Lead User Process

Innovation method for breakthroughs at 3M

New product design and development

Amirkabir University of Technology

Dr. Saeed Mansour

Golnar Zamani

Abstract

3M has been known for decades as an entrepreneurial company that peruses growth through innovation. It generates a quarter of its annual revenues from products less than 5 years old. Long before “reinvention” became a buzzword of American business, 3M already had made change a central part of its corporate culture [1]. Many say the company’s success over the years is linked to its ability to change as 3M, its products and the world marketplace evolves. Once 3M top management has long felt that the 3M innovation process was being focus on incremental improvements to existing product lines. They urgently wanted to improve matters, and wanted especially to improve 3M's ability to respond to the "unarticulated needs" of customers by providing breakthroughs and services. Among many methods of innovation that the 3M used to improve their capability of making breakthroughs, The Lead User process offered a promising solution to that problem.

Von Hipple (1999) marks that the Lead User market research method is built around the idea that the richest understanding of new product and service needs is held by just a few "Lead Users." They can be identified and drawn into a process of joint development of new product or service concepts with manufacturer personnel. In this research after a general description of innovation definition, the 3M Company is introduced as the research case study. In the fourth part the culture and methods of innovation that made or used by the 3M is discussed. And then the applications of a Lead User market research method carried out by the 3M Company, a major American manufacturer of products and materials has been interpreted.

Key words

Innovation, 3M Company, Lead User System

Table of Contents

Part 1: Basics of project

1.1. Introduction ……………………………………………………………………….

1.2. Limitations ………………………………………………………………………….

1.3. Importance of the work ……………………………………………………..

1.4. Method of research ……………………………………………………………

Part 2: Innovation

2.1. Definition of innovation ……………………………………………………..

2.2. Related concepts ………………………………………………………………..

2.2.1. Innovation and growth ……………………………………………….

2.2.2. Innovation and design ………………………………………………..

2.2.3. Innovation and failure ………………………………………………..

2.2.4. Innovation and customers ………………………………………….

2.2.5. Innovation and knowledge …………………………………………

2.3. Drivers of innovation ………………………………………………………….

2.3.1. Emerging technologies ……………………………………………….

2.3.2. Competitor actions …………………………………………………….

2.3.3. New ideas ……………………………………………………………………

2.3.4. Emerging changes in the external environment ………….

2.4. Industrial innovation ………………………………………………………….

2.5. Product innovation …………………………………………………………….

2.6. Business innovation ……………………………………………………………

Part 3: Introduction of case study; 3M Company

3.1. 3M Company ……………………………………………………………………..

3.2. History of 3M …………………………………………………………………….

3.3. Company profile …………………………………………………………………

3.4. 3M performance ………………………………………………………………..

3.5. 3M ranking and recognition ……………………………………………….

3.6. 3M trademarks ………………………………………………………………….

Part 4: Ways of innovation at 3M Company

4.1. 3M breakthrough products ………………………………………………..

4.2. 3M corporate culture for innovation ………………………………….

4.2.1. The 15% option ………………………………………………………….

4.2.2. Speed capital ………………………………………………………………

4.2.3. Dual career path …………………………………………………………

4.2.4. Reward and recognitions ……………………………………………

4.3. Essentials for innovation at 3M …………………………………………..

Part 5: Lead user system

5.1. Lead user system: A different approach ……………………………..

to concept development …………………………………………………….

5.2. Characteristics of lead user approach …………………………….…..

5.2.1. Lead user research and leading edge users ………………….

5.2.2. Lead user research and lead user experts …………………….

5.2.3. Lead user research and concept development …………….

5.3. Lead user approach in process ……………………………………….….

5.3.1. Laying the foundation …………………………………………….….

5.3.2. Determining the trends ………………………………………………

5.3.3. Identifying lead users ………………………………………………….

5.3.4. Developing breakthroughs …………………………………………

5.4. Users in lead users system ………………………………………………….

5.5. Different types of lead users ……………………………………………….

5.6. Benefits of Lead User method in brief …………………………………

List of Illustrations

Figure 3.1. ………………………………………………………………………………………

Figure 4.1. ………………………………………………………………………………………

Figure 5.1. ………………………………………………………………………………………

Figure 5.2. ………………………………………………………………………………………

List of Tables

Table 3.1. ………………………………………………………………………………………..

Table 4.1. ………………………………………………………………………………………..

Lead User Process

Innovation method for breakthroughs at 3M

Part 1: Basics of project

1.1. Introduction

To clarify the Lead User Process: Innovation method for breakthroughs at

3M as the topic of this research it has been tried to explants the general

definition of innovation and different derivations and concepts of this term in

the first place. In the next step the 3M Company (the case study of this

project), has been introduced through its history and profile and operations. In

the last two parts the methods and cultures of innovation in 3m Company has

been named and the Lead User approach specifically has been defined as the

key strategy of 3M toward its innovation.

