Eric Von Hippel started talking about lead-user innovation as early as in the mid-eighties. Sonn after, consumer participation in service delivery and product development started to gain momentum in the nineties, and the first articles about co-creation were published in 2000. Even though these trends are obvious today, few hard facts have been published about consumer vs. business innovation. This post discusses the results of two quite recent surveys, the first ones to analyse this phenomenon on a large scale. Comparing Business And Household Innovation in Consumer Products (UK) shows that « consumer innovation is not a niche phenomenon« , and the Business R&D and Innovation Survey (US) indicates that « 92% of US businesses reported NOT developing a new product/service between 06 and 08« , which is extremely low. Let’s see if we can explain the gap by looking at these surveys in more details…
On the consumer-side: Measuring the scale of User Innovation in the UK
« This first study of consumer (user) product development in a representative sample of citizens has shown the phenomenon to be of major scope and scale in the UK »
The father of open innovation, Henry Chesbrough, as well as Eric Von Hippel have spread the word about lead-users and open innovation over more than 20 years, and a lot of research has followed to show how innovative and skilled consumers can be. However, the innovation areas studied were often too narrow (sporting equipment, computer games etc.). In a study called Measuring User Innovation in the UK (pdf here), For the first time now, Von Hippel and his colleagues tackle for the first time the wide sector of consumer goods and -more importantly- try to quantify the importance of product creation by users.
It appears that « consumers’ annual product development expenditures are 2.3 times larger than the annual consumer product R&D expenditures of all firms in the UK combined« . The study revealed that « 6.2% of UK consumers – 2.9 million individuals – have engaged in consumer product innovation during the prior 3 years« .
Why do they do that? The motivations are both pragmatic and hedonic, since « 34% [of users innovate because of the] need for the item created, 32% [because of their] enjoyment of the process« .
Von Hippel and his colleagues indicate that « similar studies in other countries would be desirable » to asses the generalizability of these results. We’re looking forward to it. Also, a study about consumer creativity in France is currently being worked on by eYeka, we’re looking forward to communicate about it!
On the corporate-side: The American Business R&D and Innovation Survey (BRDIS)
« These results are the government’s first national estimates of U.S. innovative activity »
Now let’s have a look at business innovation. The American National Science Foundation has surveyed about 1.5 million companies in the United States, and came up with a surprising result (pdf here) : only « about 9% of the estimated 1.5 million for-profit companies were active product innovators in 2006–08« ! This is low, very low, but it has to be nuanced, because « the comparatively low rates of innovation observed for these companies (included are various wholesale/retail trade, hotel, entertainment, and personal services businesses), given their large number, clearly affect the aggregate rates of innovation for […] the all-industries totals« .
We tried to visualize it on a graph:
The graph shows that Computer/Electronics (let’s say Apple) or Chemicals (let’s say Dow) have reported a high innovation activity. The main finding of the study (that only 9% of for-profit companies were active product innovators in 2006–08), however, is the result of a lot of companies reporting low innovation activity, for examples in sectors like Healthcare (let’s say Axa) or Finance/Insurance (let’s say Chase Bank).
Long story short: consumers innovate by themselves and lots of companies have difficulties doing it. Why not tap into this creative energy to unlock innovation opportunities, or to refine or validate them? Of course, these studies surveyed different populations in different countries, but I would bet my shirt on the fact that findings would be similar in both countries. According to Forrester Research, both US and Latin American consumers are willing co-creators. We’re starting to find ways to generate meaningful engagement, and it’s probably just the beginning!