The Impact of Digital Media and Technologies

Digital media is present in every aspect of our lives and its impact is increasing constantly. In the course of global digitalization and Industry 4.0 the economy is also increasingly digital and is undergoing fundamental change in which new technologies and media have a growing effect on international management and business: “There is a well researched and growing recognition amongst many commentators today that it is axiomatic that ‘Business as usual’ is no longer a viable option and it is not useful to continue with some of the failing models of leadership. There is a new, more urgent rhythm of business and social life. The beat has changed and the new high-performers are playing a different tune and using new instruments (Smith & Cockburn, 2014)”.

The internet of products and services in an era of digital superabundance holds great sway over the type of leadership required in international management. Leaders are called upon to develop new capabilities in order to keep pace with increasing social-digital connectivity and remain successful over the long term (Smith & Cockburn, 2013). Leaders today must continuously strive to build and maintain a sharp, cutting-edge profile, as well as generate loyalty, innovation, and sundry other discretionary behaviors amongst staff and other stakeholders in their organizations and in their markets to facilitate better business in the global context of rapidly accelerating technological change (Pretorius & Roux, 2011).

Changes since rise of social media

Leadership and international management have changed since the rise of social media: the role of social networking has moved steadily to the fore. It’s created a new mentality of socio-cultural leadership via digital globalization and increased networking. So factors such as Corporate Social Responsibility move increasingly to the forefront.

With the advent of new technologies come new challenges in cyber security for leaders and the international management of tomorrow. Academics, consultants and leaders must search for more effective and more dynamic leadership models in order simply to keep pace intellectually and practically with the complex swirl of new digital technologies. New social-digital media and trans-disciplinary derivatives and related devices or applications are surfacing in our lives each day. Likewise the rise of digital media gives a larger share-of-voice to heretofore niche groups in global business. Kauffman (1995) describes the theoretical shift in business development as: “technological co-evolution: one business creating niches for another in the ecological landscape of the new technology market or ‘technosphere’ (nach Smith & Cockburn, 2014: 3)”.

To survive in the global economy, companies must constantly reinvent themselves in order to keep pace with rapidly evolving digital technologies.

The Case of Innovation and Product Development

A paradigm shift has been underway since the 1970s whereby the picture of the active producer and passive consumer has been replaced with the active role of the customer (von Hippel, 1978). Very successful companies spring up these days whose entire output is dependent on the ideas of their activated consumers.

The active user and consumer as partner in the value creation process has become a treasured resource of the internet economy. Consumers and users review products and services, suggest key improvements and drive innovation. Companies can initiate these activities, but often they occur as self-organized user projects.

Consumer intelligence has become a treasured resource in the company eye and consumers have come to play an active role in product development. Within product development in particular, there is a growing number of methods to identify and involve especially active internet users and cherished customers for either the long- or the short term. There are two central reasons to warrant interest about this development. Firstly, innovations arise from the combination of extant knowledge. Because the internet is the first medium that links the possibility of mass communication with a response channel, chances radically improve for users to combine globally distributed information into new knowledge (Shirky, 2008). Authors speak therefore of collective creativity in connection with open innovation (Hargadon, 2002; Ahonen et al. 2007; Chesbrough &Appleyard, 2007; Maher, 2010).

Secondly, an innovation is only a successful one, once it has been adopted by consumers. Depending on market fluctuations, the rate of new product failure is between 35 % and 90% (Cooper, 1999). Because the likelihood rises dramatically that an innovation truly satisfies consumer needs when consumers are involved in the innovation process (Pitta & Fowler, 2005), so too rises considerably the likelihood of an innovation’s market success with consumer involvement (von Hippel, 2001; Füller, 2006; Diener & Piller, 2009).

Because knowledge present at the consumer level is such an important resource, more than 1/3 of western European companies regularly use external idea sources and prize their consumers as the most important source of innovative ideas even above and beyond internal research and development departments and corporate leadership (Grant Thornton, 2009).

Methods increasingly differentiated

Methods of consumer integration are becoming increasingly differentiated and more ways are needed to apply consumer integration to the possibilities of the internet. Parallel to the more active role of the consumer, the self-organization and communication of consumers on the web has taken on totally new proportion. Many internet users are comfortable in their role as consumers with reviewing comments from other users, products and services as well as with reading user-generated content. 75% of German internet users report referring to the user-generated encyclopedia Wikipedia at least occasionally in 2010 (Busemann & Gscheidle, 2010) and for 27% of German internet users, it is a given to share their opinions about products on the web (Würdiger, 2010). Users personalize consumer goods (Franke et al., 2007; Kaplan et al., 2007; Kamis et al., 2008) or exchange views about improvements of products and services without prompting by companies (Schmeisser, 2010.

Never before has it been easier to communicate with so many people around the world over the internet and not only have entirely new possibilities opened for the purposes of market research (Kozinets, 2002; Füller et al., 2007; Garcia et al., 2009), but also for the active involvement of consumers and users.

Integration of consumers

As a consequence, the method set for integrating consumers via the internet is becoming more manifold (Bilgram et al., 2008). Using an online adaptation of the Lead-User Method, toolkits, communities and innovation competitions in various phases of the innovation process are being researched parallel to their application (Reichwald & Piller 2009). Increasingly and concurrently, online idea-communities are being deployed, in which innovative ideas are the focus and not just a byproduct of the discussion as with so many online communities (Boudreau & Lakhani, 2009; Bullinger et al., 2010).

A phenomenon quite frequently appears in various forms of voluntary internet user cooperation, which was first described in this context by researchers studying shared production in open source software projects. A small number of participants in such projects often takes on a large portion of the work in the shared production of software (Lerner & Tirole, 2002; Mockus et al., 2002; Lakhani & von Hippel 2003). This activated group is later identified in other forms of voluntary cooperation as Wikipedia (Benkler, 2006; Schroer & Hertel, 2009), blogs (Nielsen, 2006), file sharing services (Cheng & Vassileva, 2005) or product reviews (Peddibhotla & Subramani, 2007).

Productive cooperation with a multitude of customers against the backdrop of one’s own economic interests is by no means an easy task for any company: companies need a pronounced competency in consumer interaction in order to create the requisite communication-, incentive- and procedural structures for this type of cooperation (Reichwald & Piller, 2009). Furthermore, companies mostly have contact only with customers from existing business segments so that they first must create contact with potential consumers for any new product and service projects.