Case study, Xiaomi
Case study, Xiaomi
Integrating User-driven Innovation and the Organizational Design
Integrating User-driven Innovation and the Organizational Design
Jens Giver Pedersen, Anders Spile Christensen, Xiangying MENG, Jiayi RAO – Supervised by Yimei HU Jens Giver Pedersen, Anders Spile Christensen, Xiangying MENG, Jiayi RAO – Supervised by Yimei HU
Abstract
Abstract
Xiaomi is focusing on being the most user-collaborative mobile internet company, which constantly exceeds user Xiaomi is focusing on being the most user-collaborative mobile internet company, which constantly exceeds user expectations, through innovations in software, hardware and Internet services. The rapid growth of Xiaomi benefits expectations, through innovations in software, hardware and Internet services. The rapid growth of Xiaomi benefits from the way it classifies its users, and engage them in product development processes. The project studies the reason from the way it classifies its users, and engage them in product development processes. The project studies the reason why Xiaomi chooses users as external partners, and investigate how they collaborate, by using the cross-sectional why Xiaomi chooses users as external partners, and investigate how they collaborate, by using the cross-sectional case study
case study methmethod.od.
摘要
摘要
本文主要研究小米公司在软硬件与互联网服务方面所应用的粉丝驱动模式。小米的快速发展得益于其对用户进行精 本文主要研究小米公司在软硬件与互联网服务方面所应用的粉丝驱动模式。小米的快速发展得益于其对用户进行精 确分类并鼓励用户参与产品设计与研发过程。本文将利用时点法与案例法展示小米选择用户作为外部合作伙伴的原 确分类并鼓励用户参与产品设计与研发过程。本文将利用时点法与案例法展示小米选择用户作为外部合作伙伴的原 因以及其合作方式。 因以及其合作方式。Introduction
Introduction
There are currently more than 1.4 billion There are currently more than 1.4 billion s-martph
martphones in the world. ones in the world. In comparisIn comparison there areon there are on
only ly 2 2 bibillllion ion cocompmputeuters rs in in ththe e wwororldld, , anand d wiwithth a
a marmarkeket t grogrowth wth of of 1.8 1.8 milmilliolion n smasmartprtphonhones es perper da
dayy, , hahavinving g a a smasmartprtphonhone e is is basbasicaically lly the the nornormm now
nowadayadays. s. The smartphone is The smartphone is alwalways within arm’says within arm’s reach, and a recent study even shows that 9 out of reach, and a recent study even shows that 9 out of 10 searches on your smartphone, leads to some sort 10 searches on your smartphone, leads to some sort of action, and more than half of these actions leads of action, and more than half of these actions leads to some sort of
to some sort of purpurchchase (Fase (Forbeorbes s – – 20132013). ). In oth-In oth-er words, the smartphone has become an essential er words, the smartphone has become an essential part of our consumer behavior.
part of our consumer behavior.
The multi-billion dollar smartphone industry The multi-billion dollar smartphone industry is currently being led by five large companies, is currently being led by five large companies, Sam-sung, Apple, Xiaomi, Lenovo, and LG. As of third sung, Apple, Xiaomi, Lenovo, and LG. As of third quarte
quarter in r in 2014 these combi2014 these combined had more than a ned had more than a 5050 % market share.
% market share. The year-The year-on-yon-year growtear growth withinh within
the smartphone industry reached 27 % in the the smartphone industry reached 27 % in the sec-ond quarter of 2014.
ond quarter of 2014. AndroAndroid managed to captureid managed to capture a market share of around 85 % of this increase. An a market share of around 85 % of this increase. An interesting development amongst these five major interesting development amongst these five major companies within in the smartphone industry is companies within in the smartphone industry is be-ing illustrated by the latest report done by the ing illustrated by the latest report done by the In-ternat
ternational Data ional Data CorporaCorporation (IDC), tion (IDC), depicdepicting theting the smartp
smartphone vendor markhone vendor market share. et share. The mentionThe mentioneded development shows the rise of a relatively new development shows the rise of a relatively new com-pany, which by the third quarter this year was able pany, which by the third quarter this year was able to overtake the third place within the smartphone to overtake the third place within the smartphone industry, with a 5.2 % market share. The name of industry, with a 5.2 % market share. The name of the company that through the past four years has the company that through the past four years has gone from
gone from zero percent markezero percent market t share to share to respecrespective tive--ly 1.0 % to 2.1 % and now has risen to 5.2 %, is ly 1.0 % to 2.1 % and now has risen to 5.2 %, is Xiaomi.
Xiaomi.
Xiaomi was founded in 2010 by the renowned Xiaomi was founded in 2010 by the renowned angel investor and entrepreneur Lei Jun, who had angel investor and entrepreneur Lei Jun, who had
Content
Content TTableable
Abstract
Abstract
...
...
...
...1
...1
IntroductionIntroduction
...
...
...1
...1
LisList t of of AcrAcronyonymsms
...3
...3
ProbProblem lem BackBackgroungroundd
...3
...3
ProbProblem lem FormFormulatiulationon
...3
...3
Resea
Research rch QuestQuestionsions...3...3
Probl
Problem em LimitLimitatioationn...4...4 Methodology Methodology
...
...
...4
...4
Paradigm Paradigm...4...4 Ontology Ontology...4...4 Epistemology Epistemology...5...5 ReseaResearch rch DesigDesignn...5...5 1.Theoretical Framework
1.Theoretical Framework
...8
...8
1.1
1.1 Open InnovatiOpen Innovationon...8...8
1.2 Want
1.2 Want FinFind d Get ManagGet Manage e ModModelel...10...10
1.2.1
1.2.1 Want-Want-DiffuDiffusion sion of of InnovInnovatioationn...10...10
1.2.2 Find-Scouting
1.2.2 Find-Scouting...12...12 1.2.3
1.2.3 Get-PGet-Particarticipatoipatory ry DesigDesignn...13...13
1.2.4 Manage-Organization Structure
1.2.4 Manage-Organization Structure...14...14 2.Ca
2.Case se AnalyAnalysissis
...16
...16
2.1
2.1 ResResearearch ch QueQuestistion on 11...16...16
2.1.1 Diffusio
2.1.1 Diffusion n of of InnovInnovationation...16...16 2.1.2 Xiaomi
2.1.2 Xiaomi ScoutScouting ing StratStrategyegy...19...19
2.2
2.2 ResResearearch ch QueQuestistion on 22...22...22
2.2.1
2.2.1 XiaomXiaomi i User User CateCategorizgorizationation...22...22
2.2.2 Engagin
2.2.2 Engaging g userusers s in in innovinnovatioationn...23...23
2.2
2.2.3 .3 The The rolrole e of of socsocial ial plaplatfotformrm...26...26
2.2.4
2.2.4 MaintMaintain ain sustsustainabainable le innovinnovationation...28...28 2.2
2.2.5 .5 SynSynergergy y betbetweeween n XiaXiaomi omi and and useusersrs.29.29
2.3
2.3 ResResearearch ch QueQuestistion on 33...33...33
2.3.1 Current
2.3.1 Current FormaFormal l StrucStructureture...33...33 2.3.2 Capabil
2.3.2 Capabilities needed ities needed for for XiaomXiaomii...34...34
2.3.3 Formal
2.3.3 Formal StrucStructure ture VS VS CapaCapabilitbilitiesies.34.34
2.3.4
2.3.4 RestrRestructuructuring ing orgaorganizatnizationion...35...35 3.Conclusions
3.Conclusions
...36
...36
3.1
3.1 ConcConclusiolusionsns...36...36
3.2
3.2 ReflReflectioectionsns...37...37
References
References
...
