Abstract
Innovation is critical for firm success, including forest sector firms. However, historically forest sector firms have focused on process over product innovations. Additionally, research shows that forest sector firms often fail to have a structured new product development (NPD) process. The purpose of this work is to illustrate use of the lead-user method to identify user-lead ideas for innovation within the wood-window value chain, thereby demonstrating the potential of a modified lead-user approach as a NPD tool for the forest industry. Personal interviews with 22 individuals were conducted with sales agents, installation experts, homebuilders, and architects. Findings outline opportunities for the introduction of new products/services, thereby demonstrating the value of relying on lead-users for identifying potential products. This study also highlights the challenges associated with the lead-user methodology, including the varying definitions of a lead-user and the subjective nature of categorising someone as a lead-user.
Introduction
Globalisation and continual advancements in technology have caused the U.S. economy to evolve from being information-based to innovation-based (National Innovation Initiative (NII) 2004). This change in the orientation of the U.S. economy has led to an increased focus in industry, academia and society on understanding and promoting innovation. Since innovation is increasingly seen as an essential factor for economic development (Dodgson, Gann and Phillips 2014; Grunert et al. 2008) and firm-level performance and competitiveness (Dobni 2010, Andrew, Sirkin, Haanaes and Michael 2007, Välimäki et al. 2004), forest industry companies must focus in this area, especially with respect to new product development (NPD).
The forest sector is generally perceived as having a conservative culture and is often considered as an industry resistant to change (Nybakk, Hansen, Treu and Aase 2015; Hansen, Juslin and Knowles 2007). Still, industry managers clearly recognise that the nature of the industry is changing and that companies must take major steps to increase innovativeness (Hansen et al. 2007). Previous research has revealed that the industry as a whole focuses primarily on process innovation while placing less emphasis on other types of innovation (Hansen 2014, Knowles, Hansen and Shook 2008, Schaan and Anderson 2002). Findings also indicate that companies are neither particularly systematic in their approach to NPD nor do they typically carry out detailed marketing research as part of NPD efforts (Crespell, Knowles and Hansen 2006, Hansen 2006). For further insights regarding innovation-focused research in the sector see Hansen, Nybakk and Panwar (2014).
Competitiveness in modern markets is closely tied to NPD practices, with the highest performing companies being those that are most efficient in bringing new products and/or services to market (Han, Kim and Srivastava 1998, Hurley and Hult 1998, Hansen et al. 2010). Increased NPD within the forest industry is, therefore, a desirable development and requires firms to adopt specific NPD tools and place more value on systematic approaches. In order to facilitate this change, practical examples of the use of NPD tools and the potential benefits of adoption must be provided to industry managers (Hansen and Bull 2010).
Despite significant growth in academic work focused on user-driven innovation (Franke 2014), there is little work specific to the forest sector (Fell, Tokarczyk and Hansen 2007) and few practical examples of work specific to the lead-user method (Franke 2014). In this work, we illustrate a modified lead-user approach that can be used to identify innovation opportunities. Our illustration is based on the wood window market as past work has shown application of the method in the wood sector (Fell et al. 2007). We use semi-structured interviews with 22 individuals in the wood window value chain to pursue one primary objective: demonstrate the potential of a modified lead-user approach as a NPD tool for the forest industry. By demonstrating the method, we also identify multiple potential innovations and unmet customer needs in the wood-window value chain.
In the remainder of this manuscript, we provide an overview of the lead-user concept, its use in NPD, and how that differs from conventional NPD practices. We then provide an extensive explanation of the approach taken in this study to illustrate use of the lead-user method. Our results are focused on both the ideas expressed by lead-users for innovations as well as insights regarding the potential use of the lead-user method in NPD in the forest sector. Finally, we provide conclusions outlining the two primary outcomes of the work.
Background
Using lead-users in product development
Considerable extant work documents the role of users in product innovation (e.g. Bogers, Afuah and Bastian 2010; Baldwin, Hienerth and Von Hippel 2006, von Hippel 1986). In fact, from 10 to nearly 40% of users engage in modifying or developing products (von Hippel 2005). Studies of these innovators, both individuals and firms, reveal them to be ‘lead-users’. Lead-users are defined as those individuals or firms within a user population who (1) are at the leading edge of important trends, i.e. are presently experiencing needs that will later be experienced by many users, in the market place of interest and (2) anticipate realising relatively high benefits from obtaining a solution to their needs and as a consequence may innovate (von Hippel 2005, von Hippel 1986).
