Parallel sessions 4 - 20 September 2016

1. The importance of measuring household
sector innovation
OECD BlueSky Hidden Innovators Sept 20
Jeroen de Jong
Utrecht University School of Economics
jjong@rsm.nl

2. This talk: Household sector
innovation…
• Why it is important: 6 observations
• How we can measure it
– social surveys: household sector innovation
(HHS)
– firm surveys: adoption of HHS innovation

3. 1: Consumers do innovate
World Wide Web
(Tim Berners-Lee)
Whirlpool
(Candido Jacuzzi)
Stethoscope
(René Laënnec)
Wetsuit
(Jack o’Neill)
Marfan Syndrome
Aortic Root Support
(Tal Galesworthy)

4. 2: There’s millions of them
Team Country Year Sample Frequency
Flowers et al. UK 2009 1173 consumers 6.1%
De Jong Netherlands 2010 533 consumers 6.2%
Ogawa & Pongtalanert USA 2010 1992 consumers 5.2%
Ogawa & Pongtalanert Japan 2011 2000 consumers 3.7%
Kuusisto et al. Finland 2012 993 consumers 5.4%
Dupuis et al. Canada 2013 2021 consumers 5.6%
Consumer innovation….creation of a new, or significant modification of
existing… “object”…that is put into use…marked by functional novelty

5. 3: Spending serious time and money
UK US Japan
Estimated total expenditures* by
consumer innovators on consumer
product development per year
$5.2
billion
$20.2
billion
$5.8
billion
Estimated consumer product R&D
expenditures funded by companies
per year**
$3.6
billion
$62.0
billion
$43.4
billion
Source: von Hippel, Ogawa and de Jong 2011, Table 1
* Total expenditures include out-of-pocket expenditures and time investment evaluated at average wage rate for each nation.
** Calculated from national input-output tables.
Individual innovation expenditures per year on products for own use

6. 4: Their innovations can be substantial projects
(when developed collaboratively)

7. 5: It enhances social welfare
• It concerns products with new functionality (Riggs & von Hippel,
1994; Ogawa 1998)
• Upon supplier adoption, it induces radical innovation and
better financial performance (Lilien et al 2002)
• It is at the edge of emerging industries (e.g. Tripsas and Shah
2007)
• In user-contested markets, it imposes price pressure,
enhances consumer surplus (Gambardella, Raasch & von
Hippel, 2016)
• In user-complemented markets, it contributes to general use
value and producer profitability (Gambardella, Raasch & von
Hippel, 2016)
• Household sector innovations may also spillovers to
commercial producers, and producers may facilitate such
spillovers (Gambardella et al., 2016)
Conceptual & empirical work

8. 6: Household sector innovation is part of the
‘informal economy’ – relatively important in
developing countries
Reversed innovation – Bottom of the Pyramid Innovation – Grassroots innovation

9. HHS innovation can be measured: Social surveys
a computer software
b household fixtures or furnishing
c transport or vehicle-related
d tools or equipment
e sports-, hobby- or entertainment
f children- or education-related
g help-, care- or medical
h other
De Jong, J.P.J. & E. von Hippel (2013), User innovation: business and consumers, in: Gault, F. (ed), Handbook of
Innovation Indicators and Measurement, Edward Elgar: Cheltenham, UK, p. 109-132.
Specific cues needed – like in the CIS

10. tinkerers
Job-related
innovation
Create
or modify?
Job-related?
Available
on market?
yes
no
no
No HHS
innovator
yes
yes
no
HHS
innovator
What? Why?
(novelty)
yes
no
Challenges: phone vs web/pen&paper ; services ; screening
(HHS = household sector)
de Jong, Jeroen P.J., Surveying innovation in samples of individual end consumers (January 25,
2016). Available at SSRN: http://ssrn.com/abstract=2089422

