customer knowledge management in new product ...

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Dec. 14-16, Kitakyushu

CUSTOMER KNOWLEDGE MANAGEMENT IN NEW PRODUCT DEVELOPMENT Tanika Dewi Sofianti† Swiss German University, Tangerang, 15321, INDONESIA E-mail : [email protected]; [email protected] Kadarsah Suryadi1, Rajesri Govindaraju2, Budhi Prihartono3 Bandung Institute of Technology, Bandung 40132, INDONESIA E-mail : [email protected]; [email protected] [email protected] [email protected]

ABSTRACT New Product Development (NPD) is a knowledge intensive process where the generation of new ideas and concepts requires detailed knowledge of both products and customers. Managing customer knowledge in NPD process can assist firms overcome customer acceptance issues associated with innovative products. Methodologies that advance both a firms understanding of customer choice motives and value systems, and its knowledge management process, can increase the chances of new product success. Customer knowledge has been increasingly recognized as a key strategic resource in any company’s success. Customer knowledge has been recognized within marketing as a significant resource that can be managed to support R&D, to improve innovation, to facilitate sensing of emerging market opportunities and to support the management of long-term customer relationships. Technology can facilitate gathering and analyzing customer data as well as transferring customer information within an organization, but they are not able to convert information to knowledge, because knowledge is always related to a person or a group of people. Customer information and knowledge generated has to be integrated into that organization’s everyday operations and processes at the right time to benefit both the company and customer. Knowledge management enables Customer Relationship Management (CRM) to expand from its current “mechanistic, technology-driven, data-oriented approach” towards more holistic, complex, and insightful ways of developing and using customer knowledge. Customer Knowledge Management (CKM) is described as an ongoing process of generating, disseminating and using customer knowledge within an organization and between an organization and its customer. In this paper, our purpose is to provide conceptual framework of CKM in New Product Development as an integrated management approach and competence it requires. This paper is a preparatory step of a wider research. This paper demonstrates success factors of CKM that can be used in designing the CRM that support CKM in NPD to improve the new product performance. Keywords: NPD, CKM, knowledge-based NPD

1. INTRODUCTION Consumers today have more choices of products and services than ever before, but they seem dissatisfied. Firms invest in greater product variety but are not able to differentiate themselves. Growth and value creation have become the dominant topics for managers (Prahalad et.al, 2004). Many research show direct evidence the positive effects of knowledge management

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Corresponding Author is a Doctoral Student of Industrial Engineering Department, Bandung Institute of Technology, Bandung, INDONESIA

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implementation on innovative works (Caloghirou et al., 2004; Nesta dan Saviotti, 2005). One of the indicators of a company's competitiveness is the ability to develop new products (Cooper, 2001; Trott, 2005). NPD project itself needs an efficient strategy to achieve good performance, such as to shorten time to market, provide good feedback and rapid response to customer needs (Belbaly et al., 2007). Leonard (1998) adds that the ability to absorb knowledge of the market is an important component in NPD process.

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Figure 1. Knowledge-based marketing processes (integrated model) (Kohlbacher, 2007) Many studies are conducted to develop a model of knowledge management and implementation of knowledge management system to improve the performance of NPD. Jiang and Li (2008) examined the relationship between knowledge management and the performance of innovation. Lin et al. (2005) proved that in the knowledge-based companies, NPD can be designed and managed in different ways. Belbaly, et.al, (2007) developed a model of knowledge creation in the utilization of consumers to improve the performance of NPD. Kolbacher (2008) developed a model of knowledge co-creation in NPD. Schulze and Hoegl (2006) developed a model of knowledge creation in the relationship SECI framework on the concept and development stage in NPD projects. Jiang and Li (2008) examined the relationship between knowledge management with the performance of innovative activity in the case of alliances. From the results of studies, we can see that the implementation of knowledge management in NPD can improve the performance of new products. The evidence recommends the success of NPD depends on the ability to understand the technical and market knowledge combined with existing products, and the adaptation of this knowledge is to support NPD (Aoshima, 2002; and Iansiti, 1997, Iansiti and Clark, 1994). The researches in implementation of CKM have been developed to improve the performance of NPD and innovation (Li and Calantone, 1998; Belbaly et al., 2007; Kohlbacher, 2008; Smith and McKeen, 2005)

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2. THEORITICAL BACKGROUND This paper is inspired by Kohlbacher’s (2007) that promote the framework of knowledge-based marketing and knowledge co-creation in the business ecosystem. He identified four core marketing processes (SCM, market research, CRM, and PDM) in which knowledge cocreation plays an essential role. This paper will focus on the implementation of CKM in NPD.

