Lead User Process Innovation Method for Breakthroughs at 3M

Lead User Process
Innovation method for breakthroughs at 3M
New product design and development
Amirkabir University of Technology
Dr. Saeed Mansour
Golnar Zamani

Abstract
3M has been known for decades as an entrepreneurial company that
peruses growth through innovation. It generates a quarter of its annual
revenues from products less than 5 years old. Long before “reinvention”
became a buzzword of American business, 3M already had made change a
central part of its corporate culture [1]. Many say the company’s success over
the years is linked to its ability to change as 3M, its products and the world
marketplace evolves. Once 3M top management has long felt that the 3M
innovation process was being focus on incremental improvements to existing
product lines. They urgently wanted to improve matters, and wanted
especially to improve 3M's ability to respond to the "unarticulated needs" of
customers by providing breakthroughs and services. Among many methods of
innovation that the 3M used to improve their capability of making
breakthroughs, The Lead User process offered a promising solution to that
problem.
Von Hipple (1999) marks that the Lead User market research method is
built around the idea that the richest understanding of new product and
service needs is held by just a few "Lead Users." They can be identified and
drawn into a process of joint development of new product or service concepts
with manufacturer personnel. In this research after a general description of
innovation definition, the 3M Company is introduced as the research case
study. In the fourth part the culture and methods of innovation that made or
used by the 3M is discussed. And then the applications of a Lead User market
research method carried out by the 3M Company, a major American
manufacturer of products and materials has been interpreted.

Key words
Innovation, 3M Company, Lead User System

Table of Contents

Part 1: Basics of project
1.1. Introduction ……………………………………………………………………….
1.2. Limitations ………………………………………………………………………….
1.3. Importance of the work ……………………………………………………..
1.4. Method of research ……………………………………………………………

Part 2: Innovation
2.1. Definition of innovation ……………………………………………………..
2.2. Related concepts ………………………………………………………………..
2.2.1. Innovation and growth ……………………………………………….
2.2.2. Innovation and design ………………………………………………..
2.2.3. Innovation and failure ………………………………………………..
2.2.4. Innovation and customers ………………………………………….
2.2.5. Innovation and knowledge …………………………………………
2.3. Drivers of innovation ………………………………………………………….
2.3.1. Emerging technologies ……………………………………………….
2.3.2. Competitor actions …………………………………………………….
2.3.3. New ideas ……………………………………………………………………
2.3.4. Emerging changes in the external environment ………….
2.4. Industrial innovation ………………………………………………………….
2.5. Product innovation …………………………………………………………….
2.6. Business innovation ……………………………………………………………

Part 3: Introduction of case study; 3M Company
3.1. 3M Company ……………………………………………………………………..
3.2. History of 3M …………………………………………………………………….
3.3. Company profile …………………………………………………………………
3.4. 3M performance ………………………………………………………………..
3.5. 3M ranking and recognition ……………………………………………….
3.6. 3M trademarks ………………………………………………………………….

Part 4: Ways of innovation at 3M Company
4.1. 3M breakthrough products ………………………………………………..

4.2. 3M corporate culture for innovation ………………………………….
4.2.1. The 15% option ………………………………………………………….
4.2.2. Speed capital ………………………………………………………………
4.2.3. Dual career path …………………………………………………………
4.2.4. Reward and recognitions ……………………………………………
4.3. Essentials for innovation at 3M …………………………………………..

Part 5: Lead user system
5.1. Lead user system: A different approach ……………………………..
to concept development …………………………………………………….
5.2. Characteristics of lead user approach …………………………….…..
5.2.1. Lead user research and leading edge users ………………….
5.2.2. Lead user research and lead user experts …………………….
5.2.3. Lead user research and concept development …………….
5.3. Lead user approach in process ……………………………………….….
5.3.1. Laying the foundation …………………………………………….….
5.3.2. Determining the trends ………………………………………………
5.3.3. Identifying lead users ………………………………………………….
5.3.4. Developing breakthroughs …………………………………………
5.4. Users in lead users system ………………………………………………….
5.5. Different types of lead users ……………………………………………….
5.6. Benefits of Lead User method in brief …………………………………

List of Illustrations

Figure 3.1. ………………………………………………………………………………………
Figure 4.1. ………………………………………………………………………………………
Figure 5.1. ………………………………………………………………………………………
Figure 5.2. ………………………………………………………………………………………

List of Tables

Table 3.1. ………………………………………………………………………………………..
Table 4.1. ………………………………………………………………………………………..

Lead User Process
Part 1: Basics of project

1.1. Introduction
To clarify the Lead User Process: Innovation method for breakthroughs at
3M as the topic of this research it has been tried to explants the general
definition of innovation and different derivations and concepts of this term in
the first place. In the next step the 3M Company (the case study of this
project), has been introduced through its history and profile and operations. In
the last two parts the methods and cultures of innovation in 3m Company has
been named and the Lead User approach specifically has been defined as the
key strategy of 3M toward its innovation.

