Open Innovation & Lead Users

There are two sources of information. On one side, consumers possess information regarding their needs, preferences, tastes. On the other side, companies have information about their targets, capabilities, budget restrictions. Companies are trying to get access to consumers’ information. they want to know what they want, what they need, in order to offer the best match possible. Although advances in modeling allow for more accurate predictions of consumer choice behavior, there is still a lot left unknown. A lot is remained probabilistic.

An alternative approach emerged is to invite consumers inside the company. Invite them to share their information, to share their insights. To generate ideas with the companies. Consumer information and problem-solving capabilities must be combined for the firm to be able to innovate. The question that naturally is asked then, is which customers to invite. Lead users are consumers with high expertise and strong and unique needs, willing and able to develop their own product solutions. Lead users often develop new products and services they need for themselves but many times these solutions become the basis for important commercial products (Von Hippel 1986). A very interesting application of open innovation, based on users but with a significant role of toolkits can be found in a speech by Prof Von Hippel himself regarding the open innovation initiative used in Lego (MITs_Eric_von_Hippel_Open_Innovation).

Although, open innovation requires a shift to a different value system, which sometimes entails high switching and transition costs, we can see many applications in real business practices. The merits are obvious for both sides: (1) getting detailed information and create stronger bonds with the consumers and (2) being able to get better products that better match your needs, feeling of belonging and being unique (to name only a few). The following video illustrates some of the best examples of involving the customer in the product development stage.

Dimitris T.

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