User innovation What do we know, What does it mean?
Jeroen de Jong
How innovation works (?)
Producer: Solution, Diffusion
Idea > Screen > Prototype > Test > Launch OR Research > Development > Introduction
Many opportunities – products fail – high uncertainty
User: Need
Lessons we learned… ‘Find a gap in the market, then develop a solution’ ‘Focus on what customers need’ ‘Think out-of-the-box to develop breakthrough products’
Methods & techniques Market research (focus groups, trendwatching, surveys) Product development funnel
Brainstorming
…great innovations…
Contact lens
GSM Cell phone
(Otto Wichterle, TU Prague)
(Martin Cooper, Motorola)
Nylon (W.H. Carothers, DuPont)
Electric Shaver
Contraception pill
(Sascha Horowitz, Philips)
(Carl Djerassi, Syntex/Stanford)
But not all innovations fit…
Famous examples – no funnel or R&D
Airplane
World Wide Web
(Wright brothers)
(Tim Berners-Lee)
Whirlpool (Candido Jacuzzi)
Baby buggy (Owen F. Maclaren)
Stethoscope (René Laënnec)
Hidden innovation: by users Producer: Adoption User: Need, Solution
Need DIY identification Solution
Apply Solution
Diffusion
User: Start-up
Free revealing
One opportunity – No failure – Uncertainty in diffusion
Comparing both models Main benefit Motive Actor Type of knowledge Diffusion
Producer
User
Sales
Personal use
Opportunity
Necessity
Organizations (enterprises, inventors) Dimension of merit
Individuals, communities Functional novelty
Sales Licensing Involuntary spillovers
Free revealing Start-ups Producer adoption
More common than anticipated Team
Country
Year
Sample
Frequency user inn.
Schaan & Uhrbach
Canada
2007
Manufacturing plants
40%
de Jong & von Hippel
Netherlands
2007
high-tech small firms
54%
de Jong & von Hippel
Netherlands
2008
SMEs
21%
Flowers et al.
UK
2009
SMEs
15%
Kim & Kim
South-Korea
2009
Manufacturing firms
18%
Flowers et al.
UK
2009
Individual consumers
6.1%
De Jong
Netherlands
2010
Individual consumers
6.2%
Ogawa & Pongtalanert
USA
2010
Individual consumers
5.2%
Ogawa & Pongtalanert
Japan
2011
Individual consumers
3.7%
Mendoca et al.
Portugal
2012
Engineering & medical
17.0%
Firm surveys
Consumer surveys
‘…represent millions of consumers…’
Bedrijven: Machineverhuur Trainings- en opleidingsbureau
Fabrikant van papierwaren
We hebben een alternatief hefsysteem ontwikkeld. Voorheen vervoerden we onze machines met heftrucks, maar daarmee gebeurden te veel ongelukken. We hebben software ontwikkeld om online examens af te nemen en om resultaten aan individuele trainers en klanten te laten zien. Zulke software vraagt om extreme veiligheidsmaatregelen. Een wringer voor pulpresten om tijd en geld te besparen. In onze business zou het veel te duur worden om er een van een leverancier te bestellen.
Consumenten: Consument A
Consument B Consument C
Hulpmiddel gemaakt voor gehandicapten en ouderen om in een roeiboot te stappen. Bestaande oplossingen kosten tienduizenden euro's. Ik heb een speciale instapstok gemaakt waarmee het goedkoper kan. Voor de hengelsport heb ik een nieuw kunstvisje gemaakt zonder lood, waardoor je beter vissen vangt. Nieuw is de verdeling van het gewicht. Ik produceer het voor vrienden; om octrooien geef ik niet. Hoeslaken voor een dekbed maar dan stofmijtvrij. Ik ben allergisch en transpiratievocht komt nu niet in het dekbed.
Hidden innovation User innovation by producers: at best partially in the statistics Firms with process innovation in past 3 years (CIS indicator)
Firms with user innovation in past three years No
Yes
Total
- No
60%
10%
70%
- Yes
19%
11%
30%
Total
79%
21%
100%
Source: EIM, Survey of 2 416 SMEs in the Netherlands, 2008
User innovation by consumers: not visible at all
Diffusion: Adoption by producers & other users Team
Country
Year
Sample
Adoption
de Jong & von Hippel
Netherlands
2007
high-tech small firms
24.7% (a)
Schaan & Urbach
Canada
2007
Manufacturing firms
26.3% (a) 25.3% (b)
Flowers et al.
UK
2009
SMEs
19.5%
Kim & Kim
South-Korea
2009
Manufacturing firms
3.2%
Flowers et al.
UK
2009
Individual consumers
17.1%
Ogawa & Pongtalanert
USA
2010
Individual consumers
6.1%
Ogawa & Pongtalanert
Japan
2011
Individual consumers
5.0%
Firm surveys
Consumer surveys
(a) Adoption by producers only; (b) by users only
Diffusion: Users more likely to create new ventures Indicator (From Global Entrepreneurship monitor)
User innovators
Dutch consumers aged 18-64
Entrepreneurial intentions
15.2%
7.4%
Nascent entrepreneurship
9.1%
3.1%
Start-up entrepreneurship
3.0%
4.1%
Established entrepreneurship
3.0%
8.0%
User innovation are meaningful to others
Breakthrough innovations… 100 of the biggest inventions in history: At least 1 out of 3 developed by users (and probably more)
Grauls, M. (2009), Gewoon Geniaal!, Van Halewyck: Leuven.
Gebruikers met behoefte
New industry emergence
Homogeen segment
tijd Innovatieve gebruikers
Gebruikers starten bedrijven
Producenten treden toe
Gevolgen: User-contested > Prijsdruk > Consumentensurplus User-complemented > Consumentensurplus + productensurplus
How to cope with this (as producer) ‘We should pay close attention to what our customers need’
NO ‘Focus on how (potential) customers fixed their problems’
YES
Do not underestimate users
Consider Center-Pivot Irrigation – A major agriculture innovation
Functional novelty…
Original user innovation by a farmer (perfect need information; poor solution skills i.e. bricolage)
..vs dimension of merit improvements
(scant need information; great solution skills i.e. new product development)
The first snowmobile: modified T Ford
Implications for policy Producer faces market failure, legitimizing subsidies, patents, PPP
Many opportunities products fail high uncertainty
One opportunitiy User faces ‘diffusion’ Welfare loss if not diffused failure, legitimizing… (not a great deal of money!)
Innovation paradigms evolving Trends: education, tools, Web
The lone Inventor
Closed Innovation (R&D lab)
Open Innovation
User-centered Innovation
< 1920
1920-1980
1980-
???
Franklin, patents
Edison
Chesbrough
Goodyear Diesel Fahrenheit
General Electric Philips IBM
Intel Apple
End users, Communities