italan ktchen n eneral; new flavour trends n spces and tastes; or textures that s beleved to spn the development n food trends the comn season. The trend report s the vantae pont of a dscusson on a follown nternal dea-eneraton-meetn led by the Development Manaer. Partcpants at ths meetn are development employees and a newly hred employee n the qualty department. The dscusson and 7

8 eneraton of deas for new products are centred on the trend-report supplemented wth the partcpants own expectatons of comn food trends related to consumers, based on ther personal experences and observatons from fars, trade-shows, maaznes etc. Another vtal ssue n the dscusson s the exstn product portfolo at Spce Inc. Often the partcpants are referrn to what s mssn or what s not ncluded n the current product portfolo. At the meetn every new dea comn up s wrtten drectly nto at power pont presentaton so t s vsble to all partcpants. Even thouh the dscusson at the meetn s centred on crtera concernn comn flavour as well as more eneral trends the dea eneraton process are drectly lnk to the three product cateores n the exstn company portfolo that s marnades, spce blends and specal blends for flavourn sausaes. Every cateory are dscussed and related to potental trends as a bass for eneratn new product deas. At the meetn any dea related to other potental product cateores are however also lsted. Even thouh the nternal meetn s manly for eneratn deas for new products n a creatve dscusson several upcomn deas are arued to potentally create producton-related problems. Such deas are not lsted. Addtonal deas are evaluated and some are concde rejected because of ther smlarty to exstn products n the company portfolo. Other deas are lsted because they are evaluated as a ood supplement to exstn products. Selecton crtera for prototypn The decson of whch new deas to prototype are not made at the meetn, nstead the Development Manaer and the Development Assstant meet a couple of days later to evaluate the enerated deas. They make a frst selecton of new deas to prototype by bascally on throuh every potental new product on the lst from the dea eneraton meetn. The selecton crtera are not explctly formulated and drectly dscussed. However the dscusson between the two development employees s centred around two man crtera. One crteron s whether the potental new product s related to the selected overall theme for ths years rlln season. If t s, the product s lsted to be prototyped. Another crteron s whether the new product dea wll supplement the exstn product portfolo or not, essentally whether the company has or not has a smlar product. If the product does not exst n the portfolo and the development manaer beleves n t t s lsted to be prototyped. However f the development manaer does not beleve n a new dea, t s dsmssed. Thus the decsons on whch new deas to prototype s based on consderatons related to the nternal composton of the company product portfolo and to consderatons related to the marketn theme the products are to belon to. At the end of ths meetn the deas consdered worth developn nto prototypes are prortzed. Involvn customers - ScanMeat As prototypn s fnalsn ndustral customers are startn to str. Ther process of eneratn deas and puttn toether a portfolo of new products are n the start-up phase. One ndustral customer s ScanMeat who uses Spce Inc. s products for seasonn or marnatn e.. convenence or ourmet meat products sold to consumers throuh retal chans as well as to producton of prvate label meat products. Even thouh the two partes have an on-on relatonshps charactersed by contnuous collaboraton for new products t s customary that ScanMeat sends out an addressed but open nvtaton to several selected supplers of spce blends and marnates amon those Spce Inc. The nvtaton s send by e-mal and address the wsh of developn a lst of new product deas nto ndustralsed products. ScanMeat thus nvtes not only Spce Inc. but also other supplers to present matured prototypes based on the customer s specfcaton as well as supplement ther presentaton wth the supplers own deas. Ths season ScanMeat has enerated the specfcaton and deas n collaboraton wth a professonal chef wth an expertse n Asan cookn. Even thouh the sender of the nvtaton to contrbute to the customer s product development s ScanMeat, t s Spce Inc. that nvtes ScanMeat to a jont development meetn. At the meetn the specfed new product deas of ScanMeat and deas derved by Spce Inc. are prepared as prototypes; tasted and evaluated by the partcpants from the development departments of both companes. One of the owners of Spce Inc. partcpate as well both because ScanMeat are consdered an mportant customer and because he prefers to jon n when new products are ntroduces and dscussed to mantan a feeln of the market. Spce Inc. do 8