2.1. Marketing Knowledge And KnowledgeBased Marketing Kohlbacher (2007) has developed a conceptual framework of knowledge-based marketing and the essential processes of marketing knowledge cocreation among the main actors in the business ecosystem – or network – of which global firms are a part – customers, suppliers, competitors, and business partners (Figure 1). While traditional marketing approaches have focused too much on explicit knowledge and neglected the important role of tacit knowledge, specifically in international (cross-cultural) settings, Kohlbacher’s approach aimed to adjust this imbalance in the extant literature and proposed a new knowledge-based marketing paradigm where knowledge and knowledge co-creation is the key to sustainable competitive advantage in the global network economy. Facing the current global business environment and fierce competition, knowledge-based marketing has already become

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crucial as a determinant for corporate competitive advantage and as such a sine qua non for leading MNCs. Needless to say, as much of marketing knowledge is tacit and hard to codify, face-to-face communication and the integration of local staff into marketing processes and decision-making is an important factor in global marketing knowledge sharing, one that that leads to successful marketing and sales (Kohlbacher, 2007). Hanvanich et al. (2003) argue that while marketing scholars have been interested in the topic of marketing knowledge, “they have focused mainly on how firms acquire, disseminate, and store knowledge”, with related research areas being market orientation and organizational learning. Kohlbacher (2007) defines marketing knowledge as “all knowledge, both declarative as well as procedural, concerning marketing thinking and behavior in a corporation”. Taking a new approach to re-conceptualizing marketing knowledge and innovation, Hanvanich et al. (2003) claim that “marketing knowledge resides in three key marketing processes: Product Development Management (PDM), Customer Relationship Management (CRM), and Supply Chain Management (SCM)”. This notion is based on Srivastava et al.’s (1999) framework that redefines marketing as a phenomenon embedded in the three core marketing processes of PDM, SCM and CRM. Bjerre and Sharma seem to agree when they posit that the “important thing is not one specific piece of knowledge, but an entire package that includes knowledge about clients, competitors, local institutions, suppliers etc.” (Bjerre and Sharma, 2003)

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This phase identified as activities that consider the correspondence between the strength and capabilities by identifying "a growing market and the weak". Design (and Business Analysis) This design phase is used to evaluate and update the ideas and to identify ideas that have a high probability for success in the marketplace. Testing or Marketing Trial This method will evaluate the product, promotion, advertising and pricing. Commercialization This phase is the introductory phase in which a company set to market the product in the world or just a particular market. Life Cycle Management Monitoring conducted to identify if there is such an opportunity to develop or increase the length of a product line.

2.2. New Product Development

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New product is not needed just because it is new. New product is needed because it provides what is needed by the customer and the companies. According to Natter et al. (2001) decision-making on new product strategy has important implications for determining the future of business and involves several areas in the organization functions. Leonard (1998) also stated that one of the most important company's rejuvenation activator is the development of new products. NPD requires knowledge creation and the pursuit for knowledge, and can be organized in various ways (Mild and Taudes, 2007). Stage in the NPD is as shown in Figure 2 (Urban and Hauser, 1993). The definition of the stage respectively is: Opportunity Identification: Searching and Filtering Product Ideas.

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Figure 2. Main stages of NPD (Urban, 1993)

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Reseach & Design Development

Production

Marketing & Sales

Engineering

Internal Sources of Information

Customer & Technical Services

Purchasing & Supply

External Sources of Information

Competitor

Customer

Distributor Agents

Supplier Scientist Universities Patents Exhibitions Technological Consultant

Figure 3. Sources of Information for New Product Ideas (Baker and Hart, 2007).