1.2. Limitations

This study is not attempting to identify or compare different methods of

innovation with each other inside or out of the 3M Company. The research is

restricted to identify and gather basic data about the approaches of 3M

Company toward innovation for their breakthroughs. Time limitation can be

named as the most important Constraint of this project.

1.3. Importance of the research

In the past, many organizations have been able to survive even with very

limited amounts of innovation. They focus on providing quality products and

simply update them to a level that maintains their competitiveness in the

market. This method still applies to some products with long lifecycles and few

opportunities for innovation. Recently however, organizations need more than

good products to survive; they require innovative processes and management

that can drive down costs and improve productivity. Consumer expectations

also drive the amount of innovation in the market. Modern consumers are

more informed and have more options in terms of what they buy and who

they buy it from [3].

Innovation is important as it is one of the primary ways to differentiate

products from the competition. And in a very broad sense, it is important to

the advancement of society around the world. New and innovative products

can increase the standard of living and provide people with opportunities to

improve their lives. Breakthroughs in medicine and technology have

significantly improved living standards around the world. Innovation has also

lead to significant improvements in the way businesses operate and has closed

the gaps between different markets [3].

1.4. Method of research

In this study, documentary investigation and desk research and a case study

is used for the research. In this scope of study no further attempts in searching

for data was necessary.

The Vancouver referencing method as the official term of referencing

method in Amirkabir University of Technology has been used for this research

as well.

Lead User Process

Innovation method for breakthroughs at 3M

Part 2: Innovation

2.1. Definition of innovation

Innovations can be in the form of new products or services, or cost-reducing

process improvements, or innovative business models and methods. The

benefits of innovation occur in all aspects of the profit loss statement:

innovators drive additional sales volume, achieve price premiums and reduce

costs through process improvements [4]. In other words, innovation is the

development of new customer’s value through solutions that meet new needs,

inarticulate needs, or old customer and market needs in new ways. This is

accomplished through different or more effective products and processes or

even services and technologies or ideas that are readily available to markets

and governments and society. Innovation has been and continues to be an

important topic of study for different disciplines [5].

2.2. Related concepts

Innovation is often used in conjunction with some other related terms. To

explore the term of innovation in more detail in order to get a deeper

understanding, some of the related concepts with innovation need to be

explained [5].

2.2.1. Innovation and growth

Innovation is about developing growth. According to Drucker (1988),

innovation can be viewed as a purposeful and focused effort to achieve change

in (an organization’s) economic or social potential. Bottom-line growth can

occur in a number of ways, such as better service quality and shorter lead

times in nonprofit organizations and cost reduction, cost avoidance, and

increased turnover in profit-focused organizations [5].

2.2.2. Innovation and design

The term design in the context of innovation is defined as “the conscious

decision-making process by which information (an idea) is transformed into an

outcome be it tangible (product) or intangible (service)” [5]. The design activity

draws heavily on creativity to resolve issues such as the aesthetics, form, and

functionality of the eventual outcome. In this way, during the exploitation

phase of the innovation process, organizations engage in design activities that

will produce an output that provides the optimum fit with market

requirements. Although design is an integral part of the exploitation phase of

an innovation, it is only one aspect. Exploitation can include other elements,

such as process development and market preparation [6].

2.2.3. Innovation and failure

One of the first writers to emphasize the importance of innovation was

Schumpeter (1942), who described innovation as “creative destruction” that is

essential for economic growth. Innovation is essential for helping organizations

grow. Growth is often measured in terms of turnover and profit, but growth

can also occur in knowledge, human experience, and the efficiency and quality

of products, processes, and services. The innovation process will naturally

involve unsuccessful ideas. These are seen as a natural byproduct of the

innovation process. In order for some ideas to succeed, many more must fail.

Organizations can learn from these failures and bring new knowledge (and

sometimes technology) to use in future innovative actions that may benefit the

organization. Organizations that can successfully sift out the good ideas from

the bad will be more adaptable than those that cannot do so. In managing the

innovation process, destroying poor ideas is often as important as nurturing

good ones. Destroying poor ideas early on allows scarce resources to be

released and refocused on new ideas [5].

2.2.4. Innovation and customers

An innovation must add value to customers to make them purchase or

consume the product or service or perceive an improvement. An important

part of the exploitation process is ensuring that the innovation adequately

fulfills prospective customers’ needs. The better the innovation fulfills

customer needs, the more likely customers are to adopt it. A common mistake

technology companies make is to focus on the technological capability of their

offering rather than on how that technology can satisfy customer needs. It is

important to emphasize that a customer is anyone who purchases or uses a

product or service. Customers can include students who purchase a book in

the university bookstore, patients who use services in a hospital, or members

of the public who use the services of a local library [6].

