Magazine Fall 2011 Big Idea: Social Business Research Feature

The Age of the Consumer-Innovator

Recent research shows that consumers collectively generate massive amounts of product innovation. These findings are a wake-up call for both companies and consumers — and have significant implications for our understanding of new product development.

Eric von Hippel, Susumu Ogawa and Jeroen P.J. de Jong Reading Time: 19 min 

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It has long been assumed that companies develop new products for consumers, while consumers are passive recipients — merely buying and consuming what producers create. However, a multidecade effort by many researchers has shown that this traditional innovation paradigm is fundamentally flawed: Consumers themselves are a major source of product innovations.1

Recently, this consumers-as-innovators pattern has led to the framing of a new innovation paradigm, in which consumers play a central and very active role.2 Rather than seeing consumers simply as “the market,” as the traditional innovation model has long taught, this new paradigm centers on consumers and other product users. It explains why consumers are very important innovators who often develop products on their own.

In this article, we begin by reporting on the large extent and scope of consumer innovation, as documented by first-ever national surveys. Next, we explain how the survey results lend support to a new user-centered innovation paradigm. Finally, we discuss implications of the new innovation paradigm for both consumer-innovators and companies.

ESSENTIAL INNOVATION INSIGHTS

This article has been selected as one of “12 Essential Innovation Insights” from the MIT Sloan Management Review archives.

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National Surveys of Consumer Innovation

National surveys of consumer innovation are essential to map the true extent and scope of the new innovation paradigm among consumers. Three first-ever studies of consumer product innovation were recently conducted with representative samples of citizens aged 18 and older in the U.S., the United Kingdom and Japan.3 (See “About the Research.”) All three surveys show that consumers play a very important role as product innovators.

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About the Authors

Eric von Hippel is a professor of technological innovation at the MIT Sloan School of Management in Cambridge, Massachusetts. Susumu Ogawa is a professor of marketing at the Graduate School of Business Administration at Kobe University in Kobe, Japan. Jeroen P.J. de Jong is an assistant professor of strategic management and entrepreneurship at RSM Erasmus University in Rotterdam, the Netherlands.

References

1. Among important papers documenting this pattern in consumer products: S. Shah, “Sources and Patterns of Innovation in a Consumer Products Field: Innovations in Sporting Equipment,” working paper 4105, MIT Sloan School of Management, Cambridge, Massachusetts, 2000; C. Lüthje, “Characteristics of Innovating Users in a Consumer Goods Field: An Empirical Study of Sport-Related Product Consumers,” Technovation 24, no. 9 (2004): 683-695; R. Tietz, P. Morrison, C. Lüthje and C. Herstatt, “The Process of User-Innovation: A Case Study in a Consumer Goods Setting,” International Journal of Product Development 2, no. 4 (2005): 321-338; and N. Franke, E. von Hippel and M. Schreier, “Finding Commercially Attractive User Innovations: A Test of Lead-User Theory,” Journal of Product Innovation Management 23, no. 4 (2006): 301-315.

2. C.Y. Baldwin and E. von Hippel, “Modeling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innovation,” Organization Science, in press. See http://papers.ssrn.com.

3. E. von Hippel, J.P.J. de Jong and S. Flowers, “Comparing Business and Household Sector Innovation in Consumer Products: Findings from a Representative Study in the UK,” working paper, September 2010, http://papers.ssrn.com; S. Flowers, E. von Hippel, J. de Jong and T. Sinozic, “Measuring User Innovation in the UK: The Importance of Product Creation by Users” (London: NESTA, 2010); and S. Ogawa and K. Pongtanalert, “Visualizing Invisible Innovation Content: Evidence from Global Consumer Innovation Surveys,” working paper, June 2011, http://papers.ssrn.com.

4. This three-phase process was spelled out in C.Y. Baldwin, C. Hienerth and E. von Hippel, “How User Innovations Become Commercial Products: A Theoretical Investigation and Case Study,” Research Policy 35, no. 9 (November 2006): 1291-1313.

5. S.K. Shah and M. Tripsas, “The Accidental Entrepreneur: The Emergent and Collective Process of User Entrepreneurship,” Strategic Entrepreneurship Journal 1 (November 2007): 123-140.

6. W. Riggs and E. von Hippel, “The Impact of Scientific and Commercial Values on the Sources of Scientific Instrument Innovation,” Research Policy 23 (July 1994): 459-469.

7. J.P.J. de Jong and E. von Hippel, “Transfers of User Process Innovations to Process Equipment Producers: A Study of Dutch High-Tech Firms” Research Policy 38, no. 7 (September 2009): 1181-1191.