...
...39
...39
Scientific Articles
Scientific Articles...39...39
Non
Non sciescientifintific c ArtiArticlescles...40...40 Books
Books...40...40 Appendices
Appendices
...
...
...41
...41
a vision of creating a company, that made it a vision of creating a company, that made it possi-ble for the consumer to acquire a high-end quality ble for the consumer to acquire a high-end quality prod
productuct, , at at a a reareasonsonable pricable price. e. XiaoXiaomi is mi is priprimar mar--ily focusing on the Chinese and adjacent markets, ily focusing on the Chinese and adjacent markets, which is why the company name to most people which is why the company name to most people outside of Asia, may be unknown, despite it being outside of Asia, may be unknown, despite it being the third largest smartphone company in the world the third largest smartphone company in the world (IDC - 2014).
(IDC - 2014).
When Lei Jun founded the company, he put When Lei Jun founded the company, he put together a team consisting of skilled people from together a team consisting of skilled people from various companies such as Google, Microsoft, various companies such as Google, Microsoft, Mo-torola, Y
torola, Yahoo etc. ahoo etc. These weThese were all brought togethre all brought togeth--er for the purpose of bringing Lei Jun’s vision to er for the purpose of bringing Lei Jun’s vision to life.
life. What reallWhat really sets Xiaomi apart from the rest of y sets Xiaomi apart from the rest of the industry is the philosophy stated on their the industry is the philosophy stated on their web-site, which clearly indicates the concept of the site, which clearly indicates the concept of the com-pan
panyy. . XiaoXiaomi has mi has been engabeen engaginging g thetheir fans fromir fans from the founding of the company, through social media the founding of the company, through social media where a two-way communication has been where a two-way communication has been facilitat-ed. This has contributed to the process of ed. This has contributed to the process of develop-ing new products, which has the aim of satisfydevelop-ing ing new products, which has the aim of satisfying the needs of their fans.
the needs of their fans.
He
Henrnry y W. W. ChChesesbrbrouough gh has has thrthrouough gh hihis s re re--search on how companies are able to generate new search on how companies are able to generate new ideas with external partners, stated ”not all of the ideas with external partners, stated ”not all of the smart people work for us so we must find and tap smart people work for us so we must find and tap into the
into the knoknowledge and wledge and expertiexpertise of se of brighbright t indivindivid- iduals outside our company” (Chesbrough H. W. uals outside our company” (Chesbrough H. W. -2003). This is exactly the belief that Xiaomi’s 2003). This is exactly the belief that Xiaomi’s phi-losoph
losophy y emphasemphasizes. izes. TTo o includinclude and e and engage exter-engage exter-nal partners in order to acquire the best possible nal partners in order to acquire the best possible sol
solutiutionsons. . The purpoThe purpose of se of thithis s projeproject is ct is to exam-to exam-ine how Xiaomi effectively have managed, and are ine how Xiaomi effectively have managed, and are able to improve their interaction with fans.
Content
Content TTableable
Abstract
Abstract
...
...
...
...1
...1
IntroductionIntroduction
...
...
...1
...1
LisList t of of AcrAcronyonymsms
...3
...3
ProbProblem lem BackBackgroungroundd
...3
...3
ProbProblem lem FormFormulatiulationon
...3
...3
Resea
Research rch QuestQuestionsions...3...3
Probl
Problem em LimitLimitatioationn...4...4 Methodology Methodology
...
...
...4
...4
Paradigm Paradigm...4...4 Ontology Ontology...4...4 Epistemology Epistemology...5...5 ReseaResearch rch DesigDesignn...5...5 1.Theoretical Framework
1.Theoretical Framework
...8
...8
1.1
1.1 Open InnovatiOpen Innovationon...8...8
1.2 Want
1.2 Want FinFind d Get ManagGet Manage e ModModelel...10...10
1.2.1
1.2.1 Want-Want-DiffuDiffusion sion of of InnovInnovatioationn...10...10
1.2.2 Find-Scouting
1.2.2 Find-Scouting...12...12 1.2.3
1.2.3 Get-PGet-Particarticipatoipatory ry DesigDesignn...13...13
1.2.4 Manage-Organization Structure
1.2.4 Manage-Organization Structure...14...14 2.Ca
2.Case se AnalyAnalysissis
...16
...16
2.1
2.1 ResResearearch ch QueQuestistion on 11...16...16
2.1.1 Diffusio
2.1.1 Diffusion n of of InnovInnovationation...16...16 2.1.2 Xiaomi
2.1.2 Xiaomi ScoutScouting ing StratStrategyegy...19...19
2.2
2.2 ResResearearch ch QueQuestistion on 22...22...22
2.2.1
2.2.1 XiaomXiaomi i User User CateCategorizgorizationation...22...22
2.2.2 Engagin
2.2.2 Engaging g userusers s in in innovinnovatioationn...23...23
2.2
2.2.3 .3 The The rolrole e of of socsocial ial plaplatfotformrm...26...26
2.2.4
2.2.4 MaintMaintain ain sustsustainabainable le innovinnovationation...28...28 2.2
2.2.5 .5 SynSynergergy y betbetweeween n XiaXiaomi omi and and useusersrs.29.29
2.3
2.3 ResResearearch ch QueQuestistion on 33...33...33
2.3.1 Current
2.3.1 Current FormaFormal l StrucStructureture...33...33 2.3.2 Capabil
2.3.2 Capabilities needed ities needed for for XiaomXiaomii...34...34
2.3.3 Formal
2.3.3 Formal StrucStructure ture VS VS CapaCapabilitbilitiesies.34.34
2.3.4
2.3.4 RestrRestructuructuring ing orgaorganizatnizationion...35...35 3.Conclusions
3.Conclusions
...36
...36
3.1
3.1 ConcConclusiolusionsns...36...36
3.2
3.2 ReflReflectioectionsns...37...37
References
References
...
...
...39
...39
Scientific Articles
Scientific Articles...39...39
Non
Non sciescientifintific c ArtiArticlescles...40...40 Books
Books...40...40 Appendices
Appendices
...
...
...41
...41
a vision of creating a company, that made it a vision of creating a company, that made it possi-ble for the consumer to acquire a high-end quality ble for the consumer to acquire a high-end quality prod
productuct, , at at a a reareasonsonable pricable price. e. XiaoXiaomi is mi is priprimar mar--ily focusing on the Chinese and adjacent markets, ily focusing on the Chinese and adjacent markets, which is why the company name to most people which is why the company name to most people outside of Asia, may be unknown, despite it being outside of Asia, may be unknown, despite it being the third largest smartphone company in the world the third largest smartphone company in the world (IDC - 2014).
