Lead User Innovation

Lead User Innovation 

Dr. Marion Poetz* 

Guest Lecture 

MTEC Elective Course on User Innovation 

ETH Zurich, October 25, 2011 

* Assistant Professor, Department of Innovation and Organizational Economics, Copenhagen Business School 

© Marion Poetz 2011

About myself... 

Dr. Marion Poetz 

Assistant Professor 

Department of Innovation and Organizational Economics 

Email: mp.ino@cbs.dk, Phone: +45-3815-2914, Web: http://uk.cbs.dk/staff/marion_poetz 

• Research focus: Management of Innovation and Technology, Open and Distributed Innovation, Search, 

User Innovation, Knowledge Co-Creation, New Product Development 

• Visiting scholar at MIT Sloan School of Management, Bocconi University and ETH Zurich 

• Affiliated with the Danish Research Unit for Industrial Dynamics (DRUID, www.druid.dk), the Danish Usercentered 

Innovation Lab (www.duci.dk), the CBS World Class Research Environment in Open Innovation, 

the BioBusiness & Innovation Program (www.bbip.dk) and winnovation consulting (www.winnovation.at) 

• Further development of the lead user method, development of a training program for conducting lead user 

studies in firms 

• Development of connect & innovate TM framework for assessing and developing organizations’ 

collaborative innovation potential 

• Consulting various institutions, governmental agencies and ministries 

• Several distributed innovation research and appliction projects in cooperation with e.g.: 


Agenda for today 

(1) 08:15-09:00 Who are lead users? 

• Lead user characteristics 

• Lead users from target vs. analogous markets 

• Value of lead user innovation 

(2) 09:00-09:15 Break 

(3) 09:15-10:00 Generating radical innovation using the lead user method 

• Setting the goals (phase 1) 

• Identifying important “market trends” (phase 2) 

• Identifying lead users (phase 3) 

• Lead user workshop (phase 4) 

à� Insights are based on a number of case studies, qualitative and quantitative data 

including controlled experiments and consulting experience gained over the last years 


(1) Who are lead users? 


Group discussion 

Characteristics of lead users 

• What do you think characterizes a lead user? 


Where do breakthroughs come from? 

Center-pivot 

systems for 

irrigation – a 

major agricultural 

innovation 

Source: von Hippel 2006 


Where do breakthroughs come from? 

The innovating 

company 

(claimed to be 

the source of 

innovation) 



Often, users have been the actual 

innovators at the leading edge… 

…where markets are by definition small and uncertain! 

The original source of 

innovation – a (lead) 

user? 



Users have often been the innovators 

at the leading edge… 

…where markets are by definition small and uncertain! 

John Heysham Gibbon – physician, USER - 

inventor of the heart-lung machine. 

• The death of a young patient in 1931 

motivated Dr. Gibbon to develop a heartlung 

bypass machine, to enable more 

effective heart surgery techniques. 

• Gibbon was dissuaded by all with whom he 

broached the subject but persevered 

• In 1935 he successfully used a prototype 

heart-lung bypass machine on animals… In 

1953 first used a heart-lung machine on a 

human patient… 

Why did a USER have to develop the first heartlung 

machine? 

At the start of something really new there is 

no “proven” market! 


Which users come up with the most 

attractive user innovations? 

Commercially attractive user innovation activities are concentrated among a special 

sub-group of users (lead users) 

Users needing 

a new product 

Lead 

users 

find 

solution 


users 

Commercial products available 

Early Adopters 

Routine Users 

Source: von Hippel/Thomke/Sonnack 1999 

time 


Examples for lead user innovations 

Tim Berners Lee – inventor of the world wide web 

# of users 

perceiving 

need 

Lead Users 

innovating 

Manufacturers might take over innovation and produce large-scale 

- Tim needed hypertext and 

network computers for his own work (CERN) 

