Lead user

Lead user is a term developed by Eric von Hippel in 1986(Von Hippel 1986). 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.

In other words, lead users are users of a product or service that currently experience needs still unknown to the public and who also benefit greatly if they obtain a solution to these needs. Because lead users innovate, they are considered to be one example or type of the creative consumer phenomenon, that is, those "customers who adapt, modify, or transform a proprietary offering" (Berthon et al. 2007).

Lead user method introduction

The Lead User Method is a market research tool that may be used by companies and / or individuals seeking to develop breakthrough products. Lead User methodology was originally developed by Dr. Eric von Hippel of the Massachusetts Institute of Technology (MIT) and first described in the July 1986 issue of Management Science. In contrast to the traditional market research techniques that collect information from the users at the center of the target market, the Lead User method takes a different approach, collecting information about both needs and solutions from the leading edges of the target market and from analogue markets, markets facing similar problems in a more extreme form.

The 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).

The methodology is based upon the idea that breakthrough products may be developed by identifying leading trends in the to-be-developed product’s associated marketplace(s). Once the trend or broader problem to be solved 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 policemen, home inspectors, or others who require bright, efficient lights as part of their day-to-day business. Once these “lead users” have been identified, networking is employed and the lead users are interviewed so as to gain their insight into how they solve the problem for themselves. The lead users are also queried to determine whether they have knowledge of individuals or organizations who are considered to be “outside the market” and have even more extreme portable lighting needs than the policemen or home inspectors; in our example, these users might be photographers, divers, or movie lighting designers. (See the “Examples of Lead User Method” section of this article for more examples of lead user identification.) By learning from both the lead users and the outside-the-market users, companies may identify new methods or approaches towards creating innovative products that are true breakthroughs via ideas that may not have surfaced by simply examining existing users with traditional market research 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 (Enos 1962 Von Hippel 1988, Shah 1999). Additionally, it was found that innovation by users tended to be concentrated among the “lead users” of those products and processes (Von Hippel 1986, Urban & Von Hippel 1988, Morrison, Roberts & Von Hippel 2000, Shah 1999, Luthje 2000). These “lead users” were individuals or organizations who had experienced needs for a given innovation earlier than the majority of the target market (Von Hippel 1986). Recent research highlights the fact that lead users exist for services also (Skiba and Herstatt 2009, Skiba 2010, Oliveira and Von Hippel 2011).

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 (1988) 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, Urban and Von Hippel (1988) found that lead user theory can be effectively utilized in industrial software product development; Morrison, Roberts, and Von Hippel (2000) found that many IT innovations developed by libraries had broader potential value; and Luthje (2003) found that 48 percent of surgical innovations developed by surgeons in university clinics in Germany could be produced as commercial products.

Based on its widespread success, it has been suggested that the lead user methodology should be integrated into corporate new product development efforts (Urban and Von Hippel, 1988). 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 (Enkel, Javier, and Gassmann, 2005; Luthje and Herstatt, 2004). The idea is also spreading rapidly in the business world (Coyne, 2000; Dehne, 2003; Intrachooto, 2004); 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 (Lilien et al., 2002).

Potential disadvantages of the lead user method

While the lead user methodology has proven to be very successful, select literature highlights some product development scenarios in which the Lead User method may be less effective. For example, the following was pointed out on October 14, 2007 on “TechITEasy.org”:

• "Highly secretive industries where lead users may not feel comfortable or may not be able to disclose information and knowledge are not suited for this [lead user] process;"
• "The lengthy [nature of the lead user] process can prevent this methodology from being applied effectively in industries with really short term innovation cycles or where quick turnaround from research to market delivery is required;"
• “The [lead user method] LUM is better suited to meet the needs of the industrial goods market rather than consumer goods market as lead users of industrial goods can typically be identified more reliably than lead users of most consumer goods.”^[1]

Literature also suggests that an additional obstacle to the adoption of this kind of process is related to a general resistance to innovation and / or change that can be found in typically bureaucratic organizations; these organizations tend to resist disruptive changes in processes which many force the company to evolve, (although this is exactly the purpose of such an approach). While the lead user methodology can reliably lead to breakthroughs, adopting the approach can be difficult for some organizations and on the whole, the technique itself is useful to the extent that the product and / or service under study is lead user friendly (i.e. if it’s not a top-secret or quick time-to-market idea). [need reference to the mention literature]

Examples of lead user method

The lead user method can be utilized in any industry and at any level of product complexity. The following are examples where the Lead User method was utilized to create a new product which satisfied a specific need:

3M

The lead user method was utilized in 3M’s Medical-Surgical Division to develop a breakthrough surgical drape product. 3M assembled a team of lead users which included a veterinarian surgeon, a makeup artist, doctors from developing countries and military medics.^[2]

Hilti AG

Hilti utilized the lead user method to develop a simplified pipe hanger. Hilti put together a lead user group consisting of lead layout engineers, researchers from construction departments of institutes, an engineer from a professional organization in Bonn, and two engineers from municipal building departments.^[3]

Nortel

Nortel utilized the lead user method to develop a new class of web applications for voice, video and data. Nortel put together a group of lead users including law enforcement professionals, paramedics, military personnel, animal trackers and professional storm trackers.^[2]

Sense Worldwide

Sense Worldwide has been featured in Wired Magazine ^[4] and Fast Company ^[5] for using Lead Users such as dominatrices, Nigerian hackers, medical tourists and OCD sufferers in their innovation work.

