Customers As Innovators: A New Way to Create Value. (Notable Articles And Papers).

Stefan Thomke and Eric von Hippel; Harvard Business Review, April 2002, pp. 74-81.

This article examines a new approach to product innovation, one in which companies equip their customers with the tools to design and develop their own products. This is hardly a simple process, Thomke

and von Hippel point out; "not only must companies develop the right tool kit, they must also revamp their business models as well as their management mind-sets." With custom computer chips, for instance, companies traditionally captured value by both designing and manufacturing innovative products. As customers have taken over more of the design, companies must now focus on providing the best custom manufacturing. In other words, "the location where value is created and is captured changes, and companies must reconfigure their business models accordingly." To this end, the authors offer basic principles and lessons, including five steps "for turning customers into innovators":

1. Develop a user-friendly tool kit.

2. Retool your manufacturing operations for greater flexibility.

3. Select the first customers carefully.

4. Evolve your tool kit fast and continually.

5. Revamp your business practices/ models accordingly.