1.2. Limitations
This study is not attempting to identify or compare different methods of
innovation with each other inside or out of the 3M Company. The research is
restricted to identify and gather basic data about the approaches of 3M
Company toward innovation for their breakthroughs. Time limitation can be
named as the most important Constraint of this project.

1.3. Importance of the research
In the past, many organizations have been able to survive even with very
limited amounts of innovation. They focus on providing quality products and
simply update them to a level that maintains their competitiveness in the
market. This method still applies to some products with long lifecycles and few
opportunities for innovation. Recently however, organizations need more than
good products to survive; they require innovative processes and management
that can drive down costs and improve productivity. Consumer expectations
also drive the amount of innovation in the market. Modern consumers are
more informed and have more options in terms of what they buy and who
they buy it from [3].
Innovation is important as it is one of the primary ways to differentiate
products from the competition. And in a very broad sense, it is important to

the advancement of society around the world. New and innovative products
can increase the standard of living and provide people with opportunities to
improve their lives. Breakthroughs in medicine and technology have
significantly improved living standards around the world. Innovation has also
lead to significant improvements in the way businesses operate and has closed
the gaps between different markets [3].

1.4. Method of research
In this study, documentary investigation and desk research and a case study
is used for the research. In this scope of study no further attempts in searching
for data was necessary.
The Vancouver referencing method as the official term of referencing
method in Amirkabir University of Technology has been used for this research
as well.

Lead User Process
Part 2: Innovation

2.1. Definition of innovation
Innovations can be in the form of new products or services, or cost-reducing
process improvements, or innovative business models and methods. The
benefits of innovation occur in all aspects of the profit loss statement:
innovators drive additional sales volume, achieve price premiums and reduce
costs through process improvements [4]. In other words, innovation is the
development of new customer’s value through solutions that meet new needs,
inarticulate needs, or old customer and market needs in new ways. This is
accomplished through different or more effective products and processes or
even services and technologies or ideas that are readily available to markets
and governments and society. Innovation has been and continues to be an
important topic of study for different disciplines [5].

2.2. Related concepts
Innovation is often used in conjunction with some other related terms. To
explore the term of innovation in more detail in order to get a deeper
understanding, some of the related concepts with innovation need to be
explained [5].

2.2.1. Innovation and growth
Innovation is about developing growth. According to Drucker (1988),
innovation can be viewed as a purposeful and focused effort to achieve change
in (an organization’s) economic or social potential. Bottom-line growth can
occur in a number of ways, such as better service quality and shorter lead
times in nonprofit organizations and cost reduction, cost avoidance, and
increased turnover in profit-focused organizations [5].

2.2.2. Innovation and design
The term design in the context of innovation is defined as “the conscious
decision-making process by which information (an idea) is transformed into an

outcome be it tangible (product) or intangible (service)” [5]. The design activity
draws heavily on creativity to resolve issues such as the aesthetics, form, and
functionality of the eventual outcome. In this way, during the exploitation
phase of the innovation process, organizations engage in design activities that
will produce an output that provides the optimum fit with market
requirements. Although design is an integral part of the exploitation phase of
an innovation, it is only one aspect. Exploitation can include other elements,
such as process development and market preparation [6].

2.2.3. Innovation and failure
One of the first writers to emphasize the importance of innovation was
Schumpeter (1942), who described innovation as “creative destruction” that is
essential for economic growth. Innovation is essential for helping organizations
grow. Growth is often measured in terms of turnover and profit, but growth
can also occur in knowledge, human experience, and the efficiency and quality
of products, processes, and services. The innovation process will naturally
involve unsuccessful ideas. These are seen as a natural byproduct of the
innovation process. In order for some ideas to succeed, many more must fail.
Organizations can learn from these failures and bring new knowledge (and
sometimes technology) to use in future innovative actions that may benefit the
organization. Organizations that can successfully sift out the good ideas from
the bad will be more adaptable than those that cannot do so. In managing the
innovation process, destroying poor ideas is often as important as nurturing
good ones. Destroying poor ideas early on allows scarce resources to be
released and refocused on new ideas [5].

2.2.4. Innovation and customers
An innovation must add value to customers to make them purchase or
consume the product or service or perceive an improvement. An important
part of the exploitation process is ensuring that the innovation adequately
fulfills prospective customers’ needs. The better the innovation fulfills
customer needs, the more likely customers are to adopt it. A common mistake
technology companies make is to focus on the technological capability of their
offering rather than on how that technology can satisfy customer needs. It is
important to emphasize that a customer is anyone who purchases or uses a

product or service. Customers can include students who purchase a book in
the university bookstore, patients who use services in a hospital, or members
of the public who use the services of a local library [6].
Customers can also be internal to an organization. University lecturers who
offer a service to students are in turn customers of the library, for example.
Doctors who deliver a service to patients are also customers of support
laboratories, and librarians are customers of the library’s computer service
department. When we use the term organization in this book, we refer to the
organization around which innovation is focused. This can be an entire
company, a department within a company, or a team of individuals [5].

