"Eric von Hippel's new book, Democratizing Innovation, documents how breakthrough innovations are developed by "lead users," -- users with a high incentive to solve problem, and that often develop solutions that the market will want in the future. Von Hippel argues that a user-centered innovation process -- one that harnesses lead users -- offers great advantages over the manufacturer-centric innovation model that has been the mainstay of commerce for hundreds of years. To this end, he has developed a systematic model for companies to tap into the innovation potential of their lead user communities." (quote from the Smart Mobs weblog)
"Where Did the Mountain Bike Come From?
There was a time when there were only two kinds of bikes. There were the clumsy, heavy bikes of the kind men used to ride to go to work in factories and there were racing bikes, as ridden by your elder brother and Eddie Mercks in the Tour de France. Racing bikes were glamorous and sleek, but uncomfortable to ride, with narrow saddles, thin tyres and handlebars that made you bend forward. Like greyhounds, they were too fragile for potholed city roads and for riding along country tracks. Then in the late 1970s, a new kind of bike started to appear, one with a robust frame; thick tyres with a deep tread; straight handle bars with rubber grips; as many gears as a racing bike and ferociously tight brakes. They were mountain bikes. Like most great innovations the mountain bike was adopted so quickly that it soon seemed as if it had been around forever. But where had the mountain bike come from?
Standard economic and business theory would tell you the mountain bike came from a clever entrepreneur or innovator working in their garage who emerged one day covered in grease, with his new invention. Having spotted a gap in the market, an unmet need, the entrepreneur’s new product would have been hugely successful and attracted mainstream manufacturers in search of their share of the profits. But that is not how it happened. Nor did the mountain bike emerge from the well-funded research and development laboratory of a mainstream bike maker, after months of laborious testing and exhaustive market research to “find” and then “fill” a gap in the market. Standard business theory does not have much useful to say about the emergence of the mountain bike.
There was no lone inventor and no moment of birth. The mountain bike was created by groups of avid users – passionate, Pro Am bikers – not the manufacturers who were quite happy selling products they knew well, through familiar channels, to consumers they also seemed to know well. Bike manufacturers had no incentive to innovate. Mountain bikes were developed when young cyclists in northern California started to take their bikes onto mountain tracks in search of new challenges. Traditional commercial bikes were not designed for this kind of terrain, so the rider-developers put together their machines, mixing strong, old-fashioned bike frames, wider tyres to provide grip and drum brakes from motor cycles. These mutants were called “clunkers.” Only the riders really understood what they needed and had the skills to make a product that met their distinctive needs.
For several years Pro Am bikers built clunkers for one another in their garages. Commercial manufacture began in about 1975 but even then only on a tiny scale. A year later there were half a dozen specialist assemblers in a part of northern California that lent its name to Marin, the company that became the best-known mountain bike producer. In 1980 a leading mountain biker, Mike Sinyard, founded a company to bring the first mass produced bike to market. Perhaps two years later, almost a decade after clunkers first hit mountain tracks, the incumbent bike manufacturers finally followed suit. Soon mountain bikes were being used in cities as much as on mountains. As the mountain bike went mainstream so the rider-developers went in search of ever more dangerous environments in which they could test innovations, riding at night and in all climates. These lead users continue to develop their own innovations, which tend to spread into the mainstream industry between four and six years later.
By 2004, mountain bikes were big business. In the US alone mountain bikes and related equipment accounted for 65% of all bike sales. A category that did not exist thirty years earlier and which had been invented by passionate users was worth $58bn dollars. No one in the mainstream bike industry saw it coming. The biggest disruptive innovation in modern biking history came from the users who saw themselves as innovators, not from the boffins in R & D.
With hindsight it is not hard to work out which users were most likely to become innovators. They were the most passionate and the most knowledgeable. They had been riding off road for longer, spent more of their time with their bikes, rode in more challenging terrain, competed in races and acquired more technical know-how. They did not just ride bikes, they understood how they worked and welcomed the technical challenges of improving them. Not only did they have the motivation to innovate, they had the tools as well. Many of the early user-innovators were engineers and so able to deploy skills they used in their day jobs. Riding clunkers week-in-week-out meant they had a way to carry out experiments in real time. The costs of innovation were low and the pay offs high. They enjoyed what they were doing.