9 however not prototype every specfed dea but select those deas that are n the reach of ther technolocal resources as well as deas where the development employees assess that they can create some added value to the ndustralsed product. ScanMeat s crtera for evaluatn new product prototypes At ScanMeat the selecton of whch new products to become part of the company s product portfolo s based on two steps. Frstly the product development department put toether a broad varaton of new products selected from 3-5 dfferent spce and marnade suppler. Secondly ths rouh selecton of new products s presented to the sales department that takes the fnal decson on whch products to become part of the product portfolo. When combnn a selecton of new products to be presented to the sales people the development department s prmary crtera for selecton s appearance and taste of the new product, snce these are consdered mportant purchase and re-purchase crtera for consumers. However whether the new product s compatble wth the producton processes at ScanMeat s also an essental selecton crteron. Moreover keepn qualtes and absence of aroma addtves are consdered mportant crtera; where as ssues such as hyene and bacteroloy are consdered ven. Before presentn new products to the sales department, development staff therefore conducts dfferent tests to ensure that a new product wll mantan ts appearance untl a ven expry date as well as lve up to hyenc and bacteroloc crtera. A fnal crteron for prototypes selected to be presented to the sales department s novelty value. ScanMeat development staff reard t part of ther msson to develop the open-mndedness of sales representatves reardn taste. By presentn prototypes that they expect sales representatves to reject they antcpate sales representatves wll be more open to other deas; maybe not ths season but maybe for seasons to comes. When the frst broader sample of new products s presented to sales representatves, prce s an evaluaton crteron n lne wth appearance and taste. In puttn toether the fnal product portfolo for the comn rll season varatons n taste, colour and the cuttn-out are also consdered. ScanMeat s customers natonal and nternaonal retalers do not play an actve role n the composton of the company s product portfolo. When the sales department have selected amon the products presented by development the products are later presented to retal customers. Some products are offered trouh out the season, others are presented n roups as part of seasonal campans. The reasonn behnd ths s manly to be found n practcal consderaton related to ScanMeats producton. However t s also part of a marketn related stratey to be able to present new products durn the entre season. Crtera dscussed durn evaluaton meetn between Spce Inc. and ScanMeat The man jont actvty at the meetn between Spce Inc. and ScanMeat s tastn and evaluatn the appearance of the prototyped products. At the bennn of the meetn the appearance of the raw seasoned meat are dscussed however the development assstant from ScanMeat soon says: Now I have seen ths, let s focus on the taste. If the taste s rht, there wll also be plenty of opportuntes to correct appearances. Thus the taste s a hhly apprased crteron and throuh out the meetn the taste s very much the centre pont of dscusson. Spce Inc. often ask the ScanMeat development representatves on ther opnon on the taste of the product whether they consder any adjustments necessary e.. spcer, more salty, less stron etc. As well ScanMeat s asked by Spce Inc. to evaluate the appearance of the prepared meat. Durn the dscussons the ScanMeat development representatves as well as the Development Manaer from Spce Inc. take notes on every prototype. The development responsble from ScanMeat uses these notes for remembern the dstnctve feature of the prototypes, so she has a tool for decdn whch prototypes to choose. The development manaer from Spce Inc. on the other hand uses the notes for makn decson on how to adjust prototypes for further development. When presentn every prototype Spce Inc. makes an effort to express the reasonn for choosn the product dea. Thus the development manaer often mentons behavour and expectatons of consumers to emphasze and make a pont of the taste dscusson:... Spce Inc owner: It s heavy... But don t people also hold a tendency to enjoy the spcy stuff? ScanMeat Development Responsble: Yes 9

