User-centered innovation is described by Eric von Hippel in his landmark book, 'The Democratization of Innovation'
Thesis: relying on a community of users constituting numerous non-customers is a key for future success.
See also the detailed treatment of User Innovation Theory
Democratization of Innovation
Explanation by von Hippel:
The Democratization of Innovation means that users of products and services, both firms and individual users, are increasingly able to develop what they need for themselves. Manufactured-Innovation means that firms develop innovations at private expense, then sell it.
User-Innovation means that lead users develop innovations that they need, then make it freely available. Lead users foreshadow a more general demand. But the concept should not obscure the fact that many users innovate, and that such innovation is distributed amongst different players offering incremental parts of the solution.
The cycle is most likely the following:
1) individual user develops innovation (invention, prototyping phase);
2) user diffuses innovation through networked media (information diffusion phase)
3) a community forms around it and develops a working prototype (pre-commercial replicaton phase);
4) a manufacturer may develop a commercial version adding some features (commercial phase)
The commercialisation phase should not obscure the fact that user innovation communities can bypass manufacturers altogether. Example: Kite-building communities; Some firms are moving to 'build-only' formats, leaving innovation to the user communities.
Examples: spine surgeons, lego mindstorms communities grew rapidly without company involvement but afterwards Lego incorporate the process in its R&D processes.
According to Von Hippel, the richest 'needs' information is available at user sites, but the richest 'solutions' information are available at manufacture sites. User sites are more diverse and can generate more different perspectives.
Users tend to invent novel functional abilities (new sports nutrition bar), while manufacturers tend to offer "dimension of merit' innovations (better tasting bar)
Study in spectrography/chromatography sector show 77% of innovations are user-generated!
3M products based on lead users, are 8 times higher sales than market research driven innovations.
Examples: email, mountain bike, sports bra, desktop publishing, Gatorade, white-out liquid
Definition of the related concept of "Customer-Made" by trendwatching.com:
"The phenomenon of corporations creating goods, services and experiences in close cooperation with experienced and creative consumers, tapping into their intellectual capital, and in exchange giving them a direct say in (and rewarding them for) what actually gets produced, manufactured, developed, designed, serviced, or processed.” (http://www.trendwatching.com/trends/CUSTOMER-MADE.htm)
"the user driven innovation paradigm is fading because it mainly drives the sustaining innovation trajectory of old established markets, because the users in the innovation process are the customers of the client – not the non-customers of the client. Thus, a community of users constituting numerous non-customers are a key for future success." (http://terranova.blogs.com/terra_nova/2007/06/applied-innovat.html#more)
User-Centered Innovation practices vs. Manufacturer-Centric Innovation, as explained by Eric von Hippel:
"When I say that innovation is being democratized, I mean that users of products and services—both firms and individual consumers—are increasingly able to innovate for themselves. User-centered innovation processes offer great advantages over the manufacturer-centric innovation development systems that have been the mainstay of commerce for hundreds of years. Users that innovate can develop exactly what they want, rather than relying on manufacturers to act as their (often very imperfect) agents. Moreover, individual users do not have to develop everything they need on their own: they can benefit from innovations developed and freely shared by others. The trend toward democratization of innovation applies to information products such as software and also to physical products.
The user-centered innovation process just illustrated is in sharp contrast to the traditional model, in which products and services are developed by manufacturers in a closed way, the manufacturers using patents, copyrights, and other protections to prevent imitators from free riding on their innovation investments. In this traditional model, a user’s only role is to have needs, which manufacturers then identify and fill by designing and producing new products. The manufacturer-centric model does fit some fields and conditions. However, a growing body of empirical work shows that users are the first to develop many and perhaps most new industrial and consumer products. Further, the contribution of users is growing steadily larger as a result of continuing advances in computer and communications capabilities. In this book I explain in detail how the emerging process of user-centric, democratized innovation works. I also explain how innovation by users provides a very necessary complement to and feedstock for manufacturer innovation. The ongoing shift of innovation to users has some very attractive qualities. It is becoming progressively easier for many users to get precisely what they want by designing it for themselves. And innovation by users appears to increase social welfare. At the same time, the ongoing shift of product-development activities from manufacturers to users is painful and difficult for many manufacturers. Open, distributed innovation is “attacking" a major structure of the social division of labor. Many firms and industries must make fundamental changes to long-held business models in order to adapt. Further, governmental policy and legislation sometimes preferentially supports innovation by manufacturers. Considerations of social welfare suggest that this must change. The workings of the intellectual property system are of special concern. But despite the difficulties, a democratized and user-centric system of innovation appears well worth striving for. (http://web.mit.edu/evhippel/www/books/DI/Chapter1.pdf )
Von Hippel on Lead Users
"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)
An interview with the author where he explains the concept of "lead users", at http://www.thefeature.com/article?articleid=101525&ref=6647666
Eric von Hippel et al:
"A Single User Innovator is a single firm or individual that creates an innovation in order to use it. Examples are a single firm creating a process machine in order to use it, and an individual consumer creating a new piece of sporting equipment in order to use it.
