Has a Customer Already Developed Your Next Product?

It has been conventional wisdom to assume that first-to-market products are usually designed by the manufacturers of such products. As a result of extensive research, the author has found that, in some industries, the conventional wisdom does not hold and that successful designs for what later become successful products are typically available from customers or others before the first-to-market manufacturer begins his design work. In this article, the author provides managers with a method for identifying and utilizing such free sources of product design data. Manufacturers who build on this information can eliminate duplication of effort by their own staff and streamline their operations — strategies which contribute significantly toward the goal of maximizing profits. Ed.

“Find a need and fill it” is the accepted strategy for developing a successful new product — a strategy which research into the innovation process has proven correct. But what is a “need,” and where do you most successfully look for it? During the past three years, a study carried forward at the Sloan School has systematically examined the need information which triggered the manufacture of several hundred innovative and successful new industrial products,1 and has developed some answers which should be of use to managers interested in such products. The key findings discussed in this article include:

  • Information about the need for a new product is often found bundled together with valuable product design data. This data may be missed even by experienced market researchers looking for “needs only,” with the result that a manufacturing firm has to invest in redeveloping what it could have gotten for free. Sensitivity to the amount of product design data usually present in “new” product need information can pay off handsomely.
  • Information about new product needs in some industries proves to come consistently from the same type of source in case after case. Once this source is identified, management can do a great deal to use it more efficiently.

Managers who use our findings and apply the methods proposed in this article should be able to say as a result, “In our industry, need information leading to successful new products typically also provides us with X amount of free product design data, and comes from Y source — and we can organize to pick up and process this type of information more efficiently.”

Product Design Data Contained in Need Information

The conventional wisdom is that customers provide the needs, while manufacturing firms develop the solution to the needs. But, if one thinks about it, one sees that any information about a need provides information about the nature of a product responsive to the need as well. Consider the following statements of a need.

References

1. Our data base is derived primarily from innovations in the following fields: scientific instruments; process equipment used in the manufacture of (1) silicon-based semiconductors, (2) electronic subassemblies, and (3) corrugated cardboard; engineering polymers and additives for these; and construction equipment. Readers interested in detailed discussion of our findings in some of these areas and in the research methodology used may wish to read von Hippel [i] and [ii]. We gratefully acknowledge the support provided for this research by the Division of Policy Research and Analysis, National Science Foundation via Grant #DA-44366.

2. By innovative products, we mean those which offered users in their judgement a significant functional advantage over previously available products. “Me-too” products are excluded. See von Hippel [i] and [ii] for a detailed discussion.

3. When making your estimates of ROII, note that “return” is whatever is important to the party involved. It may be monetary, as in dollars of product sold, or it may not be. (For example, instrument users are strongly motivated to develop scientific instruments by “return” measured in knowledge and peer approval.) Your knowledge of what is important to participants in your industry will help you see “return” as potential innovators would see it.

4. Very large companies may worry that examination of the products of small companies for new product ideas may seen predatory to antitrusters — even if the small company has not made much of a go of the product and you are gathering data on what not to do as well as what to do. If this seems to be a problem, you might consider studying where the smaller company gets the idea for its version of the product. Typically, its need information may also have more product design content than the consumer data you are otherwise forced to use.

i. von Hippel, E.A. “The Dominant Role of Users in the Scientific Instrument Innovation Process,” Research Policy, Volume 5, No. 3, July 1976, pp. 212-239.

ii. von Hippel, E.A. “The Dominant Role of the User in Semiconductor and Electronic Subassembly Process Innovation,” MIT Sloan School of Management Working Paper #853-76, April 1976; also, IEEE Transactions on Engineering Management, in press.

iii. Rosenberg, M. The Logic of Survey Analysis. New York: Basic Books, 1968.

iv. Corey, E.R. The Development of Markets for New Materials. Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1956.