The definition of a lead-user has two dimensions. The first dimension, being ahead of important market place trends, is expected to predict the commercial attractiveness of innovations (von Hippel 2005, von Hippel 1986). The theory of innovation diffusion states that some users, i.e. innovators, will regularly adopt innovations before other users in the market place (Rogers 2010). These innovators are therefore the best predictors of what will be needed later by the majority. The second dimension of the lead-user definition, the high expectations of benefits, derives from research into the economics of innovation. The economics of innovation serves as an indicator of the probability of innovation. Previous research of industrial product and process innovations show that the more an individual expects to benefit from a needed innovation, the greater investment he or she will have in obtaining a solution (Franke, von Hippel and Schreier 2006).
Traditional product development versus lead-user concept generation
Traditionally, product development begins with marketing researchers studying users within the target market in order to ascertain unfulfilled needs. This information is then provided to in-house developers, who are charged with developing a product that satisfies these needs (Crawford and Di Benedetto 2006). Marketing researchers use methods such as surveys, focus groups, etc., to collect information about the needs and wants of the ‘average’ user. The average user, often considered to consist of the early and late majority of adopters, typically represents the largest proportion of the market population (Rogers 2010). The rationale behind addressing the needs of average users is logical since average users represent the largest portion of the market population. On the other hand, there are limitations to the information gained from ‘average’ users. Innovations derived from these users tend to be incremental rather than breakthrough improvements (Lilien et al. 2002). Moreover, products suggested by these users are frequently inefficient and ultimately not what consumers want (Ulwick 2002). This is a result of the user not recognising their true need and instead reporting symptoms of the real need (Ulwick 2002). Finally, traditional marketing research asks the users purely for their needs, which leaves generation of the product solely up to the firm's development team. The drawback is that the product is based on how the development team interprets the reported customer needs, a perception which may or may not be what the customer intended (Crawford and Di Benedetto 2006).
While traditional marketing researchers study the ‘average’ user, they regard individuals at the leading edge of the market, or at the lagging end, as outliers and not of interest (von Hippel 2005). It is important to investigate the ‘outliers’ at the leading edge of the market (von Hippel 2005) since products developed in collaboration with lead-users have demonstrated a higher rate of new product success (Gruner and Homburg 2000).
Methods
A modified lead-user approach (explained below) was used to determine opportunities for innovation in the wood window industry. In order to capture unmet needs and innovative ideas from across the wood window value chain, lead-users were selected from several points in the value chain from supplier to specifier (Fig. 1).

Wood window value chain
Personal interviews
Data for this study was collected through personal interviews of lead-users in the wood window value chain. Interviews were conducted in 2009 and all interviews were conducted by one of the authors. Lead-users are generally willing to participate as they expect to benefit significantly from study outcomes (Herstatt and von Hippel 1992). Additionally, lead-users typically want to share their expertise. An advantage of the personal interview is that it enables the researcher to explore the respondent's attitudes, motives, and beliefs in more depth (Barriball and While 1994) than through other methods. Furthermore, respondents often provide answers to questions that the interviewer did not ask or did not think to ask.
Interviewing lead-users
The primary characteristic of the lead-user marketing research method as developed by von Hippel (2005, 1986) that distinguishes it from other methods is the focus on unique users that are ahead of the general market place. The method consists of four primary steps.
The researcher must identify what characteristics a lead-user in the product and or market segment of interest must possess. The researcher identifies actual lead-users who fit these criteria. The researcher brings the lead-users together with in-house developers and engineers to engage in a group problem-solving session(s). The research and development team tests whether the concepts generated by the lead-users will also be valued by average users in the target market.
In this study, a modified lead-user approach was used where steps 1 and 2 were followed as described by von Hippel (2005, 1986). However, for Step 3, rather than bringing the lead-users together with R&D and marketing personnel from a company to engage in a group problem-solving session(s), we spoke with each lead-user individually. This was done because rather than trying to assist one company in developing new products, this study was designed to demonstrate a research tool. Step 4 was considered to be beyond the scope of this study and was not performed.
Interview protocol development
Semi-structured interview protocols were developed for each of four user categories in the wood window value chain: sales agents, installation experts, homebuilders, and architects. One characteristic of a lead-user is expert knowledge of a particular product and market. The typical lead-user is very willing to share this expertise, often deviating from the study questions. Therefore a structure to redirect and keep the discussion relevant is important. Finally, the research involved in developing the protocol ensured that the interviewer would be perceived as a knowledgeable participant in a meaningful discussion.