Local Motors

Local Motors is the first car company to utilize the lead user method to co-create vehicles online with its virtual community of designers, fabricators, engineers and enthusiasts. The world’s first vehicle produced using co-creative method is the Local Motors Rally Fighter.

See also

• Participatory design
• Crossing the Chasm
• Eric von Hippel
• Innovation
• Marketing
• Product lifecycle management
• Technology adoption lifecycle
• Toolkits for user innovation
• User innovation
• Empathic design
• Whole Product

References

External links

Websites

• Eric Von Hippel's books on user innovation, available under the creative commons license.
• OpenInnovators.de The official Open Innovation Community for Germany, Switzerland & Austria

Papers

• Von Hippel, E. (1986), "Lead Users: A Source of Novel Product Concepts", Management Science, 32 (7): 791–806, doi:10.1287/mnsc.32.7.791, JSTOR 2631761
• Berthon, P.R.; Pitt, L.F.; McCarthy, I.P.; Kates, S.M. (2007), "When Customers Get Clever: Managerial Approaches to Dealing with Creative Consumers", Business Horizons, 50 (1): 39–47, doi:10.1016/j.bushor.2006.05.005
• Von Hippel, E. (2005), Democratizing Innovation, Cambridge, MA: MIT Press.
• Urban, G.; von Hippel, E. (1988), "Lead User Analyses for the Development of New Industrial Products", Management Science, 34 (5): 569–82., doi:10.1287/mnsc.34.5.569, JSTOR 2632079
• Von Hippel, E. (1994), "Sticky Information and the Locus of Problem Solving: Implications for Innovation", Management Science, 40 (4): 429–40, doi:10.1287/mnsc.40.4.429, JSTOR 263275
• Morrison, P.D.; Roberts, J.H.; Von Hippel, E., "Determinants of User Innovation and Innovation Sharing in a Local Market", Management Science, 46 (12): 1513–27, doi:10.1287/mnsc.46.12.1513.12076, JSTOR 2661530
• Luthje, C.; Herstatt, C. (2004), "The Lead User Method: An Outline of Empirical Findings and Issues for Future Research", R&D Management, 34 (5): 553–68, doi:10.1111/j.1467-9310.2004.00362.x, SSRN 610457
• Intrachooto, S. (2004), "Lead Users Concept in Building Design: Its Applicability to Member Selection in Technologically Innovative Projects", TQM Magazine, 16 (5): 359–68, doi:10.1108/09544780410551304
• Lilien, G.; Morrison, P.D.; Searls, K.; Sonnack, M.; Von Hippel, E. (2002), "Performance Assessment of the Lead User Generation Process for New Product Development", Management Science, 48 (8): 1042–59, doi:10.1287/mnsc.48.8.1042.171, JSTOR 822674
• Shah, Sonali (May 1999), "Sources and Patterns of Innovation in a Consumer Products Field: Innovations in Sporting Equipment" (PDF), MIT Sloan School of Management Working Paper, #410
• Luthje, Christian (2000), "Characteristics of Innovating Users in a Consumer Goods Field, An empirical study of sport-related product consumers", MIT Sloan School of Management working paper, doi:10.1016/S0166-4972(02)00150-5
• Morrison, Pamela D.; Roberts, John H.; Midgley, David F. (2002), The Nature of Lead Users and Measurement of Leading Edge Status (PDF)
• Enos, J. L. (1962), Petroleum Progress and Profits: A History of Process Innovation, Cambridge, MA: MIT Press
• Skiba, F.; Herstatt, C. (2009), "Users as sources for radical service innovations: opportunities from collaboration with service lead users", International Journal of Services Technology and Management, 12 (3): 317–37, doi:10.1504/ijstm.2009.025393
• Skiba, F. (2010), Service Users as Sources for Innovation - An Empirical Study in the German Services Industry, BoD, ISBN 978-3-8423-2609-5
• Oliveira, P.; Von Hippel, E. (2011), "Users as Service Innovators: The Case of Banking Services" (PDF), Research Policy, 40 (6): 806–18, doi:10.1016/j.respol.2011.03.009
• Eisenberg, Ivy. "Lead-User Research for Breakthrough Innovation (Lead-user research can help companies uncover both unmet customer needs and the innovative solutions that leading-edge users are developing to meet those needs)". Industrial Research Institute. Retrieved 22 April 2014.