Democratizing Innovation Is Driving Better Business Outcomes

The concept of democratizing innovation is based on the belief that organizations must shift from a top-down, command-and-control model to a more decentralized and distributed approach to be successful. This means giving users of their products and services the ability to play a role in shaping and improving them.

Innovation has traditionally been the domain of large companies with large research and development (R&D) budgets. However, this is no longer the case. With the advent of new technologies, it is now possible for individuals and small organizations to develop innovative products and services that can compete with those of larger companies.

This has led to a more competitive business landscape and requires companies to adopt a more decentralized and distributed approach to innovation.

What is Democratized Innovation?

The term “democratized innovation” was coined by Eric von Hippel, a professor at the Massachusetts Institute of Technology (MIT), in his 2005 book Democratizing Innovation. In it, he argues that the traditional model of innovation, in which large companies invest heavily in research and development (R&D) and then bring new products to market, is no longer effective.

The fact is, with more and more technology and tools becoming available to the average consumer, people are becoming much more likely to build improvements to products on their own than purchase an upgrade. They are the ones with intimate knowledge of what they need, and underprepared corporations can easily find themselves playing catch up.

As a result, savvy manufacturers have shifted their R&D departments’ focus from finding and filling the needs of consumers to discovering the innovations that consumers have developed and commercializing them.

“A variety of manufacturers have found it profitable to shift the tasks of custom product design to their customers along with appropriate toolkits for innovation.” -Eric von Hippel

von Hippel posits that this type of innovation can “address more original or newer customer needs, to have significantly higher market share, to have greater potential to develop into an entire product like, and to be more strategically important.”

Some excellent examples of user-driven innovation in the past are mountain bikes, kite surfing, self-wringing mops, and even Stormboard.

The Ethics of Democratized Innovation

Innovation is something that’s on everyone’s minds. It’s seen as an important part of society, seeing as global spending on R&D continues to grow. Currently, it sits at about $1.7 trillion USD, and many countries have pledged to increase it substantially over the next ten years.

Innovation in the private sector relies on government-supported labs, universities, and patents. It also benefits from tax credits and policies, so there is a moral obligation to create things that will move society toward the greater good.

Consumers care more and more that the products they use are environmentally conscious, safe, and consistent with their views on human rights. Democratic values are a smart business move as much as they are a moral one.

Traditional innovation processes tend to favor the ideas and priorities of a select few individuals. Recent studies have shown that now more than ever, these investors’ and innovators’ values do not align with the general public.

Taking steps towards a more equitable innovation process will not only increase your business's ability to innovate in exciting and profitable ways. It is also a tangible way that you can show consumers you care about the things they are invested in.

User-led innovation has led to some of the most essential innovations in oil refining, chemical production, and scientific instruments. There’s no telling how far allowing your consumer base to innovate will bring your company into the future of ethical and sustainable commerce.

The Benefits of Democratizing Innovation

It has been proven again and again that the majority of new products are commercial failures. Recent studies put the number of failed products introduced every year at a staggering 95%. A major reason for this is a lack of understanding when it comes to what consumers actually want and need.

A huge benefit of democratizing innovation is that you can see how excited about an innovation early adopters already are. This way, before you invest in R&D for a new product, you will already have a taste of how it will perform on the market. A great case study for this is the swift rise in the popularity of boats designed for wake surfing.

Von Hippel identifies two distinct groups of people when it comes to user-driven innovation. There are the “lead users” and the “early adopters.”

Lead users are the people who are inventing and innovating. Research shows that anywhere from 10-40% of consumers will modify and improve upon a product in one way or another.

In the case of wake surfing boats, lead users realized early on that they would have a better-sized wake with more people sitting on the back of a boat. When they couldn’t get a large enough group of people out, they would use portable ballasts to add that weight.

Early adopters are the people who see the innovations being made by their fellow enthusiasts and jump on board. They can provide excellent foresight into how well an innovation will translate to sales.

Avid wake surfers quickly started to bring portable ballasts onto their boats, which made the sport even more accessible. It was proving to be a great way to connect with people on the water, and consumers were hungry for more ways to bring it into their summertime recreation.

Studies show that products developed by lead users end up performing wildly better than those developed more traditionally. Over the course of 5 years, they were shown to generate nearly 8 times as many sales.

One of the leading manufacturers of tow boats is Malibu. They were one of the first producers to shift some of their boat lines to adding ballast tanks for wake surfing, not unlike the ones that lead users were implementing.

Since then, they have been able to produce four new boats every year, each with 15-20 new features. Many of these features are based on similar innovations made by their customers. Their market share, and the market share of other companies who have followed this user-driven model of R&D, have skyrocketed in recent years.

How to Implement Democratized Innovation

The most important piece in the democratized innovation puzzle is networking with your user base. Trust that the innovations are already being made, your job is to find them and utilize them to create your next product.

Von Hippel recommends a process called pyramiding. This hinges on the idea that if someone is passionate about a topic, they know others who are also passionate about that topic. They will also be able to point a researcher, innovator, or manufacturer toward people in their sphere who know more than them.

This process allows companies to get in contact with the top lead users in their consumer base, and rely on them for prototypes, innovations, and marketing research.

Many lead users will build communities of people who are also interested in user innovation and shared creation. Finding and utilizing these communities is a great way to stay on the cutting edge of market trends and find out what your customers are passionate about.

You’ll also need a tool to organize this data and make it useful for your team. Find something easy to understand and can connect with any interface so that no matter what your connections give you, it can be combined in one place. We recommend Stormboard, as we like to think of ourselves as innovators, we encourage R&D and product teams to leverage our data-rich workspace for user-driven innovation to stay on top of all your needs.

Some manufacturers are finding it beneficial to provide consumers with the tools they need to innovate. An example of this is the Mario Maker series which put the challenge of level design in the hands of its players.

This game generated quite a bit of buzz and allowed Nintendo to see the types of levels and mechanics that their customers are interested in seeing.

In Conclusion

Not many manufacturers are tapping into this wellspring of diverse talent and innovation, but those that are have excellent responses to the needs and desires of their customers.

A great example is Stormboard. We collaborated with thousands of customers to pinpoint the shortcomings of other digital whiteboards and find creative and powerful solutions. By communicating and collaborating with our users, we are consistently able to find out what our customers are passionate about, what features and designs they want, and use that data to provide a secure, high-functioning product.

If you take the time to engage with the people who are already innovating, you’ll be well on your way to creating new, exciting products that your user base will flock to.

Let us know your thoughts!

Promoting the concept of democratizing innovation doesn’t mean much if we aren’t open to feedback and ideas ourselves. Don’t hesitate to reach out any time or connect with us on social media! Send us your ideas, concerns, or just give us a wish list of things you would like to see in Stormboard and help us continue to innovate!

About the author:

A programmer by trade, Nick Saraev is a freelance writer and entrepreneur with a penchant for helping people excel in their careers. He's been featured on Popular Mechanics & Apple News, and has founded several successful companies in e-commerce, marketing, and artificial intelligence. When he's not working on his latest project, you can find him hiking or painting.