- The market as a whole followed 

- Major cultural phenomenon 

time 

- Emergence of companies and industries based 

on this radical innovation 



Gary Fisher – inventor of the mountain bike 

# of users 

perceiving 

need 


innovating 


time 

- Gary´s passion was biking off-road 

- He desperately needed a bike that suited his extreme 

requirements… 

- … and started to develop the first mountain bike 

- Driving off-road became easier and safer for him and 

hís friends – successful in many competitions 

- Gary founded his own firm: www.fisherbikes.com 

- Mountain biking is nowadays a mass sport with a 

respective industry behind it 



Nat Sims – development of computerized infusion pumps 

# of users 

perceiving 

need 


innovating 


Nat Sims and the development of “smart” infusion pumps: 

time 

- High need for new device at Mass General Hospital 

- First ideas at around 1985 

- Worked with many manufacturers to find 

commercialization pathways – with mixed results 

- Core IP non-exclusively and widely licensed 

- Continuing development and innovative activities 


Who are lead users? 

Lead users have two central characteristics (lead user theory) 

Characteristics of lead users Conclusion 

They face needs the rest of 

the market will face in the 

future (TREND POSITION) 

High benefit from innovation 

(EXPECTED BENEFIT 


Innovations have a 

high commercial value 

Lead Users innovate 


Lead user theory 

Lead user characteristics positively influence the commercial attractiveness of user 

innovations. 

Commercial 

attractiveness of 

innovation 

10 

5 

0 

Source: Franke/von Hippel 2003 

Estimated OLS 

curve 

Innovations 

2 3 4 5 6 7 8 9 10 11 12 13 14 

“Lead User-ness” 

of users 


Testing lead user theory 

Lead users (1) expect high benefits from innovation and (2) are ahead of the trend 

Lead user characteristics 

Expected benefit 

+ 

Ahead of trend 

Resources at hand: 

Technical expertise 

Community-connection 

Source: Franke, von Hippel & Schreier 2006 

H2 

H1 

H3 

H4a 

Innovative output 

Likelihood 

of innovation 

H4b 

Attractiveness 

of innovation 


Testing lead user theory: Findings 

high 

trend position 

(LU component 2) 

low 

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low 


∅ 

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expected 

benefit 

(LU component 1) 

V 

W 

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W 

W 

effect 1: 

more 

innovators 

high 

Combined: 

“lead user area” 

effect 2: 

more 

attractive 

innovations 

V 

innovator 

Non-innovator 


Testing lead user theory: Findings 

Lead users (1) expect high benefits from innovation and (2) are ahead of the trend 

Lead user characteristics 

Expected benefit 

+ 

Ahead of trend 

Resources at hand: 

Technical expertise 

Community-connection 


H2 

H1 

H3 

√ 

√ 

√ 

H4a 

Innovative output 

Likelihood 

of innovation 

Attractiveness 

of innovation 

√ H4b √ 


How to recognize a lead user in a “real” 

search process? 

Evaluating “lead userness” in a real setting 

Compare the state of the art in a 

certain field related to a trend with 

the achievements/activities/needs 

of the person related to that trend 

Proxy: Number and quality of 

referrals to the target person 

Trend Position 

Low high 

Level of a person’s benefit from an innovative 

solution by selling it 

Use 

Seller – Role (User Manufacturer) 

Experience 

Source: Hienerth, Pötz 

and von Hippel (2007) 


low Expected Benefit high 

Level of a person’s benefit from an 

innovative solution by using it 

User - Role 

Change of functional role or parallel functional roles 

© Marion Poetz 2010 

2011

Search for lead users in target or 

analogous markets? 

An analogous market is a market that shares an important need with the target market. 

Ideally, in an advanced form. 

• For example: manufacturer is 

looking for a method of infection 

prevention in medical surgery 

(target market) 

• Need: avoiding air pollution 

(germs etc.) 

Source: Herstatt/Lüthje/Lettl 2002 

• Analogous market = chip 

production 

• Same need 

• Maybe better insights? 


Analogous market effects 

An analogous market/industry shares a certain problem with the target market/Industry. 

Ideally, in an advanced form – similarities based on attributes of the problem. 

• For example: manufacturer is looking 

for a method of infection prevention 

in medical surgery (target market) 

• Need: avoiding air pollution 

(germs etc.) 

• Analogous market = chip production 

• Same need 

• Maybe better insights? 

