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Creating Breakthrough Products and Services with the Lead User Method Professor Eric von Hippel MIT Sloan School of Management [email_address]

Essential Definitions ,[object Object],[object Object],[object Object],[object Object]

How we discovered that users develop many major new products 63 44 4 Total 63 14 1 Transmission Electron Microscopy - 5 1 Ultraviolet Spectrophotometry - 14 1 Nuclear Magnetic Resonance Spectrometry - 11 1 Gas Chromatography Minor Improvement Major Improvement First Device Innovations Affecting

First device used in field developed and built by: 22 72 77% Total 17 44 72% Transmission Electron Microscopy 0 6 100% Ultraviolet Spectrophotometry 3 12 80% Nuclear Magnetic Resonance Spectrometry 2 10 83% Gas Chromatography Mfg. User % User Innovations Affecting

Gammaflow: ,[object Object],Source: Science Vol 194 October 1976

The World Wide Web – A Lead User Innovation ,[object Object],[object Object],[object Object]

Examples of Important Consumer Product Innovations Electronic Mail Desk Top Publishing Computer Application Software White-out Liquid Office Chocolate Milk Graham Cracker Crust Food Sports Bra Apparel Mountain Bike Mountain Climbing-Piton Sports Equipment Protein-base Shampoo Feminine Hygiene Personal Care Gatorade Health Products Example Category

History of “AOL Instant Messenger” ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: October 2002 Technology Review

Ongoing evolution of Wi-Fi ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: October 2002 Technology Review

Users aren’t always the innovators 48 - 15% - 27% 58% Sports Equipment 12 - - 83% 13% 4% Connector Attaching Equip 8 2 - - 75% 25% Wire Stripping Equip 14 - 7% 36% 14% 43% Thermoplastic-Using 12 - 8% 33% 17% 42% Industrial Gas-Using 16 4 - - 92% 8% Plastics Additives 5 - - - 90% 10% Engineering Plastics 11 - - - 94% 6% Tractor Shovel Related 10 - - - 10% 90% Pultrusion Process 49 6 12% - 21% 67% Semicon & PC Crd Process 111 17 - - 23% 77% Scientific Instruments Total (N) NA Other Suplr Manufr User Innovations Samples:

Factors influencing the sources of innovation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

User and Manufacturer Innovations Differ ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Users innovate when it pays… for them ,[object Object],[object Object],[object Object],[object Object]

Time Only lead user prototypes available Commercial versions of product available # of users perceiving need Lead users are now facing “emerging needs”

Product area selected for pilot test of lead user methods: Computer-Aided-Design systems Used to lay out printed circuit boards (PCB-CAD)

In PC-CAD Lead Users were innovating - Routine Users were not 99 33 Number in Sample 1% Yes 82% Yes Did you build own PCB CAD System Active In Solving Own Problem? It’s OK No “ Are you satisfied with your present PCB CAD system? High Need For Improved System? 4.1 15 6.8 11 ,[object Object],[object Object],[object Object],At Front of “High Density” Trend? Routine Users LEAD Users Type of Questions We Asked Expected Lead User Attribute

Performance Assessment of Lead User Research at 3M ,[object Object],[object Object],[object Object]

Overall study outcomes The 3M Assessment study showed: 8 X Higher Sales in Year 5 $146 vs. $18 Million per concept “ The highest rate of new product line generation in 50 years for the 5 Divisions tested.”

Assessment Results: Lead User vs. Non-Lead User Funded Ideas Note: Items measured on 10 pt. Scale, 10=high, 1=low 0.80 0.92 0.61 6.7 6.7 8.0 7.1 7.8 8.8 ,[object Object],[object Object],[object Object],[object Object],0.08 9.24 7.3 8.4 9.6 9.8 ,[object Object],[object Object],[object Object],0.01 0.00 33% 18m 68% $146m ,[object Object],[object Object],[object Object],0.01 0.09 6.8 5.3 9.6 8.3 ,[object Object],[object Object],[object Object],Sig. NON-LU Ideas (n=42) LU Ideas (n=5)

Essential Definitions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],5 0 LU Method At 3M 1 41 Traditional 3M Method Breakthrough Incremental

Lead User concept generation projects cost more than traditional ones $100,000 (plus coaching) 154 Lead User concept development stage At 3M $30,000 60 Traditional 3M concept development stage Total Cost Person Days

ACTIVITY: Think about possible Lead Users in your markets Specify what you might learn from each type of LU Step 4 ,[object Object],[object Object],Step 4 ,[object Object],[object Object],[object Object],Step 2 Select a specific market & specific major trend to think about Step 1

Example of searching for lead users outside your target market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Medical X-Ray Instead of a board of leading radiologists…

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