The concept of managing innovation is counter-intuitive but it is possible. 3M and Bose have demonstrated that innovation can be managed effectively in a systematic and predictable manner increasing market share and revenues. The bigger question is whether breakthrough innovation process can be managed as well when incremental innovation has a low success rate.

The answer is affirmative, but we have to travel the road less travelled. The road less travelled is also usually unpaved making the journey harder and the future uncertain. This is where lead-user methodology may help to reduce the uncertainty and risk in innovation in some ways.

Managing Innovation is not the same thing as Innovation Management. My favourite joke is that one could be doing “Innovation Management” but not managing innovation. I think it is important the clarify the difference up front as I have experienced that my former clients sometimes confused the two. If we go high up at 60,000 feet level, the process of Innovation can be segmented into four big chunks. They are Innovation FramingInnovation Management, Problem Solving Solutions Engineering.

No alt text provided for this imageFraming is mostly talking the talk, sometimes using buzz words, framing and storytelling to build consensus, to motivate teams and/or to give moral lectures. Innovation Managementis the administrative, stage gating, process and resource-oriented work to gather insights, arrange hackathons, run open innovation challenges, incubators, accelerators etc.

The next two parts are the weakest link in Innovation and things fizzle out by the time they reach the Problem solving and Solutions Engineering stage. Problem Solving is where solutions are conceptualized for unmet, underserved and overserved needs of the customers. Solution Engineering is the process of converting the concept to a service/product/process or all three of them.

I have written about this in more detail in this post “Why Most Corporate Innovations Fail“. The problem is that sometimes organizations can delude themselves that they are innovating because of the intense, resource intensive activity in Stage 1 and 2, and still achieve low or negligible output through the next two stages. It becomes the case of “operation successful but the patient died”. I term the process of managing these four processes across the lifecycle in an integrated manner so as to achieve strategic outcomes as “Managing Innovation“. LEAD user frameworks can be used to manage innovation better so as to generate breakthrough innovations.

The concept of “LEAD Users” was coined by Eric von Hippel in the mid-80s and promulgated when his book “Sources of Innovation” and a series of journal articles were released. The process can be used for new product development or help marketing teams to position the product better.

Lead users are users who identify a need before it others experience that need in the market. They are usually ahead of the curve due to their unique circumstances.

As per Dr Eric Von Hippel, a lead user is:

  1. A pro-user who experiences needs that will eventually become more general and diffused in a marketplace, but faces them months or years before the bulk of the marketplace encounters them
  2. A user who is positioned to benefit personally by obtaining a solution to their needs.

A lead-user is, in essence, someone who experiences some pain or frustration while getting a job done, when an off the shelf solution is not available. The lead-user hence, tinkers modifies or combines existing products/services to create his/her own solution. We can also say that lead-user is an existing-product inventor, the only difference being that they are inventing and tinkering with an already built up the product.

To clear any confusion, lead-user is not the same as early adopter or user-innovator. I will highlight this again and provide some examples of lead-users to make the point. Secondly, breakthrough inventing is different from breakthrough innovations in that the former requires a complete greenfield space with a heavy inventing burden. In the later, we can tap into developing or emerging hidden market opportunities to tap into the blue ocean. First is about search & creation while later is about is solely about search & capitalize.

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These categories have been defined/tinkered/modified by me for better understanding of the innovation mosaic and you may not find it elsewhere. Yes, I am reading your mind as some of you are thinking that I am the lead user of innovation processes (pats his back).

Users-Innovators are a kind of lead users who face a problem, come up with a solution when the solution does not exist in the marketplace and they also usually commercialize it (Steve Jobs and DropBox). User-Innovators also have to do extensive work in Stage 3 and 4 of the Managing Innovation process (see Figure 1) as their conceptual solution is futuristic by leaps.

Lead-Users are mainly focussed on solving their own problem, are able to easily juxtapose existing services/components to create frugal solutions that work. They are rarely motivated to commercialize their tinkered invention.

Early Adopters are a low risk averse or high enthusiasm prone pilot or beta customers of early-stage products or services.

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Companies and organizations are always looking to generate new streams of revenue and undertake many initiatives to launch new products and services. Unfortunately, extensive longitudinal research by analysts and academics indicate that the failure rate is very high in getting new products to the market.

The failure occurs when the innovators or market research team captures some truisms about the customer (demographics, psychographics, sociographics) and assume these truismsto be proxies for causal factors triggering customer adoption and purchase of new products/services.

Existing market research samples people in the bell curve zone (Figure 2) where customers suffer from something called functional fixedness. A notable quote by Henry Ford highlights this problem “If I had asked people what they wanted, they would have said faster horses.”

