By Dr. Hardik Vachhrajani

The phenomenon of N=1 in innovation as explained by professors C.K. Prahalad and M.S. Krishnan in their book: The New Age of Innovation – Driving Co-created Value Through Global Networks is studied to find implications of the phenomenon of innovation research.18 The standard N=1 requires companies to tailor their products on individual customer experiences through flexible business processes in order to engage in product co-creation. This article explains how grounded theory research has the potential to bring out the theories of innovation in a rapidly changing innovation environment where N is becoming as small as 1.

Methodology
In their book, The New Age of Innovation – Driving Co-created Value Through Global Networks, professors C.K. Prahalad and M.S. Krishnan argue that the earth is migrating rapidly toward an N=1 world. Using market research and capturing customer voice to innovate are ideas of the past. Time is moving quickly toward co-creation of the product, which is one step further in innovation hierarchy, where access, transparency, dialogue and a deep understanding of risk and benefit are needed. The spirit of the book is that this phenomenon is industry independent and time will prove that every industry can co-create or innovate with the customer, for the customer.

Prahalad and Krishnan suggest that the movement toward N=1 is not a choice. The focus of youth on websites like MySpace, YouTube, Orkut, Facebook and others suggests that a whole generation of consumers will grow up expecting to be treated as unique individuals. That they will have the skills and the propensity to engage in a market place defined by N=1. Such personalized innovations are working. For example, MySpace reports 200 million consumers in four years, whereas Facebook reports more than 47 million consumers in two years.

N=1 and Innovation
The N=1 phenomenon is not a client-centered activity. The organization that is trying to innovate at N=1 needs a robust process, structure and organizational innovation model to sustain innovation demand from the customer. When a customer gives inputs, the customer expects outputs. Except for the Internet, co-created products have a higher opportunity for revenue margins from an organization’s perspective. A Toyota or BMW car created per the client’s requirements would usually cost two to four times more than the standard car (yes, they can earn more in after sales). Co-created or co-innovated products are “in” now. An organization is left with only one choice and that choice is to align other processes that can support this phenomenon. If that is the case, the organizations are gearing up for this. They are using technology, process, organizational and structural innovations to tackle the N=1 phenomenon and this is unique to every organization. The formula for Orkut’s success is different from the formula for MySpace’s success except that they have N=1 as a common factor.

Every organization is creating their own formula to co-create innovation with its customers. Every organization is turning out to be a unique case study for those who are interested in studying the innovation process while generating theories based on the process.

Innovation has been well studied. It was previously studied from a technological perspective as well as from product marketing perspectives and entrepreneurial perspectives.1,2,3,4,5,6,7,8,9,11,12,13,14,15,19

A quick peek into the research methodologies used by various innovation researchers locates all prevailing methodologies that are used in innovation research. The majority of researchers have adopted large-scale survey research approaches carried out at arm’s length from the actual activities of innovators. Plus various patent application studies and a growth in sales (post innovation studies) have been conducted to study the underlying phenomenon of innovation.16

These studies have considered the population of (N) to be more than 1. For example, if a researcher wants to study the role of innovation in the growth of sales in the California organization then the researcher would use the organizations of California as their N. What these researchers overlooked are the basic social processes involved in innovation. The researchers fail to capture the underlying transformation process of the organization. It has resulted in the growth of the organization. The real innovation process happens when organizations use every N=1 as inputs and starts transforming the N=1 input to the customer experience delivery. This is the ultimate objective of co-creation. Quantitative-based methodologies for studying innovation have shed limited insight into what happens when people innovate.16

Grounded Theory
If qualitative methodologies cannot explain the underlying phenomenon then what is the right method to conduct innovation research where N=1? The methodology of the grounded theory approach developed by authors Barney Glaser and Anselm Strauss answers the question.10 Glaser and Strauss’s grounded theory is a methodology for inductively generating theory.17 The grounded theory is a different mindset for research methodology and requires a different approach when it comes to its application. Traditional research designs usually rely on a literature review leading to the formation of a hypothesis. This hypothesis is then put to the test through experimentation in the real world. On the other hand, grounded theory investigates the actualities in the real world and analyzes the data with no preconceived hypothesis.10 An individual does not begin with a theory and then prove it. Rather, an individual begins with an area of study and what is relevant to that area is allowed to emerge. Every sample is one of a kind and requires unique treatment.

