“Leveraging User Innovation for National Benefit: Changing the Innovation Paradigm”
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This document discusses leveraging user innovation for national benefit by changing the innovation paradigm. It outlines the traditional manufacturer-centered innovation model and introduces the user-centered innovation paradigm where lead users innovate solutions to their own needs and freely share their innovations. The document then discusses how firms can profit from user innovations developed by lead users using methods like the lead user method and community-based innovation. It proposes that nations can gain competitive advantage by supporting user-centered innovation models like the Danish Lab model.
“Leveraging User Innovation for National Benefit: Changing the Innovation Paradigm”
- 1. Leveraging user innovation for national benefit: Changing the innovation paradigm Christopher Lettl, lettl@asb.dk Christoph Hienerth, ch.ivs@cbs.dk Individual Lead Users Innovating User Firms
- 2. Agenda § The paradigm of user-centered innovation § How firms can profit from user-centered innovation § Lead User method § Community based innovation § Using user-centered innovation to gain national competitive advantage The Danish Lab Model
- 3. User-Centered (Democratized) Innovation Paradigm Lead Users innovate to solve their own needs at private expense -and then freely reveal their innovations Traditional, Manufacturer-Centered Innovation Paradigm Manufacturers identify user needs, develop products at private expense, And profit by protecting and selling what they have developed. Users innovate here First manufacturer product appears here # of users perceiving need Target Market Time
- 4. How we discovered that users develop many major new products: Example of scientific instruments Innovations Affecting First Major Minor Device Improvement Improvement Gas Chromatography 1 11 - Nuclear Magnetic 1 14 - Resonance Spectrometry Ultraviolet 1 5 - Spectrophotometry Transmission Electron 1 14 63 Microscopy Total 4 44 63
- 6. Users develop MOST commercially First device used in field important instruments developed and built by: Innovations % User User Mfg. developed for: Gas Chromatography 83% 10 2 Nuclear Magnetic 80% 12 3 Resonance Spectrometry Ultraviolet 100% 6 0 Spectrophotometry Transmission Electron 72% 44 17 Microscopy Total 77% 72 22
- 7. Examples of user-developed innovations (medical market) Robotic system for neurosurgery Biocompatible implant for hernia repair
- 8. The economics of user-centered innovation is now on firm ground Users innovate because they often have a higher benefit from an innovation than manufacturers (von Hippel 1988, Urban and von Hippel 1989, Herstatt and von Hippel 1992, Riggs and von Hippel 1994, Morrison et al. 2000, Luethje, 2003; Luethje et al. 2005, von Hippel, 2005; Franke and Shah 2003, Luethje 2003, Franke et al. 2006) Users innovation costs are often lower than manufacturers‘ (Slaughter, 1993; Luethje et al, 2005; von Hippel, 2005)
- 9. Firms can profit from innovations developed by users– because innovating users tend to be ahead of the market - they tend to be LEAD USERS “Lead Users” are users that: 1. Have needs that foreshadow general demand in the marketplace; 2. Expect to obtain high benefit from a solution to their needs. (Such users are more likely to innovate – “Necessity is the mother of invention!”)
- 10. The stronger an innovator’s lead user characteristics, the more commercially desirable is its innovation § Innovations developed by lead users have high commercial value (e.g. Herstatt and von Hippel,1992; Morrison et al., 2000; Lilien et al., 2002) § Commercial value of innovations users develop goes up as “lead user” characteristics of innovators intensify – (Franke and von Hippel, 2003; Franke et al., 2006)
- 11. Titelmasterformat durch Klicken bearbeiten Empirical test of the quality of lead user ideas A study conducted at 3M shows clear advantages of lead user generated ideas compared to ideas generated by traditional marketing research methods, e.g. lead user ideas have a more than 8times higher sales potential Lead user Ideas Non - Lead user Ideas p (n = 5) (n = 42) Novelty relative to competition 1 9,6 6,8 0,01 Originality / newness of customer needs addressed 1 8,3 5,3 0,09 Strategic Importance 1 9,6 7,3 0,08 Idea types 0 incremental 41 incremental 0,01 5 major product lines 1 major product line Estimated Sales in year 5 (deflated) 146 Mio. $ 18 Mio. $ 0,00 1 Scale: 1 = very low, 10 = very high Source: Lilien et al. (2002) 11
- 12. Lead Users can develop Inventions with Strong Technological Merit
- 13. Titelmasterformat durch Klicken bearbeiten Lead user method The lead user method is a tool to identify and integrate lead users into concrete innovation projects of a company. Basically there are four main steps: Phase 1: Phase 2: Phase 3: Phase 4: Start of the Identification of Identification of Start des Lead Lead user lead user project important needs lead users User Projekts workshop and trends and ideas 13
- 14. Titelmasterformat durch Klicken bearbeiten Lead user method / phase 1 The lead user method has four steps: Phase 1: Start of the lead user project • Formation of interdisciplinary team • Specification of the search field (target market) – problem definition • Definition of project goals (deadlines, budget, specification and requirements for innovative concepts) 14
- 15. Titelmasterformat durch Klicken bearbeiten Lead user method / phase 1 Example: lead user project with a manufacturer of escalators Search field: Pre-assembly, transport and insertion of escalators 15
- 16. Titelmasterformat durch Klicken bearbeiten Lead user method / phase 2 The lead user method has four steps: Phase 1: Phase 2: Start of the Identification of lead user Start des Lead important needs project User Projekts and trends • Scanning of literature, internet, data bases • Interviews with market and technology experts and users • Evaluation of trends • Selection of trends that are important for the search field 16
