Lead User - Review of Existing Literature

Review of Existing Literature

Research on lead users emerged from studies on sources of innovation. It was first found that users (as opposed to manufacturers) are often the first to develop new products that are commercially successful (Enos 1962 Von Hippel 1988, Shah 1999). Additionally, it was found that innovation by users tended to be concentrated among the “lead users” of those products and processes (Von Hippel 1986, Urban & Von Hippel 1988, Morrison, Roberts & Von Hippel 2000, Shah 1999, Luthje 2000). These “lead users” were individuals or organizations who had experienced needs for a given innovation earlier than the majority of the target market (Von Hippel 1986). Recent research highlights the fact, that lead users exist for service, too (Skiba and Herstatt 2009, Skiba 2010, Oliveira and Von Hippel 2011).

Various studies have explored the effectiveness of this theory in terms of identifying any user innovations. The effect found in these studies tends to be very large; for example, Urban and Von Hippel (1988) found that 82 percent of a given lead-user cluster had developed their own version of, or had modified a specific type of, the industrial product under study… whereas only 1 percent of the non-lead users had done this.

Empirical studies have also found that many of the innovations developed by users have commercial attractiveness. For example, Urban and Von Hippel (1988) found that lead user theory can be effectively utilized in industrial software product development; Morrison, Roberts, and Von Hippel (2000) found that many IT innovations developed by libraries had broader potential value; and Luthje (2003) found that 48 percent of surgical innovations developed by surgeons in university clinics in Germany could be produced as commercial products.

Based on its widespread success, it has been suggested that the lead user methodology should be integrated into corporate new product development efforts (Urban and Von Hippel, 1988). Companies may benefit (to a large extent) as they try to learn from lead users about the needs and solutions encountered at the leading edge of the market. Increasingly, this type of customer integration is being discussed among innovation management scholars (Enkel, Javier, and Gassmann, 2005; Luthje and Herstatt, 2004). The idea is also spreading rapidly in the business world (Coyne, 2000; Dehne, 2003; Intrachooto, 2004); for example, lead-user concepts developed and used at 3M showed product sales potential that was an average of eight times higher than for sales of products using more traditional development concepts / processes (Lilien et al., 2002).