(IDC - 2014).
When Lei Jun founded the company, he put When Lei Jun founded the company, he put together a team consisting of skilled people from together a team consisting of skilled people from various companies such as Google, Microsoft, various companies such as Google, Microsoft, Mo-torola, Y
torola, Yahoo etc. ahoo etc. These weThese were all brought togethre all brought togeth--er for the purpose of bringing Lei Jun’s vision to er for the purpose of bringing Lei Jun’s vision to life.
life. What reallWhat really sets Xiaomi apart from the rest of y sets Xiaomi apart from the rest of the industry is the philosophy stated on their the industry is the philosophy stated on their web-site, which clearly indicates the concept of the site, which clearly indicates the concept of the com-pan
panyy. . XiaoXiaomi has mi has been engabeen engaginging g thetheir fans fromir fans from the founding of the company, through social media the founding of the company, through social media where a two-way communication has been where a two-way communication has been facilitat-ed. This has contributed to the process of ed. This has contributed to the process of develop-ing new products, which has the aim of satisfydevelop-ing ing new products, which has the aim of satisfying the needs of their fans.
the needs of their fans.
He
Henrnry y W. W. ChChesesbrbrouough gh has has thrthrouough gh hihis s re re--search on how companies are able to generate new search on how companies are able to generate new ideas with external partners, stated ”not all of the ideas with external partners, stated ”not all of the smart people work for us so we must find and tap smart people work for us so we must find and tap into the
into the knoknowledge and wledge and expertiexpertise of se of brighbright t indivindivid- iduals outside our company” (Chesbrough H. W. uals outside our company” (Chesbrough H. W. -2003). This is exactly the belief that Xiaomi’s 2003). This is exactly the belief that Xiaomi’s phi-losoph
losophy y emphasemphasizes. izes. TTo o includinclude and e and engage exter-engage exter-nal partners in order to acquire the best possible nal partners in order to acquire the best possible sol
solutiutionsons. . The purpoThe purpose of se of thithis s projeproject is ct is to exam-to exam-ine how Xiaomi effectively have managed, and are ine how Xiaomi effectively have managed, and are able to improve their interaction with fans.
List of Acronyms
List of Acronyms
•• FFans -ans - For this paper an understanding of ”fans” For this paper an understanding of ”fans” will entail a consumer that is actively engaged in will entail a consumer that is actively engaged in the product and the development hereof.
the product and the development hereof.
• Community of users
-• Community of users - In In thithis s ppapaper er we we defidefine ne ”community of users” as a group of users who ”community of users” as a group of users who ac-tively participate in the design and development tively participate in the design and development of a product and have a relationship consisting of of a product and have a relationship consisting of sharing, communicating and disseminating sharing, communicating and disseminating infor-mation and knowledge ab
mation and knowledge about the proout the product. duct. When When they use community toolkits for innovation, they they use community toolkits for innovation, they become creation communities.
become creation communities.
•
• CroCrowdsouwdsourcing -rcing - In this paper, crowdsourcing is In this paper, crowdsourcing is defined as an open call to source traditionally defined as an open call to source traditionally gen-erated by a large group of undefined individuals erated by a large group of undefined individuals or a community of users
or a community of users
Problem Background
Problem Background
The Xiaomi phenomenon has taken China by The Xiaomi phenomenon has taken China by storm, with triple digit growth from third quarter storm, with triple digit growth from third quarter of 2013, to the third quarter of 2014, and are now of 2013, to the third quarter of 2014, and are now the third largest seller of smartphones in the world. the third largest seller of smartphones in the world. Xiaomi has unlike any other smartphone company Xiaomi has unlike any other smartphone company a devoted budget of only 1 % of its total revenue a devoted budget of only 1 % of its total revenue to
to didirerect ct mamarkrketetining. g. ThThe e lalargrgesest t prproduoducecer r of of s- s-martphones, which is currently Samsung, are using martphones, which is currently Samsung, are using close to 5.5 % of their revenue on direct marketing close to 5.5 % of their revenue on direct marketing (Bl
(Bloomoomberg - berg - 20142014). ). MorMoreoeovever, r, XiaoXiaomi mi is is pripricincingg their smartphones around half the price of the their smartphones around half the price of the de-vic
vices es offeoffered red by by thetheir ir bigbiggesgest t comcompetipetitortors, s, AppApplele and Samsung (Harvard business review - 2014). and Samsung (Harvard business review - 2014).
Xiaomis’ current success has many aspects to Xiaomis’ current success has many aspects to it, but one of them is the society of Mi-fans that it, but one of them is the society of Mi-fans that sur-rounds the company
rounds the company. . These fans are actively pro-These fans are actively pro-moting Xiaomi-products on social media and blogs, moting Xiaomi-products on social media and blogs,
and
and arare e beibeing ng emembrbracaced ed anand d enencocoururageaged d by by ththee compan
company to y to do so. do so. These fans are also co-cThese fans are also co-creatinreatingg and
and co-co-desdesignigning ing new new XiaXiaomi omi prodproductucts s whiwhich ch isis very interesting in regards to the development of very interesting in regards to the development of open innovation (Shih, Lin, and Luarn, 2013). open innovation (Shih, Lin, and Luarn, 2013).
Having recognized the amount of value these Having recognized the amount of value these fans bring the company through interaction on the fans bring the company through interaction on the social media platform, the question of why other social media platform, the question of why other technology firms haven’t done this is.
technology firms haven’t done this is.
Problem Formulation
Problem Formulation
With the outset in the above, the overall With the outset in the above, the overall prob-lem formulation of the project is as follows:
lem formulation of the project is as follows: How
How cacan n Xiaomi structurXiaomi structure e their organizatheir organization tion to more effectively engage creativity of their fans? to more effectively engage creativity of their fans?
This raises the following questions, why would This raises the following questions, why would a
a cocompmpanany y enengaggage e itits s fanfans s at all? at all? WhWherere e wowoululdd the
they y find the righfind the right t fans to collabofans to collaboratrate e witwith? h? HoHoww would they collaborate with these? And how would would they collaborate with these? And how would they have to structure the organization to have this they have to structure the organization to have this sort of collaboration?
sort of collaboration?
Research Question Research Question
1) Why would a technology company like 1) Why would a technology company like X-iaomi include fans in their organization and how iaomi include fans in their organization and how would they find the right fans?
would they find the right fans?
2) Which types of user collaboration is 2) Which types of user collaboration is impor-tant for Xiaomi as a consumer electronics tant for Xiaomi as a consumer electronics compa-ny?
ny?
3) How can you structure an organization like 3) How can you structure an organization like Xiaomi to effectively engage its fans?