Analogous Market Effects / Distance Effects 

Ideas from analogous/distant markets are more novel than those from the target market 

(e.g. Franke and Poetz 2011, Hienerth, Pötz, von Hippel 2007, Lilien et al 2002, Jeppesen und Lakhani 2010) 

Less / no functional fixedness Transfer of existing solutions 


Empirical evidence for „analogous 

market effects“ in lead user studies 

First exploratory insights show that lead users from analogous markets are the drivers of 

truly novel new product concepts. 

Study 1 Study 2 





81 

lead 

users 

high 

Novelty of Concepts 

low 

3,62 

Target Market 

p


Exercise: Identifying appropriate analogous markets 

• Image you have the task of developing a new running shoe, and know that 

one of the most important needs is to provide running shoes that are much 

lighter than existing ones but very stable at the same time: 

• In which other (analogous) markets could the need for „something“ being light 

and stable at the same time also be relevant, and it thus might make sense to 

search for lead users in these markets? 

• Discuss with your neighbor (2 min brainstorming) as a preparation for group 

discussion 

Source: Poetz (2008) 


Conclusion: Which lead users should 

be integrated into a lead user project? 

The mix of lead users makes high quality output in lead user projects 

Target Market 

(TM) 

Analogous 

Market (AM) 

Practical implications? 

Users & User 

Manufacturers 

Users & User 

Manufacturers 

• Know the target market (problem) (+) 

• Have need and solution based information (+) 

• Are functionally fixed by existing TM solutions (-) 

à� lower novelty of innovations 

• Don´t know the target market (problem) (-) 

• Have need based information in their market 

and can transfer existing solutions (solution 

based information) (+) 

• Are not functionally fixed by existing TM 

solutions (+) 

à� higher novelty of innovations 

à� To capture different aspects of information and get most innovative output: 

à� MIX different lead users! 


© Marion Poetz 2010 2011

Value of lead user innovation (I) 

A study conducted at 3M shows clear advantages of ideas generated with the lead user 

method over those generated via traditional innovation methods used in companies. 

Novelty relative to 

competition 1 

Originality / newness of 

customer needs addressed 1 

Strategic Importance 1 

Idea types 

Estimated Sales in year 5 

(deflated) 

1 Scale: 1 = very low, 10 = very high 

Source: Lilien et al. (2002) 

Lead user ideas 

(n = 5) 

9,6 

8,3 

9,6 

0 incremental 

5 major product lines 

146 Mio. $ 

Non - Lead user ideas 

(n = 42) 

6,8 

5,3 

7,3 

41 incremental 

1 major product line 

18 18 Mio. $ 

p 

0,01 

0,09 

0,08 

0,01 

0,00 


Value of lead user innovation (II) 

The pathway from lead user innovation to industry: 

Lead users (Lead) users in Free sharing or 

starting to communities (lead) user 

innovate can innovate manufacturing 

here more cheaply 

Manufacturers can produce 

here 

more cheaply here 

# of users 

perceiving 

need 

(Lead) users and user communities 

bridge periods of technical and market 

risk in which manufacturers would not 

start investing! 

Source: Baldwin, Hienerth & von Hippel 2007 

time 


(2) Break 


(3) The lead user method 


Lead user method 

The lead user method (von Hippel 1986) is a tool to identify and integrate lead users 

into concrete innovation projects of a company. Basically there are four main steps: 

Phase 1: 

Definition Start des Lead of the 

User search Projekts field 

Phase 2: 

Identification of 

important unmet 

market needs 

Phase 3: 

Search for lead 

users in target 

and analogous 

markets 

Phase 4: 

Development of 

innovative 

concepts (lead 

user workshop) 

The lead user method works in many different industries, here is a selection of 

lead user method applications I personally have been involved: 


Phase 1 – Setting the goals: Developing 

appropriate search fields 


Lead user method / phase 1 

The lead user method has four steps: 

Phase 1: 

Definition of the 

search field 

• Specification of the search field (target market) – problem definition 

• Formation of interdisciplinary team 

• Definition of project goals (deadlines, budget, specification and requirements for 

innovative concepts) 


Tips from my experience 

Tips for stage 1: Search field and team 

à� Clear definition of search field positively influences the later search 

processes by increasing search efficiency (defining specifications and 

requirements) 

à� Search field should be based on real problems (technically and/or 

market oriented) of a company 

à� Clear commitment of the company is essential 

à� Include company internal members from different departments into the 

project team (marketing, R&D, production, etc) 

à� Consider including external search team members for a pilot study 

à� Collect existing company internal information with respect to the 

search field (e.g. existing studies, striking customers, suppliers or 

partners, etc.) 

