Eric Von Hippel on Innovation

Eric Von Hippel has long been an advocate of user-led innovation but it is not always clear what user-led innovation really means. A newly released study on consumer innovation by Von Hippel reveals more than you might think. Haydn Shaughnessy delves deeper..

Like many in the innovation space I think of user-led innovation as a no-brainer. Who wouldn’t talk to their users?  It makes so much sense it’s almost a cliche.

Reading through Eric Von Hippel’s study of consumer innovation in the UK, written with Jeroen De Jong and Steven Flowers, however, shook me out of this complacency.

Consumer innovation is much more profound than simply being influenced by user’s needs. This is the user as lead innovator, the producer who historically we have overlooked as we weave a distorted view of where good ideas come from and how new products emerge.

The big news from the report (conducted for NESTA, London) is that consumers spend twice as much as companies in their own product development and adaptation efforts. What’s that about?

“We were asked to find out how much innovation ordinary people do with the products they use,” says Von Hippel. “What products in the last three years have you modified to make them work better for you?”

And the result is astonishing. It challenges us to rethink how we tell the innovation narrative. Listening to Von Hippel on innovation can be like that.

“Historically it was thought that producers were the innovators,” explains Von Hippel. “Because, of course, they can spread the cost, and justify the cost, of doing research and development. But when you look at it every market starts insignificantly, so for example in skateboards it’s the kids who develop them and it is the company, say a Mattel, that jumps on board later when the user has a product. The user innovates.”

Surely product development is a result of lab work, R&D, careful testing and experimentation. But of course the invention of social networking was entirely driven by users like Mark Zuckerberg. Mountain bikes, kitesurfing and skateboarding are other examples.

“It is the same for products in the consumer markets as well as in business products,” insists Von Hippel.  “Industrial goods are used by someone as much as are consumer goods. A business is also a user. For example the heart-lung machine was developed by a surgeon who needed one. The user in this case was a surgeon.”

Indeed. And doctors quickly began adapting the Microsoft’s X-Box Kinect for use in patient recovery programs and pain relief. The World Wide Web was ‘invented’ by a group of academic scientists who needed a better way to communicate, led by one who had a particular passion for the project, Tim Berners- Lee

“Soldiers in the Vietnam war used to mount guns on cargo planes. This became the blueprint for the helicopter gun ship,” says Von Hippel, extending the examples to a ripe source of user innovation, the military.

So what stops us realising how significant users are to the innovation process?

In part it is the narrative we have built up around good ideas. We are told they spring from science or emerge from mysterious processes. And the enterprises that manufacture products who take control of inventions through patents have a strong say in this narrative. There is a simpler answer.  We just don’t measure the right activities to understand innovation fully.

The Consumer Innovator

As the leading advocate of this new view, is it surprising to Eric Von Hippel that the consumer expends quite so much on innovation?  “No. It surprised everyone else but it doesn’t surprise me. Ever since Schumpeter people have thought producers not consumers innovate.”

So it seems that we have failed to tell ourselves the right story and the result of that is we now talk about lead-users and prosumers as a modern phenomenon, another one of those ‘change is accelerating’ impacts of the world wide web.

“What is changing,” cautions Von Hippel, “is that it is getting easier for consumers to innovate, with the Internet and such tools, and it is becoming more visible for the same reason. Historically though the only person who had the incentive to publicize innovation was the producer. People build institutions around how a process works and the mass production era products were built by mass production companies, but they weren’t invented by them. When you create institutions like mass production companies you create the infrastructure to help and protect them such as heavy patent protection. Now though we see that innovation is distributed, open collaborative.”

It seems we should be thinking less of lead-users as a source of input in the product development process, more of the anthropology of consumers, what they are up to and where the nexus of innovation exists, out there, among the masses of people who make things better each day. But to clear the matter up, is Von Hippels’ thesis really about lead-users or user-innovators?

“It turns out that the users are the innovators and when you take that into account a lot has to change. Marketing has to change. Marketing says let’s talk to our customers and see what they want. Instead you have to find those customers who are innovating and find out what they are doing.”

The impact of rethinking the user as innovator

The idea of innovation being driven by users carries some risks. It might dent a few egos. It might demand of us a rewriting of product history. It also suggests we are headed towards a huge fragmentation of markets if large companies decide to pick up on the different varieties of new products being created out there by consumers. Is that Eric’s vision? Because if it is  we have another barrier to overcome. Large companies are geared for scale – not fragmented markets.

