1. Leveraging user innovation for national benefit:
Changing the innovation paradigm
Christopher Lettl, lettl@asb.dk
Christoph Hienerth, ch.ivs@cbs.dk
Individual Lead Users Innovating User Firms

2. Agenda
§ The paradigm of user-centered innovation
§ How firms can profit from user-centered innovation
§ Lead User method
§ Community based innovation
§ Using user-centered innovation to gain national competitive advantage
The Danish Lab Model

3. User-Centered (Democratized) Innovation Paradigm
Lead Users innovate to solve their own needs at private expense
-and then freely reveal their innovations
Traditional, Manufacturer-Centered Innovation Paradigm
Manufacturers identify user needs, develop products at private expense,
And profit by protecting and selling what they have developed.
Users innovate here
First manufacturer product appears here
# of users
perceiving
need
Target
Market
Time

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

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

7. Examples of user-developed innovations
(medical market)
Robotic system for neurosurgery Biocompatible implant for hernia repair

8. The economics of user-centered innovation is
now on firm ground
Users innovate because they often have a higher benefit
from an innovation than manufacturers
(von Hippel 1988, Urban and von Hippel 1989, Herstatt and von Hippel 1992,
Riggs and von Hippel 1994, Morrison et al. 2000, Luethje, 2003;
Luethje et al. 2005, von Hippel, 2005; Franke and Shah 2003, Luethje 2003,
Franke et al. 2006)
Users innovation costs are often lower
than manufacturers‘
(Slaughter, 1993; Luethje et al, 2005; von Hippel, 2005)

9. Firms can profit from innovations developed by users–
because innovating users tend to be ahead of the market -
they tend to be LEAD USERS
“Lead Users” are users that:
1. Have needs that foreshadow general
demand in the marketplace;
2. Expect to obtain high benefit from a
solution to their needs. (Such users are
more likely to innovate – “Necessity is the
mother of invention!”)

10. The stronger an innovator’s lead user characteristics,
the more commercially desirable is its innovation
§ Innovations developed by
lead users have high
commercial value
(e.g. Herstatt and von Hippel,1992;
Morrison et al., 2000; Lilien et al., 2002)
§ Commercial value of
innovations users develop
goes up as “lead user”
characteristics of innovators
intensify –
(Franke and von Hippel, 2003;
Franke et al., 2006)

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Empirical test of the quality of lead user ideas
A study conducted at 3M shows clear advantages of lead user generated ideas
compared to ideas generated by traditional marketing research methods, e.g. lead user
ideas have a more than 8times higher sales potential
Lead user Ideas Non - Lead user Ideas p
(n = 5) (n = 42)
Novelty relative to
competition 1 9,6 6,8 0,01
Originality / newness of
customer needs addressed 1 8,3 5,3 0,09
Strategic Importance 1 9,6 7,3 0,08
Idea types 0 incremental 41 incremental 0,01
5 major product lines 1 major product line
Estimated Sales in year 5
(deflated) 146 Mio. $ 18 Mio. $ 0,00
1 Scale: 1 = very low, 10 = very high
Source: Lilien et al. (2002)
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12. Lead Users can develop Inventions with Strong
Technological Merit

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Lead user method
The lead user method is a tool to identify and integrate lead users into concrete
innovation projects of a company. Basically there are four main steps:
Phase 1: Phase 2: Phase 3: Phase 4:
Start of the Identification of Identification of
Start des Lead Lead user
lead user project important needs lead users
User Projekts workshop
and trends and ideas
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Lead user method / phase 1
The lead user method has four steps:
Phase 1:
Start of the
lead user project
• Formation of interdisciplinary team
• Specification of the search field (target market) – problem definition
• Definition of project goals (deadlines, budget, specification and requirements for
innovative concepts)
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Lead user method / phase 1
Example: lead user project with a manufacturer of escalators
Search field: Pre-assembly, transport and insertion of escalators
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Lead user method / phase 2
The lead user method has four steps:
Phase 1: Phase 2:
Start of the Identification of
lead user
Start des Lead important needs
project
User Projekts and trends
• Scanning of literature, internet, data bases
• Interviews with market and technology experts and users
• Evaluation of trends
• Selection of trends that are important for the search field
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Lead user method / phase 2
Example: project with manufacturer of escalators
Selection of 3 out of 8 trends, basis for lead user identification
Pre-assembly,
transport and
insertion
of escalators
High degree of Modular design
pre-fabrication Plug`n´Play
Space optimization
Hardware/Software
Sources: 72 Interviews, 81 secondary data sources 17