8. P. Oliveira and E. von Hippel, “Users as Service Innovators: The Case of Banking Services,” Research Policy 40, no. 6 (July 2011): 806-818.

9. Google SketchUp CAD software can be downloaded for free at http://sketchup.google.com.

10. For example, explore services offered by Shapeways.com at http://shapeways.com.

11. S. Ogawa and F. Piller, “Reducing the Risks of New Product Development,” MIT Sloan Management Review 47, no. 2 (winter 2006): 65-71.

12. Lead user project handbooks and videos are available for free download from http://mit.edu/evhippel/www/teaching.htm.

13. L.B. Jeppesen and K.R. Lakhani, “Marginality and Problem-Solving Effectiveness in Broadcast Search,” Organization Science 21, no. 5 (September-October 2010): 1016-1033.

14. G.L. Lilien, P.D. Morrison, K. Searls, M. Sonnack and E. von Hippel, “Performance Assessment of the Lead User Idea-Generation Process for New Product Development,” Management Science 48, no. 8 (August 2002): 1042-1059, table 1.

15. For examples of user innovation activity associated with the Kinect, see P. Wayner, “With a Wave of the Hand, Improvising on Kinect,” New York Times, July 21, 2011, p. B8.

16. R. Prügl and N. Franke, “Factors Impacting the Success of Toolkits for User Innovation and Design: A Test of Toolkit Characteristics and Complementary User-Community Activities in the Computer Gaming Industry,” working paper, Vienna University of Economics, 2005.

17. Baldwin and von Hippel, “Modeling a Paradigm Shift.”

i. von Hippel, de Jong and Flowers, “Comparing Business and Household Sector Innovation in Consumer Products.” Flowers, von Hippel, de Jong and Sinozic, “Measuring User Innovation in the UK.”

ii. Ogawa and Pongtanalert, “Visualizing Invisible Innovation Content.”

Acknowledgments

This article includes an overview of survey research on consumer innovation in the United Kingdom conducted and reported upon by Stephen Flowers, Jeroen de Jong and Eric von Hippel, and in Japan and the U.S. conducted and reported upon by Susumu Ogawa and Kritinee Pongtanalert. For the research in the United Kingdom, we are grateful for financial support from the National Endowment for Science, Technology and the Arts (NESTA), and, for the research in Japan and the U.S., for financial support from the Yoshida Hideo Memorial Foundation.

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Comments (6)
Eurico Gushi
Thanks for a nice article. 
I think We can use the Focus Group with Users Leaders  
not only to Discover Their Needs but also to Help them Create Prototypes.  
In this case the Focus Group Facilitador must have new skills.  
It is interesting to observe the Evolution of Innovation Processes: 
 - Design Thinking: Development of Prototypes by the Multidisciplinary Team Without Consumers 
 - Co-Creation: Developing Prototypes by the Multidisciplinary Team and Consumers  
 - User-Generated Innovations: Development of Prototypes only by Consumers 
Eurico Gushi - Brazil -  
http://facilitadordeworkshopdeinovacao.blogspot.com/
chantzeleong
Matti is right.  I think many organisations miss the mark by having narrow focus on business on items such as profits and technology. Others probably innovate too superfically. Ultimately, customer has to be number 1 on the list and with the right customer engagement and innovating environment, companies could innovate differently.
siswanto.gatot549
recent business brings manufacturer going closer to their customers. customers are involved in production process, since product more specific and unique
Randy Hough
Nothing seems to stay the same for very long in today's world. Now, with the prevelance of smart phones and laptops computers, just about anything can happen in the marketplace.
One good example is 3-D printing.
Matti Makelin
Thanks for a nice article. Also the related innovation articles are interesting.  I think the product-oriented approach is far too narrow. In service or social and managerial innovations “consumers” become “prosumers” or “cocreators”.  Interesting areas include health, energy, environment and workplace.  For instance, most of healthcare costs are lifestyle related. Healthcare cost crisis, as well as any “green” and work-life-fit issue, is only solved through behavioral change and embracing the consumers (in fact, cocreators).  Here in process consumerization is the next big innovation potential and imperative.
Darin Grimm
To me this is about the now common theme of “customer-centricity”; putting the customer at the center of your business. Additionally in the age of social media customer conversations are constant and an excellent source for ideas, innovations, and product breakthroughs. Any business that is creating solely “for” a consumer and not in partnership “with” a consumer is now and has long been missing the boat. Lastly, this relates to both B2C and B2B businesses.