2.2.5. Innovation and knowledge
Innovation is built on a foundation of creativity and sometimes on
invention, resulting in the creation of new knowledge and learning within the
organization. Even when failures occur, the learning gained can be a valuable
asset for the organization. The scope of innovation exists primarily within the
realm of the individual and the collective knowledge of the organization. This
has become increasingly evident as the complexity of technology and markets
have increased. Therefore, the knowledge reservoir of the organization
determines the type and level of innovation possible. If an organization’s
culture and routine are capable of capturing knowledge from past failures,
then future innovative efforts will not repeat the mistakes of the past.
Organizations that develop such knowledge systems are in a better position to
store and share this knowledge so that it will improve the innovation process
through enhanced idea generation, better decision making, and more effective
exploitation. In this way, all ideas, whether successful or not, can contribute to
the organization’s long-term success [7].

2.3. Drivers of innovation
Various factors encourage an organization to innovate. Each of these
drivers demands continuous innovation and learning so that the process can
be repeated continuously. These drivers also help to create a sense of urgency
around the need to create new organizational goals and generate new ideas
for meeting these goals. These drivers can be summarized as follows [5]:

2.3.1. Emerging technologies
These have the potential for significant innovation across the organization
and can be the basis for innovative products, processes, and services that can
revolutionize the fortunes of an organization. In the past, organizations
developed technologies in large R&D laboratories; however, in today’s
environment the sources of emerging technology are often far too prolific for
any one organization to develop internally. Consequently, organizations
expend more resources scanning the environment for potential technological
opportunities. Sources of emerging technology can include universities, high-
technology startups, and competing organizations [5].

2.3.2. Competitor actions
The innovative actions of competitors and other organizations can be
another driver of innovation. Competitors can provide a benchmark regarding
which projects and initiatives to pursue. Copying competitor innovations
reduces risk because the products may have already been adopted by the
market. Although such behavior is unlikely to increase market share, it can be
effective in maintaining the status quo by counteracting the advantage to the
competitor [5].

2.3.3. New ideas from customers, strategic partners, and employees
In the past, innovations were developed from the insights of a small
number of designers and engineers. Now, however, with greater technological
complexity and market segmentation, modern organizations are engaging as
many stakeholders as possible in the innovation process. This can result in
increased scanning capabilities and better information about market needs.
Engaging employees, suppliers, customers, and other lead users can reveal
new opportunities that otherwise might have gone undiscovered [8].

2.3.4. Emerging changes in the external environment
All organizations are affected by changes in their external environment;
these changes can be another driver of innovation. Environmental changes can
occur because of competitor actions that have revolutionized the business
environment or can happen through macro shifts in the political, economic,
cultural, or technological environment. As organizations struggle to realign

with their new business environment, they must innovate their products,
processes, and services accordingly [8].

2.4. Industrial innovation
Industrial innovation is about helping organizations grow. Growth is often
measured in terms of turnover and profit, but can also occur in knowledge,
human experience, efficiency and quality. Innovation is the process of making
changes to something established by introducing something new. As such, it
can be radical or incremental, and it can be applied to products, processes, or
services and in any organization. It can happen at all levels in an organization,
from management teams to departments and even to the level of the
individual. Applying innovation is the application of practical tools and
techniques that make changes, large and small, to products, processes, and
services that results in the introduction of something new for the organization
that adds value to customers and contributes to the knowledge store of the
organization [9].

2.5. Product innovation
Product innovation is about making beneficial changes to physical products.
Related terms that are often used interchangeably include product design,
research and development, and new product development (NPD). Each of
these terms offers a particular perspective on the degree of changes to
products. The degree of change can include the following [9]:

 Incremental improvements
 Additions to product families
 Next-generation products
 New core products

Established organizations typically have a portfolio of products that must be
incrementally improved or adjusted as problems are identified in service or as
new requirements emerge. It is important that they also work on additions to
the product families. One of the main activities of the product design team is
the work it performs on next-generation products or new models of products.
They may also work on designing radical new products or new core products

that expand the portfolio significantly and often involve radically new
processes to create them. These new core products ideally offer the
organization the possibility of major increases in revenue and growth, which
can also create the potential of a temporary monopoly in the market. The
product development process for next-generation and new core products
follows a familiar cycle in most organizations [5]:
1. Ideation
2. Preliminary investigation
3. Detailed investigation
4. Development
5. Testing and validation
6. Market launch and full production
Each of these steps involves interaction with customers, who may
participate in idea generation and feature recognition. Key performance
criteria in the design process revolve around the following [5]:

 Time to market
 Product cost
 Customer benefit delivery
 Development costs

These criteria can be traded off against one another. For example,
development costs can be traded against time to market, customer benefits
can be traded against product costs, and so on. Three design methods have
established themselves as providing a management system for effective
product innovation: phase review, stage gate, and product and cycle time
excellence1 [5].

1
PACE: The PACE method is concerned primarily with developing product development
strategies (McGrath, 1996). The method links product strategy with the overall strategy and
vision of the organization. A key feature is deploying the voice of the customer throughout
the product design process. Strategies are divided into six product strategic thrusts:
expansion, innovation, strategic balance, platform strategy, product line strategy, and
competitive strategy [5].

