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Week 6 - The Role of Market Experimentation and End-user Innovation - Complete


Democratizing Innovation by Eric Von Hippel Chapters 1- 4

Chapter 1
With a traditional model, a user’s only role is to have needs, which
manufacturers then identify and fill by designing and producing new products.
The manufacturer-centric model does fit some fields and conditions.
We are heading towards a user-centered innovation process.
- can develop exactly what they want
- can benefit from innovations by others
- increases social welfare

User firms with unique needs will always be better off developing new products
for themselves.

Chapter 2
Important processes or improvements are developed by users
- machines that facilitate and abridge labor, and enable one man to do the work of many
- working on a machine naturally leads to thoughts of improvement
- mainly developed by lead users
 - experience needs today that the bulk of the market will want tomorrow
 - users who are on the leading edge of important market trends
 - anticipate benefits from getting a solution

Technique innovation is as important as equipment innovation

Chapter 3
Heterogeneity of need may be substantial among users within their product categories

Users do not improve products on their own unless the cost of doing so would exceed the benefits

Chapter 4
Make or buy evaluations include factors 
- time
- materials
Compare with product output's benefits
Add in process rewards
- produces learning and enjoyment

Enlightened Experimentation by Stefan Thomke 

Experimental ideas
- in the past were prohibitively expensive to test and develop
- more can be tested
- new technologies (computer simulation, rapid prototyping, and combinatorial chemistry) allows for cheaper and easier development
- rapid feedback
- unpromising candidates can be eliminated before too much money is spent

- challenges are managerial as well as technical - must revamp entrenched routines

How to do it

1) Organize for rapid experimentation
- requires changes in process, organization, and attitude
- understand and appreciate the needs of other groups. Ideas must be shared with different groups, not just perfected ideas.

2) Fail early and often but avoid mistakes
- rethink failure - remove the stigma
- is not counterproductive
- exposes gaps in knowledge
- prevents time and energy spent on unfavorable options
- cheap rough designs are easy to change
- avoid mistakes (exp. poor planning, documentation) new information cannot be learned

3) Anticipate and exploit early information
- more money is needed to correct problems in the later stages
- front-loaded development
- rough, rapid, and right
- helps to determine what must be right

4) Combine new and traditional technologies
- reconfigure processes and organization to use in concert with new technologies

Helps to focus on
- generation of novel ideas and concepts
- learning from experiments
- making decisions that require human judgement

Lecture Notes 

With something so complicated (Internet) how do you focus your efforts?
- experiment in the marketplace

How do you take something from the lab into the marketplace?
- narrow down what the marketplace is to you
- in the past it was too expensive - now should be used extensively

70% of new products fail - may be great products but customers don't buy them
If something fails quickly it is a learning experience

There is a distributive collaboration that wasn't available before