10 Spce Inc owner: There are lots and lots of chl on the market, so people have otten used to thns really tastn of t. If t doesn t they thnk we just wrote chl to sell t. Spce Inc Development Manaer: I beleve that people not necessarly assocate Mexco wth somethn spcy. I mean, when you buy Mexcan food you can choose mld or medum or hot, rht? ScanMeat Development Responsble: Well yes, t s true... Spce Inc Development Manaer:...Then t s not necessarly spcy. But f you say ths s chlseasoned, then people know t s spcy and then they can leave t f they don t fancy that. But Mexco s not brn exactly the same assocaton to peoples mnd that t s spcy.... Durn hs arumentaton for a prototype the Development manaer from Spce Inc. also refers to the preferences and actons of retal customers. Whether retalers are also usn these products are used as an arument for acceptance on the market:... Spce Inc Development Manaer: So we have captured the taste of Mexco n ths marnade called Mexco. And f you look at t... so ths s a product, well UP Retaln use t, R.E.Taler uses t as a spceblend. So there s actually an acceptance of ths product n terms of taste n the to b retal chans, so Ths way of selln n to the development employees at ScanMeat s a conscous and delberate stratey, as stated by the Development Manaer from Spce Inc.: The result s, one could say, out of our hands on that tme. We can do our best to nfluence the opnon of the ScanMeat development staff... so they beleve our products to be so ood, that ther wll present them to ther sales department. When they approach ther sales department, we a lttle stranded... we are dependent on how well we presented our products to the development staff so they have the best tools for knd of selln them on to them. So when... we are concous about makn these presentatons to provde them (the development staff) wth some aruments that they mht use as aruments to ther sales representatves, rht... Involvn customers R.E.Taler An essental characterstc of the relatonshp wth R.E.Taler s that Spce Inc. s snle suppler of marnade and spce blends to every n-store butcher n the retal chan. Ths s specal because R.E.Taler s the only retal customer n Spce Inc. s customer portfolo the company s snle suppler to. As well t s the not the eneral suppler polcy at R.E.Taler to hold snle supplers. The man reasons for R.E.Taler to keep Spce Inc. as a snle suppler s that ths company earler on has proven to be compettve on ther prces and that they are open for contnuous neotatons on prces. Ths s supplemented wth reflecton by the purchasn manaer that the cost of coordnaton requrements for havn multple supplers would exceed the potental ans. Besdes, Spce Inc. takes on a reat deal of servces. Spce Inc. consent ths poston and values t snce they conceve R.E.Taler as a promnent partner wth an nnovatve lead on the market. The ntroducton of new products n the retal chan s not only related to the rll season. Therefore the two partners meet reularly to evaluate prototypes for potental new products to be ntroduced n the n-store butcher shops n R.E.Taler. When the retal Purchasn Manaer bens to plan for the comn rll season the partners nformally aree to meet to dscuss and evaluate potental new products based on deas enerated by Spce Inc. and deas enerated by the Purchasn Manaer. R.E.Taler s crtera for evaluatn new product prototypes At R.E.Taler the Purchasn Manaer responsble for the n-store butcher shops posses a multple functon. He plans and decdes new product ntroductons, makes decsons on the composton of the product portfolo, trans and coaches employees at the n-store butcher shops as well as prepare for marketn of new and exstn products. When evaluatn and selectn amon new product deas several crtera are mportant. Frstly hs personal experence as a butcher n R.E.Taler s n-store butcher shops provdes hm wth a feeln of what mht be a successful new product. It s all about havn that unexplanable sense and ut feeln, he states. Secondly, the refnement or producton processes at the n-store butcher shops are 10