Problem Limitation Problem Limitation
Since this project is only focusing on Since this project is only focusing on assump-tions for a certain type of industry, and only one tions for a certain type of industry, and only one case will be included in the research, our findings case will be included in the research, our findings will not necessarily be applicable to other will not necessarily be applicable to other compa-nies, despit
nies, despite them e them being in being in the same industrythe same industry. . TheThe assumptions will be clarified within the work with assumptions will be clarified within the work with each of our research questions. The findings in the each of our research questions. The findings in the project can, howev
project can, however, be er, be used as inspiration to oth-used as inspiration to oth-er companies who seek to develop a more er companies who seek to develop a more collabo-rative approach, towards its’ external environment. rative approach, towards its’ external environment. Furthermore, the projects only focus is on the Open Furthermore, the projects only focus is on the Open Innovation aspect of the Xiaomi case, since this is Innovation aspect of the Xiaomi case, since this is the most relevant to our project. Due to the the most relevant to our project. Due to the limit-ed time to conduct the project, no interviews have ed time to conduct the project, no interviews have been made, and no other primary data have been been made, and no other primary data have been obtained.
obtained.
The project is
The project is conconducducted from ted from a a comcompanpany’sy’s point of view, and does not take the consumer or point of view, and does not take the consumer or the societies point of view into account.
the societies point of view into account.
Methodology
Methodology
ParadigmParadigm
The interpretivistic approach is the ideal for The interpretivistic approach is the ideal for ou
our resr reseaearcrch (Brh (Brymyman – an – 202012 p. 12 p. 3030). ). TTo fulo fullyly understand our use of the interpretivistic understand our use of the interpretivistic paradig-m both ontology and episteparadig-mology is thoroughly m both ontology and epistemology is thoroughly bein
being g desdescricribed bed in in regregardards s to to phiphiloslosophophy y of of sci sci--en
encece. . FFollollowowining g an an unundedersrstantandiding ng of of ththe e ususe e of of the methodology, methods and techniques will be the methodology, methods and techniques will be outlined in order to comprehend the ”package” of outlined in order to comprehend the ”package” of fundamental assumptions that a paradigm consists fundamental assumptions that a paradigm consists of.
of. ModeModel l 1 1 proprovidvides an es an ovoververview of iew of the resethe researcarchh method of the project.
method of the project.
Figure 1: Overall research approach Figure 1: Overall research approach
Ontology Ontology
For interpretivism in regards to ontology, For interpretivism in regards to ontology, Bry-man emphasize that a given social phenomena and man emphasize that a given social phenomena and the meaning of it, has an existence that is the meaning of it, has an existence that is depen-dent of social actor
dent of social actors (Bryman – 2012). s (Bryman – 2012). The indivThe individ- id-ual creates its own meanings, attitudes, lifeworld ual creates its own meanings, attitudes, lifeworld etc.
etc. and with an outset in these cogniand with an outset in these cognitions, a fun-tions, a fun-damental understanding of the social world arises. damental understanding of the social world arises. According to Kuada, the interpretive paradigm According to Kuada, the interpretive paradigm re-quires investigators to perceive their actors as quires investigators to perceive their actors as en-gaged in
gaged in contcontinuinuous ous intinterpreerpretationtation, , meaninmeaning g cre- cre-ation and sense-making of events, and their ation and sense-making of events, and their con-tex
texts. ts. TheThese se ininvevestistigatogators subscrs subscribe to ribe to the viewthe view tha
that t huhumaman n beibeingngs s do do nonot t papassssivivelely y rerespospond nd toto what is going on around them (Kuada – 2012 p. what is going on around them (Kuada – 2012 p. 77).
77).
With our project, a part of the Xiaomi With our project, a part of the Xiaomi cor-poration will be
poration will be invinvestigaestigated. ted. TTo acquire the nec-o acquire the nec-essary knowledge, we will scour through available essary knowledge, we will scour through available empirical data such as scientific articles, research empirical data such as scientific articles, research papers, and company homepages, as well as papers, and company homepages, as well as rele-vant theoretical research papers. These will be the vant theoretical research papers. These will be the sources used to conduct our research upon. We will sources used to conduct our research upon. We will be using an interpretive approach on the gathered be using an interpretive approach on the gathered inform
information. ation. FFrom the rom the inteinterpretrpretive point of ive point of view,view, our analysis will be the interpretation of our analysis will be the interpretation of
materi-al from people who are within our field of study. Hence, the benchmark of answering our research questions will be their perception of the ”truth”, within their respective fields.
Epistemology
For a researcher grasping the social world with an interpretivistic scope, observations of the indi-vidual and its perception is the cornerstone of the analysis. Hence, the knowledge gathered is not be-ing tampered with, but rather sought to be under-stood in the context in which it occurred. The epis-temology for this branch, is according to Bryman how it: ”... requires the social scientist to grasp the subjective meaning of the social actor” (Bryman – 2012 p. 27).
The type of epistemology called antipositivis-m will be the priantipositivis-me approach used in this project. The assumption that a certain individual direct-ly involved in a given environment has an accu-rate understanding, is the reasoning behind this. Understanding and interpreting the social world is our approach throughout the project. According to Kuada it is possible as an external observer to view the social world as it is, and still locate the actual truth (Kuada – 2012 p. 73). The choice of this the-ory is also closely related to our choice of method of analysis. We use the general inductive method of analysis and by incorporating a substantial amount of articles, we are able to create consensus between several social researchers, as to how we define cer-tain aspects of our case. In this way, antipositivis-m is our way of understanding the general idea in the researchers society, about different aspects of the Xiaomi case. Moreover, we acknowledge that we have our own interpretation based on our edu-cation and understanding of the world. This will
also influence the main points we get from working with our collected data. In relation to the Xiao-mi case, and to give an example, we need to define what is meant by the ambidextrous organizations, in the final part of our research paper. To solve this we combine the points from the two articles we have chosen in relation to this subject, and in-terpret them based on our education in relation to ambidextrous organizations. Thereby we interpret what the researchers who originally conducted re-search on the matter defines as ambidexterity, and at the same time influence it ourselves (Bryman – 2012).
Methodology
When choosing what kind of methodology you want to use, it is essential to be aware of what y-ou want to know, and why it is important. Baring that in mind, the research object of this project is best being examined by primarily using the cross-sectional design, by incorporating elements from the case study approach.
The prime research design chosen for this project is the sectional design. The cross-sectional design has been chosen due to the very limited amount of time, we have to conduct this research paper. We simply do not have the time to collect longitudinal data or conduct experiments. Looking at our problem formulation, we will be comparing a theoretical point of view with a con-ceptual approach, to reflect upon an ideal solution for Xiaomi. This also results in a primarily theo-retical project.
Research Design
The cross-sectional research design is often used when static and structured observation is
be-ing used as methods, for data gatherbe-ing. Since we employ a research strategy founded in qualitative data within the cross-sectional case study, our ap-proach will tend to be inductive (Bryman 2012). Baring this in mind we are aware that a purely inductive approach is almost never possible, and we acknowledge that some deductive and abduc-tive aspects does influence our project as well. As interpretivism subscribes to understanding a given social world from the points of view of people, and the intentions underlying their behavior, the induc-tive method is the primary approach. This mean-s bamean-sing conclumean-sionmean-s on mean-specific obmean-servation rather than logical arguments that may not be necessarily supported by empirical evidence. When choosing the qualitative method you are studying the expe-riences, attitudes, meanings as the individual per-ceives them, and interpreting these to make sense of a given phenomenon or situation.
