This paper explores the importance of applying a user-producer perspective to innovation. It presents analytical and normative propositions, focusing on the relationships and interactions between users and producers of innovations. The paper is based on the work of the IKE group at Aalborg University, which has been studying industrial development, international competitiveness, and technical change since 1977. The approach is eclectic and not mainstream, drawing from various schools of thought, including French and UK-based theories. The paper discusses the interaction between technical opportunities and user needs, the separation of users from innovating units, and the relationship between innovation and production. It also examines the role of information, the stability of user-producer relationships, and the impact of market structures on innovation. The paper argues that perfect competition is not effective in promoting product innovations, as it leads to weak incentives and limited information exchange. Instead, organized markets with elements of cooperation and hierarchy are more effective in fostering innovation. The paper also highlights the importance of user-producer relationships in the context of product innovation, emphasizing the need for cooperation, information exchange, and mutual trust. It discusses the limitations of vertical integration and the role of organized markets in promoting technical change. The paper concludes that user-producer relationships are crucial for innovation, and that the stability and structure of these relationships significantly influence the rate and direction of technical change. The paper also addresses the challenges of assessing the optimal pattern of innovation and the need for policy recommendations based on an analysis of user-producer relationships.This paper explores the importance of applying a user-producer perspective to innovation. It presents analytical and normative propositions, focusing on the relationships and interactions between users and producers of innovations. The paper is based on the work of the IKE group at Aalborg University, which has been studying industrial development, international competitiveness, and technical change since 1977. The approach is eclectic and not mainstream, drawing from various schools of thought, including French and UK-based theories. The paper discusses the interaction between technical opportunities and user needs, the separation of users from innovating units, and the relationship between innovation and production. It also examines the role of information, the stability of user-producer relationships, and the impact of market structures on innovation. The paper argues that perfect competition is not effective in promoting product innovations, as it leads to weak incentives and limited information exchange. Instead, organized markets with elements of cooperation and hierarchy are more effective in fostering innovation. The paper also highlights the importance of user-producer relationships in the context of product innovation, emphasizing the need for cooperation, information exchange, and mutual trust. It discusses the limitations of vertical integration and the role of organized markets in promoting technical change. The paper concludes that user-producer relationships are crucial for innovation, and that the stability and structure of these relationships significantly influence the rate and direction of technical change. The paper also addresses the challenges of assessing the optimal pattern of innovation and the need for policy recommendations based on an analysis of user-producer relationships.