Companies innovate by making incremental product improvements inspired largely by market research that looks to fill needs. New product development of the future, it can be argued, will actually be accomplished by communities of user groups feeding cool stuff they want to use into manufacturers who make it happen. And now, Denmark has become the first to say it will pay incentives to companies who align with their open innovators rather than in-house R&D to create new products. Expect EU partners to follow.

Over the last 30 years, market-changing, mega-income producing new products have largely been created with a single market research method: find a need and fill it.

Simple.

Yes, but increasingly ineffective, says MIT/Sloan School of Management Professor of Innovation Management Eric von Hippel. His exhaustive study of multiple industries and innovations shows that in most cases, the truly ground-shaking product innovations come from the the most ignored part of the market curve: the user’s own invention.

“All markets are small and uncertain at the beginning; users experience need well ahead of manufacturers and are usually ignored by companies because they are few in number,” Dr. von Hippel just told hundreds of global business strategists attending the World Innovation Forum in New York.

Why? Because, Dr. von Hippel says, users innovate to develop something they can use the way they want to use it as opposed to companies who innovate largely when they see the potential to sell something. Products created this way include the heart and lung machine, the jogger baby stroller, the mountain bike, the Dyson vacuum cleaners, and endless software and IT systems.

ERE.net, a company that combines the best characteristics of a trade association, publisher, user-generated content community and event planning, has found the key to growth is hiring the best people, no matter what their location and using communications technologies to propel the business forward.

When David Manaster, CEO, ERE.net, founded the firm in 1998, he was living with his parents in Brooklyn, NY, and while he had a business concept that was building steam in the marketplace, he didn’t have a lot of office space to spare. ERE, which began as the Electronic Recruiting Exchange, provides an online destination for corporate and third-party recruiters to gather, post their blogs and view the posts of industry recruitment and retention analysts.

The company produces three physical conference events each year that draw upwards of 1,000 international participants each, and the buzz continues online in webcasts, discussion groups and blogs and in print in a quarterly journal or recruiting. And while today there is a small physical office in New York City, for the most part, the key team members are located around the country from Albany to Orlando to Washington state to California and parts in between.

“The first two employees I had wanted to work from their homes,” Manaster recalls, “and from there it became a matter of preference.” ERE operates in an industry well-known for retention problems. Most B2B media companies replace at least a third of their staffs each year. “It’s become a competitive advantage,” Manaster notes. “We’ve had people who wanted to move to new cities for family or lifestyle reasons. If we insisted on a physical location, we’d have lost crucial employees. To be able to keep them and to attract others with special skills, we have a lot more to offer because we don’t insist on relocation.”

No phone, email, Internet or visitors. What would occur during your period of solitude?

Last month, Starbucks closed all their U.S. stores for three hours for an employee training session. In our 24/7/365 world, this seems almost unthinkable, especially for an establishment that sells coffee — the fuel that enables us to live with little downtime.

This retail stoppage got me thinking about what life would be like if I were to shut down my operations for three hours. What could I accomplish in that time period without email, phone and visitors? Internet service would have to be suspended too, lest I become tempted to spend the time reading or watching videos.