2.3. Product Ideas NPD process is rarely linear. It follows that idea generation, the first task in the process of bringing a new product to the market, is rarely a true beginning set on a blank page. Before the first task, new product strategy and objective have been set, all within the context of a company’s strategic plan, which itself is based upon its operating, competitive and market environment. So, idea generation will be unavoidably inspired with opportunities and constraints that define what can realistically be achieved. A simple example is that, without an active and resourced R&D department, radical ideas will rarely develop, nor will a company have the know-how to realize any ideas which do come to the fore (Baker and Hart, 2007). Ideas are not always of the same degree of newness, nor do they always apply to the product itself. Newness may refer to technologies and therefore to the product, but it may also refer to markets. A final point is that ‘ideas’ do not always have to be ‘generated’. The whole process of selling corporate and new product strategies sets out ideas for development. Technologist and scientists working in research laboratories are working with ideas constantly, designers are at the creative idea generation – heart of the organization, sales and

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marketing personnel are in constant contact with new ideas both from competitors and from customers. This means that, far from being ‘generated’, as if they do not already exist, many ideas really have to be managed (Baker and Hart, 2007).

2.4. Source Of Information For New Product Ideas A multiplicity of sources of information for new product ideas exists. These can be broken down into those inside and outside the company. The task facing organization searching for new product ideas is to identify these sources, and to organize them so that they activate the flow of ideas in such a way as to direct ideas to those people charged with the responsibility for developing them into new product launches (Baker and Hart, 2007). The internal sources of information are (Figure 3): - Research and Design Development - Marketing and sales - Production - Engineering - Customer and Technical Services - Purchasing and Supply

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Table 1. CKM versus KM and CRM (Gibbert et al., 2002) KM Knowledge Sought in

CRM

Employee, team, company, network “if only we know what we knew” Sharing knowledge about customer among employees

Customer Database

Customer experience and creativity

“retention is cheaper than acquisition” Mining knowledge about the customer

Role of Customer

Passive, recipient of product

Recipient of Incentives Corporate Role

Employee Lobbying knowledge boarding employees Efficiency and speed gains, avoidance of re-inventing the wheel Customer retention

Captive, tied to product by loyalty schemes Customer Captive customers

“if we only knew what our customer know” Gaining, sharing and expanding knowledge of (inside) the customer. Individual or group experiences in application, competitor behavior, possible future solution, etc Active, knowledge partner

Axioms Objectives

Business Objectives

Conceptual Base Business Metrics

Performance against budget; Customer retention rate

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Customer Emancipate customers

Customer base nurturing, maintaining our customer

Collaboration with customers, joint value creation

Customer satisfaction

Customer success, innovation, organizational learning Performance against competitors in innovation and growth; Contribution to customer success

Performance in terms of customer satisfaction and loyalty

The external sources of information are (Figure 3): -

CKM

At first glance, CKM may seem just another name for Customer Relationship Management (CRM), or Knowledge Management (KM). But customer knowledge managers require a different mindset along a number of key variables (see Table 1). Customer knowledge managers first and foremost focus on knowledge from the customer (i.e. knowledge residing in customers), rather than focusing on knowledge about the customer, as characteristic of customer relationship management. In other words, smart companies realize that corporate customers are more knowledgeable than one might think, and consequently seek knowledge through direct interaction with customers, in addition to seeking knowledge about customers from their sales representatives. Similarly, conventional knowledge managers typically focus only on trying to convert employees from egoistic knowledge hoarders into altruistic knowledge sharers (Eisenhardt and Galunic, 2000). In contrast, with CKM ‘If only we knew what we know’ turns into ‘if only we also knew what our customers know.’ (Gibbert et al., 2002)

Information from customers Information from competitors Information from the scientific/technological world Information from supplier Information from Distributors and Agents

2.5. Customer Knowledge Management Gibbert et al. (2002) research shows that by managing the knowledge of their customers, corporations are more likely to sense emerging market opportunities before their competitors, to constructively challenge the established wisdom of “doing things around here”, and to more rapidly create economic value for the corporation, its shareholders, and last, but not least, its customers. CKM is the strategic process by which cutting edge companies emancipate their customers from passive recipients of products and services, to empowerment as knowledge partners. CKM is about gaining, sharing, and expanding the knowledge residing in customers, to both customer and corporate benefit (Gibbert et al., 2002).