Because the goal of implementing the lead-user method was to determine new product ideas to satisfy user needs not currently met by existing wood window products, the interview protocols included a series of questions designed to approach this goal from multiple directions. The interview protocol was structured into two sections. Questions for all respondents: Respondents were asked to identify what factors of wood windows, e.g. quality, brand, function, service, etc., customers consider when making the decision about which window to purchase. Second, respondents were asked to identify what factors of wood windows they felt were the most important for customers to consider when making a purchase decision. The motives behind these questions were to ease respondents into the discussion and to start them thinking about specific product features and where the most common window needs might exist. All respondents were asked to address questions about product innovations. The first product innovation question asked respondents what companies or products currently on the market they found to be particularly innovative or exciting. The key purpose of this question was to focus respondents’ thoughts on innovation as a lead-in to the next question: if they were to design a wood window, what features would they add or subtract from what is currently available. Questions for User Categories: Questions in this category addressed problems encountered and solutions arrived at by users that were specific to their position in the wood window value chain.
Data collection
Portland, Oregon was selected as the area within which to collect data based on its proximity to the research team. Portland has a population of approximately 550 000.
Sample selection
The lead-user method is based on the concept that the best understanding of new product or service needs comes from a few ‘lead-users’ (Herstatt and von Hippel 1992). Consequently, units of analysis were selected based on their identification as individuals who exhibited the identified lead-user characteristics in the wood window industry. The identified lead-user characteristics employed in this study were: extensive consumer knowledge and use experience in the wood window market, creativity (i.e. a willingness to try new products or try existing products in new usage situations), an innovative personality (i.e. a predisposition towards new and uncertain situations), and a propensity for adopting new products and trends faster or more frequently than average users (Schreier and Prügl 2008).
Each of our four user categories included sub-categories. For sales agent these sub-categories were full-service retailer (i.e. sell and install windows), do-it-yourself retailer (i.e. sell windows, company may or may not be hired to install the window), resale/millwork (i.e. company both resells products from manufacturers and manufacture their own custom product), and distributor (i.e. company is responsible for selling products from one specific company to a region). For homebuilders there were two sub-categories, single-location and multiple-location. For architects, there were also two sub-categories, self-employed and firm. In total there were nine identified user categories.
Because of our qualitative approach and the focus on illustrating the lead-user method as a tool, we set a simple goal of interviewing two individuals from each category shown in Table 1. A total of 22 individuals were interviewed, 19 of these in individual interviews and 3 of these in a group interview.
Interviewees categorised by user category
This was a group interview consisting of three people from the same firm.
We employed a purposive sampling strategy, including use of ‘snowballing’. The term snowballing refers to the process of identifying additional respondents through the recommendations of previous respondents (Miles, Huberman and Saldana 2014). There were two starting points. One, we contacted manufacturers and asked for the names of local retailers who fit the specified lead-user criteria (lead-user criteria are provided below), and two, we contacted a representative of the Oregon Remodeler's Association and asked for the names of local builders and architects who fit the specified lead-user criteria. These individuals were then contacted and in turn asked to recommend the names of other individuals fitting our criteria.
Information about these individuals as lead-users was obtained via peer-recognition, journal/magazine articles, company websites, and interview responses. The primary characteristic used to identify lead-users in this study was a demonstration of extensive consumer knowledge and experience in the wood window market. This was determined both by peer evaluation and impressions over the course of the interview. Other lead-user criteria were also considered, such as an innovative personality and the propensity for adopting new products. These characteristics were determined based on statements made by the user over the course of the interview, including the discussion of specific new products and trends the user either had or was planning on to utilise, and their ideas about new products or services. Judging whether or not interviewed individuals possessed these lead-user characteristics was based on interpretation of the researcher.
Prior to data collection, the interview protocol was pre-tested on one individual, outside the sample, who possessed extensive window installation experience. Minimal changes were made to the protocol based on pretesting. All interviews were digital audio-recorded unless the situation made it impossible. Audio recording interviews allowed more accurate retention of interview data and more engagement in the conversation (Yin 1994). Additionally, recordings provide extensive textual data for use in analysis. In instances where it was not possible to record, extensive field notes were taken for use in data analysis. Audio recordings were captured for 19 of the 22 respondents. These recordings were verbatim transcribed and compared to field notes. Transcripts of the audio recordings were used for data analysis. After each interview, the researcher summarised what was learned via field notes. This constant summary method was used to guide further interviews. New issues that arose during initial interviews were incorporated into later interviews.
