Transferring process equipment innovations from user-innovators to equipment manufacturing firms

Product users are not usually thought of as product innovators. We have found, however, that 67% of the significant process equipment innovations in the two fields of semiconductor manufacture and electronic subassembly manufacture were in fact developed by equipment users rather than equipment manufacturers. Our analysis of the process by which these user innovations are transferred t o the first firm to manufacture them commercially shows three major patterns: 46% transferred by multiple user-manufacturer interactions; 21% transferred via a direct purchase order from the inventive user; 8% manufactured by a user firm for commercial sale. A final 25%, we found, were apparently not transferred, but were reinvented by the equipment manufacturing firm. Inventive user firms and adopting equipment manufacturing firms are characterized, and the implications of our findings discussed. 1.0 I N T R O D U C T I O N In previous publications (von Hippel, 1976a and 1976b), we have presented evidence that, in some industries, industrial products judged by users to offer them a significant increment in functional utility are usually invented, prototyped and first applied by users themselves, and nor by the firms which make a business of manufacturing such goods for commercial sale. The typical innovation process role played by industrial product manufacturers in such industries is ‘simply’ to become awaresomehow-of the user innovation and its value, and then to manufacture a conimercial version of the device for sale to the user community as a whole. This pattern of innovation by product users is contrary to the usual assumption that product manufacturers are responsible for the innovation process from ‘finding the need t o filling it’ via development of a responsive new product. Yet we have found that innovation by users is strongly present in the industries we have studied: The percentage of innovative products developed by users ranges from 67% to 77% of all innovative products sampled. An innovation pattern so strongly present in some industries is of research interest and may also be of potential operational utility to firms: it may well be managerially practical to reorganize a firm’s innovation activities in a manner responsive to a pattern accounting for more than two-thirds of all innovation cases. Accordingly. we have felt it appropriate to press our studies of innovation by users beyond a simple demonstration that the phenomenon exists and is pervasive in some industries. In this paper, we will report on further research into innovation by product users built upon our previously characterized (von Hippel, 1976b) sample of innovations in process equipment used in the manufacture of (a) silicon-based semiR R D Management 8, I , 1977 conductors and (b) electronic subassemblies fabricated on printed circuit boards. We will proceed by first briefly reviewing our evidence that users are indeed the source of m a t innovations in some industries (Section 2). We will next describe our research methods (Section 3 ) and then focus in turn on each of the three major elements involved in the transfer of user innovations from innovating user to adopting manufacturer, viz: Characteristics of the innovative user firm (Section 4); characteristics of the process machinery manufacturing firms which are the first t o commercialize user innovations (Section 5); and, thirdly, the nature of the process by which user innovations are transferred from innovative users to the adopting manufacturers (Section 6). Finally (Section 7), we will discuss some implications of our findings regarding product innovation by users and its transfer, for firm and governmental policymakers. 2.0 I N D U S T R I A L PRODUCT I N N O V A T I O N B Y U S E R S A N O V E R V I E W We have termed a pattern of innovation activity ‘user dominated’ if it is the initial user of an industrial product who: -perceives the need for the product innovation; -conceives of a solution; -builds a prototype device; -proves the value of the prototype by using it; -diffuses (intentionally or unintentionally) detailed information on the value of his ‘homemade’ device and on how it may be replicated to other potential users and to firms which might be interested in manufacturing the device on a commercial basis. Only when all of the above has transpired does the first commercial manufacturer become active in the innovation process. Typically, the manufacturer’s contribution is then to: -Perform product engineering work on the user’s device to improve its reliability, convenience of operation, etc. (While this work may be extensive, it typically affects only the engineering embodiment of the user’s invention, not its operating principles); -Manufacture, market and sell the innovative product. Schematically, the process may be envisioned as in Figure 1. As an example of such a ‘user dominated’ innovation process, consider the innovation history of ‘wire wrapping’. Wire wrapping is a means of making a gas-tight, reliable electrical connection between a wire and a terminal without the use of solder. It has great advantages over soldering in speed, and also allows one to 13 14 E R I C V O N H I P P E L