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Customer

Stage 1 Knowledge Revealing

Stage 2 Knowledge Sorting

Initial basic information of product Preferences Competitor information Firm Information

Learning Process Assimilation of new knowledge Changes in preferences

Salesperson

Describing All knowledge of product and firm

Listening Clarifying

Specifying Selecting

Knowledge sorting to suit customer needs Adjusting knowledge sharing technique to suite customer

Defining Clarifying

Stage 3 Knowledge Leveling

Clarifying Bold Italic : what firms is interested in capturing from customer

Figure 4. Stages of The Model (Garcia-Murillo and Annabi, 2002). The stages of the CKM model can be seen in Figure 4 (Garcia-Murillo and Annabi, 2002) Step 1: knowledge revealing When the customer and salesperson come together, they both bring their knowledge and experiences to the interaction. In this face-to-face encounter the customer seeks to satisfy a need. The need can be for a product or service. On some occasions the customer knows well what he intends to buy but in other circumstances, the customer may not be oriented and hopes to find information at the store. Although the customer does not expect to be educated about a particular product, since this has not generally been a store practice, he could learn something. On some occasions he may be lucky and find a helpful salesperson that is willing to offer some advice. In CKM the role of the salesperson changes considerably and, instead of just providing basic information about a location or availability of a product, he becomes an attentive listener who is trying to understand the customer's needs. In addition to informing, the salesperson can gather knowledge from the customer about: (1) preferences with respect to the product or service, such as color, size, shape, textures, style for products and requirements for services; (2) competing products and in particular the attributes that are appealing about them; and even (3) industry trends such as incoming products or services.

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At the initial part of this step, the customer and the salesperson identify the objective of their interaction. This is an important requirement. Otherwise two-way learning would be difficult. The customer's sharing of what he/she knows can be characterized as knowledge revealing in this first step of the interaction. The customer reveals his/her preferences and prior knowledge; this is what Yoon and Nilan refer to as certainty, as opposed to the information need, which they refer to as uncertainty. Step 2: knowledge sorting While the customer displays what he/she knows and his/her preferences, the salesperson begins to create a mental map of user needs. Based on customer needs, the salesperson will begin to identify the pieces of knowledge that can help the consumer in his/her particular situation. To help a customer make a decision, the salesperson sorts knowledge relevant to that particular individual regarding product characteristics, functional attributes, information about common problems, substitute products, maintenance information, quality records, competitive products, and options. The knowledge identified by the salesperson should be articulated and presented to the customer not necessarily as pressure for a sale but as a genuine effort to assist in the decision-making process. The customer in turn feels more comfortable making a decision that satisfies his/her needs and returns to the store to satisfy future needs. The determining factors, in this sorting

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mechanism, are the customer's knowledge of the product and firm, the amount of information the customer needs, the type of information appropriate to meet the customer's needs, and the time available for the interaction. Once the factors have been initially determined, the salesperson presents the pieces of knowledge he has identified to the customer. This facilitates the process of creating long-term partnership with the customer. Step 3: knowledge leveling At this point of the interaction, the customer has obtained general information about the products and services. Similarly the salesperson has an idea of customer preferences and needs. Because complete understanding might not have been achieved initially and because preferences change over the course of the interaction, this third step in the process involves reaching an understanding of the needs and perspectives of both parties. It is important for the salesperson to have a clear idea of customer needs after exchange of knowledge has taken place and for the customer to realize the type of information that he requires to make a decision. Although this step is necessary to satisfy the user, the company benefits the most from the initial encounter. This is because once the customer is aware of the options available at the store he will have to adjust his preferences to what is actually available. It may be useful then for a company to make a distinction in the company's knowledge base between actual and modified preferences (Garcia-Murillo and Annabi, 2002). The logic of CKM seems counterintuitive: the challenges of getting employees to share their knowledge with one another are daunting enough. Why would customers, of all people, want to share their knowledge to create value for the company and then pay for their own knowledge once it is deployed in the company’s products? This is further exacerbated because customers, like employees, are often not able to make knowledge, i.e. their experiences with the company’s products, their skills, and reflections explicit, and thereby easily transferable and shareable. The answer to these questions is customer knowledge managers put themselves in the shoes of corporate customers, kindling customers’ intrinsic, rather than extrinsic motivation to share their knowledge for the benefit of the company. (Gibbert et al., 2002). There are several sources of customer knowledge. Some pertain to structured data that is gathered from transactions. Others come from interactions with customers (Garcia-Murillo and Annabi, 2002). Customer knowledge in this paper refers to two different aspects of knowledge: (a) the knowledge that the customer has about the issues that are related to the product or services that he is interested in buying; and (b) the knowledge that the firm should have that can be used to assist the customer in making a purchase decision. The reason why we make this distinction is because we are assuming an interactive process of knowledge exchange between the firm and the customer

