How to Think About Innovation

One of the most interesting books I've read recently was MIT professor Eric von Hippel's Demoocratizing Innovation. In the book, Von Hippel describes how companies that look to what he calls "lead users" for innovative ideas are far more likely to bring new ideas to market successfully and profitably than companies that pursue the traditional R&D model, by which a small team of smart people devise the coolest new products they can think of and then push them out into the world. (You can download a free copy of the book here and learn more about Von Hippel's work here.)

Lead users, by the way, can either be someone who uses your products all the time and intensely, or they can be people who use other products intensely, but borrow, in some fashion, the features or functionality of your products. For example, Von Hippel notes that windsurfers took existing sports gear and reengineered it to create a new sport. Sporting goods manufacturers were then able to make products that supported these lead users. Thus, a whole new industry was created. The lesson for business owners: ask your customers if they customize your products themselves, and look to those custom changes for inspiration for new products or product features.

Lead users are easier to identify than ever because they congregate online, in chatrooms and on messageboards. This is perhaps ironic, because the inventor of the World Wide Web, Tim Berners Lee, was himself a lead user in the world of Internet connectivity--his invention is a prime example of democratic innovation, Von Hippel says. And like many other lead users, Berners Lee acted in a way that was independent of commerce. He had no plans to create a new business, but instead was trying to create something useful to himself and to his colleagues. That quite obviously did not diminish the power of his idea. The search for profitable new businesses does not necessarily set the stage for the great breakthroughs.

Von Hippel's ideas about innovation seem to be catching on, especially among the entrepreneurial cluster that surrounds MIT. According to an article that appeared on CNet today, Frank Moss, the serial entrepreneur who has been tapped to be the new head of the prestigious and prolific MIT Media Lab, said in an interview, "I think a lot of innovation will come from a different place. It will trickle down further so that innovation will come from the consumer, whereas in the past they were the recipient" of company-driven innovation.

What do you think about Von Hippel's theories concerning lead-user centric innovation? Have you turned to customers for new ideas? If so, what did you learn from them? And do you have a process for indentifying and following the work of lead users? That's the next step.

Mike Hofman was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City. @mikehofman