Sourcing, Filtering, and Evaluating New Product Ideas: An Empirical Exploration of the Performance of Idea Markets

Abstract

The proliferation of interconnectivity and interactivity through Internet-based technologies enables new forms of support for new product development. This paper analyzes idea markets, which use widely distributed knowledge, the power of markets, and the Internet to support the crucial initial tasks of the new product development process, including the sourcing, filtering, and evaluation of new product ideas. Idea markets employ virtual stocks to represent new product ideas and allow participants to suggest and trade new product ideas in a virtual marketplace. This paper empirically explores the performance of idea markets in a real-world field study at a large, high-tech business-tobusiness company that includes more than 500 participants from 17 countries and features various idea sourcing tasks. The results indicate that idea markets are a feasible and promising method to support the fuzzy front end of the new product development process. Idea markets offer a platform and formal process to capture, select, and distribute ideas in an organization, which motivates employees to communicate their ideas to management. By effectively sourcing and contemporaneously filtering, idea markets help reduce the number of ideas brought to management's attention to those that seem worthy of further consideration. Because idea markets also have the ability to source many ideas, they can increase efficiency at the fuzzy front end of the new product development process.

Rate or Trade? Identifying Winning Ideas in Open Idea Sourcing

“…First, task representation is crucial for the success of IT-based open idea evaluation (Afuah and Tucci 2012, Estellés-Arolas and González-Ladrón-deGuevara 2012, Zhao and Zhu 2014 but is poorly understood at this time (Dean et al 2006, Ozer 2005, Riedl et al 2013, Soukhoroukova et al 2012. Our study explains differences in perceived ease of use resulting from the two different task representations.…”

“…Preference markets are a frequently applied instantiation of idea evaluation as a choice task. Preference markets are a special type of prediction markets that are virtual markets for collecting, aggregating, and evaluating dispersed information (Soukhoroukova et al 2012). In prediction markets, users buy contracts that are bound to future events, e.g., the outcomes of political elections or sporting events.…”

“…27-48, © 2016 INFORMS important in the area of idea evaluation, where we have a variety of evaluation strategies at our disposal. Two IT-based mechanisms are currently used in open idea evaluation: rating scales that represent idea evaluation as a judgment task (e.g., Di Gangi andWasko 2009, Riedl et al 2013) and preference markets that represent idea evaluation as a choice task (e.g., LaComb et al 2007, Soukhoroukova et al 2012). Yet representing a task as judgment-or choice-based brings with it several other critical differences in the IT-based implementation of such an evaluation mechanism.…”

“…The systematic evaluation of early stage product ideas is of paramount importance for organizations (e.g., Girotra et al 2010, LaComb et al 2007, Ozer 2005, Riedl et al 2013, Soukhoroukova et al 2012. Open idea sourcing can only become valuable innovations if ideas can be evaluated in cost-efficient ways while also addressing ideas' increased diversity.…”

Crowd Wisdom Relies on Agents’ Ability in Small Groups with a Voting Aggregation Rule

“…Firms have thus been increasingly employing mechanisms of aggregating multiple opinions, especially when navigating markets which are difficult to predict (e.g., Bonabeau 2009, Soukhoroukova et al 2012). We believe that combining independent judgments offers a valuable management tool to improve collective decision-making in both firms and public administration.…”