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where sometimes the customer provides information while other times the firm does (Garcia-Murillo and Annabi, 2002). The Illustration of this concept can be seen in Figure 5. Selected Customers

Selected Customers Knowledge for Customers

Knowledge CoCreation

Company Knowledge From Customers

All Customers

Knowledge Of Customers

All Customers

Figure 5. A Conceptual Framework for CKM (Smith and McKeen, 2005) CKM collects large amounts of data about customers and their transactions to help companies understand the behavior of their customers through Advocates of CRM argue that that it improves customer retention and satisfaction by providing customer-tailored services (McKeen and Smith, 2003). KM enables CRM to expand from its current ‘mechanistic, technology-driven, dataoriented approach’ towards more ‘holistic, complex, and insightful ways of developing and using CK (Gebert et al., 2003).

2.6. Benefits And Outcomes Of Customer Knowledge The outcome of this process will be of benefit to both the customer and the firm. From a better understanding of the customer, the company will have greater understanding of the true needs and expectations of the customer. This is because transactional data only reflects the satisfying (satisfying behavior is a relaxed assumption based on the assumption of rational behavior commonly used in economics. It means that agents will not necessarily reach the most optimal choice because of high transactions costs. Instead they satisfied, or choose an option that is good enough under the constraints that they face Listening to the customer will reveal knowledge that customers bring to the transaction. These pieces become increasingly valuable when they are collected because they can help identify trends and patterns about multiple aspects of the product and the customer (Garcia-Murillo and Annabi, 2002).

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Because this is a two-way exchange, the interaction will also reveal customer knowledge needs that the firm may not be collecting. While the firm learns from its customers, customers also benefit from the hunches, insights, and intuition of other customers, which are relayed to them by the salesperson. Meeting the customer's needs by taking the time to listen to him/her and later providing knowledge will foster the relationship between the customer and the firm. The company will acquire knowledge that will assist in product innovation and improvements. Since the firm has a better understanding of the customer's expectations and needs it will be able to improve customer service and thus achieve customer satisfaction and retention. Better relationships with the customer lead to increased sales and the acquisition of new customers (Garcia-Murillo and Annabi, 2002).

2.7. Knowledge Based New Product Development Knowledge has frequently been identified as a crucial factor in innovation. This is also why there exists a strong body of literature that deals with product development and product introduction from the organizational learning, knowledge management or market orientation perspectives. However, product development is often difficult because “the ‘need’ information (what the customer wants) resides with the customer and the ‘solution’ information (how to satisfy those needs) lies with the manufacturer.” (Thomke, 2003) Traditionally, “the obligation has been on manufacturers to collect the customer need information through various means, including market research and information gathered from the field”, a process that “can be costly and time-consuming because customer needs are often complex, subtle, and fast-changing” (Thomke, 2003). There are three key points necessary to understand knowledge in this context (Kohlbacher, 2008): • In accordance with the knowledge-based view of the firm, which sees knowledge and competencies as decisive foundations for the performance and abilities of organizations, knowledge can be identified as the decisive success factor in NPD. Note that throughout this paper, product or product development always means products and services. • Much of the required knowledge in NPD is tacit and resides in entities outside the firm, specifically in customers but also within other stakeholders such as competitors, suppliers and business partners. • Contrary to the assumptions made by most of the literature, the required knowledge is not simply ‘out there’, ready to be collected and processed by the firm, but actually needs – at least partly – to be created. This then involves the co-creation of