2.6. Business innovation
According to the U.S. magazine Business Week, the process of innovation
consists of re-creating business models and building entirely new markets to
satisfy unmet human needs; above all, it aspires to select and execute the right
ideas, and bring them to market in record time. Traditionally, innovation in the
business world has meant seeking new technological solutions. However, in
the 1990’s, the dissemination of Total Quality Management1 gave birth to a
new approach to innovation: to innovate, it was not only necessary to find new
technological solutions, but also to explore new markets. Thus, in addition to
creating new forms of contact with customers, new approaches to satisfying
their needs were also opened up [9].

1
(TQM): A management philosophy created by Deming (1986) that aims at
continuous improvement in the quality of products and processes [9].

Lead User Process
Part 3: Introduction of case study; 3M Company

3.1. 3M Company
3M was founded in 1902 at the Lake Superior town of Two Harbors,
Minnesota. Five businessmen set out to mine a mineral deposit for grinding-
wheel abrasives. But the deposits proved to be of little value, and the new
Minnesota Mining and Manufacturing Co. quickly moved to nearby Duluth to
focus on sandpaper products. Years of struggle ensued until the company
could master quality production and a supply chain [10].

3.2. History of 3M
 In 1910, new investors were attracted to 3M, such as Lucius Ordway,
who moved the company to St. Paul.
 In 1916, early technical and marketing innovations began to produce
successes and the company paid its first dividend of 6 cents a share.
 In the early 1920s, the world's first waterproof sandpaper, which
reduced airborne dusts during automobile manufacturing, was developed.
 In 1925, a second major milestone occurred when Richard G. Drew, a
young lab assistant, invented masking tape – an innovative step toward
diversification and the first of many Scotch Pressure-Sensitive Tapes. In the
following years, technical progress resulted in Scotch Cellophane Tape for box
sealing and soon hundreds of practical uses were discovered.
 In the early 1940s, 3M was diverted into defense materials for World
War II, which was followed by new ventures, such as Scotchlite Reflective
Sheeting for highway markings, magnetic sound recording tape, filament
adhesive tape and the start of 3M's involvement in the graphic arts field with
offset printing plates.
 In the 1950s, 3M introduced the Thermo-Fax copying process,
Scotchgard Fabric Protector, videotape, Scotch-Brite Cleaning Pads and several
new electro-mechanical products.

 In the 1960s, Dry-silver microfilm was introduced, along with
photographic products, carbonless papers, overhead projection systems, and a
rapidly growing health care business of medical and dental products.
 In the 1970s and 1980s, Markets further expanded into pharmaceuticals,
radiology and energy control.
 In 1980, 3M introduced Post-it Notes, which created a whole new
category in the marketplace and changed people’s communication and
organization behavior forever.
 In the 1990s, sales reached the $15 billion mark. 3M continued to
develop an array of innovative products, including immune response modifier
pharmaceuticals; brightness enhancement films for electronic displays; and
flexible circuits used in inkjet printers, cell phones and other electronic devices.
 In 2004, sales topped $20 billion for the first time, with innovative new
products contributing significantly to growth. Recent innovations include Post-
it Super Sticky Notes, Scotch Transparent Duct Tape, optical films for LCD
televisions and a new family of Scotch-Brite Cleaning Products that give
consumers the right scrubbing power for a host of cleaning jobs [11].

3.3. Company Profile
As shown in figure 3.1. [11] 3M is a diversified technology company with a
global presence in the following businesses: industrial and transportation,
health care, display and graphics, consumer and office, safety, security and
protection services, and electro and communications. 3M is among the leading
manufacturers of products for many of the markets it serves. Most 3M
products involve expertise in product development, manufacturing and
marketing, and are subject to competition from products manufactured and
sold by other technologically oriented companies. At December 31, 2007, the
Company employed 76,239 people, with 34,138 employed in the United States
and 42,101 employed internationally, i.e. 55% of the total staff. 3 Moreover,
63% of total sales are made internationally (total sales reach $24.462 billion in
2007).
3M’s six business segments bring together common or related 3M
technologies, enhancing the development of innovative products and services
and providing for efficient sharing of business resources. These segments have
worldwide responsibility for virtually all 3M product lines. Certain small

businesses and lab-sponsored products, as well as various corporate assets and
expenses, are not allocated to the business segments [11].

Figure 3.1. 3M’s six business segments and their proportion of the total sales in 2007

3M’s general offices, corporate research laboratories, and certain division
laboratories are located in St. Paul, Minnesota. In the United States, 3M has
nine sales offices in eight states and operates 74 manufacturing facilities in 27
states. Internationally, 3M has 148 sales offices. The Company operates 93
manufacturing and converting facilities in 32 countries outside the United
States [11].

3.4. 3M Performance

3M is fundamentally a science-based company and produce thousands of
imaginative products. It’s a leader in scores of markets - from health care and
highway safety to office products and abrasives and adhesives. 3M success is
joining with the ability to apply technologies - often in combination - to an
endless array of real-world customer needs. 3M Company leverage these
competencies to create innovative solutions for the customers and also to
provide investors with attractive long-term returns [12].