- 17. Titelmasterformat durch Klicken bearbeiten Lead user method / phase 2 Example: project with manufacturer of escalators Selection of 3 out of 8 trends, basis for lead user identification Pre-assembly, transport and insertion of escalators High degree of Modular design pre-fabrication Plug`n´Play Space optimization Hardware/Software Sources: 72 Interviews, 81 secondary data sources 17
- 18. Titelmasterformat durch Klicken bearbeiten Lead user method / phase 3 The lead user method has four steps: Phase 1: Phase 2: Phase 3: Start of the Identification of Identification of lead user Start des Lead important needs lead users and project User Projekts and trends lead user ideas Search for lead users in the target market Search for lead users in analogous markets Analogous market: Evaluation of lead users A market in which the same trend that was identified as being Tracking and evaluating first ideas relevant for the target field problem plays an important role 18
- 19. Titelmasterformat durch Klicken bearbeiten Analogous markets Example project Problem: preassembly, transportation and insertion of current solution Study 5 Search field: innovative solutions for pre-assembly, transport and insertion Target market E.g. modular design / plug & play trends leading edge model maker Model making leading edge Analogous Power plant engineering power plant Markets logistic engineer Crane engineering leading edge crane engineer 19
- 20. Titelmasterformat durch Klicken bearbeiten Lead user method / phase 4 The lead user method has four steps: Phase 1: Phase 2: Phase 3: Phase 4: Start of the Identification of Identification of Development of lead user important needs lead users and innovative Start des Lead project and trends lead user ideas concepts (lead User Projekts user workshop) Conducting the workshop with lead users and company members Development of innovative concepts Evaluation of innovative concepts 20
- 21. Titelmasterformat durch Klicken bearbeiten Lead user method / phase 4 In a three days workshop lead users, together with company employees, develop innovative solutions Thursday Friday Saturday Working session 1 Working session 3 Plenum Session Plenum Session and Evaluation Working session 2 Plenum Session Project Introduction Group formation 3 Teams consisting of: Get together Evening program LU LU DOC COMP MOD LU 21
- 22. Titelmasterformat durch Klicken bearbeiten Positive outcomes in all lead user projects In 10 lead user projects we identified 81 lead users and worked with different companies successfully Industry Empl. Sales Search field Drilling oil and gas wells 49,919 $19,949.80 M Value added services at petrol stations Alcoholic and other beverages 38 $22.20 M Functional beverages/packaging Communication systems (air traffic control) 553 $97.70 M Decision support for air traffic controllers Electrical and electronic equipment 7,852 $5,933.30 M B2B communication systems for office workplaces Escalators and elevators 782 $255.20 M Pre-assembly, transport and insertion of escalators Logistic systems 45 $2.8 M B2B stock logistics Telecommunications 244,000 $76,322.90 M Online entertainment for broadband networks Construction machinery, cranes 3,087 $665.90 M Stability monitoring for truck-cranes Escalators and elevators 782 $255.20 M Step chain systems Motor vehicle parts and accessories 90 $101.25 M Crush protection for passenger cars Study 1 Study 2 Study 3 Study 4 Study 5 Study 6 Study 7 Study 8 Study 9 Study 10 22
- 23. Titelmasterformat durch Klicken bearbeiten Positive outcomes in all lead user projects A first analysis shows that the concepts developed by the lead users score significantly higher on novelty, value and realizability, compared to company internal concepts 5 Ref. 2.5 Value 3.8 3.7 3.5 1 Novelty Value Realizability t-test for single sample, T = 19.18*** T = 22.00*** T = 14.53*** test value=2.50b df = 80 df = 80 df = 80 mean diff. = 1.29 mean diff. = 1.20 mean diff. = 0.99 n=40; ***p<0.001, two-tailed tests a…mean values, five point rating scale: 1=very low, 5=very high 23
- 24. International community of leading spine surgeons (lead users in their field) 358 members from 11 countries 400 cases and 1500 reviews Involvement with medical device manufacturers and patent attorneys
- 25. The Case of Lego Mindstorms Mindstorms robot kit The brain • Computer “brain” within Lego brick Movement • 3 stepper motors Sensors • Light • Touch • Temperature Teaching • Kid-friendly, graphical programming environment • Programs downloaded from PC via infrared Price ~ $200
- 26. Lego mindstorms user communities grew rapidly Members - without company involvement 900 800 700 600 500 400 Robots become widely available Lego robots August 1998 300 announced January 1998 200 100 Nov Jun Feb Oct Jun Jan Aug Apr 1997 1998 1999 1999 2000 2001 2001 2002
- 27. Today, LEGO is creating links to innovating fans Top innovators from For NXT Mindstorms Robot product line: “Adult Fans of Lego” • Lego adopts key existing AFOL innovations participate in LEGO factory • Lego asks a few AFOL members to join product development teams R&D team “Lego Factory” Website links young fans who want to share their designs
- 28. National competitive advantage with user-centered innovation: the DANISH USER INNOVATION LAB Leading academics in user-centered innovation Eric von Hippel, Yun Mi Antorini, Lars Bo Jeppesen, Christoph Hienerth Advanced Danish Christopher Lettl practices firms Work with Leading Danish Firms Lego, Novo Nordisk, Danisco Bang & Olufson, Coloplast, IO Interactive
- 29. How to start your own national user-centered innovation program § Staff some professorships in top institutions with leading specialists in user-centered innovation § Set up a program to fund research and diffusion efforts in user-centered innovation § Professors and firms will set up a collaborative academic / industry Lab to develop and test and diffuse best practices in user-centered innovation. § Adapt government innovation policies to support user-centered innovation − Support development of collaborative innovation tools − Support users’ rights to modify standard products