The following was the third sub-question (RQ3) of this study: How, and through what kinds of approaches, can industrial service providers best utilize customer contributions? To answer this question, the study showed that service providers could capitalize on customer involvement through two generic approaches —one emphasizing the exploitation of customer contributions and the other the creation and exploration of new knowledge with customers. In the empirical part of the study, the cross-case classification framework (see, Table 15) provided a basis for illustrating and comparing the findings in terms of value of customer-provided knowledge and degree of customer involvement. Two configurations were evident in the matrices used to display the findings (see, Figure 13–Figure 16). In some of the analyzed situations, the value of customer-provided knowledge was higher than the degree of customer involvement (either high vs. medium or low, or medium vs. low). In other situations, the value of customer-provided knowledge was at the same level as the degree of customer involvement (either low–low or medium–medium), thus providing a basis for two distinct approaches to utilizing customer contributions— exploitative and explorative customer involvement.
On the one hand, service providers could take advantage of the knowledge that customers possess by increasing the degree of customer involvement when the degree is low in relation to the value of available knowledge. In these situations, the service providers could extend the use of passive market research techniques, such as customer surveys, interviews, and focus groups (see, Cui and Wu, 2016; Griffin and Hauser, 1993; Witell, et al., 2011). Moreover, the use of other techniques could be increased, for example, those that address informal interactions with customers (see, Edvardsson, et al., 2006) or those that increase the use of customer collaboration (see, Cui and Wu, 2016). On the other hand, if the value of available knowledge levels is lower than the degree of customer involvement, customer knowledge contributions cannot be further utilized by simply increasing customer involvement. In those situations, the value of the potential knowledge should be first increased. Here, a customer could be involved in service portfolio development
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more deeply through proactive approaches by allowing them to participate, for example, in idea creation, designing solutions, or re-designing service processes (Edvardsson, et al., 2006). The aim would be to create new insights and knowledge including both spoken and latent needs (Witell, et al., 2011).
These two approaches that inductively emerged as an outcome of the empirical analysis are aligned with the generic organizational learning strategies of knowledge exploitation and knowledge exploration (March, 1991). Exploitation refers to capitalizing the existing and attainable knowledge, whereas exploration is about rethinking, creating, or searching completely new knowledge (Hatch and Cunliffe, 2013; March, 1991; Menor, et al., 2002). Figure 17 presents the cross-comparison matrix that is complemented with the knowledge exploitation and exploration approaches.
Figure 17. Knowledge exploration and exploitation in customer involvement
In the figure, a horizontal movement (arrow A) toward the diagonal illustrates knowledge exploitation, which is the primary approach in the upper part of the figure. Because the value of available knowledge is higher than the degree of utilizing customer involvement, a firm can “exploit” its customers’ knowledge potential directly by increasing the use of customer involvement, for example, through traditional market research methods as discussed above (see, Cui and Wu, 2016; Griffin and Hauser, 1993; Witell, et al., 2011). A vertical upward movement (arrow B), in contrast, represents knowledge exploration, which is the primary approach in the lower part of the model. Here, the available customer knowledge is low in relation to its current or intended use. That is, either customers do not possess valuable knowledge or the knowledge is tacit and therefore difficult to communicate (see, Nonaka and Takeuchi, 1995). Thus, there is a need to search or create new
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knowledge through “exploration” before it can be exploited in the service portfolio development. As discussed above, a firm may need to engage in customer involvement techniques that go beyond traditional market research toward genuine co-development (see, Cui and Wu, 2016; Edvardsson, et al., 2006; Witell, et al., 2011). Obviously, either type of movement could be possible in both parts of the figure (i.e., upper and lower sections). Horizontal movement toward the right in the lower section would represent a situation wherein insufficient knowledge takes precedence, for example, if attention is payed to individual customer views that do not represent the customers’ views at large. Thus, it is not a recommended approach. In contrast, an upward vertical movement in the upper section would represent an advocated approach as it opens up further possibilities to exploitation through the creation of new knowledge.
Table 25 further illustrates how the exploitation and exploration approaches appeared in relation to the offering development modes and customer involvement forms in this study. The table is directly derived from the findings matrices (see, Figure 13–Figure 16) following the above illustrated logic.
Table 25. Exploitation and exploration across offering development modes and customer involvement forms
Offering development mode
Customer
involvement form Refining basic services portfolio Promoting customer service elements Developing more complete offerings Extending portfolios with advanced
services Communicating
customer needs Exploitation Exploitation Exploration Exploration Giving feedback Exploitation Exploitation Exploitation and/or
exploration
Exploitation and/or exploration
Providing ideas Exploration Exploration Exploration Exploration
Co-developing services Exploitation and/or exploration Exploitation and/or exploration Exploitation Exploitation Customers as
innovators n/a n/a n/a n/a
The table demonstrates that both exploitation- and exploration-based approaches are needed if service providers want to efficiently utilize customer involvement in multidirectional offering development (see, Kowalkowski, et al., 2015; Matthyssens and Vandenbempt, 2010; Raddats and Kowalkowski, 2014; Windahl and Lakemond, 2010). The table also illustrates that in terms of exploitation and exploration, the offering development forms could be divided into two groups. In refining basic services portfolio and developing customer service elements, customer needs and feedback seem as potential targets for exploitation, whereas in idea generation and
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co-development, exploration prevails. In developing more complete offerings and advancing portfolios with advanced services, in contrast, co-development seems as a potential area for exploitation, whereas the role of exploration is more substantial in other customer involvement forms.