• Cross-sectional Design
Cross-sectional design entails collecting data at a certain point in time, all analysis relies on dif-ferences in the sample at that point of time. In the cross-sectional design the groups” are con-structed on the basis of existing differences in the sample and the sample is divided up into groups according to the category of the indepen-dent variable to which they happen to belong (De Vaus – 2001 p. 171). In regards to this project, we are analyzing why and how Xiaomi chooses to cooperate with its fans and a representative sample among technology field is necessary, if we are to generalize from results obtained in a sample to the wider population. However, we do not include a representative sample but use a theoretical approach to our case in order to test theory in practice and thereby drawing some
generalizations based on theory on what might work for technology companies. Cross-sectional design can have more success than other designs in achieving representativeness based on theory. To answer which type of external collaboration is best for Xiaomi, a thorough description of the process of innovation diffusion of Xiaomi is need-ed. Cross-sectional designs are well suited to descriptive analysis, at least for descriptions of things as they are at a given point of time. How-ever, cross-sectional designs have been criticized for their weakness at the level of causal analy-sis. Since no specific causal relationship would be included in the project, cross-sectional design is the most optimal given our circumstances and the overall research design frame.
• Case-study Design
Case-study designs are suited to situations in-volving a small number of cases with a large num-ber of variables. The approach is appropriate for the investigation of cases when it is necessary to understand parts of a case within the context of the whole case (Bryman – 2012 p. 69). In this research, both the descriptive case study and the explanatory case study design are applied.
Due to the fact that good description is the pre-condition of good explanation, the descriptive case study design in the project consists of an in-troduction to the Xiaomi case and has a focus on its external collaboration with its users and fur-ther highlights the important role of user-driven innovation and the want, find, get, manage mod-el. As mentioned we have chosen just one part of the Xiaomi case and focuses on the open innova-tion part of the company and especially the par-ticipatory innovation. We have chosen theories
and concepts I order to conduct our explanatory as well as our descriptive analysis of the case. Explanatory case study seeks to achieve both more complex and fuller explanations of phenom-ena. They seek to achieve idiographic as well as nomothetic explanation, which in the project refers to the fan-centric collaboration model in Xiaomi. Among categories according to the d-ifferent relevance to theory testing, theory de-velopment and using existing theory the project is using the existing innovation diffusion theory, user-driven theory and open innovation theory and so on. As a consequence, the specific ex-planatory case study design used in this paper is a clinical case study design.
Research methods used in this paper such as par-ticipant observations is being used to keep an open mind in relation to combining our data and the theories. This is how Bryman describes the inductive approach, which aligns with the con-cepts being used within the paradigm of this pa-per (Bryman – 2012 p. 71).
• Data Sampling
For our method of data collecting, we have cho-sen non-probability sampling and more specifi-cally, convenient sampling. This type of sam-pling is chosen solely based on the accessibility of data. As we have had limited time to conduc-t conduc-this projecconduc-t, we simply do noconduc-t have conduc-the conduc-time to conduct large data collections. Furthermore, convenient sampling is often used when study-ing organizations, and is more prominent than samples based on probability sampling. One of the major flaws with probability sampling, is the lack of validity as it is not representative for a population. For our research paper, we try to
generalize based on theory and not the data we collect. In this way, we address the biggest flaw in convenience sampling (Bryman – 2012 pp. 200 – 202).
From having a cross-cultural group we have gained access to databases which would not be accessible otherwise. The library at Peking Uni-versity has been one of our sources of data as well as the Chinese magazine “Executives” and the Chinese UCAS library. In this way, our cross-cultural group, expand our convenient sampling to grasp both Chinese and Western sources of information, broadening the boundaries of where we are able to seek information, in regards to our project.
• Evaluation of the Case Study
Case study focus’ on a large number of variables while other designs rely on controlling out the influence of other variables and focusing on the influence of a very limited number of variables. Hence, one strength of applying case studies in this research is that it attempts to understand the significance of particular factors within the context of the whole Xiaomi case, rather than by screening out this context. Due to the fact that the unique user-driven model exists in a given cultural context, specific market environment, or special characteristics of the company itself. As a consequence, the case study in this project has the potential for good internal validity based on a more thorough understanding of the mean-ing of Xiaomi’s particular external collaboration with its users (De Vaus - 2001).
In regards of making statistically valid general-izations beyond that particular case, case study is lacking external validity. But case studies
do not strive from this type of external validi-ty. They do theoretical generalization instead of statistical generalization (De Vaus - 2001). The-oretical generalization involves generalizing from a study to a theory. Case study is designed to help develop, refine and test theories by using the logic of replication. Findings of a case study can be tested by repeating case studies under differ-ent conditions. Regarding the research question-s, the findings of the most important collabora-tion type for company like Xiaomi and the most effective organization structure could be tested by replication in other companies in the same technology field, and then develop and refine the theory of user-driven, innovation diffusion and organizational structure. Hence the theoretical generalization is achieved.
• Analysis Design
Figure 2: Inductive approach
For our analysis design we have chosen to use general inductive analysis. We use this in the sense that we have gathered a number of sec-ondary data. To be able to say something with some kind of certainty we have to break down this material in order for it to make sense. In the general inductive analysis you read through all qualitative data, before you assemble the au-thors points of view on the things that matter to
the research project. Then you categorize those based on all the empirical data we have collect-ed, and then we are able to say something about what the tendency is within the case of Xiaomi or, if there are any outstanding points of view. It resemble grounded theory a little bit but with the general inductive analysis we don’t have to state any hypothesis before we begin, we simply have to let the authors tell us about their thought-s, and analyze based on our grouping of these thoughts. Below is a model illustrating general inductive analysis. (Bryman – 2012 p. 568-569)
1 Theoretical Framework
1.1 Open InnovationOpen innovation is a new way of thinking. The basic assumption regarding this concept is that no business is an island, meaning that you cannot s-tand alone and you will have to engage the envi-ronment around you. Open innovation means that you tap into other people outside your company, to profit from their knowledge and resources. This al-so means that you don’t have to be the inventor of something to profit from it, a better business model beats getting first to market, and if a firm manages to benefit from both internal and external ideas, they are a lot stronger than competitors who are not able to do this. The idea of gaining a competi-tive advantage from open innovation is therefore to cooperate with the environment around the firms, in order to better be able to bring innovations to the market, and not necessarily be the first to do this, in order to have competitive advantage. The idea of open innovation is illustrated in figure 3.