“What happens is there are many ideas that only one user wants. Some of the ideas, like skateboards or mountain bikes, are clearly copied by other users and that begins to indicate a market. The heart-lung machine and kitesurfing are other examples. Markets evolve.”

The skateboard is often used as a case study of how companies had to provide customisation opportunities for users – the case studies said kids stopped buying skating magazines because of the rise of social media and manufacturers suddenly lost a way to reach them through advertising. They began making boards available for customisation because the power of their branding channel was in decline.

“The reason it is called a skateboard,” says Von Hippel, “is that the old product, the metal skates you and I used as kids are where it began. These skates came in two halves so you could shorten or lengthen them.  Kids took the skates apart and hammered the parts onto a board – hence skateboard. It became a phenomenon long before manufacturers got involved. The basic functions were all developed by consumers and the same is true of mountain biking, kitesurfing and many other sports.

But didn’t the manufacturers start creating blank skateboards for kids to customise rather than kids inventing skateboards? “That would be just decoration, right?,” says von Hippel. “When I talk to manufacturers they routinely say, yeah the customer produced that change but we don´t advertise that – because they don´twant to pay customers a fee or they just want the credit.”

Talking about innovation and skateboards can appear a little underwhelming. Gunsights seem a little specialised, Facebook however is monumental but even that is dwarfed by the web – developed by a guy in his corner cube looking for a better way to share images and text.

”There’s another example in mobile banking,” says Von Hippel. “People assume mobile banking is an innovation of mobile phone companies. How mobile banking began was with airtime cards. What users did initially to transfer money was to send their airtime card code to their village and have the local phone owner use that code. The airtime card code became a currency. You bought your airtime. You rang up the person in the village who had a phone. You gave her the code for a $10 card. She passed on, say, $9.00 to your family, and used the code for cheap calling. This was the basis of mobile banking. It also meant mobile agents were already in place when mobile phone companies took the innovation on. M-Pesa says it came up with mobile banking but it is not the case.”

So how do the enterprises Von Hippel deals with react to this research?  “Quite a few companies say the user is the designer. The UK study said there are a lot of users who are innovating. The question becomes what do companies do about this? Sometimes they have to hook up with users. The other things is they can go looking for these users and products.”

In order to do that of course we all need to rethink where good ideas really come from and deal with it.

By Haydn Shaughnessy

About the author

Haydn ShaughnessyHaydn Shaughnessy, senior editor, has worked at the epicentre of innovation in a 25 year career spanning journalism, consultancy and research management. He began his technology career as a manager of application research in broadband, mobile and downstream satellite services and has maintained a continuous production of analysis and intellectual material around innovation since then, having written on Wired Cities, Fibre to the Home, Future Search Engines, and international collaboration. He is an emerging thought leader in systemic innovation building on his PhD research in large scale economic transformations. He was previously a parter at The Conversation Group, the leading global social technologies consultancy where he helped companies such as Alcatel Lucent, Volvo, General Motors, Symbian Foundation, and Unilever adapt to the current transformations in the global digital economy. He has written for the Wall St Journal, Forbes.com, Harvard Business Review, and many newspapers as well as making documentaries for the BBC, Channel 4 and RTE. His consultancy and research work encompasses changing enterprise structures, new business models and long-term trends in attitudes. He is in demand as a speaker on the impact of changing attitudes on business and on gearing innovation to new consumer requirements. More information about Haydn can be found at fiveideasthatmatter.com
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  • http://www.bizstuff.co Zulfiqar Deo

    I agree with the flow of your article. However, what about design based innovation, where you have furniture and other similar products that lead consumer taste. In these cases the end user is studied and the end product not only meets the functional need, but also something extra the consumer didn’t initially believe he/ she needed.

    Look forward to your thoughts.

  • haydn

    You make an extremely important point – one feature of the innovation landscape is that many thinkers/writers believe they have the magic formula. We need to take a more inclusive view – yes design thinking is extremely important and often doesn’t involve engagement with users. But yes also, Von Hippel is making an extremely important point that users are active agents not just passive (some of the time).I am sure we need to train people in innovation to take on board a very wide range of perspectives.

  • http://www.mindforceconsulting.com Rogelio Nochebuena

    Hayden,

    According with Prof. Von Hippel many of the breakthrough products were in reality developed by lead costumers, who had an unmet need and after a conversation with some of the companies that were their suppliers. The suppplier’s team realized that such needs could be applied to more customers and that lead to some of the market introduction of some of their most successful products.

