(adapted from: Democratizing Innovation by Eric Von Hippel)

Objective How 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 ?

How 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

Enterprise Software users customize (often) heavily

Surgical and Medical users (MRI, surgical equipment)

Sports

Designer Cars

Holiday offered by a tour operator

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 AND they expect high profits They customize on their own because they find it: Difficult to explain to manufacturers Easy 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

Lead users have needs that foreshadow the general market

They customize because:

they have unique needs AND

they expect high profits

They customize on their own because they find it:

Difficult to explain to manufacturers

Easy and quick to do it on their own

Interesting to figure it out on their own

Innovation = Need + Solution Information is difficult to transfer It 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

Information is difficult to transfer

It may be tacit (“how can we explain this ?”)

A lot of it is required (“you did not tell us that ”)

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

Advantage to Manufacturers:

Can take one user innovation to other users

Can offers innovation cheaper and more functional

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 space Depending on the constraints that manufacturer wants to impose User Friendly Tools: Both parties need not learn others languages Offer commonly used modules for re-use So that user creativity is focused Quality of Toolkits is key to their effectiveness

Allow complete cycle of trial-and-error learning:

Not just pick from a menu

Offer a solution space

Depending on the constraints that manufacturer wants to impose

User Friendly Tools:

Both parties need not learn others languages

Offer commonly used modules for re-use

So that user creativity is focused

Will Users share information? Reality : Lead Users often freely reveal their innovations Lead 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

Reality :

Lead Users often freely reveal their innovations

Lead 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!

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