Henry Chesbrough introduced open innovation as a concept for the first time back in 2003. He was
Figure 3: Open innovation model
frustrated that the gap between academia and the corporate world was too wide thereby meaning that the collaboration between corporations and the u-niversities was too low, and the firms did not take advantage of the many good projects and ideas that the students and professors was working with. He therefore enrolled in a PhD program to become a professor after working for several years in Sil-icon Valley. After working as a professor for some time he wrote the book ”Open Innovation” which described how companies could profit from work-ing together with its external environment. Today there are titles all around the world labeled ”Open Innovation Manager”. The corporate world have found out that working with its external environ-ment can be very lucrative for your business and have several good aspects including reduced costs, acceleration from idea to market, increased differ-entiation, and the creation of new revenue streams for the company.
Since we are working with the Chinese com-pany Xiaomi, we have chosen open innovation to be our overall concept for this project. This also means that we are working with open innovation theories and have designed our theoretical frame-work to grasp the ideas of open innovation. The company Xiaomi is very actively engaging its
ex-ternal environment and have a business model that seeks to work together with its users and fans to create and improve products and processes within the firm. This is why the theories chosen within this project will all be related to the open innova-tion concept and this relates to our overall theory as well. Henry Chesbrough defines open innovation as ”the use of purposive inflows and outflows of knowl-edge to accelerate internal innovation, and expand the markets for external use of innovation, respec-tively.” In regards to our project we interpret this in terms of the flow of knowledge between Xiaomi and the companies external collaborators. Xiaomi has millions of fans and users and therefore the com-pany has to identify who to collaborate with and how to collaborate with these individuals. Further-more the company will have to formally structure itself to be able to engage with these fans, without letting the fans come too close to or influence too much on the company operations.
To come up with a solution of these challenges we adopt the ”Want, Find, Get, Manage” (WFG-M) as our theoretical framework. This model was developed back in 2004 by Gene Slowinski and was created as a solution to issues within the medical industry in regards to insourcing. It has later been adopted to consumer products, food, technology and other markets. The model is a ”good practice” which has worked for many companies. The model is designed to enable companies to asses which indi-viduals are the most essential to them and then in-source these into the company. It has been proven to work for a lot of companies but since it varies from company to company it has only been defined as a ”good practice” and not ”best practice”.
1.2 Want, Find, Get, Manage Model The model is divided into 4 phases where com-panies have to complete a certain task within each phase in order to proceed to the next phase. For this project we have created three research ques-tions which will all be answered by moving through the four phases within the Want, Find, Get, and Manage model (WFGM model). As the WFGM model is our theoretical framework we will use the-ories related to open innovation. The reason for using this specific model in the case of Xiaomi is that the company has a very unique business mod-el, and other technology firms could learn a lot from the way Xiaomi interacts with its external environ-ment. The use of the WFGM model in the case of Xiaomi will hopefully outline an approach oth-er companies could embrace and effectively learn from in order to be able to collaborate with its ex-ternal partners. In the following section we will move through the WFGM model and describe how we are going to use the different phases in relation to our research. Since we are using a general model as our framework, the following section will be ded-icated to further explanation on how we are going use its phases in relation to our object of investiga-tion. We are altering the model to be able to say something in regards to the overall company of Xi-aomi, instead of only grasping insourcing in regards to specific project.
1.2.1 Phase 1:Want-Diffusion of Innovation In the first phase of the WFGM model a com-pany has to define which targets it is opting to engage and what capabilities these targets should have. In order to specify what type of targets Xiao-mi should be engaging, we have taken into account
Figure 4: Overall theories used in four phases of Want, Find, Get, Manage model
what capabilities the company is searching for and what goals it is seeking to fulfill. To do this we have to look at the vision of Xiaomi which is defined on the company website.
In this project we focus on the concept of open innovation in regards to Xiaomi. This means that from our interpretation, the most essential elemen-t in Xiaomi’s vision is elemen-the elemen-transfer of knowledge between the company and its fans. To investigate this, a selection of the theory diffusion of innova-tion has been made, because its focus is mainly on describing how knowledge is being spread and shared amongst participants and it is also explain-ing which actors that is important to engage in or-der to acquire new knowledge for the company to build upon.
• Diffusion of innovation
With the theory diffusion of innovation we want to acquire a deeper understanding of the rela-tionship between new technology and new ideas in regards to how, why, and with what rate these are being spread amongst users through commu-nication in cultures. The forming of innovation is being examined by observing channels over a cer-tain period of time, where the communication a-mongst participants in a social system is the pro-cess where the diffusion occurs. The diffusion of
messages with information shared between par-ticipants through communication on the social platform is vital to fully grasp in order to benefit from the shared knowledge. By understanding this process, a company like Xiaomi will be able to efficiently allocate their resources to best en-gage and benefit from interacting with their fans. For Xiaomi to pursue their vision of creating a fan base that can contribute to the R&D process, understanding which kind of fans to engage is a ”must”, which is why we have chosen to use the theory diffusion of innovation, because it facili-tates access to this information.
The theory was originally published in the book Diffusion of Innovation by Evertt Rogers in 1962 and has been republished multiple times, with the latest fifth edition in 2003. Rogers argues that four overall elements are what causes the spread of the an idea: 1) an innovation, 2) that is communicated through certain channels, 3) over time, 4) among the members of a social system (Rogers, E. M. - 2003).
When Rogers talks about innovation he is refer-ring to an idea, practice, or object that is being perceived as something new by an individual. S-ince most of the innovations discussed by Rogers are categorized as technological innovations, an acknowledged definition of technology is neces-sary. A technology consists of the two parts, hardware and software. Hardware being the ac-tual tangible object, whereas the software is the intangible tools within the object (ibid).
The messages being shared amongst individuals in the social system is taking place through the communication channels. This can either occur in the mass media channels or in interpersonal
channels. When an individual chooses to adop-t an innovaadop-tion iadop-t is ofadop-ten due adop-to an evaluaadop-tion done by another individual within the same so-cial system. These individuals evaluating inno-vations are characterized as role models. An im-portant aspect of diffusion is the likelihood of heterophility being present. Heterophily is a ter-m used to describe the degree of differences a-mongst group members in regards to education, social status, beliefs etc. A result of the com-munication taking place between individuals who are heterophilous, certain problems with the ef-fectiveness of the communication will arise (ibid). The element of time in the process of diffu-sion can be depicted through five steps. First, the knowledge is passed along by an individ-ual to, secondly, persuade another individindivid-ual, that thirdly accepts or rejects the innovation and fourthly chooses whether to implement the new idea and last but not least confirms the deci-sion. During this process the decision-making individual is seeking further information to eval-uate whether the new technology or idea is to be adopted or rejected. The basis of the final de-cision is made with an outset in the uncertainty related to the innovation and the expected con-sequences of implementing it (ibid).
When looking at the social system in which the process of joint problem solving happens, the structure that dictates the approach and the es-tablished common rules are what defines the out-come. The interconnected units in the social system act upon the norms set for behavioral patterns which also facilitates stability and reg-ularity. However the structure of the social and communication aspect can both be hindering and
helping the diffusion of innovation (ibid). 1.2.2 Phase 2:Find-Scouting
From solving our first phase of defining which targets Xiaomi will have to engage, we move on to actually finding those actors.
