Tools for Innovation Management Lead User Approach

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Tools for Innovation Management Lead User
Approach

• Prasada Reddy
• Lund University, Sweden

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Innovation Adopter Categories 1

• Innovators - first people to adopt an innovation.
  Comfortable with complexity and uncertainty.
  Adventurous with access to financial resources.
  Not well integrated into the society, but bring
  in new ideas into the society.
• Early Adopters - well integrated into the society
  and are opinion leaders. Peers trust that these
  people make sound innovation adoption decisions.
  Excellent missionaries for new products and
  processes.

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Innovation Adopter Categories 2

• Early Majority - this group adopts innovation
  slightly before the average member of a social
  system. Not opinion leaders, but frequently
  interact with peers.
• Late Majority - skeptical about innovation and
  may nor adopt until they feel pressure from their
  peers. They also have scarce resources and so are
  reluctant to adopt until the uncertainty has been
  resolved.
• Laggards - decisions based on past experience,
  rather than societal cues. Highly skeptical of
  innovations and innovators.

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Market Research 1

• Source (Herstatt and von Hippel, 1992).
• Traditional market research methods are designed
  to sample the needs of a relatively large group
  of users, analyze the data obtained and then
  present the results to product developers.
• In many fields, however, the richest
  understanding of new products and services is
  held by just a few users.

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Market Research 2

• Source (Herstatt and von Hippel, 1992).
• Firms interested in identifying needs for new
  products and services begin by identifying a
  small sample of lead users.
• These sophisticated users are drawn into a
  process of joint development of new product or
  service concepts with the manufacturers
  personnel.

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Lead User 1

• Source (Herstatt and von Hippel, 1992).
• Lead users have two characteristics
• 1. They face needs that will be general in market
  place - but face them months or years before the
  majority of the market faces them
• 2. They expect to benefit significantly by
  obtaining a solution to those needs.

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Lead User 2

• Source (Herstatt and von Hippel, 1992).
• The first is valuable as users who have
  real-world experience with a need are in the best
  position to provide accurate data regarding it.
  With product evolving rapidly, only users at the
  front of the trend will have the experience
  that manufacturers must analyze in order to
  understand accurately needs that the bulk of the
  market will soon face.

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Lead User 3

• Source (Herstatt and von Hippel, 1992).
• The second quality, users who expect high benefit
  from a solution to a need can provide the richest
  need and solution data to market researchers.
• The greater the benefit a given user expects to
  obtain from a needed novel product or process,
  the greater will be his or her investment in
  obtaining a solution.

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Lead User Approach - Four Steps

• Source (Herstatt and von Hippel, 1992).
• 1. Involves spicifying the characteristics lead
  users will have in the product/market segment
  under study.
• That is, one must identify the trends on which
  they lead the market, and also must specify
  indicators that show that they expect relatively
  high benefit from obtaining a solution to their
  trend-related needs.
• An useful proxy for expectations of high benefits
  is the evidence of users modifying or developing
  products by themselves.

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Lead User Approach - Four Steps

• Source (Herstatt and von Hippel, 1992).
• 2. Identify a smaple of lead users who meet both
  of the lead user criteria mentioned in step 1.
• Such a group will be both at the leading edge of
  the trend being studied and will display
  correlates of high expected benefit from
  solutions to related needs.

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Lead User Approach - Four Steps

• Source (Herstatt and von Hippel, 1992).
• 3. Bring the sample of lead users together with
  company engineering and marketing personnel to
  engage in group problem-solving sessions.
• The outcome of these sessions is one or more
  lead user product or service concepts judged by
  session participants to be both responsive to
  lead user needs and responsive to manufacturer
  concerns regarding producibility, etc.

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Lead User Approach - Four Steps

• Source (Herstatt and von Hippel, 1992).
• 4. Test whether concepts found valuable by lead
  users also will be valued by more typical users
  in the target market.
• This is because, the needs of todays lead users
  are not necessarily the same as the needs of the
  users who will make up a major share of
  tomorrows predicted market.

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Lead User - Case study (Hilti AG) 1

• Source (Herstatt and von Hippel, 1992).
• Step 1 - Specification of Lead User Indicators
• Identification of trends - people with expert
  knowledge to be found among layout engineers,
  specialists in planning complext pipe networks in
  large buildings, construction departments in
  technical universities. Trends identified
• a) should be extremely easy to put together with
  instruction manuals (education levels among
  installers are going down)
• b) need for rapidly actuated, positive,
  interlocking fastners to connect pipe hanger
  elements together securely and attach the
  completed hangers securely to building walls and
  ceilings (increasing safety standards)
• c) need for pipe hangers made from lighter,
  non-corrodible materials (systems made of steel
  are heavy and difficult and dangerous to hang
  under some conditions).

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Lead User - Case study (Hilti AG) 1

• Source (Herstatt and von Hippel, 1992).
• Step 1 - Specification of Lead User Indicators
• Identification of High-Benefit Expectations
• a) Can be identified by a survey or
• b) Innovation-related activity by users as a
  proxy.
• Category b) - identified by conducting telephone
  interviews by asking questions
• Did you ever build or intall pipe hanger hardware
  of your own design?
• Did you ever modify hardware available in the
  market?

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Lead User - Case study (Hilti AG) 2

• Source (Herstatt and von Hippel, 1992).
• Step 2 - Identification of Lead Users (2
  characteristics)
• Hiltis sales offices provided a list of user
  firms, with whom telephone interviews were
  conducted.
• Proxy used
• 1. Did the interviewees agree that advances along
  the trends that had been specified by the expert
  panel were in fact needed and important?
• 2. Could the interviewees describe at least some
  technically interesting ideas regarding these
  trends? (including questions relating to
  modifications of designs by the interviewees).

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Lead User - Case study (Hilti AG) 3

• Source (Herstatt and von Hippel, 1992).
• Step 3 - Lead Users Product Concept Development
• Selection of the lead user concept group - Could
  the user describe his experiences and ideas
  clearly? Did the user have personal interest in
  the development of improved components/systems?
• Three-Day Product Concept Generation Workshop -
  i) sub-groups ii) presentation of sub-groups
  ideas to the entire group for evaluation and
  suggestions
• Three criteria Originality (how novel is the
  solution from a technical point of view?)
  Feasibility (how quickly can the solution be
  realized, using currently available technology)
  and Comprehensiveness of the solution (does it
  solve a single problem or multiple problems of
  users).
• Members of the sub-groups changed Informal
  engineering drawings

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Lead User - Case study (Hilti AG) 3

• Source (Herstatt and von Hippel, 1992).
• Step 4 - Testing the Concept with Ordinary Users
• Tested with a sample of old cutomers, after
  assurances of non-disclosure.

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Lead User Appraoch

• Class Discussion
• What are the merits of the approach?
• What are the de-merits of the approach?