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The Age of the Consumer- Innovator. Research shows that consumers collectively generate massive amounts of product innovation  ASSUMPTION: companies.

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Presentation on theme: "The Age of the Consumer- Innovator. Research shows that consumers collectively generate massive amounts of product innovation  ASSUMPTION: companies."— Presentation transcript:

1 The Age of the Consumer- Innovator

2 Research shows that consumers collectively generate massive amounts of product innovation  ASSUMPTION: companies develop new products FOR consumers  Consumers are buying and consuming what producers create  REALITY: Consumers themselves are a major source of product innovations  Consumer-as-Innovators pattern has led to the framing of a new innovation paradigm

3 Consumers-as-Innovators  Rather than seeing consumers as “the market”  Paradigm centers on consumers and other product users  Explains why consumers are important innovators who often develop products on their own

4 Leading Question: What is the role of consumers in product innovation? 1. Millions of citizens in 3 countries studied create and modify consumer products 2. It is getting easier for consumers to design and make what they want 3. Businesses need to organize their product development systems to efficiently accept and build upon prototypes developed by users

5 National Surveys of Consumer Innovation  Three first-ever studies of consumer product innovation were recently conducted  People age 18 and older in U.S., UK, and Japan  All 3 surveys show that consumers play a very important role as product innovators

6 National Surveys of Consumer Innovation (Cont.)  Percentage of the population developing products for their own use differs among countries  Citizens who innovate in the US, UK, and Japan spend similar amounts of money and time on this activity  Consumer-innovators are significantly more likely than the average citizen to be  highly educated (US)  have technical education (UK)  to be male (Japan)

7 A Paradigm Shift in Understanding Innovation  3 Phases  Phase 1: Users develop new products for themselves  Producers do not like small and uncertain markets

8 A Paradigm Shift in Understanding Innovation  Phase 2: Other users evaluate and reject, or copy and improve  Freely available  Offers a progressively stronger signal to producers  Consumers provide producers with marketing research data

9 A Paradigm Shift in Understanding Innovation  Phase 3: Producers enter when market potential is clear  Has it reach acceptable levers for their risk profiles?  Some new start ups are:  Consumer-innovators  Acquisitions

10 Implications for innovating consumers - Phase 1  Consumers should realize that:  they are important developers of really novel products and services  it is getting progressively easier to design and make what they want for themselves  it is getting progressively easier to build what you design 10

11 Phase 2 - Implications  Consumers can choose to exert effort to make people aware of their innovation  to assess demand if they wish, and  to act upon that information if they wish 11

12 Implications for entrepreneurs - Phase 3  It is getting steadily easier for the consumer-innovators to commercialize an innovation oneself  Companies can be hired to produce your design  The innovating consumer can now be a “casual entrepreneur” without giving up their career 12

13 Implications for existing companies  reorganize their product development systems to efficiently accept and build upon prototypes developed by users  learn to identify promising consumer- developed innovations  teach their own product developers to look at consumer-developed innovations with new eyes 13

14 Priceless information for companies  Product engineering is not the value companies should look for  The value is — that the consumer is showing a product prototype that performs a novel function that people have demonstrated they want.  Companies can save money and raise their success ratio by focusing on product concepts that consumers have prototyped and to some extent -market-tested. 14

15 What should companies do? 1. Stop attacking your innovating users (whether intentionally or by mistake) 2. Consider actively supporting the consumers that do or could offer you a feedstock for your in-house innovation process

16 Ways to increase the attractiveness of your products to user-innovators:  Support user innovation  Explore to determine what userse want in exchange for your benefiting from their innovations  When you decide to product a commercial version of a user-developed product, give the innovators credit


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