particular product | professor of business administration | 3M | Nikolaus Franke

Driving this popularity is the fact that bringing lead users - those at the leading edge of major market trends and who have a strong need to solve the new problems they encounter, often by developing new products - into the development process helps companies to commercialize the product innovations that the lead users have developed, thus serving the companies' leading-edge needs. As a result, the products they develop are more likely to succeed in the market. A 2002 study by von Hippel and others compared products developed at 3M via the lead-user method with those developed in other ways, and found that after five years, average market share for the lead-user products was 68 percent - more than double the 33 percent share for the rest.

Of course, the desire to participate in product development is nothing new. "At the beginning of mankind, you saw innovations like the controlled use of fire and the development of weapons," says Nikolaus Franke, professor of business administration at Vienna University of Economics and Business Administration in Austria. These breakthroughs didn't come from a corporate R&D lab but from people who needed to stay warm and protect themselves from enemies.

However, user innovation declined during the Industrial Revolution in the 1800s, when the production of many goods moved from people's homes to assembly lines in factories. "Mass production knocked user innovation off center stage," von Hippel says. Even so, the tendency of users to tinker with the products they bought never went away. Studies show that today, between 10 and 40 percent of lead users modify a product so that it better meets their needs.

TO APPLY THIS INNOVATION approach to their own organizations, executives need to identify the lead users of their products. Somewhat surprisingly, lead users aren't necessarily a company's customers. Instead, these individuals possess two key attributes, says Mary Sonnack, a Minneapolis-based senior consultant with Lead User Concepts. First, they have a strong need for a particular product or function before the mass market does.