Integrating Problem Solvers from Analogous Markets in New Product Ideation

Who provides better inputs to new product ideation tasks, problem solvers with expertise in the area for which new products are to be developed or problem solvers from “analogous” markets that are distant but share an analogous problem or need? Conventional wisdom appears to suggest that target market expertise is indispensable, which is why most managers searching for new ideas tend to stay within their own market context even when they do search outside their firms' boundaries. However, in a unique symmetric experiment that isolates the effect of market origin, we find evidence for the opposite: Although solutions provided by problem solvers from analogous markets show lower potential for immediate use, they demonstrate substantially higher levels of novelty. Also, compared to established novelty drivers, this effect appears highly relevant from a managerial perspective: we find that including problem solvers from analogous markets versus the target market accounts for almost two-thirds of the well-known effect of involving lead users instead of average problem solvers. This effect is further amplified when the analogous distance between the markets increases, i.e., when searching in far versus near analogous markets. Finally, results indicate that the analogous market effect is particularly strong in the upper tail of the novelty distribution, which again underscores the effect's practical importance. All of this suggests that it might pay to systematically search across firm-external sources of innovation that were formerly out of scope for most managers.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2013.1805. This paper was accepted by Lee Fleming, entrepreneurship and innovation.