Market Orientation and Partnership Learning in Product Development and Design




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Market Orientation and Partnership Learning in Product Development and Design

by

Brynjulf Tellefsen, Ph.D.


Published in Ilstad, Steinar (ed.), Industrial Organization and Business Management. Trondheim: Tapir Akademiske Forlag. ISBN 82-519-1661-5. pp 396-405


Brynjulf Tellefsen is associate professor of marketing and management at the Norwegian School of Management (Handelshøyskolen BI). His research fields including market orientation, team organization and service management. Tellefsen edited the book Market Orientation published by Fagbokforlaget in 1995.


Tellefsen is a board member of NAMM, a research consortium funded by the Norwegian Research Council to study market oriented product development in the food industry.


Summary of Paper


This paper has two goals. I will (1) show why a strong customer and market orientation is a prerequisite for successful design, and (2) present concepts and techniques for building designer-consumer partnerships.


Every successful designer serves a constellation of customers and producers as well as one or more end users. One way of looking at this constellation of design users is to consider the value network centered on any product. One group of participants in the value network -- upstream suppliers -- may not use the product, but they are customers in an important sense. These participants help to organize and deliver resources that make it possible to develop the product, and the feedback from the product should and must reach backward to them through sellers, distributors, manufacturer and designer. Design can have great impact on their production logistics and costs. Looking downstream from the designer, the participating members of the value chain are, indeed, consumers. The manufacturer buys the product from a designer, conceptually in the case of in-house designer, literally in the case of external suppliers. Multiple levels of distribution and retailing each buy the product from the manufacturer. Retail buyers may themselves be part of a value network when they are buying a product for use by someone else -- a parent buying a toy, a professor designating a schoolbook, a pet-owner selecting dog food. The case of the fiat packaging design concept developed by IKEA illustrates the ways that a single design concept can affect many participants parties in a value network in significant and different ways.

Some consumers are, in themselves, both direct consumers and end-users. The clients of architects, commissioned craftsmen, fine restaurants and hotels are often direct consumers. More often, however, the consumers we consider are the end-users of manufactured products or mass-produced services. In this paper, I will consider two groups of consumers. The first group is the complete constellation of participants in a value network . The second is the end user. The ways in which designers consider, interact with and understand all of the consumers for whom they work spells success or failure in the design process.

Participants in the value network fulfill multiple roles in social systems and business networks. The designer must address their needs in many ways. Any designed product negotiates a series of stratagems in meeting these many needs.

Consider the relationship between the designer and a market. A market is a forum in which two or more actors meet to transact value. One or more actors declares needs, wants, or desires. One or more actors offers to fill these needs, wants, or desires. A designer enters the market with the purpose of creating an artifact or process that will fill the needs, wants, or desires established by one or more actors in the market. Whether supplying the artifact or process directly or through intermediaries, the designer sets out to solve an expressed problem in a better way than the problem has been solved before.

Bernsen (1986:10) defines design in terms of problems. He describes design as "solutions to a problem." More specifically, Simon (1982:129) defines design as "[devising] courses of action aimed at changing existing situations into preferred ones." The design process can be distinguished from the artistic process as a goal-oriented process oriented toward external problems.

Because the variety of possible needs, wants, or desires is so great, these may be met in a great many ways. The key issue can be summarized under the concept of an improvement in needs coverage compared to solutions in use. The alternative solutions define the range of competition.

In some cases, the solution involves fashion and taste. Here, we speak of internal or psychological needs such as differentiation and belonging. The product or service must be different enough from existent solutions to satisfy a wish to be or seem to be different than others using the same product or service. It may also operate under a second constraint, belonging. In this case, the same product or service must be similar enough to existing solutions used by a key reference group to satisfy the wish to be or seem to be a part of the group of significant others using the same product or service. Products embellished with the Harley-Davidson symbol illustrate this design function.

How different must the product be to current solutions? How similar? How will design and technology work to create genuine or apparent differences? How can design and technology be used, when desired, to cannibalize otherwise similar products now in the market? And how can design be used for common imaging and recognition building across product groups, organizations and user groups?

These are the kinds of questions designers must ask in reference to the first of several levels of consumers, those who order, manufacture and distribute the product or service. These sorts of questions are paramount for a simple reason: if a product or service can't be sold, even the best product or service will not long survive.

We come to many of the same questions when we address the needs of end users. In addition to these needs, we have a second range of needs. While end-users are moved by fashion, by taste, by style, by functional needs and other purchasing considerations, they will -- in the end -- become loyal or disloyal based on how well the product covers needs.