11 crtcal. It s mportant that a new product s relatvely easy to produce and do not demand allot of tme at the shop. Hstory determnes that complcated new products wll not be prortzed. To be a success a new product has to be easy to produce. Thrd, the appearance of a new product s mportant n the sense that s provdes an eye-catchn effect on consumers. Fourth and closely related to the appearance s the taste of the products. Snce many of the products produced by the n-store butchers are convenence products t s consdered mportant that consumers have a ood experence wth the product to they keep comn back. Prce s a ffth ssue snce t accordn to the Purchasn Manaer nfluence the consumer purchasn stuaton. Summn up the crtera taken nto consderaton s the purchasn manaer personal hunch and experence, consderatons on the nternal producton or refnement process at the retal chan s n-store butcher shop and fnally consumer buyn behavour. Fnally hyenc and bacteroloc ssues are an onon concern and the retal chan has ther own laboratory for contnuous montorn of new and exstn products. To decde on the composton of the product portfolo of the n-store butcher shops statstcs on sales plays a reat mportance as well. Sales of exstn products are evaluated on an on-on bass and the same apply for newly launched products. When decdn on when to launch new products the Purchasn Manaer also takes seasons and relous festvals nto consderaton, snce these have an nfluence on the type and prce of meat products consumers are buyn. Crtera dscussed durn evaluaton meetn between Spce Inc. and R.E.Taler The meetn between R.E.Taler and Spce Inc. are charactersed by the nstant decson makn done by the Purchasn Manaer from R.E.Taler. At the meetn he decdes product for product whch he wll launch n the retal chans n-store butcher shops and when. He nformally leads the meetn held at Spce Inc. s development ktchen where the partcpatn partners the Development Manaer, Development Assstant and one of the owners of Spce Inc. as well as the Purchasn Manaer from R.E.Taler and hs assstant taste and evaluate every prototype of potental new products. Three dfferent cateores of new products are evaluated. Frstly, several of the prototypes evaluated are products that have been mproved on taste snce they where evaluated on prevous meetns. When the taste of these products s approved or t s decded how to adjust them the Purchasn Manaer decdes and coordnates the tmn of the ensun producton, marketn and launch actvtes at the receptve partes. Secondly, new product deas that are presented as prototypes for the frst tme at the meetn are evaluated by the Purchasn Manaer and hs Assstant on several crtera. These are not stated or dscussed drectly by e.. the Spce Inc. Development Manaer askn the customer for evaluaton on certan crtera but occur contnuously and repeated durn the mutual dscusson on on. Every tme a new prototype s tasted the appearance and taste s commented on. When a prototype s accepted or t s decded to be adjusted the Purchasn Manaer takes note as well as the Development Assstant from Spce Inc. Whether or not a new product are accepted depends on crtera related to sales statstcs on exstn and former products; whether s wll cause potental problems n the producton or refnement process at the n-store butcher shops; the potental revenue and whether t s consstent wth the R.E.Taler convenence concept. The dscusson of these crtera s nformal but very drect wth an almost harsh tone. The new product prototypes n these frst two cateores are manly based on deas enerated at R.E.Taler or n jont collaboraton wth Spce Inc. The thrd new product cateory dscussed at the meetn s based on deas developed by Spce Inc. Some of these products are rejected by R.E.Taler on ther appearance, even before they are tasted. When the Development Manaer refers to ndustral customers usn these products the Purchasn Manaer rejects them wth reference to hs personal preference:... R.E.Taler Purchasn Manaer: Well, what we can tell s, t s our barbeque marnades ths year, they are totally flopped, rht? It only works for sparerbs. That s what we must learn; t works for nothn else, only for sparerbs. Spce Inc. Development Manaer: Ths s actually a... but actually t was dfferent n the bennn... R.E.Taler Purchasn Manaer: Well, I stll won t eat t. You don t have to sell t to me. Spce Inc Development Manaer: Then we have taken our Mexcan blend and... 11

