WHERE DOES INNOVATION COME FROM?

For years we’ve been puzzled by the cognitive disconnect between our successful customer co-design practice and the commonly held belief that “customers aren’t good sources of innovative ideas because they can’t imagine what they haven’t experienced.”

In our consulting practice, we’ve rarely encountered a group of customers who weren’t extremely articulate and creative in designing solutions to their problems. We’ve seldom found customers who weren’t passionate about improv-ing the way they do things. We’ve never found customers who weren’t happy to tell our clients how they should revamp their processes.

The common wisdom that customers can’t create useful new products or processes may stem from a traditional manufacturing-centric world view: Users’ have needs; manufacturers discover these needs and design products to fill them. The customer as non-innovator world view is rein-forced by a marketing-advertising-centric world view: It’s the job of the advertiser to create the need, which the customer can then realize that he or she has, and then the marketer pitches the product in order to fill this previously unrecognized need.

The sources of innovation, and in particular, of discontinuous innovation—the kind of innovation that changes industries and creates whole new markets— has been the subject of a number of books that have won popular acclaim—from Clay Christensen’s Innovator’s Dilemma and Innovator’s Solution, to Evan Schwartz’s Juice. But only one recent book on innovation addresses the role of the customer or user in the process of innovation. That book is Eric von Hippel’s Democratizing Innovation.  Those of you who are familiar with Eric’s work will know that he is a Professor of Management and Innovation and heads the Innovation and Entrepreneurship Group at the MIT Sloan School of Management. In his earlier book, The Sources of Innovation,  he popularized the notion of “lead users” as one source of innovation.

In Democratizing Innovation, Eric makes a compelling case that lead users are, in fact, the most predictable source of breakthrough innovation. Instead of treating oddball customer requests as, well, oddball, you should be cherishing them as forerunners of profitable new product categories. You should foster a creative environment in which end-users are encouraged to strut their stuff. You should tap communities of users—people who are problem-solving and innovating as they go. Then, you’ll be able to quickly spot and commercialize more successful products than you would by sitting back in the lab and inventing solutions in response to real or perceived market needs. Let your customers do the innovation. Commercialize your customers’ solutions. That’s the democratization of innovation to which Eric refers—put the power to create new products and processes in the hands of your users.

Lead Users Create the Most Important Innovations

Eric von Hippel has studied innovation in fields as diverse as perfumes, mountain bikes, semiconductors, food, medical instruments, sporting goods and software. In this book, he cites studies across a wide variety of industries to show that both consumer and business users modify and/or develop products for their own use between 10% and 40% of the time. Even more significant is the growing set of data which shows that between 75% and 85% of the most important innovations (judged by their commercial success) have come from users.

What’s the Main Message of Democratizing Innovation?

The lead users of the products and services you offer—the people who push the envelope in the application of those products to meet their particular needs—are frequently able and willing to innovate for themselves. Lead users in both the markets you serve (and in markets you hadn’t thought of serving) are increasingly able and willing to tailor and/or to design products and services to meet their distinctive needs. By de-signing and/or customizing their own solutions to meet their very heterogeneous needs, your cus-tomers realize more benefit in much shorter time and at lower costs than they would by specifying, contracting and waiting for a customized pur-pose-built solution from you or one of your partners.

User-driven innovation is here to stay, given the design, prototyping, and information sharing tools that users now have at their disposal. Manufacturer-led innovation is passé. User-led innovation is now a fact of life.

Why Is User Innovation Important to Your Business and to Your Customer Experience Strategy?

If Eric von Hippel is correct—and we believe he is—you’ll want to beef up your organization’s interactions with lead users—“the customers whose present strong needs will become general in the marketplace months or years into the future.”  These are the users who are already pushing the envelope in tailoring your products and services to meet their specific needs.

Here’s our take: By better understanding the context in which your most advanced end-users are applying and/or extending your products and services, you’ll gain foresight into new markets, applications, and extensions. However, don’t think of harnessing customer innovation as the function of solely your R&D organization. Instead, we recommend that you ...

 ***References***

1. Eric von Hippel, Democratizing Innovation (MIT Press, 2005).
2. Eric von Hippel, The Sources of Innovation (Oxford University Press, 1988).
3. From the Abstract of: Lead Users: An Important Source of Novel Product Concepts,” Management Sci-ence 32, No. 7 (July): 791-805; http://web.mit.edu/evhippel/www/papers/Lead%20Users%20Paper%20-1986.pdf