Living labs are increasingly facilitating new ways to stimulate innovation. They offer the possibility to catalyse how innovation can be carried out, focusing on user communities supported by information technology. However, living labs are poorly understood by the business community, in particular by small to medium companies who arguably have the potential to benefit most from accessing the services provided by living labs. This position paper sets out the context for the rising popularity of living labs, explaining how public-private- academic partnerships offer new ways or carrying out innovation activities that are increasingly user-orientated. The paper also discusses the issues and opportunities arising from this new approach.