Innovation is a crucial success factor as competitive advantage is often gained through the introduction of new products to the market. The challenge thereby is to find the right mix between keeping existing products in the portfolio and introducing innovative new offers. In order to constantly bring innovation forward, companies have to establish an efficient process for development, which generally requires the allocation of many resources to the respective department. Especially for companies operating in the consumer goods or service industry, it is a big challenge to constantly offer innovative products to the market. Moreover, studies revealed a high failure rate of up to 50% for newly lunched products in these business fields. Companies thereby try to reduce failure rates by conducting further market research in order to better meet the needs of their customers. So far, many studies cover the topic of market orientation and its influence on companies’ successes. One aspect of these studies is the integration of customers into the development process. The crucial factor for successful customer integration however is the selection of the right customers for the development program as only a small proportion of the user community is suitable for this task.
It was Eric von Hippel who addressed the problem of selecting the right customers and who introduced the concept of Lead Users. According to him, Lead Users tend to be different compared to ordinary users with respect to certain character traits and are part of a progressive segment within the user community. Since von Hippel presented his Lead User concept, many studies have been conducted to analyze strengths and weaknesses of his idea and many companies have applied his concept in real-life cases to improve their innovation processes. Moreover, other researchers have modified von Hippel’s theory and added further aspects based on personal experiences. The objective of this literature review is therefore to identify, evaluate, and reflect relevant literature about the topic and to present it in an academic way. In this paper, literature on the topic “Innovation by Individuals: A Review on Lead User Characteristics” is reviewed, examined, and analyzed in order to collect not only established characteristics from various sources but also to give background information and useful real-life examples to clarify what defines and drives Lead Users and what makes them special within the user community.
Table of Contents
1. Introduction
1.1 Problem Definition and Objectives
1.2 Course of Investigation
2. Capability
2.1 The Need for New Products
2.2 Being Ahead of the Market
2.3 Cognitive Learning Theory
3. Motivation
3.1 Industry and Product Category Level
3.1.1 Heterogeneity and Homogeneity of Needs
3.1.2 Intellectual Property
3.1.3 Innovation Costs
3.2 Individual Level
3.2.1 Benefit Expectations
4. Traits
4.1 Locus of Control
4.2 Innovativeness
5. Knowledge
5.1 Usage Experience
5.2 Product Environment-Related Knowledge
5.3 General Technical Knowledge
6. Creativity
7. Conclusion
Research Objectives and Themes
The primary objective of this literature review is to identify, examine, and analyze established characteristics of Lead Users to provide a comprehensive academic background and understanding of what defines and drives these individuals within a user community.
- Theoretical identification of Lead User characteristics based on von Hippel’s concept.
- Analysis of Capability and Motivation as primary drivers for user innovation.
- Examination of psychological traits, specifically Locus of Control and Innovativeness.
- Evaluation of knowledge types (Usage Experience, Technical Knowledge) in innovation processes.
- Investigation of the role of creativity in generating new product ideas.
Excerpt from the Book
2.1 The Need for New Products
If we go back to von Hippel’s notion, “Lead Users face new needs of the market…”, it expresses the assumption that the feeling for a new product or solution does not impact all customers at once, but spreads slowly within user communities, market segments, and whole markets (von Hippel, 1988). Thereby, the concept of the gradual diffusion of needs supports studies about the diffusion of innovation (Lüthje & Herstatt, 2004). Information, ideas, products, and services never disperse instantly but need time, as one of the fundamental statements of diffusion theory points out (Dosi, 1991; Mahajan, Muller, & Bass, 1990). Previous studies on the adoption of new products have revealed a clear correlation between the perceived relative advantage of a new product and the likelihood of its acceptance in the market. Users naturally are more willing to adopt their buying behavior and switch to new products the larger their perceived benefits in comparison to previously existing products are. Therefore, the perceived relative advantage turned out to be good indicator weather a new product will succeed or fail (Davis, Bagozzi, & Warshaw, 1989; Gatignon & Robertson, 1985). These studies also indicate, that even if an innovative product offers a high level of benefits, it is not perceived in that way by all customers at the same time. Rather there are customers who are more suspicious concerning innovations and others, who welcome change and have a strong desire to be at the leading edge of the market. The existence of the last group within the diffusion theory corroborates the model of Lead Users.
Summary of Chapters
1. Introduction: Defines the significance of innovation for companies and introduces the Lead User concept as a means to improve innovation processes by selecting suitable customers.
2. Capability: Explores why Lead Users possess the unique ability to identify market needs earlier than others and how their cognitive learning processes facilitate innovation.
3. Motivation: Analyzes the reasons why users commit personal resources to innovation, looking at industry-level constraints and individual benefit expectations.
4. Traits: Discusses psychological personality factors, specifically Locus of Control and Innovativeness, that characterize potential Lead Users.
5. Knowledge: Examines how specific forms of knowledge, such as usage experience and technical understanding, are critical for contributing to product development.
6. Creativity: Highlights creativity as a precondition for innovative thinking, allowing users to apply past experiences to create new solutions.
7. Conclusion: Summarizes the key findings and suggests that the identified characteristics provide a framework for organizations to identify Lead Users.
Keywords
Lead Users, Innovation, Market Needs, Diffusion Theory, Capability, Motivation, Locus of Control, Innovativeness, Usage Experience, Technical Knowledge, Creativity, Customer Integration, Sticky Information, Product Development, User Innovation.
Frequently Asked Questions
What is the core focus of this literature review?
The work focuses on identifying and analyzing the characteristics that distinguish Lead Users from ordinary users, specifically examining what drives them to engage in innovation.
What are the primary thematic pillars of the research?
The central pillars identified are Capability, Motivation, personality Traits (Locus of Control and Innovativeness), various forms of Knowledge, and Creativity.
What is the ultimate research objective of this paper?
The objective is to provide a theoretical framework and a comprehensive catalogue of characteristics that firms can use to identify suitable Lead Users within their customer communities.
Which scientific methodology is employed?
The paper employs a systematic literature review methodology, synthesizing existing studies, theories, and empirical findings related to the Lead User concept.
What does the main body of the text cover?
It covers the specific definition of Lead Users, the economic and psychological drivers behind user-led innovation, and the specific personal attributes and knowledge levels that enable users to contribute to development processes.
How are the key terms in this work defined?
Key terms such as "Lead Users," "Sticky Information," and "Locus of Control" are defined through established literature citations from authors like von Hippel, Lüthje, and Herstatt.
Why is "sticky information" relevant for Lead Users?
Sticky information refers to specialized knowledge that is difficult to transfer to manufacturers; Lead Users often hold this information, making them the natural drivers of innovation in such contexts.
How does the concept of "being ahead of the market" define a Lead User?
It defines a Lead User as someone who not only encounters a new need early but also identifies needs that will eventually become important to the broader market, even if the market is currently unaware of them.
What role does creativity play for Lead Users?
Creativity is identified as a vital precondition; it enables Lead Users to bridge their existing knowledge and experience with novel situations to generate innovative product solutions.
- Arbeit zitieren
- Philipp Back (Autor:in), 2012, Innovation by Individuals, München, GRIN Verlag, https://www.grin.com/document/265187
