Lead users, suppliers, and experts: the exploration and exploitation trade-off in product development

Abstract

We develop a theoretical framework that explains how lead users, key suppliers, and product experts play into the exploration and exploitation trade-off, and how their changing roles support the development of their ideas into marketable solutions. We explain that close collaboration with product experts, suppliers and lead users supports exploitation, as it tends to enable the development and improvement of existing products. Irregular or non-systematic collaboration with lead users, on the other hand, supports exploration by providing ideas for entirely new products. Furthermore, our theoretical framework argues that the changing role of the external agents increases their understanding of the products they help to develop, supporting a process of exploration and exploitation. This learning process supports the technical abilities of the lead user group in particular, who can then use their newly acquired knowledge to further modify existing products and introduce new ones to meet their needs. At the same time, this process educates internal staff, suppliers, and product experts about the use of the product, which then enhances their ability to develop new and marketable ideas. Our proposed theoretical model has several implications for lead user theory and for product development managers seeking to enhance the development of new products and solutions, which we discuss at the end of the paper.