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essential knowledge with other entities in the business ecosystem, such as customers. In an effort to explain the role of knowledge in NPD and the process of its co-creation and management, the paper develops and presents the concept of CKM in NPD. It tries to advance the notion of knowledge management in NPD, with a particular focus on the involvement of customers – i.e., the co-creation of knowledge, value and innovation with customers (Kohlbacher, 2008).

2.8. Customer Knowledge Management In New Product Development Traditionally, market research was used to shed light on what the customer knew and thought about the product, which resulted in enormous CRM databases (Galbreath and Rogers, 1999; Woodruff, 1997). Even if the data about customers are readily available through existing CRM database software packages, their main limitation remains the inability to integrate disparate data sources and provide the right kind of information to the right people (Bose and Sugumaran, 2003). In fact, CRM databases do not allow organizations to know more about their customers (Davenport et al., 2001), because data alone do not lead to customer knowledge (Bierly and Chakrabarti, 1996). Indeed, managers need to transform data into customer information and to integrate this information throughout the firm to develop customer knowledge (Campbell, 2003). This is particularly significant in the context of NPD projects where KMS are used as enablers to help the organization understand its customers as well as serve and learn from them (Gibber et al, 2002). On the basis of the preceding, we can define CKM as the need of a firm to manage the knowledge about customers (in order to address them), knowledge for customers (for their interactions) and knowledge from customers (to improve products and services) (Bueren et al, 2005). The management of the customer knowledge is enabled by processes such as the creation, analysis, and dissemination of customer-related information (Li and Calantone, 1998). These processes improve firm's ability to identify customer needs. Other related activities include the deployment of new product ideas, concepts, and prototypes among target customers, the analysis of customer feedback and the development of subsequent probes based on the analysis (Hargadon and Sutton, 2000). In order to manage individual customer relationships in an organization, customer knowledge should be available everywhere and to everyone who uses it for decision making (Davenport et al. 2001). While

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most companies started developing this type of customer knowledge by creating data warehouses or customer information files, not many have gained true insights. “They may know more about their customers but they don’t know the customers themselves or how to attract new ones” (Davenport et al. 2001). To create useful knowledge about customers, companies need more than transaction databases. Therefore, the customer knowledge must be integrated across processes, information and technology. Few companies have yet achieved this goal (McKeen and Smith, 2003). For this reason, companies started to support the customer knowledge creation process with KMS. KMS have been defined as a line of systems which target professional and managerial activities by focusing on creating, gathering, organizing and disseminating an organization’s ‘knowledge’ as opposed to ‘information’ or ‘data’ (Belbaly and Benbya, 2006). KMS potential to support the customer knowledge creation, demand that customer knowledge be obtained, produced, shared, regulated and leveraged by a steady conglomeration of individuals, processes and Information Technology (IT) (Benbya and Belbaly, 2005). As studied in (Bierly, and Chakrabarti, 1996) with two dozens of enterprises that manage customer knowledge, CKM could make an enterprise much easier to fulfill/expand its value creation process by seeking and leveraging customer knowledge through

Figure 6. The Conceptual Framework of CKM in NPD

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direct interaction with customers. Therefore, in our opinion, CKM would play a more contributive role than CRM/KM does in the success of CustomerOriented EC (Lin, 2007).

2.9. Implications for Theory and Research This paper proposes a framework to link CKM process with NPD process. In our case, findings confirm that CKM is consisted of knowledge for customer, knowledge of customer, knowledge from customer and knowledge co-creation. The process of CKM includes knowledge revealing, knowledge sorting and knowledge leveling. One of new product information source is the customer information. CKM can be achieved from cooperation between knowledge management and customer relationship management. Successful knowledge management system should be aligned with customer relationship management to attain an appropriate form of CKM. Good customer knowledge captured from the CKM provides good decision for new product design. New product that designed through this process is expected to have a good performance such as shorter time to market, and good response to market needs. Therefore more failed product can be avoided.