3.5. 3M Rankings and Recognition

Some of the 3Ms achievements in ranking and recognition are [12]:

3M ranked No. 37 on Universum USA’s list of “Top 100 MBA Employers” for
2012. Research firm Universum USA annually ranks the most desirable
employers in the world based on where MBA candidates say they would most
like to work.

3M came in at No. 29 on Corporate Responsibility Magazine’s 2012 list of “100
Best Corporate Citizens.” The list ranks companies in seven areas, including
environment, human rights, employee relations and philanthropy.

3M ranked No. 27 on the 2012 list of “America’s Most Reputable Companies.”
The list, developed by the Reputation Institute and Forbes magazine, is the
result of an online study of more than 10,000 consumers, measuring their
perceptions of the 150 largest U.S. companies.

3M ranked No. 18 on Fortune magazine’s 2012 list of “50 Most Admired
Companies.”

3M ranked No. 4 on Chief Executive magazine’s 2012 list of “10 Best
Companies for Leaders”—a list of corporations who lead the pack when it
comes to leadership development.

3M was among 13 companies in Minnesota (and 190 companies nationwide)
to receive a 100-percent index rating in the 2012 Corporate Equality Index
report for workplace inclusiveness. Washington, D.C.-based Human Rights
Campaign Foundation rated employers on policies and practices that are most
friendly to lesbian, gay, bisexual and transgender employees.

3.6. 3M trademarks
As shown in table 3.1. 3M Company owns lots of brands and trademarks
under its main organization. Some of those trademarks are named below [10]:

Active™ Aldara™ Aseptex™ Black Watch™
Buf-Puf™ Colorquartz™ Command™ Controltac™
Diamond Grade™ Durapore™ DuraPrep™ Dyneon™
Elek-Tro-Cut™ Filtrete™ Fluorel™ Imperial™
Interam™ Isotak™ Lacelon™ Littmann™
Magic™ Magnetic™ Microfoam™ Micropore™
Minitran™ Mistlon™ Nexcare™ Nextel™
Nomad™ Novec™ O-Cel-O™ Panaflex™
Plastiform™ Post-it® Reston™ Retsul™
Safety-Walk™ Sasheen™ Scotch® Scotchban™
Scotch-Brite™ Scotchcal™ Scotchcast™ Scotchgard™
Scotchkote™ Scotchlite™ Scotchlok™ Scotchmate™
Scotchshield™ Skimmit™ Steri-Strip™ Stikit™
Tambocor™ Tartan Track™ Tartan Turf™ Tattoo™
Tegaderm™ hermo-Fax™ TThinsulate™ 3M™
Three-M-Ite™ Transpore™ Tri-M-Ite™ Trizact™
Unitek™ VHB™ Vikuiti™ Volition™

Table3.1. List of 3M Company trademarks

Lead User Process
Part 4: Ways of innovation at 3M Company

4.1. 3M Breakthrough Products
Traditionally the 3M’s management has fostered innovation by taking a “get
out of the way” attitude toward product developers who, in turn, have worked
according to the aphorism “It’s better to seek forgiveness than to ask
premission”. This relationship between managers and developers has resulted
in the creation of a long line of profitable product from waterproof sandpaper
and scotch tape in the 1920s to Post-It-Notes and thinsulate in the 1970s. but
by the mid 1990s, 3M’s top managers were concerned that too much of the
companies growth was coming from changes to existing products.
Breakthroughs were fewer and farther between. The demand for- and the
rewards from- incremental improvements spurred the company to focus on
current products. To counter this trend, management set a bold objective: 30%
of sales would come from products that had not existed four years erlier [12].
For the company to meet that goal, some employees started becoming
acquinted with a new method for developing breakthrough products: The
Leader User Process. The process which makes the generation of
breakthrough strategies, products and services systematic is based on two
magor findings by innovation researches [12].
First the researchers found that many commercially important products are
initially thought of and even prototyped by users rather than manufacturers.
Second they discovered that such products tend to be developed by “Lead
Users” companies, organizations and individuals that are well ahead of market
trends and have needs that go far beyond those of the avarage user. Those
discoveries transformed the difficult job of creating breakthroughs from
scratch into a systematic task of identifying lead users- companies or people
that have already developed elements of commercially attractive
breakthroughs- and learning from them [13].

4.2. 3M Corporate Culture for Innovation
3M has a number of programs geared to support and grow innovation
among its researchers. These include:

4.2.1. The 15% option
Many employees can spend up to 15% of their workweek on projects of
their own choice that might benefit the company. They often don't have to
inform their manager of the project or even justify it [13].

4.2.2. Seed capital
If researchers create a new technology or idea, they can request seed
capital from their business unit managers to develop it further. If that funding
is denied, they can take it to any other 3M business unit. Failing even that, they
can request a corporate Genesis Grant for independent R&D awards of up to
$100,000; about a dozen of these are granted each year [12].

4.2.3. Dual career path
Researchers can choose to follow a technical career path or a management
career path, with equal advancement opportunities. This option is offered
successfully by a number of technology firms, allowing researchers to more
fully develop their technical professional interests without being penalized
financially for not going into management [13].

