The increasing popularity of customer-driven innovation has led to a disparate variety of approaches to feature customer participation in new product development (NPD). These diversified techniques range from leveraging widely dispersed crowds of virtually anonymous contributors, to working closely with only a few select non-representative customers, to simply observing and learning from the emergent phenomena of customer-directed activities whereby users innovate with little direction or input from firms. This chapter provides a conceptual typology for classifying different forms of customer-driven innovation. The typology relies upon dimensions from the NPD literature that describe the extent that a customer participates as an information resource or more deeply as a developer of the product, and the extent that the NPD tasks are directed predominantly by the firm or primarily by the user of the product. The typology delineates eight approaches to customer-driven innovation: crowdsourcing, community selection, co-development, downstream collaboration, lead users, Web 2.0, open source, and nonmarket innovation. Moreover, the chapter offers a table with a summary of definitions, selected relevant papers, and examples of each of these approaches to customer-driven innovation. The chapter highlights important theoretical perspectives that are frequently utilized to undertake research in this domain. To aid further research, key trends are noted that influence industry practices and reveal new avenues to investigate topics that should yield managerial insights. The chapter concludes by suggesting future research directions that provide opportunities to advance knowledge about customer-driven innovation.
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