Where does most product innovation come from? You might look for it in the R&D units of consumer-product manufacturers, but you’d be better off checking the basement workshop of your next-door neighbor. In a survey conducted in the U.K. last year, MIT’s Eric von Hippel and colleagues found evidence that that the amount of money consumers spent tweaking products dwarfed the R&D outlays by all British consumer-product firms combined. David Talbot, Technology Review’s chief correspondent, recently asked von Hippel, a professor of technological innovation at the Sloan School of Management, what lessons he gleaned from the survey on how companies can recognize and tap the power of user innovation.
TR: You surveyed 1,173 U.K. adults about their product-tinkering and inventive habits. What did you find?
Von Hippel: We found that 6.2 percent—representing 2.9 million people, or two orders of magnitude more than are employed as product developers in the U.K.—created or modified consumer products over the past three years and spent 2.3 billion pounds per year, more than double what the U.K. firms spent on consumer-product R&D.
What sorts of things were they doing?
Our surveyors found people who reprogrammed their washing machines to create a spin-only cycle, modified dog bowls so they wouldn’t slide around the floor when the dog ate, built treetop trimmers based on a fishing rod and line, and reprogrammed their GPS gadgets for better usability.
We all know people who are tinkerers. What’s new in your findings?
What’s remarkable is the scale and scope of it, and that it’s been unrecognized. Basically, nobody ever expected that consumers innovate. It’s not in economic theory. It’s not in policymaking. The traditional model that has been in place since 1934 [the economist Joseph A. Schumpeter published The Theory of Economic Development that year] is that producers are the innovators. Schumpeter even argued that producers, by what they offer, create user needs. Because there was an assumption that producers were innovators, nobody looked at individual consumers to see if they innovated. Now that we’ve taken a look, we find out it’s twice as large as producer innovation in consumer categories.
Aren’t companies already adopting these kinds of user innovations?
The normal method for innovating in a firm is to do market research in the target market, and then do in-house product development. The problem is that market researchers often disregard solutions contained in what users told them. If users said “I came up with a better way to do X,” market research would convert that into “So-and-so needs a better way to do X,” and ignore the user-developed solution. After all, they would think, “It’s R&D’s job—not the consumers’ job—to find the solution.”
That sounds like something from a Dilbert cartoon.
Well, yes, I guess it does have that entertainingly perverse quality.
Besides your survey, what other evidence has emerged for broad user innovation?
The Internet has made user innovation much more visible. You might know privately about your Uncle Joe modifying something in his basement. But when you start to see consumer innovation on the Web—on sites [about topics] ranging from software improvements to John Deere garden-tractor hacks—then it starts to strike you as a category.
Why do companies ignore this?
For many years it has been very difficult to convince people of the increasing importance of new product and service development by users serving their own needs. Part of the reason is that the ongoing shift from producer to user innovation is also a paradigm shift. User innovation does not fit into the traditional, producer-centered paradigm. Until people understand the new paradigm, even though user innovation is in plain sight, it can be invisible to them.
So how can companies understand this trend and know where to look for good ideas?
The key take-home is that they should look for innovators in the leading edge of markets, instead of ordinary consumers. In other words, if you have someone who has an intense need today for something, those are the ones who will innovate. Tim Berners-Lee was at CERN and had an intense need for networking. So he created the World Wide Web. Microsoft didn’t think people had this need, because they served average consumers.
Once companies have found somebody’s solution, what comes next?
You have to be open to those outside solutions, which R&D often isn’t. Not only do you have to change market research processes—and look at the outliers, the leading edge—but you have to then adapt R&D processes to build upon user-developed solutions rather than starting from scratch. I have a free, how-to-do-it book on my website explaining how to implement lead-user innovation processes for any who are interested.
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