à� Checking access to potential sources of information – are there any 

barriers? (e.g. are there any social desirability or secrecy reasons?) 

à� Goals of the company should match with possible outcome of a lead 

user study (solutions on a concept level, radical innovations, etc.) 



Phase 2 – Preparing the tracks for lead user 

identification (identifying unmet market 

needs) 




Phase 1: 


Start search des field Lead 

User Projekts 

Phase 2: 

• Scanning of literature, internet, data bases 

• Interviews with market and technology experts and users 

• Evaluation of market trends 


important market 

trends 

• Selection of market trends that are most important for the search field 

• Market trends refer to “aggregated, not yet 

covered needs for ...“ in the target market* 

• They are the result of a qualitative data 

collection and pattern recognition approach 



User 

Early Adopters 

Routine Users 

*In a lead user study trends refer to 

aggregated, unmet user needs within 

the search field that are not yet 

addressed by existing products or 

services and, furthermore, usually not 

yet (fully) known to companies/ 

industries. 



For classifying the results of phase 2 (“unmet need clusters”) and facilitate the decision 

making for later project stages we use a trend matrix: 

Fit with the search field 

high 

low 


low 

2 

1 

Importance for the target market 

5 

4 

3 

high 

The size of the circles represents the number of referrals 

Trend Matrix 


Summary: Tips from my experience 

Tips for stage 2: Trend identification 

à� The most important trends are market trends (aggregated user needs), 

technology trends or general social/legal/economic trends might 

sometimes also play a role 

à� Look also for trends in analogous markets that might spill over 

à� Users are market experts – talking to users will help to get an idea of 

important (not yet covered) needs (market trends) 

à� Usually more than 10 trends are identified as being relevant, do not 

follow more than 3 trends for lead user identification (the selection of 

trends shall reduce the solution space 

à� Selection of most important trends can be done by looking at their 

relevance for the target market, their fit with the search field and the 

number of sources that back the trend 

à� Evaluation tools can support decision processes 

à� Use interview partners as evaluators (similar to Delphi methods) 



Phase 3 – Identifying lead users from target 

and analogous markets 


How to find lead users? 

To find lead users, different search processes can be employed 

Pyramiding: Using references of interviewees to identify the target person at the 

‘top of the pyramid’ (lead user), getting stepwise to the target person 

Starting point: Who 

experiences most advanced 

needs related to trend X...? 


Sources: Franke/Prügl/von Hippel (2009), Poetz (2008) 

Result: Lead Users 

Analogy: playing golf 

Interview guides and 

interviewer training 


Pyramiding search 

A performance analysis of Pyramiding search processes shows that 52,3% of all 

interviewees were able to make a referral. Within this sample, 35,2% were able to cross 

domain-specific boundaries and refer into analogous domains. 

Interview 

without 

referral 

47,7% 

n=1147 

Source: Poetz and Prügl 2010 

Interview 

with 

referral 

52,3% 

Withindomain 

referral 

64,8% 

n=600 

Crossdomain 

referral 

35,2% 

‘true’ crossing-boundaries 

achievement: 

• from target market into 

analogous market 

• from analogous market 

into other analogous 

market 

• Total: 326 referrals 

No crossing-boundaries 

achievement: 

• from target market into 

target market 

• from analogous market 

into same analogous 

market 

• From analogous 

market into target 

market 

• Total: 771 referrals 



The underlying concept: attracting solutions from crowds (e.g. Jeppesen and Lakhani 2010) 

Broadcasting: Broadcast questions/problems to a crowd of potential problem solvers 

(e.g. opening a thread in an online communities) to identify promising 

ideas (and the people behind them – self selection) 

Asking a question (posting/thread) 

related to search field and/or trend 

Interview(s) 

ideas, hints and contacts 

Search process starting points 


Analogy: sowing and harvesting 




To find lead users, different search processes can be employed 

Content Analysis: Passively searching content in online forums for possible 

solutions, then contact the persons behind them 

Interview(s) 

problem issues, ideas 

Search process starting points 


Analogy: harvesting 



Pyramiding search vs. 

