Knowledge-based selection of customers: The opportunity/profitability matrix

New knowledge production is a crucial issue for Knowledge Intensive Business Services (KIBS). By definition, knowledge is the main competitive resource of these companies. Many studies have revealed that KIBS firms rely on various cognitive sources, that can be located both inside and outside the firm. In particular, scholars agree that clients play a crucial role in helping KIBS companies to co-create or co-produce the new knowledge needed to innovate their services. An in-depth interaction between supplier and user is essential: both are involved in mutual learning processes. In light of this, choosing the customers to serve becomes particularly crucial. According to past studies, the selection processes should be based on two dimensions: the profitability of clients (i.e. the economic returns clients can give), and the cognitive opportunities they give (i.e. the opportunities for suppliers to develop new knowledge based on the interaction with clients). Based on the above mentioned study, this paper proposes and discusses a practical tool to perform a knowledge-oriented assessment of the customer portfolio of a KIBS company: the opportunity/profitability matrix allows to classify customers according to the two mentioned dimensions. In addition, the usefulness and practical applicability of the matrix have been preliminary evaluated by means of a focus group with executives of a number of KIBS firms. The paper reports the results of this focus group and also describes the potential and limitations of the opportunity/profitability matrix.