(by Carolin Eckinger)
In today’s world, innovation is key and provides the underlying source of having a competitive advantage. But what would innovation be if not based on users changing demands? And what is the easiest way to find out?
User innovations provide an answer. But before I will tell you how, let us first have a look at what user innovations actually are. According to Henkel and von Hippel (2005), user innovations are developed for personal usage and satisfy needs not yet detected by producers. A classic example of user innovation is the Maclaren buggy which was developed by Owen Maclaren, a successful aircraft engineer and pilot, after having observed his daughter having a lot of difficulties getting her children’s pushchair on board of the airplane during a trip to the US (Bessant, 2017). Today development platforms like GitHub are a major source of user innovations within software development (Warner, 2018).
User innovations reveal a lot about consumers’ needs and desires for product improvements and most of them are being communicated freely within user communities and other online platforms, leading to the diffusion of innovative ideas as well as further improvements thereafter (Baldwin & von Hippel, 2011). Since user innovations help resolve inefficiencies in the market such as reducing asymmetry or filling high-need niche markets (Henkel & von Hippel, 2005), user innovations represent an important as well as a low-cost source of innovation for businesses as well as society as a whole.
But how can user innovations now benefit businesses directly?
Examples of successful user innovations can be found in the form of software improvements, moderation of computer assistance systems, or modification of video games (Urban & von Hippel, 1988; Morrison, Roberts, & von Hippel, 2000; Abrate & Menozzi, 2020). While these examples provide an idea of existing consumer needs for product adjustments, let us have a closer look at how an interaction between the user and the producer could look like. Abrate and Menozzi (2020) identify two key findings when looking at the relationship between user innovation and the producer side: direct and indirect network effects. Since users often freely innovate within user communities (Baldwin & von Hippel, 2011), it is likely that other users have the same needs. Hence, they would like to purchase the original product as well as obtain its newly added features. As a result, the demand for the product increases and causes indirect network effects. This in return leads to growing product purchases, increasing sales without spending a lot of money on research and development or marketing (Abrate & Menozzi, 2020).
If it is so easy, shouldn’t producers just invest in user innovations as a sales strategy? Research shows that user innovations are still underestimated by many decision-makers (Brandonjic, Franke, & Lüthje, 2019). Maybe now is the time to change this and listen to what consumers really want!
Sources:
Abrate, G., & Menozzi, A. (2020). User innovation and network effects: the case of video games. Industrial and Corporate Change, 1-16.
Baldwin, C., & Von Hippel, E. (2011). Modelling a paradigm shift: From producer innovation to user and open collaborative innovation. Organization Science, 22(6), 1399-1417.
Bessant, J. (2017, January 10). The Power of User-Led Innovations. Retrieved from https://blog.hypeinnovation.com/frustrated-mothers-and-fathers-of-invention
Bradonjic, P., Franke, N., & Lüthje, C. (2019). Decision-makers‘ underestimation of user innovation. Research Policy. 48(6), 1354-1361.
Henkel, J., & von Hippel, E. (2005). Welfare implications of user innovation. Journal of Technology Transfer, 30(1/2), 73-87.
Morrison, P., Roberts, J. H., & von Hippel, E. (2000). Determinants of user innovation and innovation sharing in a local market. Management Science, 46(12), 1513-1527.
Urban, G. L., & Von Hippel, E. (1988). Lead user analyses for the development of new industrial products. Management Science, 34(5), 569-582.
Warner, J. (2018, October 16). Future of Software: Developers at the center of the universe. Retrieved from https://github.blog/2018-10-16-future-of-software/
Picture link:
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