Customers can also be internal to an organization. University lecturers who

offer a service to students are in turn customers of the library, for example.

Doctors who deliver a service to patients are also customers of support

laboratories, and librarians are customers of the library’s computer service

department. When we use the term organization in this book, we refer to the

organization around which innovation is focused. This can be an entire

company, a department within a company, or a team of individuals [5].

2.2.5. Innovation and knowledge

Innovation is built on a foundation of creativity and sometimes on

invention, resulting in the creation of new knowledge and learning within the

organization. Even when failures occur, the learning gained can be a valuable

asset for the organization. The scope of innovation exists primarily within the

realm of the individual and the collective knowledge of the organization. This

has become increasingly evident as the complexity of technology and markets

have increased. Therefore, the knowledge reservoir of the organization

determines the type and level of innovation possible. If an organization’s

culture and routine are capable of capturing knowledge from past failures,

then future innovative efforts will not repeat the mistakes of the past.

Organizations that develop such knowledge systems are in a better position to

store and share this knowledge so that it will improve the innovation process

through enhanced idea generation, better decision making, and more effective

exploitation. In this way, all ideas, whether successful or not, can contribute to

the organization’s long-term success [7].

2.3. Drivers of innovation

Various factors encourage an organization to innovate. Each of these

drivers demands continuous innovation and learning so that the process can

be repeated continuously. These drivers also help to create a sense of urgency

around the need to create new organizational goals and generate new ideas

for meeting these goals. These drivers can be summarized as follows [5]:

2.3.1. Emerging technologies

These have the potential for significant innovation across the organization

and can be the basis for innovative products, processes, and services that can

revolutionize the fortunes of an organization. In the past, organizations

developed technologies in large R&D laboratories; however, in today’s

environment the sources of emerging technology are often far too prolific for

any one organization to develop internally. Consequently, organizations

expend more resources scanning the environment for potential technological

opportunities. Sources of emerging technology can include universities, high-

technology startups, and competing organizations [5].

2.3.2. Competitor actions

The innovative actions of competitors and other organizations can be

another driver of innovation. Competitors can provide a benchmark regarding

which projects and initiatives to pursue. Copying competitor innovations

reduces risk because the products may have already been adopted by the

market. Although such behavior is unlikely to increase market share, it can be

effective in maintaining the status quo by counteracting the advantage to the

competitor [5].

2.3.3. New ideas from customers, strategic partners, and employees

In the past, innovations were developed from the insights of a small

number of designers and engineers. Now, however, with greater technological

complexity and market segmentation, modern organizations are engaging as

many stakeholders as possible in the innovation process. This can result in

increased scanning capabilities and better information about market needs.

Engaging employees, suppliers, customers, and other lead users can reveal

new opportunities that otherwise might have gone undiscovered [8].

2.3.4. Emerging changes in the external environment

All organizations are affected by changes in their external environment;

these changes can be another driver of innovation. Environmental changes can

occur because of competitor actions that have revolutionized the business

environment or can happen through macro shifts in the political, economic,

cultural, or technological environment. As organizations struggle to realign

with their new business environment, they must innovate their products,

processes, and services accordingly [8].

2.4. Industrial innovation

Industrial innovation is about helping organizations grow. Growth is often

measured in terms of turnover and profit, but can also occur in knowledge,

human experience, efficiency and quality. Innovation is the process of making

changes to something established by introducing something new. As such, it

can be radical or incremental, and it can be applied to products, processes, or

services and in any organization. It can happen at all levels in an organization,

from management teams to departments and even to the level of the

individual. Applying innovation is the application of practical tools and

techniques that make changes, large and small, to products, processes, and

services that results in the introduction of something new for the organization

that adds value to customers and contributes to the knowledge store of the

organization [9].

2.5. Product innovation

Product innovation is about making beneficial changes to physical products.

Related terms that are often used interchangeably include product design,

research and development, and new product development (NPD). Each of

these terms offers a particular perspective on the degree of changes to

products. The degree of change can include the following [9]:

Incremental improvements

Additions to product families

Next-generation products

New core products

Established organizations typically have a portfolio of products that must be

incrementally improved or adjusted as problems are identified in service or as

new requirements emerge. It is important that they also work on additions to

the product families. One of the main activities of the product design team is

the work it performs on next-generation products or new models of products.

