One of the most powerful processes for developing truly customer-focused innovation comes from Eric von Hippel's work on Lead Users. Here's a part of an interview just released by CIO magazine.
CIO: Eric, your work challenges prevailing wisdom regarding innovation. That model assumes that the product manufacturer almost always drives innovation. Your research asserts that functionally novel products and services tend to be developed by "lead users." Would you explain what you mean?
von Hippel: First let me describe what I mean by the term "users." Users may or may not be direct customers of the manufacturer. They may be in different industries or segments of
"APACHE and other open-source PROGRAMS are examples of user-to-user INNOVATION systems."
—ERIC VON HIPPEL
the marketplace, but they are out in the field trying to do something, grappling with real-world needs and concerns. Lead users are an innovative subset of the user community displaying two characteristics with respect to a product, process or service. They face general needs in a marketplace but face them months or years before the rest of the marketplace encounters them. Since existing companies can't customize solutions good enough for them, lead users go out there, patch things together and develop their own solutions. They expect to benefit significantly by obtaining solutions to their needs. When those needs are evolving rapidly, as is the case in many high-technology product categories, only users at the front of the trend will have experience today with tomorrow's needs and solutions.
Companies interested in developing functionally novel breakthroughs—as opposed to improvements along known dimensions of merit such as speed and capacity—will want to find out how to track lead users down and learn from what they have developed. We have developed systematic ways to do this via lead-user research. Studies of project outcomes to date at 3M, which has been a pioneer in applying lead-user methods, show more than $100 million in new, projected sales per project.