The mountain bike story does not fit into the way we usually tell the history of innovation as a string of heroic inventions. In this conventional history every invention has a moment of birth when it comes into being. The inventor can usually say what the invention is for and how it should be used. That traditional focus on invention as the source of innovation leaves us hopelessly ill equipped to understand not just the mountain bike but the rise of barefoot organisations – the likes of Linux, Wikipedia, Craigslist and many others - that succeed by mobilising masses of volunteer contributors and innovators. These organisations do not have research labs and yet they innovate at scale because they turn their users into creators, combining their many small contributions into larger complex products. Once we realise users can be innovators we have a different lens on how technology spreads, productivity improves, society changes and how we could organise ourselves in future." (http://wethink.wikia.com/wiki/Chapter_6)
From the NYT :
"Mr. McMurry is part of an emerging corps of Web-savvy helpers that large corporations, start-up companies and venture capitalists are betting will transform the field of customer service.
Such enthusiasts are known as lead users, or super-users, and their role in contributing innovations to product development and improvement — often selflessly — has been closely researched in recent years. There have been case studies of early skateboarders and mountain bikers and their pioneering tweaks to their gear, for example, and of the programmers who were behind open-source software like the Linux operating system. These unpaid contributors, it seems, are motivated mainly by a payoff in enjoyment and respect among their peers.
But can this same kind of economy of social rewards develop in the realm of customer service? It is, after all, a field that companies typically regard as a costly nuisance and that consumers often view as a source of frustration.
A look at the evolving experiment that Verizon Communications began in July suggests that company-sponsored online communities for customer service, if handled adeptly, hold considerable promise.
Mark Studness, director of e-commerce at Verizon, is a software engineer by training and an avid consumer electronics tinkerer whose home projects have included installing high-end audiovisual systems. In those projects, he has often visited Web sites where users offer one another tips and answer questions. Verizon, Mr. Studness determined, needed to find a smart way to try to tap into that potential resource for customer service.
In talking to people and surveying the research on voluntary online communities, Verizon concluded that super-users would be crucial to success." (http://www.nytimes.com/2009/04/26/business/26unbox.html?)
- Our key finding was that approximately 80% of the innovations judged by users to offer them a significant increment in functional utility were in fact invented, prototyped and first field-tested by users of the instrument rather than by an instrument manufacturer.
Source: von Hippel, E. (1976). The dominant role of users in the scientific instrument innovation process. Research Policy, 5(3), 212-239. doi: 10.1016/0048-7333(76)90028-7 
- 67% of the significant process equipment innovations in the two fields of semiconductor manufacture and electronic subassembly manufacture were in fact developed by equipment users rather than equipment manufacturers.
Source: von Hippel, E. (1977). Transferring process equipment innovations from user-innovators to equipment manufacturing firms. R&D Management, 8(1), 13-22. doi: 10.1111/j.1467-9310.1977.tb01270.x 
- Eighty-two (57%) of the 143 drug therapy innovations in our sample were discovered by practicing clinicians through field discovery
Source: Demonaco, H. J., Ali, A., & von Hippel, E. (2006). The major role of clinicians in the discovery of off-label drug therapies. Pharmacotherapy, 26(3), 323-32. doi: 10.1592/phco.26.3.323 
- in 85% of these cases (of service innovation in banking), users self-provided the service before any bank offered it
Source: Oliveira, P. & von Hippel, E. A. (2009). Users as Service Innovators: The Case of Banking Services. Research Paper, MIT Sloan School of Management. Retrieved October 20, 2009, 
- von Hippel, E. (1986). Lead Users: A Source of Novel Product Concepts. Management Science, 32(7), 791-805 
- See also the entry on Lead Markets
- The pioneering and key research in the field is Von Hippel, Eric's work on User Innovation
- von Hippel, E. (1978). Successful Industrial Products from Customer Ideas. Journal of Marketing, 42(1), 39-49 
- Related concepts: Task Partitioning ; Pyramiding ; User Innovation Toolkits