They may also work on designing radical new products or new core products

that expand the portfolio significantly and often involve radically new

processes to create them. These new core products ideally offer the

organization the possibility of major increases in revenue and growth, which

can also create the potential of a temporary monopoly in the market. The

product development process for next-generation and new core products

follows a familiar cycle in most organizations [5]:

1. Ideation

2. Preliminary investigation

3. Detailed investigation

4. Development

5. Testing and validation

6. Market launch and full production

Each of these steps involves interaction with customers, who may

participate in idea generation and feature recognition. Key performance

criteria in the design process revolve around the following [5]:

Time to market

Product cost

Customer benefit delivery

Development costs

These criteria can be traded off against one another. For example,

development costs can be traded against time to market, customer benefits

can be traded against product costs, and so on. Three design methods have

established themselves as providing a management system for effective

product innovation: phase review, stage gate, and product and cycle time

excellence1 [5].

1 PACE: The PACE method is concerned primarily with developing product development strategies (McGrath, 1996). The method links product strategy with the overall strategy and vision of the organization. A key feature is deploying the voice of the customer throughout the product design process. Strategies are divided into six product strategic thrusts: expansion, innovation, strategic balance, platform strategy, product line strategy, and competitive strategy [5].

2.6. Business innovation

According to the U.S. magazine Business Week, the process of innovation

consists of re-creating business models and building entirely new markets to

satisfy unmet human needs; above all, it aspires to select and execute the right

ideas, and bring them to market in record time. Traditionally, innovation in the

business world has meant seeking new technological solutions. However, in

the 1990’s, the dissemination of Total Quality Management1 gave birth to a

new approach to innovation: to innovate, it was not only necessary to find new

technological solutions, but also to explore new markets. Thus, in addition to

creating new forms of contact with customers, new approaches to satisfying

their needs were also opened up [9].

1 (TQM): A management philosophy created by Deming (1986) that aims at continuous improvement in the quality of products and processes [9].

Lead User Process

Innovation method for breakthroughs at 3M

Part 3: Introduction of case study; 3M Company

3.1. 3M Company

3M was founded in 1902 at the Lake Superior town of Two Harbors,

Minnesota. Five businessmen set out to mine a mineral deposit for grinding-

wheel abrasives. But the deposits proved to be of little value, and the new

Minnesota Mining and Manufacturing Co. quickly moved to nearby Duluth to

focus on sandpaper products. Years of struggle ensued until the company

could master quality production and a supply chain [10].

3.2. History of 3M

In 1910, new investors were attracted to 3M, such as Lucius Ordway,

who moved the company to St. Paul.

In 1916, early technical and marketing innovations began to produce

successes and the company paid its first dividend of 6 cents a share.

In the early 1920s, the world's first waterproof sandpaper, which

reduced airborne dusts during automobile manufacturing, was developed.

In 1925, a second major milestone occurred when Richard G. Drew, a

young lab assistant, invented masking tape – an innovative step toward

diversification and the first of many Scotch Pressure-Sensitive Tapes. In the

following years, technical progress resulted in Scotch Cellophane Tape for box

sealing and soon hundreds of practical uses were discovered.

In the early 1940s, 3M was diverted into defense materials for World

War II, which was followed by new ventures, such as Scotchlite Reflective

Sheeting for highway markings, magnetic sound recording tape, filament

adhesive tape and the start of 3M's involvement in the graphic arts field with

offset printing plates.

In the 1950s, 3M introduced the Thermo-Fax copying process,

Scotchgard Fabric Protector, videotape, Scotch-Brite Cleaning Pads and several

new electro-mechanical products.

In the 1960s, Dry-silver microfilm was introduced, along with

photographic products, carbonless papers, overhead projection systems, and a

rapidly growing health care business of medical and dental products.

In the 1970s and 1980s, Markets further expanded into pharmaceuticals,

radiology and energy control.

In 1980, 3M introduced Post-it Notes, which created a whole new

category in the marketplace and changed people’s communication and

organization behavior forever.

In the 1990s, sales reached the $15 billion mark. 3M continued to

develop an array of innovative products, including immune response modifier

pharmaceuticals; brightness enhancement films for electronic displays; and

flexible circuits used in inkjet printers, cell phones and other electronic devices.

In 2004, sales topped $20 billion for the first time, with innovative new

products contributing significantly to growth. Recent innovations include Post-

it Super Sticky Notes, Scotch Transparent Duct Tape, optical films for LCD

televisions and a new family of Scotch-Brite Cleaning Products that give

consumers the right scrubbing power for a host of cleaning jobs [11].

