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Social media success stories have become widely shared narratives, highlighting the impact social media can have on companies’ fortunes. For example, Burberry Group plc, the London-based luxury fashion brand, relies heavily on social media to reach customers and fans.1 As far back as 2011, Burberry was spending more than 60% of its marketing budget on digital media.2 Increasingly, companies are attempting to navigate the social media landscape and use social media as a business tool to enhance performance. This is reflected in reports of increased spending on social media initiatives and the establishment by some organizations of dedicated social media functions.3 Despite this, there is a significant opportunity that isn’t being tapped: using social media to support innovation and new product development.4
Consultants and academics alike have been touting social media as a resource for innovation and new product development — a vehicle for developing customer insights, accessing knowledge, cocreating ideas and concepts with users, and supporting new product launches. Yet our research suggests that, despite the promise, the expected positive results are frequently not realized in practice. To begin with, the use of social media by companies for new product development lags far behind social media use by the general public. Although some companies have been able to use social media to develop new insights that lead to successful new products, many others simply do not know how to utilize social media for innovation. What’s more, some companies have seen their innovation performance negatively affected. For instance, some get distracted by the diversity of input from social media; their traditional filters for screening data, like representativeness or consumer demographics, no longer work. Others waste resources by not validating the source and reliability of information; they mistakenly consider the information from social media to be just as valid as information from traditional online databases.
Nevertheless, we believe that social media provides a game-changing opportunity for companies that learn how to exploit it. But taking advantage of the opportunity requires more than having a Facebook presence with a loyal base of “friends” who say they “like” you. In order to use social media for innovation, organizations need clear strategies and objectives.
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1. M. Phan, R. Thomas, and K. Heine, “Social Media and Luxury Brand Management: The Case of Burberry,” Journal of Global Fashion Marketing 2, no. 4 (November 2011): 213-222.
2. C. Barrett and T. Bradshaw, “Burberry in Step With Digital Age,” August 31, 2011, www.ft.com.
3. V. Kumar and R. Mirchandani, “Increasing the ROI of Social Media Marketing,” MIT Sloan Management Review 54, no. 1 (fall 2012): 55-61; and M. Mount and M. Garcia Martinez, “Rejuvenating a Brand Through Social Media,” MIT Sloan Management Review 55, no. 4 (summer 2014): 14-16.
4. Social media can enhance innovation in a company in two ways. First, it is a source of unconventional knowledge and information from current customers, noncustomers, external experts, and also internal colleagues. Using social media to tap into these sources increases the scale and scope of search — a core strategy to increase innovation performance. Second, social media is a way to communicate innovation internally and to facilitate change and organizational innovation within a company. While the latter is crucial for the company’s long-term survival, we focus on the former in this article.
5. G.C. Kane, M. Alavi, G. Labianca, and S.P. Borgatti, “What’s Different About Social Media Networks? A Framework and Research Agenda,” MIS Quarterly 38, no. 1 (March 2014): 274-304; and G.C. Kane, D. Palmer, A.N. Phillips, D. Kiron, and N. Buckley, “Moving Beyond Marketing: Generating Social Business Value Across the Enterprise,” MIT Sloan Management Review/Deloitte 2014 Social Business Global Executive Study and Research Project, https://sloanreview.mit.edu.
6. D.L. Roberts and M. Candi, “Leveraging Social Network Sites in New Product Development: Opportunity or Hype?,” Journal of Product Innovation Management 31, no. S1 (December 2014): 105-117; also see Kane et al., “Moving Beyond Marketing.” Companies that are more mature in using social media for marketing and communications are also more actively using social media for innovation. In contrast, 71% of those companies that consider themselves as being in the early stage of adopting social media are using it not at all or only very rarely for new product development. Data were calculated using the MIT Sloan Management Review tool kit for Kane et al., “Moving Beyond Marketing”; see “2014 Social Business Interactive Tool,” 2014, https://sloanreview.mit.edu.
7. D.L. Roberts, F. Piller, and D. Luettgens, “Mapping the Scale and Scope of Social Media Tools for New Product Development Practice,” unpublished ms.
8. The PDMA Comparative Performance Assessment Study is a broad international benchmarking survey conducted by the Product Development Management Association . For more information on this survey, see S.K. Markham and H. Lee, “Product Development and Management Association’s 2012 Comparative Performance Assessment Study,” Journal of Product Innovation Management 30, no. 3 (May 2013): 408-429.
9. V. Bilgram, M. Bartl, and S. Biel, “Getting Closer to the Consumer — How Nivea Co-Creates New Products,” Marketing Review St. Gallen 28, no. 1 (February 2011): 34-40.
10. B. Cassiman and R. Veugelers, “In Search of Complementarity in Innovation Strategy: Internal R&D and External Knowledge Acquisition,” Management Science 52, no. 1 (January 2006): 68-82.
11. A.K. Chatterji and K.R. Fabrizio, “Using Users: When Does External Knowledge Enhance Corporate Product Innovation?,” Strategic Management Journal 35, no. 10 (October 2014): 1427-1445; and E. von Hippel, S. Ogawa, and J.P.J. de Jong, “The Age of the Consumer-Innovator,” MIT Sloan Management Review 53, no. 1 (fall 2011): 27-35.
12. R.V. Kozinets, P.-Y. Dolbec, and A. Earley, “Netnographic Analysis: Understanding Culture Through Social Media Data,” in “The SAGE Handbook of Qualitative Data Analysis,” ed. U. Flick (London: Sage Publications, 2014): 262-276; and F.T. Piller, A. Vossen, and C. Ihl, “From Social Media to Social Product Development: The Impact of Social Media on Co-Creation of Innovation,” Die Unternehmung 66, no. 1 (December 2011): 7-27.
13. B.L. Bayus, “Crowdsourcing New Product Ideas Over Time: An Analysis of the Dell IdeaStorm Community,” Management Science 59, no. 1 (January 2013): 226-244.; and S. Israel, “Dell Modernizes Ideastorm,” March 27, 2012, www.forbes.com.
14. C. Heller Baird and G. Parasnis, “From Social Media to Social Customer Relationship Management,” Strategy & Leadership 39, no. 5 (2011): 30-37.