The find phase will consist of 3 parts. First we want to establish why you have to scout for indi-vidual capability providers and which errors might occur in this process. Secondly we want to establish the definition of a social media platform. And for the final part, we want to analyze based on the X-iaomi case, how a company successfully can use its social media assets to single out important individ-uals whom the company is interested in collaborat-ing with. Therefore the theory will also consist of three main topics; The spectrum of collaboration, Defining the ”Social Media Platform” and The Xi-aomi scouting strategy.
• The Spectrum of Collaboration
The collaboration spectrum was developed by Shoshanah Cohen and Joseph Roussel and was first published in their book Strategic Supply Chain Management: The 5 Disciplines for top Performance (2005).
The collaboration spectrum was originally de-signed to illustrate how to most effectively collab-orate with the supply chain of a company. How-ever, this model is well suited for illustrating how firms should collaborate with their external envi-ronment and how they should go about this. The model shows that the most effective way of col-laboration is with a few individuals and then hav-ing an extensive collaboration with these. From theory regarding diffusion of innovation we de-fined the targets that Xiaomi would want to
Figure 5: Collaboration Spectrum
have extensive collaborations with. Therefore, the spectrum of collaboration suggests that the most effective solution would be to engage few individuals who could provide the capabilities X-iaomi is looking for, and then having an extensive collaboration with these individuals. The model will also be used in regards to the social media platform and how Xiaomi targets specific indi-viduals to avoid loss of resources and time. • Social Media Platform
There are numerous definitions of what the social media platform exactly is. For this research pa-per we have chosen to work with the definition by Kaplan and Haenlein from their research paper ”Users of the world, unite! The challenges and opportunities of Social Media”. This research pa-per describes how social media is a very valu-able asset for firms if they are valu-able to control it. This definition is therefore the most accurate in regards to our project as it conducts research from a firm’s point of view regarding social me-dia. The definition is; ”Social Media is a group
of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of User Generated Content.”(Kaplan and Haenlein, 2010)
• Xiaomi Scouting Strategy
Xiaomi have built up a huge fan base around it-s productit-s and it-serviceit-s. Thiit-s meanit-s that they have to choose from millions of fans, trying to find the best individuals to collaborate with. We are going to analyze research papers and figuring out how they are using their social media plat-forms and their forums to sort out which fans to collaborate with.
1.2.3 Phase 3:Get-Participatory Design In the two previous phases we have defined who Xiaomi is looking to collaborate with and how to use their unique social media platform to engage these individuals. To move on we have to define what type of alliance they should have with the ex-ternal collaborators they want to engage. To do this we will use the concept of participatory inno-vation and the theory of user-driven innoinno-vation. • Lead User and Participatory Design
Lead-User approach and Participatory Design is the main focus throughout this phase.
Users have been regarded as an important source of innovation in many industries, especially in hi-tech industries (Baldwin, Hienerth, and von Hippel-2006). Whether or not the product is promising in mass market is decided by how ac-curately this type of product innovation reflects user needs. Lead users are those users who expe-rience innovative product ahead of commercial-ization. They usually have the ability or
profes-sional skills to redesign and adapt the product in order to predict further needs (Franke, von Hip-pel, and Schreier- 2006). Lead users are usually involved in the initial exploration phase where the task is to define problems.
Eric Von Hippel labels participatory design as a design and development processes in which end-users were invited to participate and contribute, not simply as critics and evaluators of product, but as co-designers. Participatory design work-s awork-s a complementary way to gain knowledge of end users’ work and context (von Hippel-2006). Participatory design works as a method to bring diverse stakeholders together who confront each other with very different perspectives of a cer-tain kind of issue. In participatory design, par-ticipants are invited to co-operate with techni-cians, engineers, designers and developers during innovation process, bringing about new ideas to optimize the product.
This type of approach is particularly diffused in hi-tech industries, such as computer - and smart-phones industries where participatory design in-dicates full participation practice taken by user-s both in user-software, hardware, user-service and repu-tation (Greenbaum&Kyng-1991; Muller& Kuhn-1993; Schuler& Namioka-1993).
• User Communities
Traditionally, firms themselves were responsible for their research and development of products, nowadays it is important to accurately assess the user’s needs before starting the process of defin-ing and developdefin-ing a product. User communities do not only facilitate the sharing of users’ needs but it also accumulates their knowledge and ideas regarding existing and new products (Brown and
Duguid-1991;Murray and O’Mahony-2007; von Hippel-2007).
Back in 1988 von Hippel stated that the innova-tion generated by user communities can be char-acterized though three major strengths. First-ly, the user community facilitates a forum where problems can be viewed from diverse perspec-tives and a broad set of shared knowledge can be used to figure out solutions to these problem-s. Secondly, the innovation generated by users in a community could be accumulated and trigger even more innovation. Thirdly, the user commu-nity provides a considerable sum of novel ideas and effective detection of flaws of designs.
One specific kind of user community is one that centers on the brand of a focal producer firm. O’Guinn defines this kind of brand community as ”a specialized, non-geographically bound com-munity, based on a structured set of social rela-tionships among admirers of a brand”. Brand communities are composed of individuals who share the same interest in a particular brand (Algesheimer, Dholakia, and Herrmann-2005; M-cAlexander, Schouten, and Koenig-2002). Such a brand user community has great impact on consumers loyalty, it often uses motivations to engage users in co-creation process (Franke and Piller-2004; Kim, Bae, and Kang-2008; Sawhney, Verona, and Prandell-2005).
• User Community’s Toolkit for Innovation
Von Hippel defined the user toolkit for innova-tion in terms of the isolated user whose need-s are directly realized in the reneed-sultneed-s of hineed-s or her creation, during which users build dense re-lationships with the firms. Such rere-lationships has a strong impact on knowledge creation and
the community’s innovation efficiency (Farag, Jarvenpaa,Majchrzak-2011; Frey, Luthje - 2011). In these user communities, the user creations and innovations are discussed, adjusted and renego-tiated by means of virtual tools that facilitate a cycle of design by trial and error (Thomke -1998).
The toolkits used in a community support inno-vation and increases the value of user creations. A user toolkit in a community helps the firm ori-ent its developmori-ent to improve its product. Thus the toolkit and innovations issuing from a user community forms an innovation system based on cooperation and interaction between community and firm. To determine the role of the innova-tion toolkit in this system, we need to examine the users’ creative and innovative activities, as well as their relation with the firm’s innovation process.
1.2.4 Phase 4:Manage-Organization Struc-ture
In the final part of the project, we will be re-flecting upon how Xiaomi could structure their or-ganization to easily collaborate with its external environment. We will be working with different as-pects and theories regarding organizational struc-tures in order to create a complete picture of what are essential when structuring an organization like Xiaomi. In order to complete this analysis we will incorporate research papers and articles as well as organizational theory to determine what capabil-ities an organization like Xiaomi has to integrate into their organizational structure, in order to suc-ceed with their operations. Finally we will complete our analysis with a recommendation for Xiaomi in
regards to how they could structure their organi-zation. The following will be a brief introduction to the theoretical topics we will touch upon in our analysis. The level of analysis within our third part will be an intra-organization analysis, where we fo-cus on how to incorporate external knowledge into the company (Vanhaverbeke – 2005).