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3. FRAMEWORK OF CKM IN NPD The framework of implementation CKM is as can be seen in Figure 6, it is a spiral process that starts from the first time a new product is launched to market and being consumed by the customer. The marketing should capture the customer knowledge from the products that are being consumed. The information is not about the customer, but it is about what customer thinks about the product and what they expect from the product. The knowledge that is being capture is not managed from every customer in the market. It is better if some of the knowledge managed in a group of loyal customer. Some enterprises used to create a club of customer that have some formal and informal activities. Club of the owner of certain brand of automobile or motorbike is an example. They used to conduct a vacation trip using the same vehicle. During the trip, an informal relationship can be developed and these can help a better communication between the members. That is why the agent from the car manufacturer sometimes acts to be low profile in every occasion and the customer will be more active and freely sharing what they know from their experience with their car with other member. The agent of the company then can capture this tacit knowledge and experience as the information of the designer of the next product. A privilege membership also can be a tool to make customer more active in sharing their knowledge and experience to help the company in designing their next product. Nevertheless, a good information system that can store all of the information can be a very good equipment to help the company to define their decision about their product design. Many manufacturer of information and communication system and software developer used web-based information system to capture the information from their customer to know their experience with current product. This information will be very helpful when customer meets some problem with their new product. This describes the process of CKM implementation in new product development in a cyclic process because the knowledge and experience that the customer provides from the current product can be very good information to make the decision for the next product design. By adopting the critical success factor of CKM (AlShammari, 2009) then, the critical success factor of CKM implementation in NPD can be described as follows: • How to develop a CKM strategic change in response to customer needs of next new product? • How to condition the market in the context of CKM? • How to change people as a major organizational enabler of CKM in NPD context?

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How to change ICT systems to enable CKM in NPD context? How to develop a customer-focused product development orientation to enable CKM? How to capture data from customers on their current and future needs in NPD context? How to develop profiles of customers? How to utilize business capabilities to develop knowledge about customers? How to deliver product with the highest value to customers, and to ensure their loyalty and retention? How to measure return on relationships with customers? How to manage learning throughout the implementation of CKM change?

4. CONCLUSION Many studies have devoted attention to customer knowledge because the customer has been identified as an important source of knowledge for NPD. Areas related to knowledge management such as marketing and CRM have concentrated primarily to improve the performance of NPD and innovation. This paper is an initial attempt at incorporating CKM to create new customer knowledge in NPD. The model established the conceptual framework of CKM implementation in NPD and the critical success factor. It also provides some example how company sustain collects the knowledge and experience from selected and loyal customer. Although knowledge gained from personal interactions with customers can benefit companies, culture and incentives may have to be changed for the process to be successful. Future studies should search the behavior of knowledge creation in NPD in CKM perspective.

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AUTHOR BIOGRAPHIES Tanika D Sofianti is a lecturer of Industrial Engineering Department of Swiss German University, Indonesia. At present, she is a doctoral student in Department of Industrial Engineering, Faculty of Industrial Technology, Bandung Institute of Technology, in Indonesia. She is in her 2nd year of her research program. Her research interest is the implementation of knowledge management in innovation and product development. Her email address is Kadarsah Suryadi is a Lecturer in Department of Industrial Engineering, Faculty of Industrial technology, Bandung Institute of Technology, Indonesia. He received a Doctoral Degree from the University of Aix Marseille-3, France in 1992. His teaching and research interests include decision support system and knowledge management. His email address is Rajesri Govindaraju is a Lecturer in Department of Industrial Engineering, Faculty of Industrial technology, Bandung Institute of Technology, Indonesia. She received a Doctoral Degree from University of Twente, Netherlands in 2002. Her teaching and research interests include information system, enterprise resource planning and knowledge management. Her email address is Budhi Prihartono is a Lecturer in Department of Industrial Engineering, Faculty of Industrial technology, Bandung Institute of Technology, Indonesia. He received a Doctoral Degree from Universite De Marne la Vallée, France in 2007. His teaching and research interests include technology management, business process, performance management system and product development. His email address is