Lead Users Generate Innovative Ideas & Great Returns!

Innovation-Enabling Tools & Software for Individuals and Product Pipelines, August 15, 2013, discusses the decade-long growth of the innovation body of knowledge that has lead to new software and other tools that are achieving penetration across industries in this early market.

There are only a handful of “official” innovation tools and techniques that preceded this boom of the past decade.  Edward DeBono’s “Lateral Thinking” and wearing “Six Hats” techniques have been used by many companies around the globe since the 1960s, and have stood the test of time.  Roger Von Oech’s “Creative Whack Pack,” a mix of analogous and stretch thinking via a deck of cards, has also stood the test of time.  There are at most three or four more oldies but goodies.

Just from the high level description of these techniques in the preceding paragraph, one can intuit that the “thought patterns implicated by the two techniques” might lead to different product ideas.  One tool that has also stood the test of time, “Lead User Analysis [LUA],” is specifically devoted to spurring thinking in the direction of products that no one has yet thought of.  Every company has some level of a risk portion of its portfolio.  This technique helps to identify products that are New-To-The-Industry or New-To-The-World.

Are the chances of “New To” success the same of buying a lottery ticket?  Hardly.  It is therefore harder to understand why a technique that has been around since the 1960s, and was nearly fully documented by the early 1980s, is not more widely and systematically used.  To paraphrase W. Chan Kim’s book Blue Ocean Strategy, Blue Oceans are where products do not yet exist and Red Oceans are where competition is currently taking place. In any given year, only 14% of new products are launched into Blue Oceans. Yet, this 14% generates 38% of all corporate revenues and an unbelievable 61% of all corporate profits.

Bose Corp., for example, can trace its meteoric rise in the stereo equipment industry to a Lead User Analysis that showed in the 1960s there was a large market of high-end audiophiles that would pay thousands of dollars for speakers with accurate sound reproduction. Sony used LUA in developing the WalkMan, a product that kicked off the wearable electronics movement in the early 1980s. MiniMed’s wearable insulin pump in the early 1990s, now a Medtronic product, was also developed in part due to LUA.

LUA has been around for several decades. Yet, companies continue to center on focus groups, data mining, emotional intelligence studies, and the like to identify products that cover the the entire range of the portfolio. That’s probably because these techniques are familiar and do not require something different be done for every portfolio segment; and management readily accepts them. However, they rarely result in New To products that are now tending to be a higher percentage of many corporate portfolio goals.

Lead Users Generate Innovative Ideas & Great Returns [Machine Design – February 13, 2014], summarizes Eric von Hippel’s key role in bringing LUA to a level of practice and gives the reader a feel for the basic tenants of the Lead User Analysis approach.  [Please note that these two URLs may not be active until February 13, 2014 when the MD issue is published.]

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