Involving lead users to conceptual thinking
Course: Method Engineering
Theme: Portfolio management & product roadmapping
Lecturers: Sjaak Brinkkemper & Kevin Vlaanderen
Student:
Frank van Gasteren
ffvangas@cs.uu.nl
3249050
Master of Business Informatics Students
Faculty of Science / Department of Information and Computing Sciences
Utrecht University, Utrecht, the Netherlands
1. Introduction
Marketing researchers are trying to invent the next big wave of products, services and
(re)inventing processes to be more effective and efficient. The economic benefit is
significant if the producing company can sell the products in time and before the market
entry of competitors. It will give them the advantage to surf on the new trend. An
example of such a product is the iPod from Apple. Apple developed the iPod intern with
the use of lead users. The ordinary user quickly adapted the product from Apple and the
iPod became a success. It is always a struggle for companies to determine and adapt
products to the next trend. Some marketing techniques can be used to determine the next
big wave.
In this paper the method “Lead Users” will be investigated. This method aims to develop
an integrated body of knowledge for consumer marketing research analyses of emerging
needs for new products, processes and services. The meaning of “Lead Users” is in this
paper 2 folded. In this paper the method “Lead Users” (Hippel, 1986) will be shortened to
LU. Lead users are generally referred to as a group of people that present strong needs for
(improvements of) products or services which will become common in a marketplace in
months or even years. These strong needs derive from experience and can be used for
marketing and development research as the users often attempt to fill in those needs as
lead users are familiar with conditions which lie in the future for most others (Hippel,
1986).
3M is a company who drives on LU, it invented the sticky yellow papers which are
worldwide used, has estimated sales of $146 million over 5 years by using LU. In section
6 an example of 3M will be described. Today, the use of lead users is more mandatory for
improving products or services, the internet has evolved as a communication method for
the development, marketing and research teams. A short background study shows the
origin of the LU method in section 2, the goals and process description are described in
section 3. Complexities when using the method are elaborated in section 5. An example
of a starting company and product is given in section 6. Section 7 focuses on a case study
which is performed at 3M.
The goal of this paper is to describe LU and its processes and activities. LU can be used
for software product management to discover trends and describe new products. This
method can be used to be ahead of a trend, which can be major strategic advantage for
software product managers. Software changes, updates and innovations are made
frequently and a software product manager needs to interact with those changes by
discovering those improvements with the use of lead users. Lead users can be used to
create a vision of the product to develop or enhance. The steps which have to be taken are
described in the next section.
2. Background
In this section, the most important theories, models and frameworks related to this study
will be discussed. The study described in this paper is LU. The background of this study
lies in previous studies were findings about the influence of users on product are
concluded. To produce a successful product accurate understanding of the users needs are
important to the development of commercially successful new products (Rothwell et al,
1974; Achilliadelis et al, 1971). The users who are familiar with a certain product or
process are unlikely to use a simpler one when needed.(Luchins, 1942). This conclusion
is supported by several papers which conclude that users who use an object or see it in a
traditional and familiar way are not capable of using the object in novel way (Duncker
1945, Birch and Rabinowitz 1951, Adamson 1952). This concludes that typical users can
not be easily used for assessing unfamiliar products. It is clear that the user will have to
have the ability to think “out of the box” and apply novelties to solve problems. The
example of iPod from the introduction is an example of the theory of Rogers and
Shoemaker (1971). They concluded that the general demand exists because of new
technologies, products, tastes and several other factors related to new products that are
created through society. Because the Internet was not mandatory in the general market at
that time, the method focuses on the basics of lead users.
3. Process Description
The target of LU is to develop concepts for new products by following the four activities
described by von Hippel (1986);
- Firstly, trends must be recognized with the use of marketing research tools and
characteristics must be defined for lead users.
- Secondly, identifying the lead users
- Thirdly, drawing the lead users into a process of joint development of new products.
- The last activity involves testing a prototype on the general market.
These four activities are elaborated in the next sections.
3.1: Specification of Lead Users Trends
Identification of trends is a well known subject for most companies, some may use
simple methods like intuitive judgments of experts, or more complex like correlation and
econometric models. Martino (1972) describes a forecasting method specific for the
technology sector. A more formalized method is “Delphi”, it describes steps for
analyzing marketing trends. The results from this identification step must be translated to
trends, to create a focus for the next steps of the Lead Users method. One or more trends
can be combined.
