Democratizing Innovations
Nageshwar V G Neela
Concept of Lead Users
They are defined as a group of people
who are
• Ahead of the majority of population
with respect to important market trend.
• Expecting to gain relatively high
benefit from the solutions to the needs.
e.g. Mountaineers, Cyclists, researchers.
Why users want custom products
• Limitations of the ‘Few size fits all’ strategy of
companies
• High heterogeneity of need
• High willingness to pay
Users’ Innovate or Buy Decisions
The decision to innovate or buy is highly
dependent on ‘Agency cost’. i.e.
• Cost incurred to monitor the agent to follow
the interests of principal
• Cost incurred by agent to adhere to the
requirements of the principal
• Cost associated if the product outcome is
different from the expected product
…cont.
The requirements are highly varied for
individual users
Individual user-innovator enjoy the process
of innovation
Users’ Low-Cost Innovation Niches
• Users and manufacturers innovation
approaches are different
• Need based information and generic solution
information
• Information is “Sticky”
• Innovation activity is distributed
Revealing the innovation: Is it the
wise thing to do?
• Efficient use of resource in terms of social
welfare
• Best and at only times the only practical
solution possible
• Enhancement of reputation
Policy framework for User Innovation
• Requirement of a basic prototype for user
led innovations
• Policy framework should be neutral in terms
of innovation
• Proper usage of intellectual property as well
as patents and copyrights
• Digital Millennium Copyright Act (US) and
similar laws to be repelled