Generating breakthrough products: the Lead User Methodology

One of the difficulties of technological markets is that, in most cases, technologies are developed and then have to find a customer’s need that they can fulfill to be marketable. However, the reverse process, meaning identifying a need and looking for a technology to fulfill it, is often key to succeed, at least in the short term. But traditional market research methods fall short in indentifying customers’ needs far in advance: typical customers have trouble conceptualizing ideal products and are often stuck in the boundaries of current technologies.

For one of my course, I recently had to analyze a case on 3M innovative methods. One of them, called the Lead User Methodology (created by MIT’s Eric Von Hippel), is a well-known methodology aimed at creating breakthrough products by identifying the needs of the most advanced users, who often develop themselves some solutions to fulfill their current needs because no company already develops these solutions. The best example of this consumer-generated product is the sports drink Gatorade developed with input from athletes, or the “liquid paper” invented by a secretary for correcting typos. The Lead User Methodology proposes to leverage these users’ knowledge by offering a process for companies to identify them in their sector and translate their ideas into concrete products. You probably already know some examples of the application of the LUM but I will simply provide more details about the framework.

The LUM is a 4 stages process lasting approximately 5 to 6 months in total. It is a project team based approach, involving 4 to 6 people from the marketing and technical department. The project team is required to commit up to one third of their time to the project, with the aim of encouraging the commitment of the project team and fostering a sense of ownership of the project and its final outcome. The first stage is the Project Planning stage. This generally lasts 4 to 6 weeks and involves general research and identification of areas of interest and the level of desired innovation in the selected area. The second stage is Trends/Needs Identification. At this stage, the information gathered in the earlier stage is consolidated to identify areas for further development. This would take approximately 5 to 6 weeks and would involve discussions with experts in the relevant area. The third stage, lasting 5 to 6 weeks, involves Preliminary Concept Generation and Lead User Identification. At this stage, the project team would be working closely with lead users to gain an in depth understanding of the need and generate a preliminary concept to meet this need. The final stage is the Final Concept Generation. At this stage, the preliminary concept is further developed. A workshop is held, with participants consisting of the project team, in-house experts and lead users to discuss and improve on the final concept. It is important at this stage to evaluate the feasibility, appeal and priorities of the final concept to ensure that the final outcome is commercially viable.

At 3M, this methodology has been first implemented in the Medical-Surgical Division, and has led not only to new products in surgical drapes but also to some strategic shift: Lead Users, picked in all the relevant areas of expertise, including a make-up artist for his expertise in the application of materials to the skin) identified the need of providing a solution to keep infections from happening by precautionary upstream measures, whereas entering the upstream containment market was a departure from 3M traditional strategy of working only on incremental innovations. But the LUM was so successful for the Medical-Surgical division that it was then adopted by 8 of the 55 other divisions. According to the article “Performance Assessment of the Lead User Idea-Generation Process for New Product Development” (Lilien, 2002), the lead user method generated breakthrough new products at a higher rate than methods traditionally used at 3M. Annual sales for the average funded LUM project idea was forecasted by management to be $146 million in year five—more than eight times higher than projected sales for contemporaneous traditional projects. They also found that funded projects emerging from 3M Lead User studies had significantly higher novelty (usually being judged “new to the world”), addressed more original newer customer needs, and also had significantly higher forecasted market share in Year 5 (on average, 68% vs. 33% for non-Lead User ideas) than did those from more conventional methods.

However, even if this methodology is especially designed for technological products, some specificity can reduce its applicability:

  • Highly secretive industries where lead users may not feel comfortable or may not be able to disclose information and knowledge are not suited for this process;
  • The lengthy process can prevent this methodology from being applied effectively in industries with really short term innovation cycles or where quick turnaround from research to market delivery is required;
  • The LUM is better suited to meet the needs of the industrial goods market rather than consumer goods market as lead users of industrial goods can typically be identified more reliably than lead users of most consumer goods.

And eventually, it goes without saying that the major obstacle to the implementation of this kind of process is simply the resistance to innovation in some large companies, afraid that Lead Users could identify disruptive needs forcing the company to evolve, which exactly the purpose.

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6 Responses to “Generating breakthrough products: the Lead User Methodology”

  1. Vincent van Wylick says:

    I think this kind of methodology is actually very widespread nowadays. Start-ups use it to generate first clients for their products, websites and software-companies use it through beta-programs, it’s excellent for marketing (e.g. Nike and athletes). Gadget-makers frequently send products to reviewers and lead-bloggers. Even authors do it, by sending pre-releases to other authors to get a nice blurb.

    Where this clearly fails is in the situations you mention. A long development process with lots of risk. It doesn’t benefit anyone if you give your users broken products, even for free. Similarly, some industries today are completely incompatible with this method. Think medicine and biotech, which are fiercely regulated, and where innovation can take 10+ years. You don’t want (or can) release any early-stage products there, though there are often early-stage studies with focus-groups, which are involved in the dev. and marketing process.

    It’s not so much a resistance to innovation I think. It’s that there are different kinds of innovation, the simple kind, which is easy to prototype and build upon. This kind benefits very much from lead users. And the very skill-intensive kind of innovation, where lead-users can only really play a small part, e.g. in usability studies.

  2. Fidji SIMO says:

    I think you’re right about the fact that paying attention to these lead users is widespread nowadays; however, in this particular methodology, it’s not a matter of involving those people in the launch of a product, but using those people for the conception of the root idea, as they are supposed to have advanced needs and be able to identify them and propose solutions that companies can’t imagine without being on the field.

    It’s why, for example, a make up artist was part of this process when it was applied to 3M Surgical Division: even if he clearly won’t be the final user of the product, he has a user knowledge, and some personal “tricks” to customize products to adapt them to his needs, that are really valuable even for products in the medical sector.

    This is why this methodology as been really disruptive in some industries because it is often used in some “desperate” situations (the medical division of 3M was about to be closed at this methodology was the last attempt to generate a breakthrough product) because it is proven that it is one of the few really efficient innovation methologies able to drive strategic shifts.

  3. Vincent van Wylick says:

    I see. Well it definitely seems like the best way to go about it, if you want to create user-centric products.

  4. Marc Duchesne says:

    The one and only true Bible on Product Marketing (incl. new product generation, innovation, technology breakthrough, beta testers, early adopters, product life cycle, etc etc etc) : “Crossing The Chasm”, Geoffrey Moore.

    The rest is just pure customization and/or fine tuning by some vendors (e.g. 3M) for a specific market.



  5. A Fresh Start (up) » Blog Archive » Generating breakthrough products: the Lead User Methodology says:

    [...] identifying “lead users” on a specific market. If you want to take a look it’s here. Technorati : lead user [...]

  6. Lead User Method, método de innovación empresarial » eConectados says:

    [...] Acabo de terminar un análisis de este método aplicado por la compañía 3M para una asignatura de Innovación Empresarial. Iba a escribir una entrada comentando los detalles de este método pero buscando esta imagen, encontré una entrada que ya lo resumen bien. [...]

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