Lead user

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Lead user is a term developed by American economist Eric von Hippel. [1]

Contents

His definition for lead user is:

  1. Lead users face needs that will be general in a marketplace – but face them months or years before the bulk of that marketplace encounters them, and
  2. Lead users are positioned to benefit significantly by obtaining a solution to their needs and so may innovate.

Lead users are a very important source of innovative progress because they often pioneer - acting earlier than producers to develop important new types of products and applications. Spearheading innovation benefits lead users because they innovate to serve their own needs. For this reason, they need not concern themselves with whether others will also want what they are developing for themselves. In contrast, producers tend to wait for evidence that there is a broad, profitable market to be served before they can justify investing in a new type of innovation. [2]

For example, mountain bikes were developed by individuals who simply wanted to bike down mountains for fun, and so invented the sport of mountain biking for themselves. Bike producers stood by, simply watching and waiting for years until the extent of the market became clear. Finally, after the new sport had spread to hundreds of enthusiasts who participated by building their own "clunker" mountain bikes, producers finally entered the new market with the first commercial mountain bike products. [3] Because lead users develop new products and services and also modify existing ones, they are related to the creative consumer phenomenon, that is, those "customers who adapt, modify, or transform a proprietary offering". [4]

Lead User method

The Lead User method is a market research tool that has been developed to assist producers in identifying lead users' innovations, and analyzing the commercial potential of those innovations. The methodology is based upon the idea that breakthrough products can be developed by identifying leading trends and needs that already exist in marketplaces, and then developing the product specifically to cater to those trends and needs.

This method was originally developed by Dr. Eric von Hippel, and first described in the July 1986 issue of Management Science.[ citation needed ]

In contrast to traditional market research techniques, which collect information from the users at the center of the already-established target market, the Lead User method instead collects information about needs and solutions from the leading edges of the target market and from "analogue markets", made up of people who face similar problems in a more extreme form.

The Lead User methodology involves four major steps:

  1. Start of the Lead User process
  2. Identification of Needs and Trends
  3. Identification of Lead Users and interviews
  4. Concept Design (Workshop).

Once the trend or need has been identified, the developers seek out lead users: people or organizations that are attempting to solve a particularly extreme or demanding version of the stated problem.

For example, a company seeking to create a breakthrough in flashlight design may seek out groups of people who require bright, efficient, and portable lights as part of their day-to-day business. The company may identify policemen and home inspectors as lead users.

Once the lead users have been identified, networking is employed and the lead users are interviewed in order to gain insight into how these users solve the problem for themselves. The interview also includes questions that are designed to determine whether the lead users know of any individuals or organizations who are considered to be “outside the market” and have even more extreme needs. In the flashlight example, these users might be photographers, divers, or movie lighting designers.

By learning from both the lead users and the outside-the-market users, companies may identify new methods or approaches towards creating genuinely innovative products that may not have surfaced if the company had employed traditional marketing techniques.

Review of existing literature

Research on lead users emerged from studies on sources of innovation. It was first found that users (as opposed to manufacturers) are often the first to develop new products that are commercially successful. [5] Additionally, it was found that innovation by users tended to be concentrated among the “lead users” of those products and processes. [6] These lead users were individuals or organizations who had experienced needs for a given innovation earlier than the majority of the target market. [7] Recent research highlights the fact that lead users exist for services as well. [8]

Various studies have explored the effectiveness of this theory in terms of identifying any user innovations. The effect found in these studies tends to be very large; for example, Urban and Von Hippel [9] found that 82 percent of a given lead-user cluster had developed their own version of, or had modified a specific type of, the industrial product under study… whereas only 1 percent of the non-lead users had done this.

Empirical studies have also found that many of the innovations developed by users have commercial attractiveness. For example, in 1988 Urban and Von Hippel found that lead user theory can be effectively utilized in industrial software product development; [10] in 2000 Morrison, Roberts, and Von Hippel found that many IT innovations developed by libraries had broader potential value; [11] and in 2003 Luthje found that 48 percent of surgical innovations developed by surgeons in university clinics in Germany could be produced as commercial products.[ citation needed ]

Based on its widespread success, it has been suggested that the lead user methodology should be integrated into corporate new product development efforts. [12] Companies may benefit (to a large extent) as they try to learn from lead users about the needs and solutions encountered at the leading edge of the market. Increasingly, this type of customer integration is being discussed among innovation management scholars. [13] The idea is also spreading rapidly in the business world; [14] for example, lead-user concepts developed and used at 3M showed product sales potential that was an average of eight times higher than for sales of products using more traditional development concepts / processes. [15]

Basic lead user search methods

The central task in lead user studies is searching for lead users with valuable innovations to share. Two different methods exist - one is best suited to searches for product innovations developed by consumer lead users. The second is best suited for identifying innovations developed by professional lead users like medical personnel, or by developers within firms like banks that may have developed process improvements for their own use.