11. valid excluded
computer
software
A software that is able to take screenshots
simultaneously from several cameras. I like to
see what happens in my street.
A statistics tool for personal trading made with
spreadsheet. I guess this kind of program already
exists .
household
fixtures and
furnishing
A foldaway bathtub. I am having a small
bathroom and wanted to avoid big and
expensive renovation work.
I made a bedroom shelf and attached some LED
lights to it. It was not a very significant
construction but it looks good and my partner
likes it.
transport and
vehicle-related
A steering and idle wheel solution for a two-
wheel recumbent bicycle. It makes it easier to
steer and more stable in slow speed.
I made a trailer that we used for the domestic
needs and on the building site. The benefit for
the employees is better ergonomics .
tools and
equipment
A tool that helps to change tyres with less back
pain. There are no similar product on the
market. This one is for personal use.
A feeding machine for lambs. There are similar
machines on sale but it was cheaper to make one
myself.
sports, hobby
and
entertainment
New device for bee keeping, helps lifting the
compartments of the beehive. This is usually
done by two persons, but not anymore.
My ice skate sharpening machine is quite a heavy
device. I put it on a trolley with big wheels so that
i do not have to carry it.
children and
education-
related
A card game to learn to transpose. Cards have
questions and tasks that can be solved by
playing or by telling the answer.
A place for children to play in made of snow and
twigs. Similar places have surely been made
before as well but they are not very durable.
help, care and
medical
Tools to help my disabled brother who can only
use one arm. He can now peel, dice and slice
and work with anything from bread to fruit.
Invention related to elderly people services. This
is not just a product, but a full service concept to
bring better care for elderly people.
food and
clothes
A new way to fasten a button, as I was annoyed
by the effort it makes to sew one. I wanted a
light and convenient way to do it.
An acquaintance of mine had broken her jewel
and I figured out how to repair it. I made new
jewellery from the remaining parts.
other products
or applications
A cylinder woven of acid-proof steel net to
neutralize well water. Existing products did not
match with my well.
I modified a cushion into the shape of the
headrest to improve the massage table at my
husband's company.

13. Niemi , M. & J. Kuusisto (2015, New indicators for measuring user innovation by Finnish firms and consumers, in : Nieminen, M &
Lehtoranta, O. (eds), Measuring Broad-based innovation, VTT Technology 242 Finland, 139-153.
Pilot study:
Users as a source
of firm innovation;
Adding questions to
Finland CIS2010
Classic role of users
Co-creation
User innovation
Firm surveys: Measuring adoption of HHS innovations
To detect
HHS
innovation,
further
questions
needed

14. Niemi , M. & J. Kuusisto (2015, New indicators for measuring user innovation by Finnish firms and consumers, in : Nieminen, M &
Lehtoranta, O. (eds), Measuring Broad-based innovation, VTT Technology 242 Finland, 139-153.
Firms pick up user innovations – including HHS

15. What’s next
Develop social surveys of household sector
innovation
– Pilot studies merited: National social survey; larger scale;
few countries
– Develop Manual
– Example: Global Entrepreneurship Monitor
Revise firm innovation surveys
– Oslo Manual: explicit measurement of adoption of
household sector innovations = follow-up on process
innovation questions

17. 3: Valuable innovations fail to diffuse
get rid of Sesame street
User innovation
Commercial
diffusion
Peer
diffusionNo
diffusion
81%
16%
6%
Perceived
general value?
Diffusion
Effort?
Sample of 176 validated innovations obtained from 2048 respondents, Finland
19%
Any
Diffusion
About one out of six consumer innovations spreads to others:

18. Valuable innovations are NOT more likely to diffuse peer-to-peer & minority diffuses > market failure
Valuable innovations more likely to diffuse commercially > less ‘failure’ (but: it’s minority & only high threshold
General value
Peer
diffusion
Commercial
diffusion
Diffusion
effort: to peers
Diffusion
effort:
commercial
Cluster I: to many (17%) 12% 15% 23% 19%
Cluster II: to some (44%) 19% 9% 21% 6%
Cluster III: to none (39%) 15% 0% 12% 0%
Total 16% 6% 18% 6%
chi-sq (df) .8 (2) 8.0 (2) 2.5 (2) 12.2 (2)
p-value .646 .018 .285 .002
(Valuable innovations fail to diffuse)

19. 4: Consumers barely innovate for profit
Sample of 408 self-reported innovations from 2048 respondents, Finland
9% 37% 43% 11%
Cluster analysis of consumer innovation motives –
few can at some point be observed in CIS

20. The lone
Inventor
< 1920
Closed Innovation
(R&D lab)
1920-1980
Edison
Franklin,
patents
Goodyear
Diesel
Fahrenheit
General Electric
Philips
IBM
Open
Innovation
1980-
Chesbrough
Intel
Apple
Dominant innovation paradigms
Trends: Education, tools, Web
Distributed
Innovation
???
Consumers,
Communities
7: Consumer innovation is increasing
Von Hippel