Eric von Hippel (born August 27, 1941) is an American economist and a professor at the MIT Sloan School of Management, specializing in the nature and economics of distributed and open innovation. He is best known for his work in developing the concept of user innovation – that end-users, rather than manufacturers, are responsible for a large amount of innovation. In 1986 he coined the term lead user to describe this phenomenon.
Eric von Hippel is the son of the Arthur Robert von Hippel, a material scientist and physicist who was also a professor at MIT. His mother was Dagmar Franck von Hippel, a daughter of James Franck, a German physicist who won the 1925 Nobel Prize for Physics with Gustav Hertz "for their discovery of the laws governing the impact of an electron upon an atom." His great-uncle is the German ophthalmologist Eugen von Hippel.
von Hippel has been awarded the EU Innovation Luminary Award (2015), the Schumpeter School Prize (2017), and the Portugal Medal of Science (2020). He is a member of the advisory board of Patient Innovation, a nonprofit, international, multilingual, free venue for patients and caregivers of any disease to share their innovations.
Early life Eric von Hippel grew up in suburban Weston, MA with his parents, three brothers, and one sister. In his early years, Eric attended public school within the town, but then moved on to the Cambridge School of Weston – a private progressive school – for 8th grade, as well as his later years. Even as a young child, outside of the classroom, one of Eric's favorite pastimes was to try to create and invent new things. Much of his inspiration came from his father, Arthur Robert von Hippel, who was also a professor at MIT.
Education For his undergraduate degree, Eric von Hippel attended Harvard College. In an interview with Eric, he stated that he chose Harvard over MIT for the opportunity to pursue Liberal Arts. His decision to major in Economics came after he explored courses in Biology and History, and found that neither was particularly the right fit for him. After pursuing several inventions post undergraduate, Eric returned to school for his master's degree in Mechanical Engineering at MIT. From there, he went on to start his own company, worked at management consultant McKinsey and Co., and eventually studied at Carnegie Mellon University for his Ph.D. in Innovation.
Degrees University of Vaasa Ph.D. 2018 (Hon) Hamburg University of Technology Ph.D. 2013 (Hon) Copenhagen Business School Ph.D. 2007 (Hon) LMU Munich Ph.D. 2004 (Hon) Carnegie Mellon University Ph.D. 1974 Massachusetts Institute of Technology S.M. 1966 Harvard College B.A. 1964
Major works
Von Hippel has published three books to date. All are published under Creative Commons licenses, and electronic copies can be obtained by anyone at no cost. These books are titled The Sources of Innovation (1988);von Hippel, Eric (1988) The Sources of Innovation (New York: Oxford University Press) (2) Democratizing Innovation (2005);von Hippel, Eric (2005) Democratizing Innovation, Cambridge, MA: MIT Press and Free Innovation (2017).von Hippel, Eric (2017) Free Innovation MIT Press, Cambridge, MA
Major topics covered in these books and also in many research articles follow.
Innovation by lead users
User innovation occurs when individuals or firms that actually use a product or service develop what they need for themselves. This is in contrast to producer innovation, where firms develop products for sale to users. Eric von Hippel was one of the first to explore this phenomenon in depth.Harhoff, D. and Lakhani, K. (2016). Revolutionizing Innovation: Users, Communities, and Open Innovation. Cambridge, MA and London, England: MIT Press He found that innovation by users differed from innovation by producers in a number of important ways. For example, products developed and sold by producers are typically intended to profitably serve the average needs of a wide range of people, and therefore may fit the needs of specific customers only approximately. In contrast, users develop or modify products to fit their own needs very precisely.
von Hippel coined the term "lead users" to describe innovating users with needs that are ahead of the general market.von Hippel, Eric (1986) "Lead Users: A Source of Novel Product Concepts," Management Science 32, no. 7 (July):791-805. Lead users are a very important source of innovative progress because they often pioneer - acting earlier than producers to develop important new types of products and applications. Being innovation pioneers pays for lead users because they innovate only to serve their own needs. For this reason, they need not concern themselves with whether others will also want what they are developing for themselves. In contrast, producers must wait for evidence that there is a general and profitable market to be served before they can justify investing in a new type of innovation. For example, mountain bikes were developed by individuals who simply wanted to bike down mountains for fun, and so invented the sport of mountain biking for themselves. Bike producers stood by, simply watching and waiting for years until the extent of the market became clear. Finally, after the new sport had spread to hundreds of enthusiasts who participated by building their own "clunker" mountain bikes, producers finally entered the new market with the first commercial mountain bike products.Buenstorf, G. 2003. Designing clunkers: Demand-side innovation and the early history of the mountain bike. In Change, Transformation and Development, ed. J. S. Metcalfe and U. Cantner. Springer.