AI search of user-generated content posted on the web

Lead user consumers often post descriptions of their developments openly on the web. They do this to share their development activities with peers who share the same interest. For example, parents may openly post parenting innovations on a specialized website in order to help other parents, and also to gain from improvements contributed by others. Similarly, sporting enthusiasts may post improvements they have made to sporting equipment or techniques for use and further improvement by others. Since these innovations are openly posted on the web, the posted content is searchable by AI methods. Specifically a rapid search method based upon semantic network analytic and memory model techniques has been demonstrated to be effective. In essence, the method scans thousands of websites that have been made openly available to all, searching openly posted textual content for instances that both describe an improvement in a field of interest to the searcher, and that contain phrases indicating the presence of an innovation such as "I invented" or "I solved this problem." To isolate those innovations of general interest to users, and so of potential commercial value to producers, the innovation descriptions identified are then assessed to determine how frequently they have been the subject of web searches: the higher the frequency, the higher the likelihood of commercial potential. (Individuals using this method must be sure to first check governmental rules regulating web searches: these are rapidly evolving.) [16]

"Pyramiding" search processes for identifying lead user innovations not publicly posted

Pyramiding involves a sequence of telephonic or email interviews of experts in a professional or industrial setting. Each interviewee is initially selected on the basis of writings or reputation as someone knowledgeable in a subject of interest - for example, control of infections resulting from surgeries. Each of these interviewees is contacted and asked whether they know of someone who faces extreme problems on the topic of interest, and whether that person has innovated to their knowledge. For example, a general surgeon, when asked this question, might point to surgeons who deal with immune-compromised patients who are more likely to get infections than average patients. The individuals identified in this way are generally further up the "pyramid of expertise" than the initial interviewees. They are than contacted and interviewed in turn. From 5 to 20 of these pyramiding interviews, when carefully conducted, are generally sufficient to connect searchers with lead user innovators of the type they are seeking. [17]

Examples

Companies such as 3M, [18] Hilti, [19] Nortel, [18] Sense Worldwide, [20] [21] and Local Motors have utilized the lead user method to create new products to satisfy the needs of specific audiences of lead-users.

See also

Related Research Articles

<span class="mw-page-title-main">Innovation</span> Practical implementation of improvements

Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed entity, realizing or redistributing value". Others have different definitions; a common element in the definitions is a focus on newness, improvement, and spread of ideas or technologies.

In business and engineering, product development or new product development covers the complete process of bringing a new product to market, renewing an existing product and introducing a product in a new market. A central aspect of NPD is product design, along with various business considerations. New product development is described broadly as the transformation of a market opportunity into a product available for sale. The products developed by an organisation provide the means for it to generate income. For many technology-intensive firms their approach is based on exploiting technological innovation in a rapidly changing market.

Organizational learning is the process of creating, retaining, and transferring knowledge within an organization. An organization improves over time as it gains experience. From this experience, it is able to create knowledge. This knowledge is broad, covering any topic that could better an organization. Examples may include ways to increase production efficiency or to develop beneficial investor relations. Knowledge is created at four different units: individual, group, organizational, and inter organizational.

Commercialization or commercialisation is the process of introducing a new product or production method into commerce—making it available on the market. The term often connotes especially entry into the mass market, but it also includes a move from the laboratory into commerce. Many technologies begin in a research and development laboratory or in an inventor's workshop and may not be practical for commercial use in their infancy. The "development" segment of the "research and development" spectrum requires time and money as systems are engineered with a view to making the product or method a paying commercial proposition.

<span class="mw-page-title-main">Long tail</span> Feature of some statistical distributions

In statistics and business, a long tail of some distributions of numbers is the portion of the distribution having many occurrences far from the "head" or central part of the distribution. The distribution could involve popularities, random numbers of occurrences of events with various probabilities, etc. The term is often used loosely, with no definition or an arbitrary definition, but precise definitions are possible.