3.3. Company Profile

As shown in figure 3.1. [11] 3M is a diversified technology company with a

global presence in the following businesses: industrial and transportation,

health care, display and graphics, consumer and office, safety, security and

protection services, and electro and communications. 3M is among the leading

manufacturers of products for many of the markets it serves. Most 3M

products involve expertise in product development, manufacturing and

marketing, and are subject to competition from products manufactured and

sold by other technologically oriented companies. At December 31, 2007, the

Company employed 76,239 people, with 34,138 employed in the United States

and 42,101 employed internationally, i.e. 55% of the total staff. 3 Moreover,

63% of total sales are made internationally (total sales reach $24.462 billion in

2007).

3M’s six business segments bring together common or related 3M

technologies, enhancing the development of innovative products and services

and providing for efficient sharing of business resources. These segments have

worldwide responsibility for virtually all 3M product lines. Certain small

businesses and lab-sponsored products, as well as various corporate assets and

expenses, are not allocated to the business segments [11].

Figure 3.1. 3M’s six business segments and their proportion of the total sales in 2007

3M’s general offices, corporate research laboratories, and certain division

laboratories are located in St. Paul, Minnesota. In the United States, 3M has

nine sales offices in eight states and operates 74 manufacturing facilities in 27

states. Internationally, 3M has 148 sales offices. The Company operates 93

manufacturing and converting facilities in 32 countries outside the United

States [11].

3.4. 3M Performance

3M is fundamentally a science-based company and produce thousands of

imaginative products. It’s a leader in scores of markets - from health care and

highway safety to office products and abrasives and adhesives. 3M success is

joining with the ability to apply technologies - often in combination - to an

endless array of real-world customer needs. 3M Company leverage these

competencies to create innovative solutions for the customers and also to

provide investors with attractive long-term returns [12].

3.5. 3M Rankings and Recognition

Some of the 3Ms achievements in ranking and recognition are [12]:

3M ranked No. 37 on Universum USA’s list of “Top 100 MBA Employers” for

2012. Research firm Universum USA annually ranks the most desirable

employers in the world based on where MBA candidates say they would most

like to work.

3M came in at No. 29 on Corporate Responsibility Magazine’s 2012 list of “100

Best Corporate Citizens.” The list ranks companies in seven areas, including

environment, human rights, employee relations and philanthropy.

3M ranked No. 27 on the 2012 list of “America’s Most Reputable Companies.”

The list, developed by the Reputation Institute and Forbes magazine, is the

result of an online study of more than 10,000 consumers, measuring their

perceptions of the 150 largest U.S. companies.

3M ranked No. 18 on Fortune magazine’s 2012 list of “50 Most Admired

Companies.”

3M ranked No. 4 on Chief Executive magazine’s 2012 list of “10 Best

Companies for Leaders”—a list of corporations who lead the pack when it

comes to leadership development.

3M was among 13 companies in Minnesota (and 190 companies nationwide)

to receive a 100-percent index rating in the 2012 Corporate Equality Index

report for workplace inclusiveness. Washington, D.C.-based Human Rights

Campaign Foundation rated employers on policies and practices that are most

friendly to lesbian, gay, bisexual and transgender employees.

3.6. 3M trademarks

As shown in table 3.1. 3M Company owns lots of brands and trademarks

under its main organization. Some of those trademarks are named below [10]:

Active™ Aldara™ Aseptex™ Black Watch™

Buf-Puf™ Colorquartz™ Command™ Controltac™

Diamond Grade™ Durapore™ DuraPrep™ Dyneon™

Elek-Tro-Cut™ Filtrete™ Fluorel™ Imperial™

Interam™ Isotak™ Lacelon™ Littmann™

Magic™ Magnetic™ Microfoam™ Micropore™

Minitran™ Mistlon™ Nexcare™ Nextel™

Nomad™ Novec™ O-Cel-O™ Panaflex™

Plastiform™ Post-it® Reston™ Retsul™

Safety-Walk™ Sasheen™ Scotch® Scotchban™

Scotch-Brite™ Scotchcal™ Scotchcast™ Scotchgard™

Scotchkote™ Scotchlite™ Scotchlok™ Scotchmate™

Scotchshield™ Skimmit™ Steri-Strip™ Stikit™

Tambocor™ Tartan Track™ Tartan Turf™ Tattoo™

Tegaderm™ hermo-Fax™ TThinsulate™ 3M™

Three-M-Ite™ Transpore™ Tri-M-Ite™ Trizact™

Unitek™ VHB™ Vikuiti™ Volition™

Table3.1. List of 3M Company trademarks

Lead User Process

Innovation method for breakthroughs at 3M

Part 4: Ways of innovation at 3M Company

4.1. 3M Breakthrough Products

Traditionally the 3M’s management has fostered innovation by taking a “get

out of the way” attitude toward product developers who, in turn, have worked

according to the aphorism “It’s better to seek forgiveness than to ask

premission”. This relationship between managers and developers has resulted

in the creation of a long line of profitable product from waterproof sandpaper

and scotch tape in the 1920s to Post-It-Notes and thinsulate in the 1970s. but

by the mid 1990s, 3M’s top managers were concerned that too much of the

companies growth was coming from changes to existing products.