Data analysis
The overall study was conducted using well-accepted qualitative methods similar to those in other forest business research settings (Nybakk et al. 2015; Stendahl, Roos and Hugosson 2007, Bull and Ferguson 2006), including use of NVivo qualitative analysis software. However, results provided here are based only on product/service ideas expressed by interviewees, which were then categorised by the researcher. The overall approach to data analysis meant multiple readings of each transcript during which product/service ideas were tagged. After multiple passes through the data an inventory of ideas expressed by lead-users resulted (Table 2). Miles et al. (2014) provide highly detailed recommendations regarding maintaining reliability and validity in qualitative research. Our primary means of assuring consistency was careful and systematic use of the interview protocol. Given the simple approach (identification of ideas), there is limited risk regarding threats to reliability and validity from our data analysis.
New product ideas identified from interviews with lead-users
Results
The following results focus on the new product ideas expressed by study respondents. Through these new product ideas, we illustrate the lead-user method and its potential usefulness in the forest industry.
User-lead ideas for innovations
Respondents had a variety of ideas for innovations, ranging from service issues such as drag and drop images of windows on websites for use in Revit, a computer program used by architects to create three-dimensional models, to adaptable grid designs for replacement. Table 2 shows the complete set of innovation ideas mentioned by respondents and indicates that there is significant interest in more options for wood windows. Respondents mentioned wanting more options with all aspects of the windows including profiles, sizes, hardware, materials, and cladding.
Potential for applying a modified lead-user approach
We believe our modified lead-user approach illustrates a marketing research tool that can be effectively applied in the forest products industry to help manufacturers identify unmet customer needs and new product or service ideas. von Hippel (2005) documents that innovations from individuals with higher lead-user characteristics tend to be more attractive in the market place. The basic premise of the lead-user approach is that it provides better insight into the potential product developments that a firm might introduce into the market place. However, the method is also challenging and marketing professionals in the industry should understand these challenges.
A key challenge to the lead-user method is separating lead-users from average users. This is partly because the traditional definition of a lead-user is someone who tends to quickly adopt new products and trends and who expects to benefit greatly from doing this (von Hippel 1986) is a rather broad statement. Even the detailed characteristics presented by Schreier and Prügl (2008) leave room for interpretation. Therefore, there is a heavy reliance on the subjective judgement of the interviewer to determine whether or not an individual meets the criteria. Additionally, the characteristics of a lead-user are not always apparent until after an interview has taken place. New tools have been developed linking ‘lead-userness’ to individual creativity that may help in identifying lead-users (Faullant, Schwarz, Krajger and Breitenecker 2012).
In this study, to initially identify individuals, sources external to the users were consulted, including industry journals, professional associations and peers. On the positive side, these resources were able to provide opinions of the potential lead-user qualities of individuals and companies from a peer perspective. Peer recognition of an individual or company as a lead-user is useful as peers are more likely to have extensive knowledge of the practices and propensities of a company or individual to display lead-user characteristics. However, most people who were contacted were not familiar with the term lead-user and attempts to explain this concept did not always meet with success. Furthermore, peers are not always willing to recognise the positive aspects of other companies who frequently are perceived as rivals. On the other hand, if two or more of these sources recommended the same individual or company as being leaders in the market or particularly knowledgeable this lent support to the idea of them being a lead-user. Other research performed to identify potential lead-users consisted of searching the internet, careful reading of company websites, and occasionally consulting industry journals to determine (a) if the potential lead-user was applicable to this study in terms of their use of wood windows and (b) how they viewed themselves in terms of target markets and company positioning. These sources were used to get a feel for the relevance and lead-userness of the company or individual. After completion of this study, it can be said that these external and internal sources were fairly good tools for judging the knowledge and expertise of the individuals in the market. However, this is only one aspect of a lead-user. As a result, judging a potential respondent on what can be referred to as a ‘gut feeling’ may not accurately define a lead-user. Consequently, we may have omitted some individuals who were lead-users and incorporated some who were not.