Eric Von Hippel’s research has shown that the greatest share of breakthrough innovations have originated from a specific type of customer research namely the LEAD users. LEAD users are ahead of the curve than early adopters. They are usually not found in focus groups, are not domain experts, are not academic researchers of innovation and rarely show up at product roadshows or conferences. Hence, conventional market research methods fail to notice or interact with them. LEAD users mostly act out of self-interest to solve a significant pain or frustration and hence, hidden somewhere deeply immersed in their context.

All right, bragging time. I am a LEAD user who felt extreme frustration because of extended cycle time to the invention during a military reverse engineering project. I eventually invented a “knock your socks off” counter-intuitive process to reduce inventing cycle time (ICT) i.e how to move from the problem space to solution space as quickly and efficiently as possible. Realizing that there was nothing out there that could teach me how to reduce ICT, I took it upon myself to find the answer. When I discovered the empirical process using obvious, hidden in plain sight processes, I had the least interest in commercializing it as it gave me a massive competitive edge and helped me solve my own problems.

Here are examples of some of my kindred LEAD spirits.

Gary Christopher Fisher was a lead-user that created mountain bikes out of ordinary bikes as no one made terrain bikes at that time. As per Wikipedia, “Fisher went to work in 1975 on his 1930s Schwinn Excelsior X bicycle. His innovations to the model included drum brakes, motorcycle brake levers and cables, and triple chainrings, all taken from “junkers” Fisher found at bike shops. The next year, Fisher participated in the Repack downhill race, promoted by his roommate Charlie Kelly. This used a tortuous downhill route on Pine Mountain near Fairfax, California, just north of San Francisco, in which riders used their coaster brakes so much that they had to repack the smoking hubs with grease after every run.” In the late 1980s, Specialized Inc. was the first commercial manufacturer of mountain bikes. Imagine, if other big players would have found Gary Fisher before any else did. Imagine if a bike company actively looking to release new products in the market found Gary through a structure targeted LEAD user search. Then, this company would have launched a breakthrough product in the market as a first mover.

The second example is of the famous energy drink Gatorade. It was again a result of lead users who had underserved needs. In the mid-60s, some team members of Florida Gators, a well known American football team experienced a drop in performance of players due to loss of body fluids during physical exertion during hot days. The head-coach Ray Graves had to find a solution and requested a team of scientists at the University of Florida College of Medicine to formulate it. Note that these scientists were not in the business of formulating drinks. A couple of years down the line, Quaker Oats purchased the company which was eventually purchased by Pepsi-co. A breakthrough drink that was formulated by lead users. Coke and other retail food and drink companies lost out this multi-billion dollar opportunity.

There are many other cases of LEAD users, such as the musicians who found a unique use case of well designed Bose 901 speakers (read here) and Jake Snap who created the Tennis Ball hopper to pick up tennis balls on the court (read here).

Using the above case studies, it is easy to see that any organization wanting to innovate can achieve great results if they can know how to find these lead users, tap into their high urgency pain points, create products and become market leaders in their category. As someone who has used the lead-user process in some consulting assignments, I must emphasize that the process may be boring and burdensome during the practical application, hence may throw some people off a bit. The process is more effective than any other known innovation methodology.

No alt text provided for this imageBefore we close, I want to give two examples of User-Innovators who solve a problem for themselves and quickly saw the market potential of taking it to market themselves.

It is easy to see that in both categories i.e lead-users and user-innovators, accumulated frustrations act as guide-posts to innovations. They suddenly create an obsession in the user-consumer who has to find the solution anyhow. Steve Jobs & Drew Houston of Dropbox were such user-innovators who were frustrated due to a lack of an off-shelf solution for their unmet/underserved need. They also had a loose concept of the solution & engineering bridged the gap.

Houston came up with Dropbox idea on a bus when he used the transit time to code and forgot his USB stick with the most recent code. As per him “It was really out of personal frustration. I kept carrying a thumb drive around and emailing myself files and all the things that we used to have to do.

Jobs had a similar frustration before the launch of the iPhone but had an early version concept in his head. He said in a video conversation with journalists “To me, what I want, is this little thing I can carry around with me that’s got a keyboard on it. Because to do email you need a keyboard. And you need to be connected to the ‘net. So if somebody would just make a little thing where you’re connected to the ‘net at all times, had a little keyboard with a modem in it, I’d like to buy one. But I don’t see one of those out there. And I don’t care what OS it has in it. So, I don’t want a little scribble thing. But that’s just me.

In future posts, I will explain how to find the lead users, map out fields of play and convert the lead users into breakthrough innovations for the company using few general cases and some from my own consulting work (currently in the process of taking client permission to adhere to IP requirements).