User-driven innovation

User-driven innovation

1. What is user-driven innovation?

   • User innovation is when a firm prototypes and designs a product or service that is going to be used by set firm in order to benefit from it, not to sell it
     • It has a very direct benefit for the innovator
       • It makes things easier, more practical, and safer
     • Users are often firms or professionals

2. Theoretical explanations

   • Which users innovate and why?
     • User innovation is not an activity randomly distributed among users
       • Lead users
         • High expected benefits from innovation
           • The grater benefit an entity expects to obtain from innovation, the grater the entity's investment in obtaining a solution
             • A firm expecting benefits from selling the innovation will hesitate, while a user with a strong need for a solution might have hardly any choice
           • Indicator of innovation likelyhood
         • Position ahead of an important marketplace trend
           • Impact on the commercial attractiveness of innovations developed by users residing at the location in a marketplace
             • Some adopt innovation before others
             • Present day reality represents aspects of the future from the viewpoint of those with mainstream market needs
           • Indicates the commercial attractiveness of an innovation created by such a user
   • How do users innovate?
     • Innovative individual users purposefully seek other users to complement their capabilities
       • The purpose of this is to exchange ideas, experiences, possible solutions and further refine intermediate solutions
       • Lead users usually have a central position and often bridge different clusters or segments of users
         • Betweenness centrality
   • Why do users often freely reveal their innovations?
     • User innovation is often freely revealed
       • The innovator gives proprietary information on functioning and construction of the innovation to others at no cost
       • User innovators benefit from this in different ways
         • Being known for a helpful innovation increases a user's reputiation
         • The innovator usually increases its diffusion relative to what would occur if the charged for it
         • An adopting manufacturer may be able to produce the innovation and sell it at a price lower than the user's in house production cost
         • In innovation communities in particular, individual participantas may derive private value benefits from the fun and learning they gain from participation
         • Communities may also have established a "norm of sharing" with regard to giving assistance to and freely revealing the outcome of innovation projects, ignoring such norms would result in social costs

3. Methods for exploiting user innovativeness

   • The lead user method
     • Managerial heuristic that enables companies to search for particularly attractive user innovations and identify radically new business opportunities
       • Phase 1
         • Objectives are defined
           • Finding an innovative solution to problem X, or identifying an innovative product concept in market Y
       • Phase 2
         • Identification of major needs and trends
           • The three to five most importante trends are identified
             • Trends are those dimensions in which lead users are far ahead of the mass market
               • The function of these is to narrow the problem and to allow a systematic search for lead users
       • Phase 3
         • Identification of lead users
           • Broad search for individuals who are far ahead with regard to the trends identified and have high personal benefits from innovations
       • Phase 4
         • The lead user workshop
           • Once the lead users are identified, they are invited to a 2-3 day workshop in which company members from different functional areas also participate
   • Toolkits for user innovation and design
     • Coordinated sets of design tools that allow individual users to self design their own individual product according to their individual preferences and give visual and informational feedback
       • Many companies have started offering toolkits
         • These toolkits enable users to create their own microchips, machines, flavours, custom food, software, etc.
           • The best example of these is lego and the use of "lego bricks""
       • This method allows users to quickly test concepts as well as product or service limits. These designs and limits can be analyzed to improve or expand the offerings available to users.
   • Crowdsourcing
     • It consists of disseminating an identified problem with the user community to generate solutions through a reward for winning solutions.
       • Consumers can out-perform a firm's professionals in generating new product or service ideas
         • Firms are capitalizing on crowsourcing principles
       • It's particularly useful when the problem is ill-defined, ambiguous and requires substantial creativity to solve.
     • Also known as "broadcast search"
   • Combinations
     • Lead user, toolkits and crowdsourcing overlap and can be combined in many ways

4. Future developments

   • Currently we can observe an increase in user innovation
     • Many firms react to this trend and frequently use and experiement with ways of benefiting from user innovativeness
   • Our understanding of the most effective methods will increase in the future
     • The factors facilitating user innovation will develop further
       • Users will be able to innovate for and comunicate among themselves without a producing firm

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