Studies of 1,678 innovations in nine industries find that lead users were the pioneering developers of 54.4% of those judged most important over time.Bradonjic, Philip, Nikolaus Franke, and Christian Lüthje (2019). “Decision-makers’ underestimation of user innovation” Research Policy, Vol 48, No 6, July, Pages 1354-1361. User innovation activity appears to be present in all fields in which users have an interest, ranging from home cleaning equipment to medical devices. For example, a study of 500 patients with chronic diseases found that 8% of these individuals or their informal family caregivers had developed solutions that were both valuable to themselves, and novel to medical practice. Innovation development by users includes services as well as products. For example, in a study of the sources of important retail and commercial banking services, it was found that about half were first developed by users.Oliveira, Pedro and Eric von Hippel (2011) “Users as Service Innovators: The Case of Banking Services” Research Policy, vol. 40, Nr 6, pp. 806-818. Lead user innovation also is prominently present in "low-tech" as well as more technologically sophisticated fieldsHerstatt, C., & Hippel, E. von (1992). From experience: Developing new product concepts via the lead user method: A case study in a "low-tech" field. Journal of Product Innovation Management, 9(3), 213-221.
Lead user identification has become an important method used by companies to identify the newest user-developed innovations of potential interest to their customers. The method first developed for lead user identification, and still often used today, is called pyramiding. It centrally involves a systematic networking process in which a searcher sequentially contacts and interviews experts who may know of lead users who have developed valuable innovations.von Hippel, Eric, Nikolaus Franke, and Reinhard Prügl (2009) ““Pyramiding”: Efficient Identification of Rare Subjects.” Research Policy No. 38, pp 1397-1406. More recently, artificial intelligence methods have been developed to economically screen massive amounts of user-generated content posted on the internet to identify valuable user-developed innovations.von Hippel, Eric and Sandro Kaulartz (2020) „Next-generation consumer innovation search: Identifying early-stage need-solution pairs on the web” Research Policy (Accessed on Science Direct, Sept 10, 2020, Open Access)
Free Citizen Innovation Eric von Hippel and his colleagues have conducted a series of national surveys to identify the amount and importance of innovation being developed by consumers for their own use. These nationally representative surveys have been conducted in ten nations to date. An important, top-level finding from these studies is that the level of household sector innovation development by consumers, thought in Schumpeterian economics to be minimal, is in fact massive in scale. The fraction of citizens innovating for their own use ranges from 1.5% in China, to 5.2% in the US, to 9.6% in Russia. In aggregate across the 10 nations surveyed to date, 65 million citizen innovators - consumers - have been documented to be spending tens of billions of dollars per year to develop novel products for themselves. A second major finding is that more than 90% of the innovation developments by citizens are "free" - freely revealed by their citizen-developers to both peer consumers and commercializing producers without any intellectual property protections. Free citizen innovators are willing to openly reveal their innovation designs because they justify their development costs in terms of direct "self-rewards" they gain from innovating rather than from sales of their innovations to others.Raasch, Christina and Eric von Hippel (2013) “Innovation process benefits: The journey as reward” Sloan Management Review (Fall) pp 33-39 These self-rewards importantly include benefits from personal use of their innovations, plus the learning and enjoyment they gained by engaging in the innovation development process. The remaining 10% of household sector innovators are consumer-entrepreneurs. These individuals do hope to commercialize their innovations and so generally do not freely reveal their developments.von Hippel, Eric (2017) Free Innovation MIT Press, Cambridge, MA, Chapter 2.
Further important findings from the ten national surveys include that the rate of citizen innovation is significantly positively correlated with both citizen education and citizen income.Chen, Jin, Yu-Shan Su, Jeroen P.J. de Jong, Eric von Hippel (2020) “Household Sector Innovation in China: Impacts of Income and Motivation” Research Policy Vol 49 Also important to note is that user innovators develop different types of innovations than do producers.Riggs, William and Eric von Hippel (1994), "The Impact of Scientific and Commercial Values on the Sources of Scientific Instrument Innovation," Research Policy 23 (July): 459-469. This has led to the observation that producers and users are enacting a division of labor in the innovation process not previously documented. It has been proposed that innovation policy should be adapted to take this into account.Gambardella, Alfonso, Christina Raasch, and Eric von Hippel (2016) “The user innovation paradigm: impacts on markets and welfare” Management Science http://dx.doi.org/10.1287/mnsc.2015.2393
The implications for national economies of large-scale citizen innovation in the household sector of national economies - "Household R&D" - has been explored only in the case of the US to date. Household R&D is the dedication of household resources to creating a product or process that will generate a service flow in the future. Sichel and von Hippel find that household investment in R&D in the US was more than 11 percent of R&D funded by the private business sector in 2017, and over half of what businesses spent on R&D to develop new products for consumers. If household R&D were judged to be in scope for GDP, US GDP would have been 0.2 percent higher in 2017. The authors conclude that household R&D is important and warrants much closer attention in future.Sichel, Dan, and Eric von Hippel "Household Innovation and R&D: Bigger than You Think" NBER Working Paper # w25599 and Review of Income and Wealth, forthcoming 2020.