(adapted from: Democratizing Innovation by Eric Von Hippel)

ObjectiveHow to understand unique customer needs to create

breakthru products and services

Agenda:

Customers customize – fact?

Customers customize – why?

Customers customize – how to channel into innovation ?

Many Users want custom products Enterprise Software users customize (often) heavily

Surgical and Medical users (MRI, surgical equipment)

Sports

Designer Cars

Holiday offered by a tour operator

User Needs are heterogeneous …. unlike what mass market manufacturers believe

Lead Users customize and develop products themselves …. Often without the manufacturers

Why do Lead Users customize? Lead users have needs that foreshadow the general

market

They customize because:they have unique needs ANDthey expect high profits

They customize on their own because they find it: Difficult to explain to manufacturersEasy and quick to do it on their own Interesting to figure it out on their own Manufacturers develop products for many customers

…. leading to missed innovation opportunities

Innovation = Need + Solution

Information is difficult to transferIt may be tacit (“how can we explain this?”) A lot of it is required (“you did not tell us that”)

Information is sticky …. Which is why the twain find it difficult to meet

User has NEED

Information

Manufacturer has

SOLUTION Information

Toolkits for User Innovation

Advantage to Manufacturers:Can take one user innovation to other users Can offers innovation cheaper and more functional

Help both manufacturers and users …. they iterate within their information domain

Manufacturer develops basic

product

User develops specific

application

Examples

Automobile Car Color Selector for ICI (developed by a company I founded)

…and of course Web Services architecture

Good Toolkits should… Allow complete cycle of trial-and-error learning:

Not just pick from a menu

Offer a solution spaceDepending on the constraints that manufacturer wants to

impose

User Friendly Tools: Both parties need not learn others languages

Offer commonly used modules for re-useSo that user creativity is focused

Quality of Toolkits is key to their effectiveness

Will Users share information?Reality :

Lead Users often freely reveal their innovationsLead Users congregate and collaborate in communities

Why? Enhanced functionality and better quality through

collaboration Enhanced prestige within their community A secret is not really a secret at least not for long!

Lead Users stand to benefit from developing the innovation ….. They benefit more by sharing its details

Making Enterprise software development fun… … users developed product ideas in Idea factory