4.2.4. Rewards and recognitions
3M sponsors 12 global and four US-based award programs to honor
individuals who make significant contributions to the company. Each business
and staff unit, department, and area also has ways of recognizing and
rewarding people [12]. These include:
- The Carlton Society
Honors employees for outstanding career scientific achievements, their
contributions to new technologies or products, and high standards of
originality, dedication, and integrity [14].
- Circle of Technical Excellence & Innovation Awards
Recognize employees who have made exceptional contributions to 3M's
technical capabilities [14].

- Pyramid of Excellence Awards
Recognize the top performing administrative employees for their
exceptional achievements [14].
- Quality Achievement Awards
Recognize employees for individual and team outstanding quality
improvement efforts [13].

4.3. Essentials for innovation at 3M
Gates reviews require cross-functional teams to demonstrate extensive and
statistically valid “VOC”/ “VOM’’. Their overall innovation strategy is focused
on two core themes – deep technological competence and strong product
development capabilities. They combine these to enable them to offer a steady
stream of breakthrough products and line extensions/product improvements.
A great strength is the integrated input from the technical and marketing side
which enables ‘creative association’, coming up with new and often powerful
combinations of needs and means [1]. In table 4.1. Some of them are listed
[13]:

Setting stretch targets – such as ‘x% of sales from products introduced
during the past y years’ – provides a clear and consistent message and a
focus for the whole organization
Allocating resources as ‘slack’ – space and time in which staff can explore
and play with ideas, build on chance events or combinations, etc.
Encouragement of ‘bootlegging’ employees working on innovation
projects in their own time and often accessing resources in a non-formal
way – the ‘benevolent blind eye’ effect.
Provision of staged resource support for innovators who want to take an
idea forward – effectively different levels of internal venture capital for
which people can bid (against increasingly high hurdles) – this encourages
‘entrepreneurship’ (internal entrepreneurial behavior) rather than people
feeling they have to leave the firm to take their good ideas forward.

Table 4.1. Inputs from the technical and marketing side in 3M

As shown in figure 4.1. There is a formal stage-gate system for innovations
and extensions based on established products but in addition there is a clear
progress route for more radical ideas, moving from an incubator stage, where
they are encouraged and where development funds are available against loose
targets, through to much more rigorous business plan appraisal for projects
further down the line. The ‘trial by fire’ approach is well-known but carries
with it a strong element of encouraging innovation champions to take non-
linear ideas through the system. Effectively they run parallel systems which all
involve funnels and clear gateways through which ideas pass into narrower
parts of the funnel and which also commit more extensive resources – but
although the mechanisms differ, the intent is the same [15].

Figure 4.1. 3M corporate NPI1 framework

A more important fact about 3M is that it has a strong internal culture that
promotes bottoms-up concept generation by its employees. For example, 3M
Company policy encourages all technical or marketing employees to spend up
to 15% of work time on a project of their own choosing. Besides that, they
have very deep technological strengths in its areas of expertise. During this
time, developers work on new ideas both as individuals and as informal teams,
and bring them to the point where they can be considered for formal support
as a product or service development project. Where 3M innovation was found
to be lagging, however, was in the area of innovations driven by insights into
novel, unarticulated market needs2. needs that are unarticulated for ordinary
users in a target market might well be clearly understood, clearly expressed –
and perhaps even solved via a user developed product or service prototype -
by users who lived at the leading edges of that market or functionally similar
ones. This meant that the daunting task of finding unarticulated needs might
be transformable into learning to identify and learn from lead users [10].

1
NPI(New Product Introduction)
2
“Unarticulated needs” is 3M’s term for needs that customers have not yet found a way to express - often
because they are very novel or rapidly-evolving – but that customers would be very pleased to have solutions
to nonetheless.

Lead User Process
Part 5: Lead User System

5.1. Lead User System: A Different Approach to Concept
Developments
“Lead User System” is a research approach, which has reliably produced
profitable new products, services and strategies. The Lead User market
research method is built around the idea that the richest understanding of new
product and service needs is held by just a few "Lead Users." They can be
identified and drawn into a process of joint development of new product or
service concepts with manufacturer personnel [16].
Lead user research is done in the initial phases of an innovation project for
the purposes of identifying strong market opportunities and developing
concepts for new products or services. Concepts are developed with direct
input from "lead users." Lead users are individuals - or they may be firms - that
are experiencing needs that are ahead of the targeted market(s). Often, they
develop product or service prototypes to satisfy their leading edge needs that
will be commercially attractive to firms [2].