12 R.E.Taler Purchasn Manaer: Well, but we can t sell ths! Spce Inc Development Manaer: No, but... we actually had a product that was less thck and much pretter (...) Then we have developed t nto a ScanMeat product. R.E.Taler Purchasn Manaer: Contnue wth them... Spce Inc Development Manaer: Exactly. What they wanted was R.E.Taler Purchasn Manaer: Contnue wth them, contnue wth ScanMeat, that s a really ood dea.... Related to the rejecton of most of the presented prototypes based on deas enerated by Spce Inc., the Development Manaer concludes: Well that s... t s always annoyn to present new products that you have worked on for qute some tme (...) and then they (R.E.Taler) say that t s all crap. That they can t use any of t. Well but eh, but I have knd of learned, that t s not necessarly a measure of ther opnon, eh... t mht be ther opnon today (...) and then when we latter present them, some of these products, then t s actually suddenly ood. It s because they want ther own deas ( ) I beleve that t s more about hm (the R.E.Taler Purchasn Manaer) feeln that he s not a part of ths... when we develop these products, and that s why he doesn t thnk t s ood (...) But I bear a reat respect for hm havn a meann about thns. Rather than havn no opnon (red: lke other retal customers). Crtera for composn the Spce Inc. product portfolo The fnal product portfolo at Spce Inc. conssts of both customzed products developed and produced on requests as well as of Spce Inc. s own spce blends and marnades sold to varous customers. Ths composton reflects that some customers prefer to specfy and develop ther own blends and marnades n collaboraton wth Spce Inc. whle other customers place more weht on ssues concernn prce and delvery and prefer to choose amon fully developed products. Yet other customers o for a combnaton of these approaches. When developn potental prototypes for ther own portfolo, Spce Inc. takes customers evaluatons nto consderaton and use the nformaton athered at the descrbed meetns to adjust taste and appearance of new products. However, several nternal dscussons are succeedn customers evaluaton before decdn whch new products to ncorporate n the portfolo. Parallel to fne-tunn the taste and appearance of products several crtera are nternally dscussed and used for composn the actually portfolo. One s a wsh for renewal. E.. a total product cateory s replaced by a new one, whereas on-on cateores are supplemented wth new varants. Secondly the crtera of marketn related thematzn consdered n the bennn s mantaned. A thrd and fnal crtera s the professonal ut feeln and sense of the market that customers evaluaton has brouht about. As stated by the Development Manaer: we hear, sense and feel and throuh ths a fnal decson emere. Case dscusson - knowlede nteracton, resource nterfaces and on-on exchane actvtes In the case presented the fnal product portfolo at the focal company Spce Inc. s a result of the nteracton between the nvolved actors. Each of them wth crtera reflectn ther concurrent stuaton, nterests as well as tact knowlede and resources. The actors crtera rse from a hstory of routnes and norms and therefore customers crtera can only be a complementn element n ths process. At the development meetns presented n the case the essental actvtes evolves around the knowlede exchane, knowlede nteracton and knowlede development between the nvolved actors. In many ways the unfoldn daloue at these meetns are closely related to the concrete deas and prototypes of new products to be potentally ntroduced on the consumer market. However the knowlede exchane and knowlede nteracton evolvn around the new product deas and prototypes are based on dfferent knowlede resources that come to lfe throuh knowlede processes as explaned by Nonaka and Konno (1998). Throuh these knowlede processes smlartes occurs manly as nternalsaton and socalsaton. Smlar knowlede resources or knowlede types can be rearded n the case, as descrbed n the follown secton. On the other hand dssmlartes occur as well n the knowlede processes. The ndvdual persons deas, nterests and experences, dfferent busness problems n the dfferent oransatons nvolved, dfferent contexts etc. are reasons behnd 12

13 externalsatons and combnatons llustratn dfferent knowlede resources and types. Some of these smlartes and dssmlartes are llustrated n the case. Frst of all, all three actors use techncal knowlede related to the raw product as a letmate crtera for dscussn the value of a product dea or prototype. Spce Inc. uses techncal knowlede on raw products related to e.. qualtes of dfferent spces and the composton and texture of marnades whereas ScanMeat and R.E.Taler draws on knowlede related to dfferent meat qualtes, cuttns and refnement. Techncal knowlede s however also lnked to the dfferent actors producton facltes and producton processes. Knowlede of how these resources may facltate or hnder the potentalty of a new product s ntroducton s used as letmsed nput n the dscusson at the jont development meetns. At both meetns techncal knowlede s used as an evaluaton crteron for decdn whether a new product has a potental and should o nto the fnal development phase. Throuh externalsaton and combnaton the dfferent actors knowlede becomes explct, and