You don't know what your clients want? - Let them innovate themselves

It is generally known that many industry products or services fail commercially. One of the reasons is the inaccurate understanding of user needs. That means providers of new products or services lack relevant contextual information about what users want. What seems to be a problem of market research methodes, depends much more on the quality and quantity of information itself. In this context Eric Von Hippel (professor at MIT), speaks about the problem of sticky information - information that is defined as:

• costly to acquire (e.g. tacit information, sometimes even not known by the holder of the information itself)
• costly to transfer (e.g. Information will degrade during the process of collecting and transmitting to manufacturer-innovators)
• costly to use

So even if you're successful in collecting information about users' needs, it can be difficult to use it. Think about the variety of information you get from completely different consumers who live in different contexts. What kind of product or service are you going to offer them?

Von Hippel shows that the more difficult it is to collect and use information, the more probable it is that the development of innovative products and services takes place at the locus where information is hold. This means that not the manufacturer but the user creates a new product or service himself. The advantage is that innovating users develop exactely what they want, and companies don't have to take the risk of investing in new products that may fail in the market.

So what does this means for a company?

• Open your company and allow users to innovate or adapt existing products or services.
• Study the innovations and gain insights in user needs.
• If it seems to be useful, improve the innovations and offer them in a better version to the customers.
• And finally encourage your clients to share their innovations. So everybody can benefit and social welfare will increase.

Further reading:

• Eric von Hippel: "Sticky Information" and the Locus of Problem Solving: Implications for Innovation.
• Joachim Henkel and Eric von Hippel: Welfare Implications of user innovation.