5.2. Characteristics of lead user approach
The lead user approach to concept development differs from
conventional methods in three very important ways:

5.2.1. Lead user research captures the rich need information possessed by
leading edge users.
Conventional marketing research asks typical customers what they think
they need tomorrow in the way of new products and services. Researches have
shown that average users usually cannot say with any accuracy what they will
want in the future. They often can only speculate about their future needs - or
ask for improvements in existing products and services in terms that are very
general and already obvious to both users and manufacturers. They may ask,
for example, for existing products to be made “cheaper” or “faster” or “easier”
to use. Lead user research focuses on inquiring into the product and service

needs of “lead users” [17]. Lead users are sophisticated product/service
consumers who are facing and dealing with needs that are ahead of the bulk of
the marketplace. These leading edge users have proven to be a much richer
and more accurate source of information on future market needs than
“routine” users because they are actively grappling with the inadequacies of
existing products and services. By focusing data collection on lead users, the
result is higher quality information on emerging market needs - and thus,
better product and service concepts [8].

5.2.2. Lead user research captures prototypes and ideas for new products
and services that are developed by lead users and lead user experts.
It is conventional for marketing research specialists to focus only on the
collection of customer needs data. The creation of new products and services
that can satisfy those needs is considered to be the province of internally
based research and development staff [4]. (von Hippel, 1988) Studies have
shown that lead users often both experience emerging needs and may develop
prototype products and services that can satisfy these needs. Lead user
prototypes can then become the basis for commercially attractive new
products and services that will be appealing to routine users in the general
marketplace. Lead user research exploits this fact by bringing lead users
directly into the company’s concept development process. Thus, the project
team can benefit from both the solution data and the need information that is
held by lead users. Lead user research also directly brings “lead use” experts
into the work of concept development. Lead use experts are top authorities in
their fields who are doing leading edge work related to the team’s project.
Some firms, especially in high-technology fields, utilize experts as advisors.
What is “different from usual” about this model is that the range of experts
drawn upon is wider and the experts, as well as lead users, actually collaborate
with internal personnel in concept development. There are two major benefits
of involving both lead users and lead use experts in the development of new
products and services [17]:
1. They can provide extremely valuable design data.
2. Their input cuts down the work required of development engineers.

5.2.3. Lead user research accelerates concept development.
As shown in figure 5.1. lead user researches have proven to be a much
faster concept development process than conventional approaches used by
many firms. For example, managers have compared lead user methods to
traditional ones and estimate that they can complete concept development
twice as fast by doing a lead user study [17]. The process is faster, in large part,
because technical and marketing departments are working collaboratively
throughout a study. Thus, they are able to more fully share information and
fully coordinate their efforts. Also, the new concepts that come out of a study
typically require less development work because technical staff has direct
access to the rich information lead users have acquired by experimenting with
prototype solutions under actual field conditions [4].

Figure 5.1. Lead users have product or service needs that
are ahead of all other user groups in a given market.

5.3. Lead user approach in process
The lead user process gets under way when a cross-disciplinary team is
formed. Teams typically are composed of four to six people from marketing
and technical departments; one member serves as project leader. Team
members usually will spend 12 to 15 hours per week on the project for its
duration. That high level of immersion fosters creative thought and sustains
that projects momentum. Lead user projects proceed through four phases. The
length of each phase can vary quite a bit. For planning purpose, a team should

figure on four to six weeks for each phase and four to six months for the entire
project [18].

5.3.1. Phase 1; Laying the foundation
During this initial period, the team identifies the markets it wants to target
and the type and level of innovations desired by key stakeholders within the
company. If the team ultimate recommendations are to be credibly received,
these stakeholders must be on board early [18].

5.3.2. Phase 2; Determining the trends
It’s an axiom of the process that lead users are a head of the trend. In first
place team has to find out what the trend is. The team must talk to experts and
leading-edge applications in the area being studied [12]. In figure 5.2. [12] the
curve illustrates the shape of a market trend. Lead users have needs that are
well ahead of the trend; over time more people feel the same need.

Figure 5.2. Lead user curve

5.3.3. Phase 3, Identifying lead users
The team now begins a networking process to identify and learn from the
users at the leading edge of the target market and related markets. The
group’s members gather information that will help them identify especially
promising innovations and ideas that might contribute to the development of
the breakthrough products. Based on what they learn, team also begins to
shape preliminary product ideas and to assess the business potential of these
concepts and how they fit with company interests [18].

5.3.4. Phase 4; Developing breakthroughs
The goal is to move the preliminary concepts toward completion. The team
begins this phase by hosting a workshop with several lead users, a half-dozen
in- house marketing and technical people and the lead user team itself. Such
workshops may last two or three days. During that time the participant’s first
work in small groups and then as a whole to design final concepts that
precisely fit the company’s needs [18].
After the workshop, the project team further hones the concepts,
determines whether they fits the needs of target market users, and eventually
presents its recommendations to senior managers. By that point its proposals
will be supported by solid evidence that explains why customers would be
willing to pay for the new products. Although the project team may now
disband, at least one member should stay involved with any concepts that are
chosen foe commercialization. In that way the rich body of knowledge that was
collected during the process remains useful as the product or service families
are developed and marketed [18].