partcpants learn to letmate wth techncal evdence. Throuh nternalsaton and socalsaton techncal knowlede becomes obvous as arumentatons of the pro or cons for the development of a product. The meetn plays a crucal role n al four parts of the knowlede process. A second resource used as a basc crteron s knowlede of consumers, ther behavours and preferences. Snce consumers are the fnal users of the new products developed by the trad partners, nformaton and dscussons of consumers are used as letmate aruments n daloues of the potentalty of a new product dea. Even thouh the partcpatn actors have dfferent access to knowlede of ths type, the relevance of the crteron seems obvous to everyone. Thrdly, relatonshps to thrd partes are used as a resource n the knowlede nteracton and new product dscusson. Relatonshps are used as means of letmsaton e.. when Spce Inc. refer to what other partners do or don t do. Forth and fnal, n presented case taste s perceved by all nvolved actors as a decsve crteron when decdn whether a new product dea or prototype s to be developed and ntroduced on the consumer market. Ths percepton s related to a convcton of how the taste of food products s but one mportant parameter for consumers to repeat ther purchase. Aan, there s a stron mutual percepton of ths as an mportant type of knowlede resource. However the problem wth taste s that t s perceved as lnked to personal preferences, whch are dffcult to artculate n wordn. Addtonally t s perceved to be even more dffcult to comprehend another ndvdual s preferences n taste. Therefore developn new food products and decdn whch one to ntroduce and launch on the consumer market s not a straht forward oransatonal task snce the crtera for makn ths decson s closely related to the ntanble ssue of taste. Instead the actors n the case emphasses the personal ut feeln or sense of ther busness as an overall crteron when decdn whch new product deas to o for. Tabel 1 presents examples of the knowlede transformaton process n the descrbed case. It s mportant to stress that these are only examples, and that the dfferent phases or elements n the process not are to be vewed as lnear and successve. Indeed knowlede transformaton processes s contnuous and evolves smultaneously nternally and externally to every snle actor n the case. Tabel 1: Knowlede transformaton process n combnn Spce Inc. s product portfolo Socalzaton In the case of Spce Inc. the development meetns wth R.E.Taler and ScanMeat respectvely are oransatons for socalzaton. At the meetns the ndvdual actor are daloun, tryn to understand and share the experences and tact knowlede of the other partcpatn ndvdual actors 13

14 Externalzaton Throuh the nteracton and daloue at the developn meetns the tact crtera presented by each ndvdual actor are artculated to make them more explct. When the Development Manaer from Spce Inc. s askn ScanMeat development representatve to express ther opnon and evaluaton of each tasted product, the actors are daloun to translate tact knowlede nto explct knowlede. Throuh out the meetn the dscussed crtera are challened. Some are preserved others may be chaned. o Combnaton When puttn toether the Spce Inc. product portfolo. The now explct knowlede collated at the development meetns are dffused nternally n the Spce Inc. oransaton. The knowlede s put nto use and the customers evaluatons and crtera may be met by other crtera of e.. producton optmzaton, prces or the lke. o Internalzaton New procedures are learned and the explct knowlede are ncorporated nternally at Spce Inc. as well as n the relatonshp wth ScanMeat and R.E.Taler. Procedures are nsttutonalsed and opportuntes are delneated. Known what resources to draw on s a result of foreone knowlede exchane and knowlede nteracton or to use the conceptualsaton of Nonaka and Konno (1998) throuh prevous nternalsaton and socalsaton. When employn dfferent knowlede resources the actors are arun to letmse ther evaluaton crtera n the onon externalsaton. They are thus developn or even chann ther crtera and exstn knowlede throuh the nputs receved va externalsaton and combnaton. Therefore the onon process of knowlede transformaton n both the relatonshp between ScanMeat and Spce Inc. and R.E.Taler and Spce Inc. bear some smlartes. However, there are several dfferences n how knowlede resources are put nto use. Thus, the combnaton of knowlede the meetns created, developed and utlsed n dfferent ways by the actors as well as they create dfferent effects on the focal company s crtera for puttn toether ther portfolo of new products. To obtan a deepened understandn of these dfferent effects and the knowlede or resource nteractons that creates those effects we have looked nto the knowlede exchane and transformaton on on. 14