Breakthroughs were fewer and farther between. The demand for- and the

rewards from- incremental improvements spurred the company to focus on

current products. To counter this trend, management set a bold objective: 30%

of sales would come from products that had not existed four years erlier [12].

For the company to meet that goal, some employees started becoming

acquinted with a new method for developing breakthrough products: The

Leader User Process. The process which makes the generation of

breakthrough strategies, products and services systematic is based on two

magor findings by innovation researches [12].

First the researchers found that many commercially important products are

initially thought of and even prototyped by users rather than manufacturers.

Second they discovered that such products tend to be developed by “Lead

Users” companies, organizations and individuals that are well ahead of market

trends and have needs that go far beyond those of the avarage user. Those

discoveries transformed the difficult job of creating breakthroughs from

scratch into a systematic task of identifying lead users- companies or people

that have already developed elements of commercially attractive

breakthroughs- and learning from them [13].

4.2. 3M Corporate Culture for Innovation

3M has a number of programs geared to support and grow innovation

among its researchers. These include:

4.2.1. The 15% option

Many employees can spend up to 15% of their workweek on projects of

their own choice that might benefit the company. They often don't have to

inform their manager of the project or even justify it [13].

4.2.2. Seed capital

If researchers create a new technology or idea, they can request seed

capital from their business unit managers to develop it further. If that funding

is denied, they can take it to any other 3M business unit. Failing even that, they

can request a corporate Genesis Grant for independent R&D awards of up to

$100,000; about a dozen of these are granted each year [12].

4.2.3. Dual career path

Researchers can choose to follow a technical career path or a management

career path, with equal advancement opportunities. This option is offered

successfully by a number of technology firms, allowing researchers to more

fully develop their technical professional interests without being penalized

financially for not going into management [13].

4.2.4. Rewards and recognitions

3M sponsors 12 global and four US-based award programs to honor

individuals who make significant contributions to the company. Each business

and staff unit, department, and area also has ways of recognizing and

rewarding people [12]. These include:

- The Carlton Society

Honors employees for outstanding career scientific achievements, their

contributions to new technologies or products, and high standards of

originality, dedication, and integrity [14].

- Circle of Technical Excellence & Innovation Awards

Recognize employees who have made exceptional contributions to 3M's

technical capabilities [14].

- Pyramid of Excellence Awards

Recognize the top performing administrative employees for their

exceptional achievements [14].

- Quality Achievement Awards

Recognize employees for individual and team outstanding quality

improvement efforts [13].

4.3. Essentials for innovation at 3M

Gates reviews require cross-functional teams to demonstrate extensive and

statistically valid “VOC”/ “VOM’’. Their overall innovation strategy is focused

on two core themes – deep technological competence and strong product

development capabilities. They combine these to enable them to offer a steady

stream of breakthrough products and line extensions/product improvements.

A great strength is the integrated input from the technical and marketing side

which enables ‘creative association’, coming up with new and often powerful

combinations of needs and means [1]. In table 4.1. Some of them are listed

[13]:

Setting stretch targets – such as ‘x% of sales from products introduced

during the past y years’ – provides a clear and consistent message and a

focus for the whole organization

Allocating resources as ‘slack’ – space and time in which staff can explore

and play with ideas, build on chance events or combinations, etc.

Encouragement of ‘bootlegging’ employees working on innovation

projects in their own time and often accessing resources in a non-formal

way – the ‘benevolent blind eye’ effect.

Provision of staged resource support for innovators who want to take an

idea forward – effectively different levels of internal venture capital for

which people can bid (against increasingly high hurdles) – this encourages

‘entrepreneurship’ (internal entrepreneurial behavior) rather than people

feeling they have to leave the firm to take their good ideas forward.

Table 4.1. Inputs from the technical and marketing side in 3M

As shown in figure 4.1. There is a formal stage-gate system for innovations

and extensions based on established products but in addition there is a clear

progress route for more radical ideas, moving from an incubator stage, where

they are encouraged and where development funds are available against loose

targets, through to much more rigorous business plan appraisal for projects

further down the line. The ‘trial by fire’ approach is well-known but carries

with it a strong element of encouraging innovation champions to take non-

linear ideas through the system. Effectively they run parallel systems which all

involve funnels and clear gateways through which ideas pass into narrower

parts of the funnel and which also commit more extensive resources – but

although the mechanisms differ, the intent is the same [15].