5.4. Users in Lead Users system
Not all users are created equal with respect to the development of
commercially-important innovations and innovation prototypes. Research
shows that almost all user-developed ideas and prototypes of general
commercial interest tend to be developed by “Lead Users” – that is, users that
[8]:
1. Expect to get high benefit from an innovation and so have a strong
incentive to innovate and;

2. That are ahead of a target market with respect to one or more important
trends.
If it is demanded to find users that are actively exploring and testing new
ideas, it is a waste of time to survey users in the center of the target market.
Instead, develop methods must to seek out users that are at the leading edge
with respect to needs that are important to that market – even if such lead
users are rare and hard to find - because that is where interesting user idea
generation and innovation is concentrated. For example, if an auto company
wants to find innovative ways to improve car braking, it should surely search
among automobile users who are at the leading edge with respect to this need
– say, auto racers. But it should also go on to search for innovative ideas in
other fields that have a high need for “stopping things in a hurry” such as
aerospace [19].

5.5. Different types of lead users
It is useful to think about three different categories of lead users that can
provide important information to lead user project teams. During a lead user
study, team members systematically contact each type in order to get the best
possible information for their project. The three types of lead users are [2]:
1. Lead users in the target application and market;
2. Lead users of similar applications in advanced “analog” markets;
3. Lead users with respect to important attributes of problems faced by
users in the target market [17].

5.6. Benefits of Lead User method in brief
The Lead User method is designed to collect both need and solution
information from lead users. In other words, in the lead user method, the
emphasis is more on finding prototype product and service ideas that have
already been generated by lead users than it is on generating those ideas in-
house [20].
There are two major reasons why it makes sense to focus on the
identification and collection of innovative ideas generated by lead users [17]:

 The first is that user need information can very “sticky” – very
complex and poorly encoded, and so very hard and costly to transfer

from users to the manufacturer. When this is so, and when it is
relatively less costly to transfer solution information from
manufacturer to user than it is to transfer need information the
other way, it can make economic sense to locate the problem-solving
work of idea generation at the site of the sticky need information –
the user.
 The second reason that it makes sense to search for ideas and
concepts among lead users is that there are often many more
innovating users thinking about a problem than there are
manufacturer-based developers, and these users are thinking
about and testing a lot of different ideas.

References
1. Stapleton, G. (2009), Keeping innovation alive- The 3m way, Retrieved
October 27th 2010 from
www.fitwise.co.uk/events/snn/documents/03.GStapleton.pdf
2. Churchill, J., Von Hipple, E., Sonnak, M., (2009), Lead user project
handbook: A practical guide for teams
3. The New South Wales Information Website, (2012), Innovation Module,
Retrieved November 4th 2012 from:
http://toolkit.smallviz.nsw.gov.au.part/14/69/291
4. Samson, D., (2010), Innovation for business success: Achieving a systematic
innovation capability, University of Melbourne
5. Sullivan, O., (2008), Understanding innovation, Working paper #45628,
National University of Ireland, Galway
6. Storti, A.J., (2006), Leadership for innovation: What leaders must do for
innovation to happen, Home School Alliance for Technology Management,
Vol 10, 2(Aug).
7. Tan, B., (2004), The consequence of innovation, The Innovation Journal: The
Public Sector Innovation, Vol 9(March).
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user innovation, (Jan),Working Paper #4057
9. Vianna, M., [et al.], (2012), Design thinking: Business innovation (1st Ed.),
MJV Press, Rio de Janeiro
10. 3M Corporation, (2002), A century of innovation: The 3M story (1st Ed.),
Minnesota: 3M Publishing
11. gerybadze, A., Reger, G., (1999), Globalization of R&D: Recent changes in
the management of innovation in transnational corporations, Elsevier, Vol
28, 2(March), 251-274.
12. 3M Group, (2012), A culture of innovation, Retrieved November 4th 2012
from:
http://solutions.3m.com/wps/portal/3M/en_US/3MCompany/Information/
AboutUs/WhoWeAre/
13. Von Hipple, E., Thomke, S., Sonnak, M., (1999), Creating breakthroughs at
3M, Harvard Business Review, (Sep- Oct), #99510
14. www.business week.com/stories/2006-05-09/3ms-seven-pillars-of-
innovation

15. Cooper, R., Dreher,A., (2010), Voice-of-Customer methods: What is the
best source of new product ideas?, Marketing Management Magazine,
September Issue, PP 38-48
16. Shore, R., (2010), Managed Innovation: 3M’s latest model for new
products, Retrieved November 4th 2012 from:
http://www.manufacturingnews.com/news/editorials/shor.html
17. Herstatt, C., Von Hipple, E., (1991), Developing new product concepts via
the lead user method: A case study in a “Low Tech” field, Journal of product
innovation management, 9(Feb), 221-213
18.Holt, K., (2002), Market Oriented Product Innovation: A Key to Survival in
the Third Millennium, Netherland: Kluwer Academic Publishers.
19.Gardien, P., Kyffin, S., (2009), Navigating the innovation matrix: An
approach to design-led innovation, International Journal of Design, Vol 3,
No 1, Netherlands Publishing
20.Blaszczyk, R.L., (2000), Imaging consumers: Design and innovation from
Wedgwood to Corning, Maryland, John Hopkins University Press.

Lead User Process Innovation Method for Breakthroughs at 3M

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