A producer innovator is a single, non-collaborating firm. Producers anticipate profiting from their design by selling it to users or others: by definition they obtain no direct use-value from a new design. We assume that through secrecy or intellectual property rights a producer innovator has exclusive access and control over the innovation, and so is a monopolist with respect to its design. Examples of producer innovators are: (1) a firm or individual that patents an invention and licenses it to others; (2) a firm that develops a new process machine to sell to its customers; (3) a firm that develops an enhanced service to offer its clients.
An Open Collaborative Innovation project involves contributors who share the work of generating a design and also reveal the outputs from their individual and collective design efforts openly for anyone to use. The defining properties of this model are twofold: (1) the participants are not rivals with respect to the innovative design (otherwise they would not collaborate) and (2) they do not individually or collectively plan to sell products or services incorporating the innovation or intellectual property rights related to it. An example of such a project is an open source software project." (http://www.hbs.edu/research/pdf/10-038.pdf)
User-innovation example by Fortune
"A dedicated kite-surfer—the sport involves riding a small board through water while attached to a parachute-like "kite"—he was unhappy with the goods on the market. In 2001 he started Zeroprestige.com, a website where he posted his kite designs. Soon other amateurs submitted their own concepts, and sail manufacturers with excess capacity offered to make kites from the plans. The amateur designers kept coming back to make exactly what they wanted to buy. And though no one got rich, a few small businesses popped up to sell the finished products. Since then, kites have become commodities". (http://www.fortune.com/fortune/technology/articles/0,15114,1061773,00.html?)
Examples of user innovation communities at work
The music identification technology of Gracenotes, was almost entirely produced by music fans, at http://www.wired.com/news/digiwood/0,1412,64033,00.html?. But because it has turned private MusicBrainz has been created as a true open source alternative ; iPodLounge contains more than 220 creative designs of future iPods, at http://www.wired.com/news/mac/0,2125,63903,00.html?
Clay Shirky on weblogs as a process of mass-amateurisation, not mass-professionalistion, at http://shirky.com/writings/weblogs_publishing.html
"But the vast majority of weblogs are amateur and will stay amateur, because a medium where someone can publish globally for no cost is ideal for those who do it for the love of the thing. Rather than spawning a million micro-publishing empires, weblogs are becoming a vast and diffuse cocktail party, where most address not "the masses" but a small circle of readers, usually friends and colleagues. This is mass amateurization, and it points to a world where participating in the conversation is its own reward."
"Before, only the rich had access to tools and so only the rich were professionals, and the rest were amateurs," says Noah Glass, the co-founder of Odeo, which offers a free service for making, hosting, and distributing podcasts. "But now, as the creation tools have become easier to use and more freely distributed through open source, through the Internet, through awareness, more people have more access to more tools, so the whole amateur-professional dichotomy is dissolving." Citizen engineers are taking this even further, trying their hand not just in the digital world but in the physical world too. Much as eBay transformed distribution, they’re redefining design and manufacture. The infrastructure is there: Yahoo Groups make it easier for people to trade ideas and learn quickly; free or cheap computer-aided-design (CAD) programs allow users to cobble together blueprints; and inexpensive manufacturing in China allows the idea to go from file to factory. There are even websites like Alibaba.com that will help these small-timers find Chinese factories eager for their work. (http://www.fortune.com/fortune/technology/articles/0,15114,1061773,00.html?)
The socialization of innovation 'outside' of the enterprise
"Only a fraction of the aesthetic innovations made in society occurs within the wage labour relation. That is, in the space conceptualised by Tessa Morris-Suzuki as ‘before’ production, in laboratories and in ad agencies. Most aesthetic innovation takes place ‘after’ production. It happens 'after' the wage labour relation, in consumption, in communities, on the street, and on the school yard. It is here the social factory casts its long shadow. The social factory is a place with no walls, no gates, no boss, – and yet rift with antagonism." (Jan Soderbergh in http://info.interactivist.net/article.pl?sid=04/09/29/1411223)
The contribution byTessa Morris-Suzuki mentioned above was written in: Jim Davis, Thomas A. Hirschl & Michael Stack, eds. Cutting edge: technology, information capitalism and social revolution, 1997
What Governments can do, according to von Hippel:
1) Measure It
2) Support Infrastructure Developments (open standards, collaborative tools, open communication infrastructure)
3) Support user-modification laws and open IP laws
Example: Danish government will spend (2007), 130 million kroners supporting it.
- Read the landmark book by Eric von Hippel on Democratizing Innovation.
- More essays by the author at http://web.mit.edu/evhippel/www/papers.htm
- Sonali Shah: Open Beyond Software: case studies in sport equipment, early 19th cy automobiles, personal computers and amateur astronomy
- Report from the Nordisk Innovations Center: When the User Makes the Difference
- Our entry on User Innovation Theory; and Related entries: Crowdsourcing, Citizen Engineers, User-Generated Content, User-Generated Ecology; User-Generated Innovation
- 'Customer-made' production and marketing, special issue of Trendwatching newsletter, May 2005, at http://www.trendwatching.com/trends/CUSTOMER-MADE.html .
- Its  June 2005 issue covers twinsumers, how collaborative software is bringing consumers of similar taste together.
- How Nokia Users Drive Innovation]