Figure 4.1. 3M corporate NPI1 framework

A more important fact about 3M is that it has a strong internal culture that

promotes bottoms-up concept generation by its employees. For example, 3M

Company policy encourages all technical or marketing employees to spend up

to 15% of work time on a project of their own choosing. Besides that, they

have very deep technological strengths in its areas of expertise. During this

time, developers work on new ideas both as individuals and as informal teams,

and bring them to the point where they can be considered for formal support

as a product or service development project. Where 3M innovation was found

to be lagging, however, was in the area of innovations driven by insights into

novel, unarticulated market needs2. needs that are unarticulated for ordinary

users in a target market might well be clearly understood, clearly expressed –

and perhaps even solved via a user developed product or service prototype -

by users who lived at the leading edges of that market or functionally similar

ones. This meant that the daunting task of finding unarticulated needs might

be transformable into learning to identify and learn from lead users [10].

1 NPI(New Product Introduction) 2 “Unarticulated needs” is 3M’s term for needs that customers have not yet found a way to express - often because they are very novel or rapidly-evolving – but that customers would be very pleased to have solutions to nonetheless.

Lead User Process

Innovation method for breakthroughs at 3M

Part 5: Lead User System

5.1. Lead User System: A Different Approach to Concept

Developments

“Lead User System” is a research approach, which has reliably produced

profitable new products, services and strategies. The Lead User market

research method is built around the idea that the richest understanding of new

product and service needs is held by just a few "Lead Users." They can be

identified and drawn into a process of joint development of new product or

service concepts with manufacturer personnel [16].

Lead user research is done in the initial phases of an innovation project for

the purposes of identifying strong market opportunities and developing

concepts for new products or services. Concepts are developed with direct

input from "lead users." Lead users are individuals - or they may be firms - that

are experiencing needs that are ahead of the targeted market(s). Often, they

develop product or service prototypes to satisfy their leading edge needs that

will be commercially attractive to firms [2].

5.2. Characteristics of lead user approach

The lead user approach to concept development differs from

conventional methods in three very important ways:

5.2.1. Lead user research captures the rich need information possessed by

leading edge users.

Conventional marketing research asks typical customers what they think

they need tomorrow in the way of new products and services. Researches have

shown that average users usually cannot say with any accuracy what they will

want in the future. They often can only speculate about their future needs - or

ask for improvements in existing products and services in terms that are very

general and already obvious to both users and manufacturers. They may ask,

for example, for existing products to be made “cheaper” or “faster” or “easier”

to use. Lead user research focuses on inquiring into the product and service

needs of “lead users” [17]. Lead users are sophisticated product/service

consumers who are facing and dealing with needs that are ahead of the bulk of

the marketplace. These leading edge users have proven to be a much richer

and more accurate source of information on future market needs than

“routine” users because they are actively grappling with the inadequacies of

existing products and services. By focusing data collection on lead users, the

result is higher quality information on emerging market needs - and thus,

better product and service concepts [8].

5.2.2. Lead user research captures prototypes and ideas for new products

and services that are developed by lead users and lead user experts.

It is conventional for marketing research specialists to focus only on the

collection of customer needs data. The creation of new products and services

that can satisfy those needs is considered to be the province of internally

based research and development staff [4]. (von Hippel, 1988) Studies have

shown that lead users often both experience emerging needs and may develop

prototype products and services that can satisfy these needs. Lead user

prototypes can then become the basis for commercially attractive new

products and services that will be appealing to routine users in the general

marketplace. Lead user research exploits this fact by bringing lead users

directly into the company’s concept development process. Thus, the project

team can benefit from both the solution data and the need information that is

held by lead users. Lead user research also directly brings “lead use” experts

into the work of concept development. Lead use experts are top authorities in

their fields who are doing leading edge work related to the team’s project.

Some firms, especially in high-technology fields, utilize experts as advisors.

What is “different from usual” about this model is that the range of experts

drawn upon is wider and the experts, as well as lead users, actually collaborate

with internal personnel in concept development. There are two major benefits

of involving both lead users and lead use experts in the development of new

products and services [17]:

1. They can provide extremely valuable design data.

2. Their input cuts down the work required of development engineers.

5.2.3. Lead user research accelerates concept development.

As shown in figure 5.1. lead user researches have proven to be a much

faster concept development process than conventional approaches used by

many firms. For example, managers have compared lead user methods to

traditional ones and estimate that they can complete concept development

twice as fast by doing a lead user study [17]. The process is faster, in large part,

because technical and marketing departments are working collaboratively

throughout a study. Thus, they are able to more fully share information and

fully coordinate their efforts. Also, the new concepts that come out of a study

typically require less development work because technical staff has direct

access to the rich information lead users have acquired by experimenting with

prototype solutions under actual field conditions [4].