3.2: Identification of lead users
Specify the characteristics which lead users will have in the product/market segment of
interest. Trends must be identified on which they lead the market. Indicators must be
specified to show that they expect relatively high benefit from obtaining a solution to
their trend-related needs. A useful indicator for expectations of high benefit is evidence
of product development or product modification by users. User investments in
innovation, and user expectations of related benefit, have been found to be correlating
(Lilien et. al., 2002). This correlation is visualized in figure 1 derived from Hienerth, C.
and Pötz, M. (2006). It explains four different user types: user, expert, user innovator and
lead user. The different user types can be identified by the ratio of conceptual thinking
and the expected benefit from a product, which is shown on the axles of figure 1. Lead
users who are at the leading edge of a trend, are related to a high expected benefit from
solutions to related conceptual needs. These two factors are needed to identify lead users.
Firms who are at the leading edge of the trend are often well known to industry experts
and are familiar with general/original market/product. Those firms know their customer
characteristics quite well. The second task is to identify the firms that are in the leading
edge of the trend and are also willingly to obtain high potential benefits from adopting
solutions to trend-related needs. These benefits are often described as Return on
Investment (ROI), several papers on accounting have been published with this subject.
The main variables are the volume of products sales (V), increased rate of profit per
dollar(R), cost of developing and adoption of solution(C) and the last is the benefit the
user would obtain from old practices (D). (B) Benefit is the economic expected gains.
This results in a formula von Hippel (1986) describes as: B = (V) (R) – C – D
Users who are at the leading edge of a trend and are actively innovating to solve
problems can be very useful. These types of users can be easily identified on the Internet.
The construction of a user profile can help selecting and recruiting the best lead users; a
template is shown in table 1.s
High
Medium
Low
To be ahead of a trend
Low
Medium
High
Expected Benefit
Figure 1 Derived from Hienerth, C. & Pötz, M. (2006). Correlation of the position of a user on a trend and
the expected benefit shows four different types of users.
Lead User Profiles for Project X
ID #
#
NAW
naw
Refferer
Link
Related Work
Link/Attachment
Potential Industrial Benefits
description
Economic Benefit
B=(V)(R)-C-D
Availability
Date
Recruited
Y/N, reason
Contribution
Link/Attachment
Table 1 Lead user profile description.
3.3: Lead user Product Concept Development
Brainstorming sessions can be organized to involve the selected lead users in product
concept development. These sessions need to be joined by marketing personnel and
companies engineers, in order to keep the ideas inline with the business goals and
production possibilities. The function of this session is to identify one or more “lead
user” products or services concepts, to be both responsive to lead user needs and
responsive to manufacturer concerns, regarding the feasibility as an example.
Because of the fact that the lead users are selected upon net benefit and are at the edge of
the trend it is common that user problem solving activity already has taken place.
Sometimes users of existing commercial products or components used them in a way the
manufacturers not anticipated on. Users may even have developed complete new
products themselves to their specific needs. This is one of the complexities which will be
discussed in the next section. In the brainstorm sessions ideas may come up or just loose
statements may be made by the lead users about their needs. It is up to the marketing
researchers of product developers to identify those needs and put them in concepts. This
activity is the actual step into novel product developing where lead users communicates
his experience and needs to products. This activity is the most valuable to new concepts.
3.4: Testing whether lead user concepts appeal to ordinary users
The defined concept products or services do not have to satisfy the needs of the general
user, tests must conclude the value of the concepts by the more typical users in the target
market. Rogers and Shoemaker (1971) suggest that early adopters of a novel product or
service differ in significant ways from the general market and users. Industrial products
like processors for computers are typically goods where users calculate the relative costs
and the benefits of the product therefore can be easily calculated. One way is to prototype
the new product in the general market, the user are then in the position to provide
accurate product evaluation data to the market research. In the gaming industries these
are common ways to test their new game with the general public. Those releases are
called alpha or beta test which are commonly used by selected users and provide
feedback before release of the final product. In rapidly moving markets the proposed new
products may need to interact with many other not yet developed products in unforeseen
ways. Methods like Service Oriented Architecture and Sandboxing development can be
used as new approaches to integrate products and supply them with the necessary
interfaces to communicate.
4. Complexities
Certain pitfalls must be taken into account when using this method. This method thrives
on the identification of lead users, the most important is therefore the identification of
lead users. Key lead users may not be found within the market area of the manufacturer.
Customers of a competitor or outside of the industry may have a fresh vision of the
functionalities of a product. A complexity with respect to identifying lead users is the
restriction for identifying lead users who can illumine the entire novel product which can
be developed. Also the lead users who are identified with only a few of its attributes (or a
single attribute) must be defined as narrow is necessary. The third complexity is that
users driven by high net benefits may solve their own problems regarding the product.
Identified users on the basis of a high unmet need may not show their high net benefits.
