User-Driven Innovation: What it Means and Why it Works

User-driven innovation is a very interesting emerging phenomenon, one that is explored thoroughly in Eric von Hippel’s illuminating book, Democratizing Innovation. Von Hippel is a Professor at MIT’s Sloan School of Management, and has been involved in the research and theory of user-driven innovation for about two decades now. In his book, he casts light on several aspects of user-generated innovation, from the reasons why users are driven to innovate, how they go about doing so (both independently and collaboratively), how these innovations are shared and disseminated, and how manufacturers can benefit from user-generated innovations. Here are short summaries of some of these ideas:

Why do users innovate?
The short answer is that users (here referring both to individual users as well as user firms) innovate because most products and services available in the commercial market only partially meet their needs. These mass-produced items and services are generally made by manufacturers who attempt to design for the largest possible segment of the market, which often means that users’ needs are only partially met. This induces them to make modifications that transform the product or service to better serve their needs.

Another big reason why users innovate is because they tend to enjoy the process of innovation. Von Hippel illustrates this with the example of people who like crossword puzzles. Most people who like solving the daily or weekly puzzle would emphatically resist being shown the answer key; it is the process of solving the puzzle that makes the experience an enjoyable one, not just having the answers. This is especially the case when the user is passionate about a certain activity. For example, surgeons regularly produce innovative new instruments based on their experience and knowledge, and snowboarding enthusiasts have come up with numerous modifications and innovative designs that are suited to their specific needs.

Who are Lead Users? Why are they so important?
Lead users are individuals or firms who tend to be ahead of the majority with respect to a particular market trend. Many correlations have been found between lead users and user-innovators; that is, many lead users design new products or improve upon existing products and services, several of which then become commercially successful.

Why do users tend to share their innovations freely?
User-innovators do not have the same profit-driven motivations as manufacturer innovators, which often means that they tend to share their innovations freely, especially with online platforms that facilitate connections and conversations between different users with the same interests. This can have several benefits, including sharing of knowledge and ideas so that multiple users can benefit, providing or receiving assistance for one’s innovation, and dispersing the innovation far and wide.

User-innovators tend not to share the same views as manufacturers on issues of patents and intellectual property. Part of the reason lies with the prohibitive cost (financial and otherwise) in patenting one’s innovations, but there is also an observable element of enjoyment and satisfaction in sharing one’s ideas, and a desire to be the first to make and popularize a particular innovation, which can have a positive impact on one’s reputation.

What is ‘Sticky Information’?
Von Hippel talks about how product developers need two types of information in order to do their work effectively: need and context-of-use information (from users), and solution information (from manufacturers). Bringing these two types of information together is what makes for the most successful products; however, this is easier said than done, as a lot of this information is ‘sticky.’ That is, it is difficult and often costly to bring these two types of information together, which is one of the reasons why so many products fail. In the case of user-innovators, however, the information stickiness is reduced because the user has intimate knowledge of her own needs as well as some knowledge of the solutions to meet them.

Are user-driven innovations useful? Should manufacturers and policy-makers encourage user-driven innovation?
Indeed they are useful, and immensely so. For one, users can get the products and services they actually need and want, rather than something that is only partially satisfying. The other big reason why users should be encouraged to innovate is that user-driven innovation has been observed to have a positive impact on social welfare. Some of the most useful and successful innovations in several products and services have been developed by users, and then popularized by manufacturers.

What is the private-collective model of innovation?
Currently, there are two separate models of innovation: the private-investment model, which is the traditional profit-driven R&D efforts of mainstream manufacturers, and the collective action model, or open-innovation model, where information is shared freely, and the motivation is not profit, but rather collective social good. Von Hippel suggests a middle ground between the two, in which innovation is done through private investment, but is then freely revealed to all users. This model may seem incongruous, but studies have shown that contributors to a public good can inherently obtain better private benefits than free riders. This seems like the best of all worlds, for both users as well as manufacturers.

This article only presents some of von Hippel’s ideas on user innovation, and is intended only as an introduction. Any thoughts on these ideas are very welcome, especially on his idea of the private-collective model of innovation. Is this already in place? Could it be successful?

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