• Ambidextrous organizations
The ambidextrous organization is very loosely
defined in literature. The idea is that an
orga-nization has to be able to exploit ongoing
op-erations while exploring new possibilities for
the company to invest into. In regards to
X-iaomi, this will relate to the degree of
hav-ing a mechanic and formal structure within
the company supporting the day-to-day
oper-ations, while being able to exploit the huge
amount of knowledge from fans and external
collaborators. This theoretical topic will also
be used in regards to our reflections as to how
Xiaomi can successfully structure themselves
(O’Reilly III, C. A. Tushman, M. L. -2004).
•
Open systems – Contingency TheoryWe are going to use the open systems theory
and we have chosen to focus on the
contin-gency theory with specific focus on the role
of the environment when reflecting upon how
Xiaomi could structure its organization. This
theory was introduced in the 1960s and build
on the idea that an organization can survive
base on the throughput of resources from
it-s external environment. Bait-sed on the
con-tingency theory, the organization within the
open systems theory will therefore be defined
by the environment around it and what this
environment dictates. We will use this theory
to help build our ”best possible fit” for
Xiao-mi within the Chinese market it is currently
engaged in.
•
Organic organizationThe organic organization is concerned with
how the organization works and how it is
managed. The organic organization is made
in contrast to the mechanic organization and
primarily focuses on a more informal
struc-ture within the organization. The organic
or-ganization is more informal and will be used
in this project to clarify some of the
capa-bilities that are needed in the fast changing
hi-tech market where Xiaomi operates. The
overview of the organic versus mechanic
or-ganization can be found in appendix 1.
•
Matrix DesignThe matrix organization is often used when
you are working with larger projects. The
design is characterized by its horizontal flow
of skills and information through the various
departments, as showed in the model in
ap-pendix 2. Employees in a matrix organization
will often report to their respective
manag-er on a day to day basis. Furthmanag-ermore the
employees are required to report the
overal-l progress of the project they are engaged in
to the head of the department. This
proce-dure is an important element of this
struc-ture, because it constantly gives the people
in charge an idea of the development. In the
case of Xiaomi, we will use some of the
qual-ities from the matrix organization structure
when we describe the functions the successful
organization needs to have in order to cope
with the changing environment.
Figure 6: Cenceptual Framework
2 Case Analysis
This is the chapter where we use our theory on the data we have collected. In this chapter we will include our work with research question 1-3. This will be the chapter we will base our conclusion on. We have chosen to divide it into working with each question separately and then draw on the summary or previous conclusions when we move further down thorugh our research questions.
2.1 Research Question 1
Research Question 1: Why would a technology company like Xiaomi include fans in their organi-zation and how would they find the right fans?
The first research question will be investigated in this section.
We would like to investigate why it is a good idea for technology companies to engage its cus-tomers and fans in the process of developing its products. We would like to focus on the increas-ing change in the way companies collaborate with its external environment and especially with its customers. ”Users are widely acknowledged as a valuable source of creativity and knowledge in the
development of new products”(Wheelwright and Clark-1992).
As a result of the global technological develop-ment that has been happening for the past decades, multiple opportunities have risen for companies to take advantage of. One of which is the online di-mension, that through the invention and refining of the internet now facilitates an opportunity to gather knowledge from entities no matter their ge-ographical location. If used correctly, this approach can also be cost efficient. For Xiaomi, this oppor-tunity has made it possible to implement an online system that is able to separate their users by cate-gorizing them into groups where relevant data can be obtained. To fully benefit from the gathered da-ta and the knowledge hereof, a deeper undersda-tand- understand-ing of how the communication is beunderstand-ing spread is essential. For Xiaomi to generate the most value from the interaction with their users, an analysis of the type of user and its capabilities will be de-fined.
2.1.1 Diffusion of Innovation • The Innovation
With the outset in Rogers definition of an inno-vation, as stated in the theoretical framework, an understanding of how the users in a social net-work adopts an innovation will be investigated. The special characteristics of a new innovation as perceived in a social system by its members are what determines the rate of adoption. This is being viewed through the following five main at-tributes: 1. relative advantage, 2. compatibility, 3.complexity, 4. trialability, 5. observability. The relative advantage is the extent to which the prior products capabilities is being exceeded by
the newer version in the eyes of the user, and is positively related to the adoption rate of these. A concept called overadoption is explaining the degree to which, despite experts predictions, is being adopted by users. This could occur if users see the product as a preventive innovation, which entails the product being perceived as a good investment for future needs. With compatibili-ty the product is being judged according to the timely context where past -, present - and fu-ture values and needs of potential adopters are being analyzed (Rogers, E. M. - 2003). The time-line for Xiaomi’s new smartphone releases com-pared to its competitors is approximately twice as long due to their business strategy. However when Xiaomi is releasing their new smartphones they tend to be the best on the market, hence one could argue that it is seen as a secure and good investment for future needs for the con-sumer. A fear for most hi-tech companies is the possibility of their products being too advanced and complex for the consumer to use, and there-by having a negative influence on the adoption rate. For Xiaomi and their products, the inter-action with their customers facilitates a solution in which they are able to counteract beforehand. Due to the social networks where the users and employees of Xiaomi communicate, the trialabil-ity which is the process where new products are being tested on a limited basis is a constant on-going process because new ideas pitched by the company are being evaluated on a regular basis by the users themselves. Due to the construc-tion of Xiaomi’s online platform the observabilty, which is the option for the users to see the results of an innovation, has always been available and contributed to a positive rate of adoption (ibid).
• The communication channels
When a company’s strategy revolves around a fo-cus on using media to increase the adoption rate of a product, two very different approaches can be used. The two approaches that is referred to are operating with the following communication channels; the mass media and the interpersonal channel. Depending on the goal of implement-ing these channels in the business strategy, the mass media approach is in general more effective for spreading the brand awareness, whereas the interpersonal channel facilitates a space that is effective for forming and changing attitudes to-wards new ideas. The high exposure from the mass media strategy does not necessarily lead to adoption of a product, because individuals have varying thresholds of adoption (Marsden, P. V., Joel P. - 1990). For Xiaomi that effectively has managed to exploit the benefits of the interper-sonal space, a direct link between the rate of adoption and their community’s ability to influ-ence the shaping of the products has shown great results. One of the elements Xiaomi’s social sys-tem has succeeded with is the characterization of different groups. A certain group of user-s that euser-specially hauser-s a great impact on the rate of adoption is the opinion leaders. An opinion lead-er is an individual that is able to influence othlead-ers through their behavior and attitudes. Opinion leaders acts as important entity in the diffusion network, and are often localized and used in dif-fusion programs (Rogers, E. M. - 2003). A com-munication network is consisting of interpersonal individuals that are functioning interdependent-ly to nurture the adoption of innovations through linked patterns and flows. To optimize this pro-cess, the network should make sure the presence