With the help of survey’s, several questions need to be answered in order to gain
information about the fundaments of product innovations of the specific lead user and
help diminish these complexities .(Hippel, 1986)
5. Example
Starting companies can have difficulties with producing innovating products as they are
not aware of the future market needs. In this example the company produces websites for
users with collective (financial) responsibilities.
The first step is to identify a trend in a market. They could use several marketing
analyzing techniques. For this example they rely on their own experience and expert view
on their product. From experience they know that students share a collective
responsibility as roommates; financially, products and student house management. As
lead users can be identified as people who have developed a primitive product for
themselves the company can search for student houses who have developed their own
house management tool. A periodical search and/or interviews can show a market trend.
The second step can be focused on the developers of the current available tools which are
used at the student houses. Using the internet they can identify the current products and
lead users. The lead users can be contacted and be interviewed on their produced product.
Major factors are the innovated products and the expected benefit from the product. In
this case the lead users benefit from their products as it is an effective way to manage the
student house. This complies to the definition of identifying lead users from section 3.2:
users who are at the leading edge of a trend and are actively innovating to solve problems
can be very useful, these types of users are can be easily identified on the internet.
In the third step a closed beta is programmed for the lead users to identify their needs.
This program will be only available for the selected lead users, with the use of a forum
and polling function it is possible to identify innovations and product opportunities. This
company wants to know which product functions are the most important features to
develop. They have defined five product functions in collaboration with the lead users.
With the use of polling all the lead users can give their opinion on the most important
feature for prioritization.
The fourth step involves the open beta; the website is not advertised yet but can be used
by the general market. Again with the use of a forum, polling function or an open source
web application the market can report their findings too. An example of an open source
web application is Get Satisfaction. The company Qash is actively using this tool for
product innovation, the website can be found at http://getsatisfaction.com/qashnl.
Figure 2 Polling function for identifying the most important functions
Figure 3 Example from the company Qash using Get Satisfaction
6. Case Study
A study of the LU method has been performed to measure the differences between
conventional methods and the Lead User methods performed at 3M (Lilien, 2002).
The findings from this study are shown below.
3M is known for its office supplies and innovative products. Therefore they choose to
involve employees to participate in innovation by thinking of practical solutions to daily
office work. 3M wants to be on the leading edge of the market with innovative products.
The lead users are employees who perform in daily office work. On a routine basis these
employees are encouraged to take some time off to develop a vision of innovative office
products. These are done in several ways, from workshops and brainstorm session to a
walk in the park with the colleagues. These ideas lead to a lot of innovative products
which only some will actually be produced. The widely known product developed with
this method is the sticky yellow papers (Post-it notes).
The study performed by von Hippel at 3M shows differences between traditional methods
and the LU method:
- Found that forecast in sales are 8 times higher than with the use of traditional
methods.
-
Using Lead Users method has leaded to more new products that are described as
“new to the world”.
The rate of introduction of products forecast to grow into a major new product
line was significantly higher than with the use of conventional methods.
There are no difference measured with the fit of new products
Significant in this study is the fact that failed products are not measured. Products and
ideas that have been funded by the management are researched but ideas that did not
cross the initial evaluation have not been taken into account. It is common that LU
products and ideas fail as they are not a guarantee to success. This can be seen as a
positive side effect as the LU methods can identify a potential failure at an early stage.
7. Process Modeling
Lead users can be used to identify trends and be involved in conceptual product
developing (Hippel, 1986). In this section the processes that are used in the lead users
method are modeled in activities and artifacts. Weerd et al (2008) described the processdeliverable diagram (PDD) as a method for building, analyzing, storing, selecting, and
assembling fragments of a method. The PDD consists of two diagrams. The first diagram,
Meta Process Model, focuses on the main activities of the lead user method. The second
diagram, Meta Deliverable Model, focuses on the concept and deliverables. The models
are based on UML activity diagram and UML class diagram (Weerd et al., 2008).
7.1: Meta Process Modeling
This model shows the process flow of activities of the Lead users method, which are
described in table 2. Sub processes are defined to create a hierarchical activity
decomposition (Weerd et al., 2008). Figure 4 shows the Meta Process Model.
Process
Important Trend
Specification
Lead User
Identification
Sub process
Define trend.
Analyze leading edge
Analyze innovating users
Data Analysis
Analyze statements
Analyze user
contributions
General market
analysis
Setup Prototyping
Beta Testing
Table 2 Meta Process Model Activity Table
Description
Use of marketing/trend research
methods.
Finding the actual users who are
on the leading edge
Identify lead user by potential
benefits.