15 To Spce Inc. the development meetn wth each of the two customers are perceved as nput to the company s fnal decson on whch new products to ncorporate n ther product portfolo. In the combnaton of Spce Inc. s techncal knowlede wth that of ther customers, t becomes possble to foresee and elmnate potental techncal problems of the new products. Problems whch may be an ssue to other customers as well. And as stated n the ntroducton of ths paper the development manaer from Spce Inc. consders the opnon of customers an mportant nput to ths decson. Thus each jont development meetn s a mean for facltatn a process of externalzaton throuh daloun on the more tact knowlede of customers preference of e.. taste and appearance of new product prototypes. The nformaton aned at the jont development meetns are dffused and utlzed nternally n the follown development of prototypes nto fnal products and n ths sense the new knowlede s nternalsed n the new products becomn a part of Spce Inc. s product portfolo. However the effect from the varyn knowlede nteractons wth the two dfferent customers plays rather dstnct roles n the nternalsaton. To R.E.Taler development meetns wth Spce Inc. are consdered an mportant aspect of ther on-on relatonshp. Because the perceved purpose of the meetn s multple, the dfferent actors externalse qute dfferently. One specfc purpose s the actual development of new deas as well as makn the decsons on whch new products are to be ntroduced and when. Snce these decsons are made drectly and explctly by the R.E.Taler Purchasn Manaer durn the meetn Spce Inc. are provded wth the opportunty to combne and nterate ths nformaton nto ther nternal product development process and oransaton. The meetns thus ve the partcpants dfferent knowlede nput to brn home to ther own oransatons, to combne wth other knowlede resources. One essental dstncton between the development processes at R.E.Taler and ScanMeat s tmn. All thouh ScanMeat contnuously develops new ndustral or prvate label products to ther customers the development of ther own brand s more dsperse and related to selected seasons and relous festvals whereas R.E.Taler work wth a contnuous and more evenly dstrbuton of new product ntroductons. Thus the presented development meetn between Spce Inc. and R.E.Taler are to a hher deree charactersed by the partes on-on nteracton and jont development actvtes. To R.E.Taler a second purpose of the jont meetn s facltaton of the on-on mutual coordnaton of development and busness exchane actvtes between the partes. Frst of all ths s revealed n the dscusson and nformaton exchane concernn unresolved ssues n on-on development projects, practcal busness exchane matters as well as affars concernn thrd partes, who are jont collaboratve partners. Ths s actvtes whch forms part of an nternalsaton and socalsaton process. Moreover the presentaton and dscusson of Spce Inc. s new product deas are lend much less tme and devoton by the R.E.Taler representatve compare wth the commtment and enthusasm unfolded when dscussn ther own or jont new product deas. Ths could be nterpreted as R.E.Taler vewn Spce Inc. as a less mportant or sklled development partner. However, ths s not exactly the case. As a thrd purpose of the meetn R.E.Taler dscern the contnuously enhancement of the collaboraton and coordnaton sklls of Spce Inc. R.E.Taler thus apprecates Spce Inc. as a very sklled and knowledeable, but also vews Spce Inc. as a partner whom they have to assst n mprovn ther competences as a development partner. In other words R.E.Taler perceves Spce Inc. to be a development partner that stll hasn t reached ther potental. The case llustrates several examples of the way combnaton occurs n the knowlede process. At the development meetn R.E.Taler not only explot Spce Inc. s techncal developmental knowlede and resources but also request for the addtonal servces and resources that s a part of ther on-on relatonshp. E.. Spce Inc. makes standard recpes to R.E.Taler s n-store butcher shops and produce customzed packan and labelln for all exstn as well as new spce blends and marnades. Incremental chanes and mprovements concernn these ssues are also dscussed at the development meetn. When Spce Inc. on the other hand draws on ther relatonal knowlede on thrd partes preferences R.E.Taler are dsmssve. These actvtes are becomn the next steps n the knowlede process: Internalsaton and socalsaton. 15