Where innovation opportunities come from: Lead users

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One source of new market opportunities is to consider the trends of lead user: users at the cutting edge of technology developments. Such users, who may be some of the first to identify problems with their market, but also come up with innovative solutions, often well in advance of them being available. This article explores the opportunities – but also dangers – associated with using lead users as a source of business ideas.

The role of lead users in technology development and business opportunities

Identifying problems

Speaking with the technical leaders in your field can be an important approach for identifying new product opportunities. Relying on their experiences in the area can be useful in identifying a genuine need, from a lack of awareness that some users may have: There is nothing worse than pursuing an idea based on the premise of ‘there should be a product that does this’, only to discover at a later point that there are already various products on the market that actually offers that ability.

Identifying solutions

Perhaps the most direct way of identifying market opportunities with lead user analysis is to identify solutions that individuals have identified to meet the challenges that they face. For example, users may adapt products that they have bought to add additional features or to make them more customized to their setting, or they may create a product from scratch to satisfy the functionality that they desire.

Identifying solutions can be an attractive source of ideas on new market opportunities, with the action to actually create the solution for their needs helping to demonstrate the actually need.

Abstracting problems and solutions

While it can be useful to identify specific problems, and specific solutions, one powerful way of increasing the scope of identified issues is considering other similar settings or issues that may also be impacted. While the specific issues that apply to one lead user may be narrow or user-specific in nature to justify targeting, there may be a more general underlying issue that could be much broader in scope.

The danger of listening to lead users

Needs may be bespoke and not translate to the mass markets

One of the first issues with learning from lead users is that their demands and solutions may not translate into the mass market. It can be difficult to know whether a product will have broad appeal, and while lead users may be at the forefront of technology developments, they may also be ‘over-engineering’ their products in a way that the average consumer either would not want or at least not be willing to pay a premium for. Sometimes ‘feature requests’ can be so specific that the only user who needs the features identified is the one lead user that you speak to. 

Existing companies may be better placed to serve the market

Another danger of launching a company off the back of a product idea from lead users is that, should the idea take off, other companies may be better placed to be able to capitalize on the product. For example, even if there is a genuine need for a particular feature or adaptation, if there is little difficultly for an existing firm to adapt their offerings to integrate that feature, then your company may merely serve as the test company that illustrates the demand, before the better-placed incumbents decide to adapt their offerings to enter the market.  

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