Broadcast search 

Both methods target on identification of rare expertise, but have a different sequence 

in steps towards this goal. 

Pyramiding 

Broadcasting 

1 2 

Person 

Idea 

Idea Person 


Pyramiding search vs. 

Broadcast search 

Both methods target on identification of rare expertise, but have a different sequence 

in steps towards this goal. This leads to different strengths and weaknesses of these 

two search methods. 

Pyramiding Search 

Broadcast Search 

Person 

Innovation-related knowledge 

• Strength 1: Possiblity to adapt and refine search question during search (‚learning effect‘ on 

the fly) 

• Strength 2: Ability to cross domain-specific boundaries (reduced local search bias) 

• Strenght 3: Potential to interact with interviewees and get detailed insights 

• Weaknesses: Time and resources needed (e.g. highly skilled interviewers), ‚local optima‘ 

because of opportunistic behavior 

Innovation-related knowledge 

Person 

• Strength 1: Easily accessible and observable if a few rules are respected (‚community 

culture‘) 

• Strength 2: Fully documentated search process (no ‚extra effort‘ needed) 

• Stength 3: Attracting solutions from diverse solvers (reduced local search bias) 

• Weaknesses: Dependence on problem description, lower ‚communication 

bandwidth‘ (e.g. mainly written communication) and ‚reach‘ 


General tips for the search processes 

Please consider: 

ð� Early adopter ≠ Lead user… 

…but might be interesting for you when they come from analogous markets 

ð� Opinion leader ≠ Lead user… 

…but can be a valuable node for the pyramiding search processes 

ð� Technology experts ≠ Lead user… 

…but can (exceptionally) be considered for the workshop, e.g. certain relevant 

technology-related knowledge is not available from company participants 

Don`forget: Lead Users = Lead User Persons and Lead User Companies 



How can you evaluate potential lead user 

candidates? 

For classifying the results of the lead user search process we use a lead user matrix… 

Lead User Matrix: 

à� Trend position and expected benefit: position in the matrix 

à� Main source of benefit (using, selling): design of circles 

à� Market origin (target or analogous market): color of circles 

à� Novelty of idea: size of circles 

Trend Position 

Low high 

Low high 

Expected Benefit 

Source: Hienerth, Poetz and von Hippel (2007) 

Target 

Analogous 

User 

Seller with use 

experience 


How can you evaluate potential lead user 

candidates? 

…and other characteristics that lead to most innovative results in lead user workhops 

Lead User Matrix: 

à� Trend position and expected benefit: position in the matrix 

à� Current main source of benefit (using, selling): design of circles 

à� Market origin (target or analogous market): color of circles 

à� Novelty of idea: size of circles 

Further aspects of the person: 

à� Degree of use experience (in his/her market) 

à� Technical knowledge (in his/her market) 

à� Actual innovative activities (related to the target market problem) 

à� Aptitude to participate in the workshop (ability to communicate with others, etc) 

Further aspects of the market the person comes from: 

à� Market distance (to the target market): in terms of market related aspects 

à� Technical distance (to the target market): in terms of technical related aspects (how much 

has to be modified to solve the target market problem?) 

à� Progressiveness distance (peer or advanced analogous market) 

Further aspects of the idea: 

à� Status of the idea (idea, concept, prototype or commercial product) 

Source: Hienerth/Poetz/von Hippel (2007) 



Tips for stage 3: Lead user identification 

à� The choice of the right starting points shortens the pyramiding chain 

and allows to identify appropriate online forums for broadcast search 

à� Right starting points can be identified by operationalizing trends: 

finding variables that help identifying people for whom the trend is 

critical (e.g. because of frequency, security, legal regulations, etc.) 