Grounded theory is the best way to study the phenomenon N=1. There has been value-added research in the field of innovation based on grounded theory including Lowe’s research to study the basic social process of entrepreneurial innovation.16

The innovation landscape is rapidly changing. Innovations are becoming more and more inclusive. They are transforming lifestyles and empowering customers to create value for them. Such as rapid transformations where N has been reduced to as low as 1. Research methodologies need to evolve to capture the essence of the transformation and build upon the theories to generate knowledge for future entrepreneurs. Grounded theory if applied well has the potential to truly capture the transformational spirit of innovation.

References

1. Baker, M.J. and Hart, S., Marketing and Competitive Success, Philip Allan, London, 1989.
2. Bayley, G., Sony Design, Design Council, London, 1982.
3. Burrows, R., Deciphering the Enterprise Culture, Routledge, London, 1991.
4. Burton, R.M. and Obel, B., Innovation and Entrepreneurship, Elsevier, Amsterdam, 1986.
5. Centre for Exploitation of Science and Technology, Attitudes to Innovation in Germany and Britain: A Comparison, Centre for Exploitation of Science and Technology, Bonn, 1991.
6. Chell, E., Haworth, J. and Brearley, S., The Entrepreneurial Personality, Routledge, London, 1991.
7. Clipson, C., A Business and Design Experiment at the University of Michigan, Journal of Product Innovation, Vol. 7 No. 2, pp. 135-41, 1990.
8. Cooper, R.G., The Dimensions of Industrial New Product Success and Failure, Journal of Marketing, Vol. 43 No. 3, pp. 69-81, 1979.
9. Drucker, P.F., Innovation and Entrepreneurship, Heinnemann, London, 1985.
10. Glaser, B. & Strauss, A., The Discovery of Grounded Theory – Strategies for Qualitative Research, London, Weiderfeld and Nicolson, 1967.
11. Gupta, A.K. and Raij, S.P., A Model for Studying R&D Marketing Interface in the Product Innovation Process, Journal of Marketing, Vol. 50, April, pp. 7-17, 1986.
12. Gupta, A.K. and Wilemon, D.L., Accelerating the Development of Technology Based New Products, California Management Review, Vol. 32 No. 2, pp. 193-206, 1990.
13. Hise, R.T., O’Neal, L., McNeal, J.U. and Parasuraman, A., The Effect of Product Design Activities on Commercial Success Levels of New Products, Journal of Product Innovation Management, Vol. 6, pp. 43-50, 1989.
14. Jackson, T., Japan’s Transistor Titans Gamble on the Big Picture, The Independent on Sunday, 11 November, 1990.
15. Kuroki, Y., Design Today, Japanese Design Quarterly, Vol. 10, pp. 100-5, 1983.
16. Lowe Andy, The Basic Social Process of Entrepreneurial Innovation, International Journal of Entrepreneurial Behavior and Research, Bradford: Vol. 1, Iss. 2; pg. 54, 1995.
17. Patton, M., Qualitative Evaluation and Research Methods (California, Sage), 1990.
18. Prahalad C.K, Krishnan M.S, The New Age of Innovation: Driving Co-created Value Through Global Networks, Tata McGraw Hill, New Delhi, 2008.
19. Rothwell, R. and Zegveld, W., Innovation and the Small and Medium Sized Firm, Frances Pinter, London, 1982.

About the Author:
Dr. Hardik Vachhrajani works as an assistant professor at the School of Business, Amrita Vishwavidyapeetham, Kerala, India. He is the quality council and an India approved QMS consultant. He is also a certified Six Sigma Green Belt, NASSCOM certified BPO quality analyst and is the examiner for Ram Krishna Bajaj National Quality Award applicants (the Indian clone of the Malcolm Baldrige Award). He has over nine years of consulting, training and research experience in the field of quality and innovation management across South East Asia, the Middle East and East Africa. Dr. Vachhrajani holds his PhD in the role of innovation and in the growth of small and medium businesses (SMEs). Contact Dr. Hardik Vachhrajani at hardikv (at) am.amrita.edu.