Outside Innovation

Lead Users vs. Lead Customers and the Role of Toolkits

I recently had the honor to meet with Eric von Hippel. Eric is the Head of the Innovation and Entrepreneurship Group at the MIT Sloan School of Management and the author of "The Sources of Innovation" and "Democratizing Innovation."

I wanted to be sure that I clearly understood Eric's concept of "lead users" and to discuss with him my contention that lead users are often your "lead customers." He disagrees with my contention. Lead users may not be your customers, Eric explains, because they’re the people who couldn’t find the product or solution they needed from your firm (or any others), so they designed their own solutions.

Of course, Eric identified "lead user innovation" and has studied it deeply for more than two decades. As I understand Eric's distinction, lead users would have been your customers if you had a solution that worked for them. But you may not. So they’ve gone elsewhere and designed their own successful solutions. Lead users may be your early adopter customers—the ones who really push the envelope. But they also include people who probably aren't currently on your radar. "Lead users are a much broader category than customers of a specific firm," Eric explains in "Democratizing Innovation." "Lead users that generate innovations of interest to manufacturers can reside…at the leading edges of target markets, and also in advanced analog markets". Analog markets are fields that may be adjacent to yours, but which you don't currently serve (and may not intend to serve), but which you can learn from.

I believe one of the main points Eric is making is that you will have a much higher success rate in innovating new products or processes if you discover products or processes that lead users have already invented (as opposed to trying to invent de novo in your labs). Then you can commercialize those user-led innovations and know that you're meeting a real customer need (assuming that this lead customer represents more than a market of one).

The Future of Publishing

As an author and a publisher, I think a lot about the future of publishing--(but not as much as I should!)...I find a lot to like and learn from Tim O'Reilly. Unlike most publishers, Tim has a strong unequivocal brand experience tied to his publishing/information empire.

I particularly enjoyed Tim's The Long Snout post in which he describes lots of elements of his current thinking about his business model.

Most Amazing Form of Customer-Led Innovation: Where Online Games are Going

If you want to see the future of your business, take a look at what's going on in the online mulitplayer gaming industry. My hero in this context is Will Wright, creator of SimCity and the Sims--now in its 6th year of spawning and increasingly vibrant customer community and ecosystem. (Sims even has a French stamp in its honor!)

Having watched customers create characters, pets, houses, cities, furniture, objects, etc. in the Sims, Will quickly realized that the next generation of online games could be even-more customer-driven. Coupling that experience with the harsh reality that the complexity and cost of designing online games is escalating out of control, Wright and a small team of crack-game developers have taken a completely different tack in creating Wright's next blockbuster game, code-named Spore. Here's the seminal article by Dave "Fargo" Kosak that describes what Will Wright and his cohorts are up to.

Making It Easy for Customers to Do Business with Us

This is the one mantra that clients repeat over and over to me when they’re explaining what drives their current business strategy. Since I coined and popularized that phrase as the tagline for my book, Customers.com in 1998, I am gratified that “making it easy for customers to…” is still the Holy Grail for so many initiatives. People apply this phrase when they’re discussing a broad variety of initiatives. People used to mean literally “how do we make it easy for customers to do business with us?” as in easier for our customers to buy things, return things, use things, get support, and so on. Now, clients tend to use this phrase more broadly to mean: “Making it easy for our customers to do what they want to do,” with the subtext: “by using our products and services.”