à� Use standardized interview forms for the pyramiding process and train 

interviewers prior to interviewing activities 

à� Do not mix up lead user characteristics and motives to participate in a 

lead user workshop 

à� Clarify IP rights during the interviews (prior to the lead user workshop) 

à� Use interview partners as evaluators for trend position (similar to 

Delphi methods) 

à� Regularly discuss results within your search team 

à� Ask interview partners directly for analogous markets 

à� Check for additional characteristics of lead users that might be relevant 

for the workshop 



Phase 4 – Collaborating with lead users in a 

lead user workshop 




Phase 1: 


Start search des field Lead 

User Projekts 

Phase 2: 


important needs 

and trends 

• Conducting the workshop with lead users and company members 

• Development of innovative concepts 

• Evaluation of innovative concepts 

Phase 3: 


lead users and 

lead user ideas 

Phase 4: 

Development of 

innovative 

concepts (lead 

user workshop) 



Motives for participating and sharing ideas in a lead user workshop 

• What do you think motivates lead users to “freely” share their ideas in a lead 

user workshop? 


What motivates lead users to freely share 

their ideas in lead user workshops? 

Intrinsic motivation seems to be the main driver for free revealing in lead user workshops 

Motives for free revealing 

40% 

25% 

35% 

n=9 interviews with lead user workshop participants 

Source: Poetz and Rütgen 2008 

Social motives 

1. Exchange ideas and thoughts with likeminded 

people 

2. Social contacts 

3. Pursue collaborative goals 

4. Gain recognition 

5. Societal norms and values 

Intrinsic motives 

1. Learning effects 

2. Pride in one‘s own contribution 

3. Creativity 

4. Emotions during innovation-related tasks 

5. Exploration 

6. Fun 

7. Spinning ideas/fiddling about 

8. Interest in the topic 

9. Privilege to participate 

Extrinsic motives (only non-monetary!) 

1. Low pressure of competition 

2. Name and reputation of the company 

3. Workshop ideas as stimulation for own projects 

4. Getting to know the lead user method 

5. Access to exclusive information 

6. Reciprocity 

7. Post-workshop cooperations 

8. Qualitatively higher standards 

9. Use benefit in own (target & analogous) market 

10. Gaining reputation 

11. Aiming for career perspectives 

12. Diffusion 



In a three days workshop lead users, together with company employees, develop 

innovative solutions. We use the following design: 

Thursday Friday Saturday 

Working session 1 

Plenum Session 1 


Plenum Session 2 

Project Introduction 

Group formation 

Get together Evening program 



Plenum Session 3 and 

Evaluation 

Working Sessions: 3 

Teams consisting of: 

LU LU 

DOC 

COMP 

MOD 

LU 



Tips for stage 4: Lead user workshop 

à� Create an attractive environment for the lead user workshop (hotel, 

travel arrangements, recreation activities, etc.) 

à� Create a balance between structure and creativity (moderation and 

documentation, goal orientation, structured process, agenda, etc.) 

à� Enable interactions (e.g. for feedback) between sub-groups 

à� Create sub-groups with diverse characteristics (optimal group mix), 

but… 

à� …check for the fit between members of a sub-group (they should be 

able to talk to each other) 

à� Support group building processes (in order to minimize “storming and 

forming”) 

à� Include company members who are familiar with the problem and the 

prior project results, company members play the role of checking for 

realizability of the solutions, but avoid “cutting” interesting ideas 

because of functional fixedness 



Summary: Power of the lead user 

method 

There are three main aspects that form the power of the lead user method 

ð� Problem solvers with use experience 

• USER PERSPECTIVE 

• NEED BASED INFORMATION 

ð� Users at the leading edge of important market trends (vs. average users) 

• TREND POSITION 

• ADVANCED SOLUTION BASED INFORMATION 

ð� Problem solvers from analogous markets 

• UNBLOCKING FUNCTIONAL FIXEDNESS 

• TRANSFER OF EXISTING SOLUTIONS

Lead User Innovation

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