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Innovation by lead users

Article in focus: "Companies look for ideas in all the wrong places" (Eric von Hippel, CIO Insight, June 5 2005).

More articles on this topic: See innovation, personal fabrication, and usability and user behavior in the Digest index or the Montague Institute Review index.

About the author. Eric von Hippel is a professor of management and head of the Innovation and Entrepreneurship Group at the Massachusetts Institute of Technology. The purpose of this interview article is to promote his latest book Democratizing Innovation (MIT Press, 2005)

About the publisher. CIO Insight is a Ziff-Davis monthly magazine targeted to Chief Information Officers. It aims to give them "strategic thinking and proprietary research about business and technology issues."

Article summary. Most companies are stuck in a "find a need and fill it mode," but this is expensive and can only lead to incremental innovation. A better idea is to design products with a proprietary engine that manufacturers can protect and make money from. Then let "lead users" build and modify new products as they see the need for them. Most of the article is devoted to examples of companies that have capitalized on innovations developed by their customers — games, medical devices, statistical tests, sports equipment. But von Hippel would extend the idea to the corporate IT function. Instead of being seen as the impediment to new ideas, IT staff could start thinking of themselves as purveyors of tool kits for innovation.

What I liked. I too believe that current technology is making it easier for some users to develop new products and applications — if not rock-solid production models, then at least sophisticated prototypes. Much of our members' frustration comes, I think, from being forced to operate under what von Hippel calls the "find a need and fill it" model. In his new world of user-led innovation, we'd spend less time on market research and "strategic alignment" and more time on delivering new products. As someone who leans more toward doing than planning, I've always been skeptical about the time and money spent on preparing elaborate specifications and trying to "sell" technical capabilities to managers.

Commentary. In my career prior to the Montague Institute, I saw first-hand how valuable it can be for manufacturers to work closely with lead users, not only on new product features but also on innovations in distribution, finance, and customer service. But will the same concept work for IT departments and their internal clients?

In most companies, the idea is problematic. Often, IT views lead users as a pain in the neck. They can be vocal, demanding, impatient, and independent. They sometimes install unauthorized applications that cause network slowdowns and security problems. Yet, they can also be useful allies — relieving pressure on the IT help desk by helping colleagues solve computer problems, lobbying senior management for necessary upgrades, and testing new products.

Whether lead users are bane or boon depends in part on how the IT function is organized. I've often thought that IT should be split into three parts: basic infrastructure (the equivalent of a public utility), operations (core business applications), and innovation. The goals of infrastructure and operations should be reliability, efficiency, and cost control. The goals of the innovation section, on the other hand, should be productivity enhancement and revenue growth.

The IT function in most companies is already organized for infrastructure and operations; that's why IT often reports to the CFO. The IT innovation function, if it exists at all, lacks a corresponding discipline and set of best practices. Who are "lead users," where do you find them, and how do you work with them? In my experience, I've worked with two types: the visionary and the implementor.

Visionaries are star performers who love computers. Because of their high status, they often have access to funding sources, both internal and external. Visionaries are successful in their chosen field (i.e. sales, research, administration) in part because they're curious, observant, and willing to try something new. For them, computers can not only save time but also solve intractible problems and fill unmet customer needs.

Implementors are true hybrids. One half of them is a competent professional with a non-computer job in sales, marketing, finance, product development, or customer service. The other half is amateur computer geek. Unlike the visionary, the implementor can not only envision a new application but also create a reasonable prototype. Implementors are bi-lingual — equally adept at speaking the language of their chosen profession and of the IT world.

The ideal "lead user," then, is not one person but two. The visionary needs the implementor to create a working prototype and talk to the techies. The implementor needs the visionary to sniff out the big opportunities, find funding, and help scope out new features. Both need an IT shop that can turn the prototype into a production model, which in the beginning may serve only a single work group or department. For low cost and quick results, the best choice may be an outside contractor. Only when a new application is adopted by multiple departments may the enterprise IT group get involved.

To make user-driven innovations really useful, companies need to develop the equivalent of standard "plugs" that can allow departments to exchange data with enterprise applications. The "plug" — the digital equivalent of the electric wall socket — consists of standards for security, data transfer, and metadata. The innovator's tool kit can be configured to be compatible with these plugs.

As for the toolkits themselves, we've used three types: a user-friendly database (Filemaker), free Web sites (e.g. del.icio.us), and free downloads (e.g. PrimoPDF). Of these, Filemaker is by far the most versatile. Implementors can start customizing standard Filemaker templates for common business functions with a minimal learning curve and master the fundamentals of the Filemaker scripting language without any formal instruction.

Filemaker prototypes can be converted to production mode in one of two ways — through "editing" or conversion. In the editing method, a computer professional cleans up the Filemaker design for efficiency and compatibility with enterprise standards. In the conversion method, an IT shop translates the design into another database environment, such as SQL Server or Oracle. In either case, development time and costs are much lower — weeks or months instead of years.

Is von Hippel's idea of user-driven innovation feasible for corporate IT projects? Yes, but only if the right combination of visionaries, implementors, toolkits, and production shops are in place.

For original articles by Jean Graef, see the Montague Institute Review.