Traditionally, firms send out market researchers to discover ‘unmet needs’ of their customers. The researchers report back and the firm peruses the data, decides which ideas to develop, and assigns them to development teams. Professor Eric Von Hippel (1989) argues that harnessing the customer more effectively can reduce the number of project failures. Instead of engaging a representative sample of customers, firms must identify the few special customers who innovate. Researchers call such customers ‘lead users’. The healthcare division of General Electric (GE) refers to these ‘lead users’ as ‘luminaries’, and they tend to be well-published doctors and research scientists from leading medical institutions. GE brings up to 25 of these ‘luminaries’ together at regular medical advisory board sessions to discuss the evolution of GE’s technology. GE then shares some of its advanced technology with a sub-set of luminaries who form an ‘inner sanctum of good friends’, resulting in the release of new products as a consequence of this collaboration. Staples, an American office-supplies retailer, held a competition amongst its customers to come up with new product ideas, and received 8300 submissions. Lead users were identified from this group, and subsequently played a major role in the development of a number of products, including the ‘wordlock’ 3 a padlock that uses words instead of numbers. An interesting facet of this method is that it challenges a widely held notion that people expect to be paid for their creative work, hence the need to protect and reward the creation of intellectual property, and it appears that customers are willing to donate their creativity freely. This may be because some people value the enhanced reputation and network effects of freely revealing their work more than any money they can make out of patenting.
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