Another challenge of lead-user research is determining to what degree a potential respondent must exhibit lead-userness in order to be considered a lead-user, primarily, whether or not they must have a high degree of all lead-user characteristics. All of the respondents queried in this study fit the knowledge criteria of a lead-user, but knowledge is only one aspect of what makes a lead-user. The other characteristics of a lead-user, the propensity to put one's self-in new situations and take risks in adopting new products and trends first, could not be determined without speaking to the respondents. From the personal interviews, varying degrees of lead-userness were observed. Table 3 shows how we rated the individuals in this study based on the four lead-user characteristics used in this research and our overall judgement of the individuals as lead-users. Any of those users deemed to be low (L) on lead-userness likely do not represent true lead-users. In addition, those judged as medium are also questionable in their lead-userness. This experience illustrates the difficulty in effectively identifying lead-users.
The four specified lead-user characteristics and the level to which respondents are judged to possess each (H = high, M = medium, L = low). Lead-userness refers to the authors’ overall opinion of the degree to which the user is a lead-user
This was a group interview, but for the purposes of this table it is listed as a single lead-user as all of the individuals in this interview showed the same degree of lead-userness for each of the characteristics.
Installers illustrate well the varying degrees of lead-userness. While they are necessarily very knowledgeable about the product and market trends, they were not the most likely to adopt new products. Their work relies on doing exactly what the homeowner, contractor or architect tells them to do in terms of what product to install and in following manufacturer installation instructions for warranty purposes, leaving very little room for innovation in this framework. On the other hand, architects or homebuilders who are constantly looking for new ways to suit the ever changing needs of client lifestyles, or to create architectural masterpieces, are more likely to seek out new products and trends, but they might be less knowledgeable about specific products or uses. In some cases it was quickly evident if someone was clearly a lead-user, while in others it remained questionable. In some cases an individual exhibited extensive consumer knowledge and a desire to incorporate new and innovative products in a home design, however, they were hesitant to use new products because they feared that these new products might not be fully tested. Morrison, Roberts and Midgley (2004) suggest that lead-userness may be more of a continuous variable and introduce a construct they call ‘leading edge status’. However, we expect this approach suffers from similar challenges to those we employed.
It should be noted that while the stated lead-user parameter in this study was lead-users of wood windows, this actually encompassed several lead-users categories, i.e. sales agents, installation specialists, homebuilders, and architects. Individuals were therefore judged on their lead-userness based on their role in the wood window value chain. For example, in determining their propensity to adopt new products and/or trends, installers were judged based on their use of new tools and installation techniques, while architects were judged based on their incorporation of new window products in designs.
The challenges in identifying lead-users are the reasons why in this study individuals of varying degrees of lead-userness were included. While most individuals interviewed for this study had new product ideas, a few had never thought of an idea for a new product. Product innovation was one of the key lead-user characteristics for which this research was looking. If an individual failed to exhibit this particular characteristic it then was a judgement call whether or not the respondent had enough other lead-user characteristics to still be included in this study.
Although earlier research indicates that because of their level of expertise in the subject, lead-users tend to want to share their knowledge (Franke 2014, Urban and Von Hippel 1988), we encountered the problem of individuals not wanting to share information they considered to be proprietary. It is a competitive advantage for companies to introduce new products. For this reason, sharing proprietary information, even for the sole purpose of academic research, posed a challenge in convincing potential respondents to participate. One potential respondent stated point blank that they could not participate because the sharing of product ideas could harm their company. Other potential respondents might have refused to participate for this same reason without informing us of their logic. Even individuals who did choose to participate may have elected not to fully disclose their ideas owing to this same constraint. This unwillingness to share concept ideas might have led the researcher not only to judge the lead-userness of the individual incorrectly, but also may have not led to the best study results.
The onerous process of identifying an individual as a lead-user is a drawback to the lead-user method. It is likely that marketing professionals in the industry would have more pre-existing knowledge of individuals and companies within the market and could significantly reduce the challenge of identification. Lead-user research is more challenging than selecting average users from a market to interview. However, the quality and depth of information garnered from lead-user research, as evidenced by this study, makes it a worthwhile method to pursue.
Conclusion
Our results illustrate that the lead-user method is a viable tool for forest sector research. Given the lack of similar research specific to the forest sector, this work is an important contribution to the field. The two key insights to be gained from this research are the challenges in identifying lead-users and the many opportunities for products and services in the window market that manufacturers are not currently exploiting. While identifying lead-users and implementing the lead-user research method is a challenge, the knowledge to be gained from these individuals cannot be overlooked. Nearly every individual interviewed had at least one idea for innovation. These concepts, particularly those mentioned by multiple individuals, illustrate not only specific products and services of interest to the users, but also the categories of products or services that are most relevant to users. Accordingly, the lead-user approach shows considerable promise for forest sector firms wishing to identify product/service innovations.
