Many companies aren’t getting much benefit from incorporating social media into their new product or service development processes. One key to changing that is picking the best approach for your company.
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.