Lecture 11

Question 1

The core question for user integration

Answer 1

What do you (the firm) actually want?

1. Marketing
   – Increase people’s brand/product awareness, identification – Increase people’s interaction with brand/products
2. Innovation: access (and, hopefully transfer) external knowledge … about problems: what are the needs that they have?
   … about solutions: can they solve the problems you have?

Note: It’s unlikely that you can do one without the other, but it’s clear that you can choose which one you want to emphasize

Question 2

So, how does the knowledge stuff work?

Answer 2

Information on needs and solutions is often “sticky” – so users and manufacturers tend to draw on different domains of local information when they innovate

• Richest need information is usually found at user sites.
• Richest solution information is often found at manufacturer sites.
• User –> Need Information
• Manufacturer –> Solution Information

Question 3

What follows from stickyness is thus…

Answer 3

Users typically conceive / develop functionally novel innovations:

• The first scientific instrument of a new type
• Conveyor belt in car manufacturing (Ford was a user!)
• The first sports-nutrition bar
• Footstraps for windsurf boards

Manufacturers tend to develop improvements:

• Improvements to an existing type of instrument (cost, robustness, precision…)
• Conveyor belt manufacturers improved the conveyor belt
• A better-tasting sports-nutrition bar
• Better footstraps

Question 4

Profiting from users/consumers: Lead users

Answer 4

Core Definition

1. Have needs that foreshadow general demand in the marketplace;
2. Expect to obtain high benefit from a solution to their needs.

Important consequences

1. Lead users often innovate to solve their own needs by developing prototypes
2. Lead users are often willing to freely reveal their innovations. Individual lead users may also start companies.

Note: a lead user may be a firm or an individual!

Question 5

Examples of consumer product innovations

Answer 5

Gatorade, Protein Shampoo, Mountain bikes, Counter Strike …

Question 6

Gatorade

Answer 6

•  Based on the assistant coach’s observations
•  Florida Gators become known as the “second-half” team, win Orange Bowl in 1967:
• ”We didn’t have Gatorade. That made the difference.” (Bud Carson, Georgia Tech)
•  Subsequently brought to market in 1969
•  Through 2007, the University of Florida has received a
• total of $110mn in royalties (20%)
•  Now owned by Pepsi

Question 7

User dominated steps

Answer 7

1. Significant instrument improvement invented build and used by: Inventive user
2. User diffuses results “how to do its info via puclibation symposia..”
3. A few user build their own
4. Intrument company introduces commercial version

Question 8

User innovation – “double use”

Answer 8

•  Remember: Innovation = new combination of need and solution
•  Here: existing solution (engine) applied to existing (but unusual) need
•  Further examples: new uses of drugs, often discovered by “users” (i.e., doctors)

Question 9

Lead Users / LU method

Answer 9

•  Classical market research is based on a static concept of a representative customer
•  In contrast, the Lead User Method focuses on users that are ahead of the trend
•  Lead users are NOT leading- edge customers!

Question 10

Lead User method: Advantages

Answer 10

• Classical market research:
  
  • – Aims at representative findings (“average customer”)
  • – Large-number studies
  • – Quantitative methods preferred for comparability
• Problems: Average user…
  
  • – is mentally focused on existing reality
  • – typically has difficulties in articulating new needs (“sticky information” problem)
  • – mostly has no pressing need for new products
• Lead user method avoids these problems

Question 11

Activating the potential: The lead user method

Answer 11

1. ) Determine Lead User Indicators: a) Trends; b) Benefits from innovation
2. ) Identify Lead User Group
3. ) Develop product concept with Lead Users
4. ) Check general acceptance of concept

Question 12

Lead user method: Critique

Answer 12

•  Risks / downsides:
  
  • – Development of niche solutions
  • – Problems with intellectual property
  • – Secrecy might be compromised
  • – Costly and time-consuming
  • – Internal acceptance: “not invented here”
•  Operational difficulties:
  
  • – Identifying the right trends
  • – Identifying the true lead users
  • – Problems in lead user workshop – Problems in test of acceptance

Question 13

Lead User innovation: Beyond customers

Answer 13

•  Lead Users are often not customers of your firm
•  They may not have an incentive to “lead” you to their innovations
•  It is the responsibility of the manufacturer to identify lead user innovations via lead user studies or other means.
•  Example: The World Wide Web
  
  • – Many suppliers, such as Microsoft, have found the innovation of the Web to be difficult to master. CERN was not necessarily a customer of these suppliers, and had no duty or incentive to “lead” them to understand their user innovation. It was the suppliers’ problem to identify the upcoming innovation.

Question 14

Summary

Answer 14

•  Integration of users and consumers for knowledge advantage
  
  • – Traditionally mainly for problem information: market research
  • – Methods to successfully query for solution-related knowledge
•  Net value of external knowledge to the firm varies tremendously
  
  • – How easy is it to access the knowledge?
  • – How “good” is the knowledge?
•  Given the right context and strategy, an entire business model may be built on the knowledge held by others!
  
  • – Designing your firm to do that may be tricky though