Figure 5.1. Lead users have product or service needs that

are ahead of all other user groups in a given market.

5.3. Lead user approach in process

The lead user process gets under way when a cross-disciplinary team is

formed. Teams typically are composed of four to six people from marketing

and technical departments; one member serves as project leader. Team

members usually will spend 12 to 15 hours per week on the project for its

duration. That high level of immersion fosters creative thought and sustains

that projects momentum. Lead user projects proceed through four phases. The

length of each phase can vary quite a bit. For planning purpose, a team should

figure on four to six weeks for each phase and four to six months for the entire

project [18].

5.3.1. Phase 1; Laying the foundation

During this initial period, the team identifies the markets it wants to target

and the type and level of innovations desired by key stakeholders within the

company. If the team ultimate recommendations are to be credibly received,

these stakeholders must be on board early [18].

5.3.2. Phase 2; Determining the trends

It’s an axiom of the process that lead users are a head of the trend. In first

place team has to find out what the trend is. The team must talk to experts and

leading-edge applications in the area being studied [12]. In figure 5.2. [12] the

curve illustrates the shape of a market trend. Lead users have needs that are

well ahead of the trend; over time more people feel the same need.

Figure 5.2. Lead user curve

5.3.3. Phase 3, Identifying lead users

The team now begins a networking process to identify and learn from the

users at the leading edge of the target market and related markets. The

group’s members gather information that will help them identify especially

promising innovations and ideas that might contribute to the development of

the breakthrough products. Based on what they learn, team also begins to

shape preliminary product ideas and to assess the business potential of these

concepts and how they fit with company interests [18].

5.3.4. Phase 4; Developing breakthroughs

The goal is to move the preliminary concepts toward completion. The team

begins this phase by hosting a workshop with several lead users, a half-dozen

in- house marketing and technical people and the lead user team itself. Such

workshops may last two or three days. During that time the participant’s first

work in small groups and then as a whole to design final concepts that

precisely fit the company’s needs [18].

After the workshop, the project team further hones the concepts,

determines whether they fits the needs of target market users, and eventually

presents its recommendations to senior managers. By that point its proposals

will be supported by solid evidence that explains why customers would be

willing to pay for the new products. Although the project team may now

disband, at least one member should stay involved with any concepts that are

chosen foe commercialization. In that way the rich body of knowledge that was

collected during the process remains useful as the product or service families

are developed and marketed [18].

5.4. Users in Lead Users system

Not all users are created equal with respect to the development of

commercially-important innovations and innovation prototypes. Research

shows that almost all user-developed ideas and prototypes of general

commercial interest tend to be developed by “Lead Users” – that is, users that

[8]:

1. Expect to get high benefit from an innovation and so have a strong

incentive to innovate and;

2. That are ahead of a target market with respect to one or more important

trends.

If it is demanded to find users that are actively exploring and testing new

ideas, it is a waste of time to survey users in the center of the target market.

Instead, develop methods must to seek out users that are at the leading edge

with respect to needs that are important to that market – even if such lead

users are rare and hard to find - because that is where interesting user idea

generation and innovation is concentrated. For example, if an auto company

wants to find innovative ways to improve car braking, it should surely search

among automobile users who are at the leading edge with respect to this need

– say, auto racers. But it should also go on to search for innovative ideas in

other fields that have a high need for “stopping things in a hurry” such as

aerospace [19].

5.5. Different types of lead users It is useful to think about three different categories of lead users that can

provide important information to lead user project teams. During a lead user

study, team members systematically contact each type in order to get the best

possible information for their project. The three types of lead users are [2]:

1. Lead users in the target application and market;

2. Lead users of similar applications in advanced “analog” markets;

3. Lead users with respect to important attributes of problems faced by

users in the target market [17].

5.6. Benefits of Lead User method in brief

The Lead User method is designed to collect both need and solution

information from lead users. In other words, in the lead user method, the

emphasis is more on finding prototype product and service ideas that have

already been generated by lead users than it is on generating those ideas in-

house [20].

There are two major reasons why it makes sense to focus on the

identification and collection of innovative ideas generated by lead users [17]:

The first is that user need information can very “sticky” – very

complex and poorly encoded, and so very hard and costly to transfer

from users to the manufacturer. When this is so, and when it is

relatively less costly to transfer solution information from

manufacturer to user than it is to transfer need information the

other way, it can make economic sense to locate the problem-solving

work of idea generation at the site of the sticky need information –

the user.

The second reason that it makes sense to search for ideas and

concepts among lead users is that there are often many more

innovating users thinking about a problem than there are

manufacturer-based developers, and these users are thinking

about and testing a lot of different ideas.

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