Ruth Stafford Peale once said success will come if you just "find a need and fill it." But how do you find a need or—even better—an unmet need many customers are willing to pay a premium to fill in a competitive marketplace where demand always seems to be shifting?
One approach known as lead user analysis (LUA) has proven very effective ever since MIT professor Eric von Hippel first introduced it in 1986. The basic idea is that in most industries, there is a set of customers who push the envelope on how existing products or services can be used. While they are not the largest part of the customer base, they can be harnessed to find the next big thing, because they generally use the product in some modified or alternative way to solve their unmet need. To find them, existing customers are asked, typically by phone, to answer open-ended questions. For example, do they have any problems they cannot solve with the existing product or service? If so, have they modified or made additions to the product in some way to accommodate their need? Do they have any concepts for new products that would be an improvement over the current offering?
Examples include kids creating mountain bikes by modifying existing bikes, the college football team that developed Gatorade to help it fight dehydration, and hard-core enthusiasts making photographic equipment.
Von Hippel’s initial reports showed products that resulted from this process had revenues eight times greater those that didn’t. Large companies, such as 3M and Nortel, have successfully used the approach to generate new product lines.
After we formed a startup to use computers for medical applications, we inadvertently used LUA to come up with the first commercially successful cornea scope in 1989. In searching for our first product idea, we interviewed many surgeons and found that cornea surgery was emerging as a rapidly growing field. LUA teaches that each lead user can help the process not only by giving her subject knowledge during an interview but also by pointing you to even more advanced lead users to be interviewed. This is how we proceeded until we had a world-class team of lead users (which in this case were all eye surgeons). They told us about an unmet need for a more accurate way to measure the shape of the cornea. Some of the surgeons had made attempts to modify the conventional disk-based device used at that time. But they were not good enough for eye surgery. We solved the problem by modifying the disk idea and adding a small computer with advanced image processing. The product went on to became the dominate design and is still widely used today.
Richard Mammone, PhD Entrepreneur, professor, and director of BEST Institute Rutgers University New Brunswick, N.J.