Extreme Customer Innovation in the Front End: Learning from a New Software Paradigm

The front-end phase of the innovation process constitutes up to two-thirds of the total cost of new product development (NPD). In response to the new open innovation paradigm, new ways to integrate customers' knowledge into the innovation front-end must be explored. In an attempt to learn from analogous situations in which the interface between developers and customers has been managed successfully, this article analyses the Extreme Programming (XP) approach of software engineering. Through its iterative but disciplined probe-and-learn cycles, the approach helps companies effectively develop advanced products with the help of their customers. Using case studies from interviews with R&D directors of 16 technology-intensive companies, the applicability of successful practices from XP to traditional NPD is analyzed. The authors identify four determinants for front-end management that reside between creativity and resource efficiency. These determinants dictate the potential for front-end effectiveness improvement and enable the maximum amount of knowledge generation and absorption from the customer.