In some cases, product performance can be measured against existing needs. This is the case with well known or established product types. Innovative products must also be designed with users and uses in mind, even though the consumers don't yet want the product. Examples of this are products such as the SONY Walkman or the Apple Macintosh. These products were created to meet needs that could only be covered in other or partial ways, but when they were invented, users hadn't conceived of the new ways of using these products to meet partially covered existing needs. The genius of the Walkman and the Mac were simple: they showed people how to do what a careful needs assessment would show they had wanted to do, even thought a market survey of current products would never have revealed the how and why of the new solution. Whether innovating or renovating, however, successful design is always centered on consumers and users at every level of the value network.

Consumer centered design suggests a conceptual partnership between designer and consumer. Businesses increasingly use team organization to enhance the value stream and teams frequently include members external to the firm. The idea of consumer as team member is implicit in the market orientation perspective (Narver and Slater 1990; Kohli and Jaworski 1990; Jaworski and Kohli 1993; Slater and Narver 1995; Tellefsen 1995) and understanding consumer needs requires more than the narrow framework of sales-oriented marketing research (Barabba and Zaltman 1991).

While the market is the forum of exchange, the design process begins well before the exchange transaction and ends long after. We must therefore understand consumers and users to plan products and we must work with consumers and users after the product is sold (Wheelwright and Clark 1992).

How can we do this? The key is a mutual learning process. In transaction or negotiation theory, we can consider the process the development of a win-win strategy. The design process, however, is more than a negotiation. It involves a series of interactive individual learning cycles (see Fig. 1) with each of the consumer groups the designer serves.

Figure 1: A single-loop learning circle



The individual`s picture of reality

(Weltanschau / Personal Theory)


Personal reflections Individual action

on the observation Designed test





Partial observation of environmental Unobserved

Reactions (practical experience) Reactions


Each of these connected individual learning cycles must generate what Argyris has characterized as a double-loop learning process. I apply Argyris's concept to the design process with a more specific concept that I term dual-loop learning among interacting pairs in a design process (see Fig. 2), and I propose a process of chained dual-loops of learning between the designer and at least one person in each of the several groups a product or process may affect (see Fig. 3).

Figure 2: Double loop learning; Partial common learning in dyads



Partially Personal Partial

Common Action Observation Reflection

Reality

DESIGNER CUSTOMER


Reflection Partial Personal Partially

Observation Action Common

Reality

Figure 3: Multiple dual-loop learning of

partially shared culture in cooperative networks





Media and Designer Competing

Social groups community designers










Firm`s suppliers The designer Customers










Non-designer Designer`s Customers`

Colleagues suppliers customers,

Within the firm Consumers


Simply put, I believe that the answer to a single question will determine the basic success or failure of any design project: “Have the designers interacted with representatives of every single group the product or service will affect”?

We already know that the relationship between designer and user is central to effective design (Benktzon and Juhlin 1984, 1989; Friedman 1991; Fuller 1964, 1965, 1967, 1981; Papanek 1991, 1995). Today's emphasis on market orientation and industrial process are a framework for what the best designers have always wanted to do. That is to make products that are, like the Apple Macintosh computer, "insanely great." Great products are great because they serve people effectively.

The multiple needs of consumers distributed through the entire value network may have other needs. It is a fact -- a challenge or sometimes a problem -- that these needs may be in conflict. More often, it is possible to resolve conflicting needs through careful listening and learning cycles. The problems arise not because of any inherent conflict, but because designers have failed to recognize and resolve potential conflicts between different levels and kinds of needs, wants and desires.

Designers need a series of effective tools for meeting the many levels and kinds of needs, wants and desires that a product or process must satisfy. To do this, the designer must learn to master an organizational learning wheel that moves from single-loop learning to double-loop learning and finally to multi-loop learning in cooperative networks. He or she must understand the flow of product or process from upstream suppliers to makers, and then from makers to markets, intermediate consumers and end-users.


Building designer-consumer partnerships


Product development litterature based on technology, design and marketing techniques for organization-internal learning for executing unilatteral projects is abundant. The writers treat consumers and external providers of resources and knowledge as passive partners or territory to be conquered. Does this reflect the real world? Every participant i value creation and consumption is a person capable of thinking, knowing, and acting in own self-interest. Market exchanges build on win-win. New designs and product development are virtually always a result of mutually agreed-upon sharing of risks, investments, efforts, learning and profit among partners. Ring and Van De Ven (1994) identify competitive pressure, shock and technological complexity as external motivators for cooperation and organizational learning.

The designer and partners must master quick mutual learning in rapidly changing environments to gain competitive advantage and ensure new product development success. It is therefore natural that the partners create both relationship learning as well as ad hoc situation specific product development learning for handling each unique project.