    As you pointed out the manufacturers took the credit, for products and services that they didn’t invent just refine and commercialize. So it behoves to any organization to engage with lead customers to get a better understanding of the embryonic product or market opportunities that will fuel the innovation pipeline and also the generation of sustainable growth.

    Cheers
    Rogelio

  • http://www.top-innosense.nl Harold van Garderen

    Hayden,

    Erics story is indeed maturing w.r.t. product-invention. He still calls it innovation though :-)

    What still surprises me that very few people point towards services as an industry-type where all invention and innovation is led by users.

    After all, services are defined as activities carried out by a provider on behalf of the user/client. And when do you go to a services provider? When there is no economic good readily available!!

    So services providers are constantly “doing new things that are requested by customers/users that cannot find the offering they are looking for”.

    That is why the co-creation is taken place constantly in services and new services are invented every day. Indeed they are – as Hippel also indicates – “one-off” and the whole challenge for services organisations is the questions “which one-off service-varietions should we invest in to let them grow into mature services lines”?.

    This process (from one-off for a customer to a mature services line) is IMHO a splendid example of outside-in innovation. Such a process can furthermore characterized as the inverse of a the normal valorization route. In services value is first created “in the field” and only later partially captured by the services provider.

    Would be happy to hear from others how they views the applicability of user-involved innovation in services.

  • Rein Võsari

    Is this really news…companies have been aware of customers modifying their products (think automobiles) for at least 60 years !

  • haydn

    Yes they have but have they used that as an input to future design? I guess that’s the critical question.

    DO you not think it is news to see just how much customers do with products – i.e. the amount they spend?

  • http://faculty.babson.edu/gordon/ Steven Gordon

    User as Inventor vs. User as Innovator

    There is no question about the consumer’s value in generating new ideas from existing products and services. There are two problems, however, in thinking about the consumer as an innovator.

    First, only a tiny portion of consumers’ fantastic ideas can be converted into commercial value. While it’s easy to identify successes after the fact, focusing on these ignores the reality that many start ups have gone bankrupt and many well-heeled companies have lost millions pursuing inventions that could not be commercialized or at least not easily so.

    Second, very few consumers are like Tim Berners Lee in having the technical ability to implement their invention on a large enough scale to get it noticed and make a difference. Schumpeter’s arguments for organizational structure continue to make sense in this context. While consumers often are the source of invention, it generally takes the resources and specialization of an organization to convert the invention into a commercial opportunity or at least into an innovation that can make a difference to a company or the world.

    So, I do not disagree with the notion of the consumer as the source of invention, but I am highly skeptical of the notion of user-led innovation unless innovation is defined so narrowly as to be equivalent to invention.

  • haydn

    In principle it is difficult to disagree. However Von Hippel is saying something very similar that USERS (not necessarily consumers in any marketing sense) are closest to an activity and product(s) and do make innovations. his example of helicopter gunships arising from soldiers firing out the back of cargo planes is a good case in point. Their equipment simply did not suit the needs they encountered. And I think this is what happens very often – people develop new activities and there are no products there to help them, so they are literally inventors and innovators of activity.

  • http://faculty.babson.edu/gordon/ Steven Gordon

    I agree that user-led innovation occasionally happens, but maintain that it is extremely rare relative to user-inspired innovation. Corporate innovators are well advised to keep a lookout for how users are adapting products and services to their needs, and to use these examples as inspiration for innovation in their markets.

    BTW, this line of reasoning mirrors a well-established theory in the adoption and use of information systems known as Adaptive Structuration Theory, which holds (loosely paraphrased) that users will adapt technology for uses in ways that were not originally anticipated and that this in turn will affect how the technology is developed. See Orlikowski, W. J. (2000). Using technology and constituting structures: a practice lens for studying technology in organizations. Organization Science, 11(4):404-428.

  • haydn

    If something ‘occasionally’ happens and something related to it is extremely rare then you’re suggesting that user-inspired innovation is pretty rare already and user-led as you say is extremely rare – that’s a damning criticism of Von Hippel’s argument. What do you make of the aggregate argument that ‘customers’ in the UK spend twice as much on innovation as companies do? By the way I don’t believe user-led innovation is so rare – many start-ups begin from the insights of users who are not being well-served by markets.

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