<span class="mw-page-title-main">Eric von Hippel</span> American economist (born 1941)

Eric von Hippel is an American economist and a professor at the MIT Sloan School of Management, specializing in the nature and economics of distributed and open innovation. He is best known for his work in developing the concept of user innovation – that end-users, rather than manufacturers, are responsible for a large amount of innovation. In 1986 he coined the term lead user to describe this phenomenon.

User innovation refers to innovation by intermediate users or consumer users, rather than by suppliers. This is a concept closely aligned to co-design and co-creation, and has been proven to result in more innovative solutions than traditional consultation methodologies.

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Service innovation is used to refer to many things. These include but not limited to:

  1. Innovation in services, in service products – new or improved service products. Often this is contrasted with “technological innovation”, though service products can have technological elements. This sense of service innovation is closely related to service design and "new service development".
  2. Innovation in service processes – new or improved ways of designing and producing services. This may include innovation in service delivery systems, though often this will be regarded instead as a service product innovation. Innovation of this sort may be technological, technological - or expertise -based, or a matter of work organization.
  3. Innovation in service firms, organizations, and industries – organizational innovations, as well as service product and process innovations, and the management of innovation processes, within service organizations.

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Kamalini Ramdas is a Professor of Management Science and Operations and Deloitte Chair in Innovation & Entrepreneurship at London Business School, with expertise in the areas of innovation, entrepreneurship, and operations management. Ramdas' research examines innovative approaches, including service innovation, operational innovation, and business model innovation, to accelerate value creation in various service and manufacturing industries.

The Trend Receiver Concept is a method for developing Customer Foresight and has been overall identified as an approach to develop foresight. At the core of the Trend Receiver Concept is the identification of suitable conversation partners, so called Trend Receivers, when developing foresight on the future demands and habits of consumers.

References

  1. ↑ Von Hippel 1986
  2. ↑ von Hippel, Eric (2017) Free Innovation MIT Press, Cambridge, MA Chapter 4
  3. ↑ Buenstorf, G. 2003. Designing clunkers: Demand-side innovation and the early history of the mountain bike. In Change, Transformation and Development, ed. J. S. Metcalfe and U. Cantner. Springer.
  4. ↑ Berthon et al. 2007
  5. ↑ Enos 1962, Von Hippel 1986, Shah 1999
  6. ↑ Von Hippel 1986, Urban & Von Hippel 1988, Morrison, Roberts & Von Hippel 2000, Shah 1999, Luthje 2000
  7. ↑ Von Hippel 1986
  8. ↑ Skiba & Herstatt 2009, Skiba 2010, Oliveira & Von Hippel 2011
  9. ↑ Urban & Von Hippel 1988
  10. ↑ Urban & Von Hippel 1988
  11. ↑ Morrison, Roberts & Von Hippel 2000
  12. ↑ Urban & Von Hippel 1988
  13. ↑ Enkel, Javier & Gassmann 2005, Luthje & Herstatt 2004
  14. ↑ Coyne 2000, Dehne 2003; Intrachooto 2004
  15. ↑ Lilien et al. 2002
  16. ↑ von Hippel, Eric and Sandro Kaulartz (2020) „Next-generation consumer innovation search: Identifying early-stage need-solution pairs on the web” Research Policy (Accessed Sept 10, 2020, von Hippel, Eric and Sandro Kaulartz (2020) „Next-generation consumer innovation search: Identifying early-stage need-solution pairs on the web” Research Policy (Accessed on Science Direct, Sept 10, 2020, Open Access)
  17. ↑ Lilien, Gary L., Pamela D. Morrison, Kathleen Searls, Mary Sonnack, Eric von Hippel, (2002) “Performance Assessment of the Lead User Idea Generation Process,” Management Science, Vol 48, No 8 (August) pp. 1042-1059.
  18. 1 2 "leaduser.com". leaduser.com. Retrieved 2012-06-01.
  19. ↑ "Developing New Product Concepts Via the Lead User Method: A Case Study in a "Low Tech" Field"" (PDF). Retrieved 2012-06-01.
  20. ↑ "Need extreme ideas? Talk to extreme consumers (Wired UK)". Wired.co.uk. 2012-05-22. Retrieved 2012-06-01.
  21. ↑ "Want Breakthrough Ideas? First, Listen To The Freaks And Geeks". Fastcodesign.com. Retrieved 2012-06-01.

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