Customers as Innovators: A New Way to Create Value By Stefan Thomke and Eric von Hippel The article discusses the shift from traditional product development to a model where customers are involved in the innovation process. Traditional product development is costly and time-consuming, as companies must understand customer needs, which can be complex and change rapidly. This process often involves multiple iterations between the manufacturer and customer, leading to high costs and delays. However, some companies have adopted a new approach by providing customers with tools to design and develop their own products. These tools, often called "tool kits for customer innovation," use technologies like computer simulation and rapid prototyping to make product development faster and less expensive. This approach has been successfully implemented in various industries, including specialty flavors, materials, and software. The article highlights the case of Bush Boake Allen (BBA), which allows customers to develop their own flavors, and GE, which provides Web-based tools for designing better plastic products. In the software industry, companies allow customers to add custom-designed modules to their standard products. Open-source software also allows users to design, build, distribute, and support their own programs. The article also discusses the challenges of implementing this approach, including the need to revamp business models and management mindsets. Companies must redefine their relationship with customers and focus on providing the best custom manufacturing. The article provides a framework for companies to adopt this approach, including developing user-friendly tool kits, increasing production flexibility, selecting the right customers, evolving the tool kit, and adapting business practices. The article concludes that the customers-as-innovators approach has the potential to transform industries by creating and shifting value at three levels: the industry as a whole, companies that implement the technology, and customers that take advantage of it. The success of this approach depends on the ability of companies to adapt and capture the value generated by customer innovation.Customers as Innovators: A New Way to Create Value By Stefan Thomke and Eric von Hippel The article discusses the shift from traditional product development to a model where customers are involved in the innovation process. Traditional product development is costly and time-consuming, as companies must understand customer needs, which can be complex and change rapidly. This process often involves multiple iterations between the manufacturer and customer, leading to high costs and delays. However, some companies have adopted a new approach by providing customers with tools to design and develop their own products. These tools, often called "tool kits for customer innovation," use technologies like computer simulation and rapid prototyping to make product development faster and less expensive. This approach has been successfully implemented in various industries, including specialty flavors, materials, and software. The article highlights the case of Bush Boake Allen (BBA), which allows customers to develop their own flavors, and GE, which provides Web-based tools for designing better plastic products. In the software industry, companies allow customers to add custom-designed modules to their standard products. Open-source software also allows users to design, build, distribute, and support their own programs. The article also discusses the challenges of implementing this approach, including the need to revamp business models and management mindsets. Companies must redefine their relationship with customers and focus on providing the best custom manufacturing. The article provides a framework for companies to adopt this approach, including developing user-friendly tool kits, increasing production flexibility, selecting the right customers, evolving the tool kit, and adapting business practices. The article concludes that the customers-as-innovators approach has the potential to transform industries by creating and shifting value at three levels: the industry as a whole, companies that implement the technology, and customers that take advantage of it. The success of this approach depends on the ability of companies to adapt and capture the value generated by customer innovation.