Chapter 2

Summary


Chapter 2 begins by introducing the idea of innovations facilitated by the product consumers themselves. Although it makes sense when you think about it, it conflicts with the idea that technological innovation occurs only in million dollar research laboratories and done only by men in white labcoats. More surprisingly, about 80% of cost reduction methods are attributed to minor innovations, according to Hippel. No matter how trivial the finding, it plays a large role in the overall scheme of advancement.

That may be good news to most ears, but the harsh reality is that not everyone is the next Einstein or Newton when it comes to making great technological discoveries. That’s why we have a ‘Lead User’. The Lead User theory tells us that most user-developed products come from people with ‘lead user’ characteristics, which are: the ability to stay ahead of the game in the technology field and being able to anticipate high benefits as a result of the innovation. In layman’s terms, lead users are more likely to develop significant products if they are on the leading edge of the technology field so they can anticipate needs that future users will be facing. In addition, the more that the lead user will anticipate great rewards from developing the product, the more he will invest.

As examples, Von Hippel gives us his own life experiences in the printed circuit board (PCB) industry. From a computer trade show, he sorted out users who contained the characteristics of a Lead User by finding technicians who 1) had worked with the densest PCBs, thus being the most innovative and 2) were dissatisfied with their company’s methods, thus wanting a higher reward and willing to put in higher investment. From the pool of selected technicians, they did indeed confirm the Lead User Theory when they found out 87% of the technicians in the Lead User category had modified their own PCBs outside of work.

Reflection

Other examples were given but I enjoyed reading the PCB example the most, since it struck a chord with my own life. As a guitarist and amplifier enthusiast, there’s a large, but niche market for amplification modification. Most rock fans will know Marshall and Fender like they know the names of their parents, but most do not know the innovative history behind the two companies. Marshall amps were actually created by copying and tweaking the schematics of Fender amps, and Fender amps were first made through copying and tweaking the valve-tube manual from RCA. It’s crazy to think that such small innovations created two of the biggest amplification companies today, and the field of PCBs isn’t such a stones throw away from tube amplification technology.