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Lead user method / phase 3
The lead user method has four steps:
Phase 1: Phase 2: Phase 3:
Start of the Identification of Identification of
lead user
Start des Lead important needs lead users and
project
User Projekts and trends lead user ideas
Search for lead users in the target market
Search for lead users in analogous markets
Analogous market:
Evaluation of lead users A market in which the same trend
that was identified as being
Tracking and evaluating first ideas relevant for the target field problem
plays an important role
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Analogous markets
Example project
Problem: preassembly, transportation
and insertion of current solution
Study 5
Search field: innovative solutions for
pre-assembly, transport and insertion
Target market
E.g. modular design / plug & play
trends leading edge
model maker
Model making leading edge
Analogous
Power plant engineering power plant
Markets
logistic engineer
Crane engineering
leading edge
crane engineer
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Lead user method / phase 4
The lead user method has four steps:
Phase 1: Phase 2: Phase 3: Phase 4:
Start of the Identification of Identification of Development of
lead user important needs lead users and innovative
Start des Lead
project and trends lead user ideas concepts (lead
User Projekts
user workshop)
Conducting the workshop with lead users and company members
Development of innovative concepts
Evaluation of innovative concepts
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Lead user method / phase 4
In a three days workshop lead users, together with company employees, develop
innovative solutions
Thursday Friday Saturday
Working session 1 Working session 3
Plenum Session
Plenum Session and
Evaluation
Working session 2
Plenum Session
Project Introduction
Group formation 3 Teams consisting of:
Get together Evening program
LU LU
DOC COMP MOD
LU
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Positive outcomes in all lead user projects
In 10 lead user projects we identified 81 lead users and worked with different
companies successfully
Industry Empl. Sales Search field
Drilling oil and gas wells 49,919 $19,949.80 M Value added services at petrol stations
Alcoholic and other beverages 38 $22.20 M Functional beverages/packaging
Communication systems (air traffic control) 553 $97.70 M Decision support for air traffic controllers
Electrical and electronic equipment 7,852 $5,933.30 M B2B communication systems for office workplaces
Escalators and elevators 782 $255.20 M Pre-assembly, transport and insertion of escalators
Logistic systems 45 $2.8 M B2B stock logistics
Telecommunications 244,000 $76,322.90 M Online entertainment for broadband networks
Construction machinery, cranes 3,087 $665.90 M Stability monitoring for truck-cranes
Escalators and elevators 782 $255.20 M Step chain systems
Motor vehicle parts and accessories 90 $101.25 M Crush protection for passenger cars
Study 1 Study 2 Study 3 Study 4 Study 5
Study 6 Study 7 Study 8 Study 9 Study 10
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Positive outcomes in all lead user projects
A first analysis shows that the concepts developed by the lead users score significantly
higher on novelty, value and realizability, compared to company internal concepts
5
Ref.
2.5 Value
3.8 3.7 3.5
1
Novelty Value Realizability
t-test for single sample, T = 19.18*** T = 22.00*** T = 14.53***
test value=2.50b df = 80 df = 80 df = 80
mean diff. = 1.29 mean diff. = 1.20 mean diff. = 0.99
n=40; ***p<0.001, two-tailed tests
a…mean values, five point rating scale: 1=very low, 5=very high 23

24. International community of leading spine
surgeons (lead users in their field)
358 members from 11 countries
400 cases and 1500 reviews
Involvement with medical device manufacturers and
patent attorneys

25. The Case of Lego Mindstorms
Mindstorms robot kit
The brain
• Computer “brain” within Lego brick
Movement
• 3 stepper motors
Sensors
• Light
• Touch
• Temperature
Teaching
• Kid-friendly, graphical
programming environment
• Programs downloaded from
PC via infrared
Price ~ $200

26. Lego mindstorms user communities grew rapidly
Members
- without company involvement
900
800
700
600
500
400 Robots become
widely available
Lego robots August 1998
300 announced
January 1998
200
100
Nov Jun Feb Oct Jun Jan Aug Apr
1997 1998 1999 1999 2000 2001 2001 2002

27. Today, LEGO is creating links to innovating fans
Top innovators from For NXT Mindstorms Robot product line:
“Adult Fans of Lego” • Lego adopts key existing AFOL
innovations
participate in LEGO factory
• Lego asks a few AFOL members to join
product development teams R&D team
“Lego Factory”
Website links young
fans who want
to share their designs

28. National competitive advantage with user-centered
innovation: the DANISH USER INNOVATION LAB
Leading
academics
in
user-centered innovation
Eric von Hippel, Yun Mi Antorini,
Lars Bo Jeppesen, Christoph Hienerth Advanced Danish
Christopher Lettl practices firms
Work with
Leading Danish Firms
Lego, Novo Nordisk, Danisco
Bang & Olufson, Coloplast,
IO Interactive

29. How to start your own national
user-centered innovation program
§ Staff some professorships in top institutions with
leading specialists in user-centered innovation
§ Set up a program to fund research and diffusion
efforts in user-centered innovation
§ Professors and firms will set up a collaborative
academic / industry Lab to develop and test and
diffuse best practices in user-centered innovation.
§ Adapt government innovation policies to support
user-centered innovation
− Support development of collaborative
innovation tools
− Support users’ rights to modify standard
products