Academics have given surprisingly little attention to the learning that takes place between marketplace partners and consumers in ad hoc development or permanent relationships. Lukas, Hult and Ferrel (1996) developed a theoretical model for antecedents and consequences of organizational learning in marketing channels. However, they addressed organizational learning in general and not relationship learning in particular. Anderson and Naurus (1990) and Biong and Selnes (1996) have investigated the learning element of information sharing in their research on buyer-seller relationships. Selnes and Sallis (1998) confronting the issue recently used general organizational learning theories (e.g. Argyris and Schön 1978 and 1996; Fiol 1985; Hedberg 1981; Huber 1991; Levitt and March 1988; Walsch and Ungson 1991) to develop a theory of relationship learning that has not been field tested yet. Selnes and Sallis (1998, 7) defines relationship learning as:


An organization learns in a relationship with another party to the degree that information is shared among the two parties, the information is interpreted, and then integrated into relationship-domain specific memory that will change the range or likelihood of potentional relationship-domain specific behavior.


Extending the above definition, partnership network relationship learning consists of a web of dyadic domain specific relationship learning, plus a network domain specific relationship learning primarily embedded in the organization that governs the network. The network learning model would thus be an expansion of the original organizational learning model emphazising partial dyadic relationship learning as well as a network-wide relationship learning. The model would internalize several learning links that the organizational learning models traditionally define as externalities.

Learning uses energy. An organization may use the external motivating factors by mapping the threat conditions and converting them to threats and opportunities that are explict for the employees and the business partners in the network. The organization may also activate internal motivators like profits or other common values sought; being number one in one\s field, enhancing personal careers and personal and collective capabilities, developing personal and professional learning ties that may come in handy when solving future tasks. The spider in the web may gain superior profits by developing competitive advantage through its multi-relationship learning. In particular the learning network organizer can profit from combining generalizable knowledge generated within the partnerships with superior access to multiple tacit knowledge sources for specific business opportunities. Selnes and Sallies (1998) hypothesise that increased transaction and relationship complexity lead to higher motivation for relationship learning. This suggests that network organizers and their partners should develop cooperative agreements covering a multitude of compatible and complimentary markets, goods, services and knowledge areas. Network managers should in particular promote deutero learning (learning to learn with others) and the ability to share and combine knowledge across disciplines and areas of experiences. Managing and monitoring the development of deutero and relationship learning may be more important for long-term value creation than managing and monitoring individual product and marketing development projects.


Management of network learning


The basis for all cooperation is the recognition that individual goals are easier to achieve with help from people with complimentary resources and knowledge. Such help will not be provided unless you return something of value to the other parties. To construct such win-win arrangements cost more in terms of time, money and efforts than using already established relations. For a relationship to develop and become stable the individual projects in the relationship must in sum produce more value than known alternatives, and cover the costs of maintaining the relationship. The relationship becomes stronger with lower transaction costs and increasing value creating ability. Transaction costs and value creating ability depend on a series of cultural communalities among the parties. A minimum of communalities like values (the measuring rods of success), language (the basis for communicating and sharing knowledge), behavioral rules, organization, systems and technology (for physical coordination and compatibility) must be developed and maintained. Values like openness (to enable problem solving communication), integrity (to build trust), and fair sharing of efforts, knowledge and economic results are particularly important for developing value creating ability in a network. A good relationship manager should strive to develop these cultural traits early via programmed learning, and pick projects with a high probability of demonstrating positive effects to generate market-back learning (Narver and Slater 1998). The culture of cooperation will then be embedded through common positive experiences.


Project spesific network learning


The behavioral and social sciences offer a rich spectrum of techniques that enable designers to serve people effectively by learn from them and understanding them. These techniques allow design experts to embrace the consumer in a fruitful partnership by articulating consumer needs and desires, by transforming tacit consumer knowledge into articulate design goals.

Some of these techniques are purely conceptual. As new ways of understanding the design process and a rich view of definitions and social needs prompts the open vision that lies behind all success full design. On a more specific level, I will point to an array of usable techniques including survey, face-to-face interaction, qualitative research methods, quantitative research methods, production and logistics costs analysis, content analysis of existing documents, and other analytical and synthetic tools. The issue at this level is not the number of variety of tools: these tools exist in such quantity and profusion that no professional has the time or skill to master them all. Conceptually, there are several kinds of testing tools that can be used to create the designer`s knowledge of their multiple customers, consumers and users. Here are seven key areas for testing:


1. Needs discovery testing for users who cannot articulate or express their needs.

2. Solution concept testing for users who cannot develop solutions.

3. Solution concept testing.

4. Solution testing of prototype products or services at the individual level.

5. Solution testing of prototype products or services at the small group level.

6. Solution in-use testing of products or services for marginal improvement.

  1. Social group acceptance testing of solutions for diffusion and learning.


Use the whole range of the test areas above as a basis for dialogue with your business partners and your customers. You will be surprised how much you learn about yourself and your business environment. Your relationship to your partners will improve. Your product development and design will become superior as you learn. Your profit potential will soar.

References


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