Workshop on Lead User Methodology

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Workshop on Lead User Methodology
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Agree or Disagree?

• Company A develops an (incrementally) innovative
  product. The MR department conducts three focus
  groups of eight existing customers per group and
  ascertains the feasibility of this innovation.
  All three focus groups record unanimous approval.
  Based on these results, Company A is delighted.
  It plans to introduce the product in six months
  with a launch budget of 1 M.

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Agree or Disagree?

• Company B develops an (incrementally) innovative
  product targeted to a new market segment. The MR
  department conducts a mail survey of the
  feasibility of this innovation. Questionnaires
  were sent to 2000 existing customers. 220
  responses were received. 80 of the responses
  favored introducing the product. Based on these
  results, Company B is delighted. It plans to
  introduce the product in six months with a
  launch budget of 1 M.

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Agree or Disagree

• In general, a random sample of 10000 customers is
  preferable to a random sample of 2000 customers.

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Moral of the Story!

• Population vs. sample
• Generalizing vs. diagnosing
• Probability vs. non probability sample
• Qualitative research vs. quantitative research.
  Law of large numbers.
• What do you do for radical or disruptive
  innovations?

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Why is product development difficult?

• Need information resides with the customer
  solution information is with the manufacturer.
  This discrepancy creates problems. Lead user
  analysis.
• Video on Lead Users (Thanks to Dr. Eric Von
  Hippel!)
• http//mit.edu/evhippel/www/tutorials.htm

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Users as Innovators

• It is a user innovation when an individual or a
  firm expects to benefit by using it.
• It is a manufacturer innovation when the
  developer expects to benefit by making and
  selling it.

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Users as Innovators (2)

• Why? To satisfy custom needs.
• Users tend to innovate collaboratively in
  communities and freely reveal their innovations.
  Free revealing makes economic sense.

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How often do Users Innovate?

• 0 in Plastics
• 15 in the pultrusion machinery
• 25 in the computer industry
• 29 in the semiconductor industry
• 30 in the chemical processes and process
  equipment
• 67 in process machinery
• 77 in scientific instruments
• You get the picture.

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Characteristics of Lead Users

• Lead users have new product (or service) needs
  much before the bulk of the market.
• Lead users expect to benefit by solving their
  problems themselves.
• Differences between lead users and leading edge
  customers or early adopters?

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Target and Analogous Markets

• If an automobile company wanted to design an
  innovative braking system, what should they do?
• If medical imaging technicians wanted to obtain
  innovative capabilities to detect extremely small
  tumors, what should they do?
• A fridge manufacturing firm looking for cooling
  solutions?

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Democratizing Innovation

• In some cases, user innovation communities can
  supplant product development by manufacturers.
  EXAMPLE www.zeroprestige.org
• We are interested in furthering kite-powered
  sport by enabling an 'open source' (shared
  knowledge and documentation) approach to
  kite-building and things kite-powered in general.

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Democratizing Innovation (2)

• Users developed and posted their kite designs -
  often better than designs by kite manufacturers.
• Kite design tools posted by users on
  Zeroprestige.org are often better than
  manufacturers internal tools.
• Today some firms are moving to a build only
  specialization leaving product design innovation
  to the user community.

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Democratizing Innovation (3)

• This is happening in many fields international
  community of leading spine surgeons (lead users
  in their field)
• AFOLs of LEGO200 RD people inside LEGO, 20000
  AFOLs. LEGO Mindstorms. LEGO has links to
  innovating fans.

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Steps in the Lead User Process

• Step 1 Laying the foundation
• Step 2 Determining the trends
• Step 3 Identifying lead users
• Step 4 Developing the breakthroughs

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National Priority

• Danish Government makes support of user-driven
  innovation a national priority.
• Source Nye Mal Regerings Grundlag, VK
  Regeringen II, February, 2005.

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General Principles of Lead User Research

• Specify a segment
• Identify important trend(s)
• Identify lead users with respect to trend.
• Develop new concepts. Identification of
  functionally novel products at the leading edge
  versus evaluation of commercial potential at the
  means.