Analyze investments of lead
users and/or existing products by
users
Perform Interviews or Survey’s
with the lead users to gather
statements
Construct prototype version
Perform beta test with users
from the general targeted
market.
Important trend
specification
Define trend
Marketing
Lead user identification
Analyze leading
edge
Analyze
Innovating users
Human
Resources
Data analysis
Analyze
statements
Analyze users
contribution
[not approved]
[approved]
Research
Team
General market analysis
Setup prototyping
Beta testing
[not approved]
[approved]
Developers
Figure 4 Meta Process Model
7.2. Meta Deliverable modeling
The meta-deliverable model consists of concept diagrams which are basically an adjusted
class diagram (Weerd et al., 2008). Table 3 gives the definitions of the concepts which
are shown in figure 5.
Concept
PRODUCT TREND
TREND
CONSUMER PRODUCT
INDUSTRIAL PRODUCT
LEAD USER
USER BENEFIT
USER INFORMATION
USER PRODUCT
CONCEPT PRODUCT
BETA PRODUCT
Table 3 Meta Deliverable concepts and definitions
Definition
Perform a marketing research.
Standard models used for analyzing the
market and its trends like Delphi.
(Hippel,1986)
Trend analyses on Consumer goods, a
subjective approach can be used such as
assessments based on survey’s
(Hippel,1986)
Trend analyses on Industrial goods, a
Informal and/or Accurate measurements
can be performed. (Hippel,1986)
Identifying Lead Users profile (Matthing,
2006)
User who are actively innovating/working
on a trend can be identified. By performing
economic measurements user can be
identified whom benefits from innovations
on a trend. (Hippel,1986)
Make a profile of the innovation with the
information of the contribution by the lead
users (Herstatt, 1992)
The innovation of the lead users should fit
the organization strategies and the target
market. (Hippel, 1986)
Construction of Prototype
Methods of product or process construction
TREND
0...*
Input
for
INDUSTRIAL
PRODUCT
1
1...*
PRODUCT TREND
CONSUMER
PRODUCT
1
Input for
1...*
LEAD USER
1
Frequency
of use
Frequent users
Fits
profile of
of company
target
Fit profile
audience
Willing to cooperate
Willing to participate
1...*
1...*
USER BENEFIT
Input for
Input for
1
USER INFORMATION
1...*
USER PRODUCT
has
1
Input for
CONCEPT PRODUCT
1
Market Trend
Lead User Contribution
General Market
Contribution
1
uses
1...*
BETA PRODUCT
1
1
1
Figure 5 Meta Deliverable Model
7.3. Process Deliverable Diagram
In the Process Deliverable Diagram (PDD) the meta process model and the meta
deliverable model are connected. This is done by the drawing of a dotted line with an
arrow as shown in figure 6. The PDD shows a complete overview of the process involved
in using lead users.
TREND
0...*
Input
for
Important trend
specification
INDUSTRIAL
PRODUCT
1
1...*
Define trend
PRODUCT TREND
CONSUMER
PRODUCT
1
Marketing
Input for
1...*
Lead user identification
LEAD USER
Analyze leading
edge
Frequency
of use
Frequent users
Fits
profile of
of company
target
Fit profile
audience
Willing to cooperate
Willing to participate
1
1...*
1...*
Analyze
Innovating users
USER BENEFIT
Human
Resources
Input for
Input for
Data analysis
1
Analyze
statements
USER INFORMATION
Analyze users
contribution
1...*
USER PRODUCT
[not approved]
[approved]
has
Research
Team
1
Input for
CONCEPT PRODUCT
1
Market Trend
Lead User Contribution
General Market
Contribution
General market analysis
1
uses
1...*
BETA PRODUCT
1
Setup prototyping
1
1
Beta testing
[not approved]
[approved]
Developers
Figure 6 The Process Deliverable diagram
8. Literature
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Succes and Failure in Industrial Innovation. London: Center for the study of industrial
innovation.
Adamson, R.E. (1952). Functional Fixedness as Related to Problem Solving: A repetition
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Birch, H.G. & Rabinowitz, H.K(1954). The Negative Effect of Previous Experience on
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Duncker, K., trans. Lees, L.S. (1945). On Problem-Solving. Psychological Monographs,
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Concepts Via the Lead User Method: A Case Study in a “Low-Tech” Field. The journal
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Martino, J.P. (1972). An Introduction to Technological Forecasting. New York: Gordon
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Rogers, E.M. & Shoemaker F.F. (1971). Communication of Innovations: A CrossCultural Approach, 2nd ed., New York: The Free Press.
Rothwell, R., C. Freeman (1974). SAPPHO Updated-Project SAPPHO Phase II,
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