The Lead User Method: an Outline of Empirical Findings and Issues For
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The Lead User method: an outline of empirical findings and issues for future research Christian Lu¨thje and Cornelius Herstatt Institute for Technology and Innovation Management, Hamburg University of Technology, Schwarzenbergstr. 95, D-21073 Hamburg, Germany [email protected]; [email protected] In order to reduce the risks of failure usually associated with NPD, leading companies such as 3M, HILTI, or Johnson&Johnson are increasingly working with so-called Lead Users. Their identification and involvement is supported by the Lead User method – a multi stage approach aiming to generate innovative new product concepts and to enhance the effectiveness of cross- functional innovation teams. While the Lead User method is frequently cited in the literature, yet, there are only limited attempts to comprehensively discuss how this approach is embedded in theories and empirical findings of innovation and marketing research. Therefore the Lead User method is in the focus of the present paper, both with respect to its theoretical foundation and its implementation into the innovation management system. First, empirical research on user innovations is reviewed to clarify the theoretical foundation of the Lead User method. Second the attention is drawn to the Lead User practice by discussing the various process steps of this specific approach on the basis of two applications of the method. Based on this discussion, we outline open questions related with the practical implementation of the Lead User method in order to start an agenda for future research. 1. Introduction mination), and translating this information into marketable products and services (responsive- he creation of innovations leading to corpo- ness) (Kohli and Jaworski, 1990). A customer T rate growth and profitability is a critical task focus in this sense seems to foster product ad- for managers in nearly all industries. Empirical vantage in terms of quality, reliability and unique- research, however, shows the high risk which is ness which in turn is positively correlated with usually associated with developing new products product market performance (Li and Calantone, (Crawford, 1994; Brockhoff, 1999). In order to 1998). reduce the risk of failure, researchers and practi- Reducing market uncertainty is particularly tioners concordantly recommend to better align important in the early stages of innovation pro- key activities within NPD-projects with the needs jects. By using the customers as an information of actual and potential customers (Jaworski and source in the ‘fuzzy front-end’, the project teams Kohli, 1993; Atuahene-Gima, 1995). A strong may receive valuable input for the generation of customer orientation encompasses acquiring in- promising new product ideas (Kim and Wilemon, formation about customer needs (intelligence 2002a). The market compatibility of the selected generation), disseminating the information project idea is an important determinant of the throughout all critical functional areas like mar- performance in the fuzzy front end. After all, keting, R&D and production (intelligence disse- the product idea will influence the definition of R&D Management 34, 5, 2004. r Blackwell Publishing Ltd, 2004. Published by Blackwell Publishing Ltd, 553 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA. Christian Lu¨thje and Cornelius Herstatt the product concept and, at the end, will deter- are mostly determined in advance. Customers are mine the key attributes of the commercial product confronted with such stimuli and market re- (Kim and Wilemon, 2002b). searchers mainly record the customers’ answers But does the intensive integration of customers and reactions. There are no mechanisms to induce into the fuzzy front-end of innovation processes involved customers to formulate emerging needs basically involve the same set of activities, regard- and to identify new solutions to those needs (von less of the specific type of innovation project? We Hippel, 1988). believe the answer to this question is no. Particu- In light of such difficulties with conventional larly, there is strong evidence that customer market research methods, leading companies such integration in the context of incremental innova- as 3M, HILTI, and Johnson&Johnson are in- tion projects is very different from the case of creasingly working with so-called Lead Users in radically new products (Lynn et al., 1996; Ver- the early phases of innovation projects (Herstatt yzer, 1998). and von Hippel, 1992; von Hippel et al., 1999; For incremental innovations a company can Lilien et al., 2001). Lead Users are at the leading- apply a variety of proven market research meth- edge and are both, sufficiently well qualified and ods. For example, some well-documented meth- motivated to make significant contributions to the ods for the assessment of current and future development of new products or services (von customer needs (‘need assessment’) can be used Hippel, 1986, von Hippel, 1988). to generate promising ideas for innovations early Their identification and involvement in the in the process (Herstatt and Geschka, 2002; Holt fuzzy front end of innovation is supported by et al., 1984). Subsequently, quantitative user ques- the Lead User method – a multi stage approach tioning, (virtual) focus group discussions and aiming to generate innovative new product con- sophisticated conjoint analysis techniques can be cepts and to enhance the effectiveness of cross- applied to examine whether early product con- functional product development teams. cepts meet general customer needs or not (Dahan While the Lead User method is frequently cited and Hauser, 2002; Bristol and Fern, 1996). in the literature, yet, there are only limited But for breakthrough innovations the situation attempts to comprehensively discuss how this is very different. The results from conventional approach is embedded in theories and empirical market research studies continually evoke disap- findings of innovation and marketing manage- pointment. It appears impossible to determine the ment. Therefore the Lead User method is in the demands of tomorrow’s markets via traditional focus of the present paper both, with respect to its market research methods (Lynn et al., 1996; theoretical-empirical foundation and its imple- O’Connor, 1998). Two limitations seem to be mentation into the innovation and R&D manage- most important. Firstly, most market research ment systems. approaches work with random samples of custo- In section 2 we review the empirical research on mers. Market researchers aim to ensure that user innovations to point out that the phenom- findings are representative by integrating a group enon of user-initiated product development is of ‘typical’ customers that represents the popula- anything but rare. In section 3 we outline the tion of the target customers. The insight of these characteristics of Lead Users and review theore- customers into new product needs and potential tical concepts and empirical findings which sup- solutions is constrained by their own real-world port the assumptions that underlie these experience. In order to forecast their needs in the characteristics. This discussion serves to qualify future, the customers will have to integrate the the theoretical-empirical foundation of the Lead potential product into a use context which does User method. not yet exist (Davis, 1993). This is a difficult In the second part of the paper (section 4) we mental task. Hence, it seems reasonable that the draw the attention to the Lead User practice by familiarity with existing market offers often in- discussing the various process steps of the Lead hibits to conceive substantial novel product attri- User approach. In contrast to the method’s the- butes (von Hippel, 1986). Secondly, most of the oretical and empirical foundation, little is known market research techniques do not offer appro- about critical success factors of the method’s priate ways to discover new product attributes implementation in the fuzzy front-end phases of and ideas outside the well-known solution space innovation projects. Although published applica- (Fornell and Menko, 1981; Schrader, 1995). Sur- tions of the method provide first insights with vey designs and stimuli (e.g. questionnaires, test respect to promising actions and decisions when products) that researchers present to customers working with Lead Users, empirical findings are 554 R&D Management 34, 5, 2004 r Blackwell Publishing Ltd. 2004 The Lead User method scarce. We therefore outline some open questions by professional companies (e.g. Red Hat Inc., VA regarding the successful practical application of Linux Systems), manufacturers are rarely in- this method in order to start an agenda for future volved in the development of the software research. (Franke and von Hippel 2002; von Hippel, 2001). For consumer markets, a number of anecdotal cases of user innovations are documented. One of 2. Empirical evidence of user innovations these well-known examples is ‘TipEx’, that was invented at the end of the 1950s by a secretary. Empirical research has shown that users fre- The athletes’ drink ‘Gatorade’ was developed by quently play an important role in the develop- the trainer of a college football team. The early ment of new products – particularly for industrial versions of protein shampoos go back to recipes markets. Often, a significant fraction of the in- of house wifes, the same is true for baking recipes novations within a given industry are directly of ready-mixed cakes. In general,