Radical Innovation in the Software Industry : Do Lead Users Take Part to the Process ?

Our research bears on the literature about customer/supplier relationship in the development of radical innovations. We discuss the concepts of lead user and toolkit introduced by Von Hippel. With the concept of "lead user", Von Hippel (1986) insists on the role that first customers play in designing innovative offers. The notion of "toolkit" (Von Hippel et Katz, 2002) is introduced to distinguish the respective roles of the innovating firm and the customers in the design process. The innovating firm develop toolkits that the lead users use to finish designing the solution that fits their needs. Our focus is on the impact of the collaboration with specific customers along innovation processes in the software industry. Software vendors face the question of how to take into account users' current and future needs to target the innovation process (Cusumano, 2004). They try to tackle the problem by involving users in the different phases of the innovation process: design, development and integration (Fichman and Kemerer, 1997). Our methodological approach consists in studying the case of a typical innovative software company : SoftCo. We analysed two projects developed for two different customers that are based on the same innovative "heart". Both projects combine an innovative text mining software from SoftCo, and an innovative knowledge base management software from KnowCo. They are aimed at "automating the creation of a knowledge base". We studied longitudinally the design and deployment of these innovative software solutions in large firms over a three-year period. We show that first customers played a fundamental role in the conception of the innovative offer, but they did not themselves develop their solution, despite the existence of a toolkit. The first customer imagined the solution, asked different software vendors to collaborate in order to develop the solution, and tried to lead the project and take part to the development of a customized part using SoftCo and KnowCo software components. The customer failed to lead the project and to take part to the development process ; a software editor had to take on the leadership for the project and actually, developed the customer's software part in working with the customer's user groups. The customer had a key role in defining of the architecture of the solution. The innovative solution is modular: made up of different software which are interfacing and independent from each other (Baldwin and Clark, 1997). This modular architecture led to multiple interactions between software vendors and users. These interactions mobilised resources at SoftCo and KnowCo but facilitated information's feedback in relation to the sub-parts of the solution (MacCormack, Verganti et Iansiti, 2001) and stimulated innovative developments. However, without this customer contribution, the innovative solution for the automated creation of knowledge base would never have existed. The evolution observed between the first and the second project lead us to put forward the hypothesis of a progressive maturation of the offer through the successive projects (architecture, toolkit). In parallel, there is a learning process on the side of the vendor of the innovative software about how to interact more efficiently with the first users. We assume that once the offer is stabilized, in a second phase, users might develop their own solutions with operational toolkits and become real lead users. Only at this phase, the emergence of a user community would lead to further innovation improvements (Von Hippel, 2005).