Eric Von Hippel has his book, "
Democratizing Innovation
" published on the web under a creative commons license. The book concentrates on user-centred innovation. It studies this phenomenon quantitatively, focusing on how it manifests itself in communities and the economy.
Democratization
I often use the term "abundance era", where data networks have dropped the capital intensive nature of many pursuits to zero. So low that anyone can do it and share their output. Economic Capitalism is the process of commoditization. With the advent of computer technology and the internet reducing the cost of construction and distribution to zero for some technologies, innovation has been extremely rapid. When nanotechnology and universal replicators kick in, I expect the same will happen with manufacturing as well. My use of abundance and post-scarcity is not far off what Hippel calls "user-centric innovation";
When I say that innovation is being democratized, I mean that users of products and services - both firms and individual consumers - are increasingly able to innovate for themselves. User-centred innovation processes offer great advantages over the manufacturer-centric innovation development systems that have been the mainstay of commerce for hundreds of years. Users that innovate can develop exactly what they want, rather than relying on manufacturers to act as their (often very imperfect) agents. Moreover, individual users do not have to develop everything they need on their own: they can benefit from innovations developed and freely shared by others.By comparison the industrial era method of controlling innovation is by the manufacturer or producing creating artificial scarcity for their product or service through patents, copyrights and other protections. innovations came from lead users. Especially ones that were commercially attractive. it is because user's needs for products and services are so heterogeneous these are the markets that are being missed by mass-market manufacturers who rely on economies of scale (such as volume) to keep the cost of a product down.
In that study, an average of 3.7 market segments were specified and 54 percent of total variance was left as within-segment variation after the completion of cluster analysis. These data suggest that heterogeneity of need might be very substantial among users in many product categories.The authors studied if there was a willingness to pay to have the needs of that heterogeneous solved. They used the Apache webserver as the example.
After deflation, our sample of 137 webmasters said they were willing to pay $700,000 in aggregate to modify web server software to a point that fully satisfied them with respect to their security function needs. This amounts to an average of $5,232 total willingness to pay per respondent. This is a striking number because the price of commercial web server software similar to Apache's for one server was about $1,100 at the time of our study.This number, though high, is less than the cost for a skilled programmer to modify Apache and maintain it. The authors found that costs out-weighed the benefits. Another thing I would add, is that popular opensource software moves at a rapid pace. Adding your own patches to the software means you are out of sync with the main source repository. This means you can be left behind in functionality and security updates. With opensource software it is best when you can have your patch checked into the main trunk of the project. This gives others the benefits of your addition as well. But there is also the risk that your modification is not suitable for the project and will be rejected. We had the issue in one project where we had to develop graphs on the fly. We ended up using JFreeChart. From memory, it only had twelve colours, and we needed closer to forty. So I extended a class and added more colours that the graph could automatically draw from. Not wanting our version of that library to get out of sync with the main project, I submitted it as a patch. It was accepted, meaning that we were compatible with future versions and updates of that library. Specialization The authors make the point that users are often freer to innovate as they are not restricted by a specialization. The example of a carbon fibre manufacturer is used. That manufacturer may innovate in products that have to do with carbon fibre, from tennis rackets to aircraft wings. But an innovation that may require the use of wood will escape them. A user has no such restriction and will innovate across fields and technologies to achieve the desired result. Another issue is that users who innovate do not face the same legal risks that a manufacturer does. The legal costs and regulatory requirements make manufacturers risk adverse which hampers innovation. In the construction industry in the United States, regulatory approvals can hold up a requested building panel for up to two hundred and fifty days. This will leave construction crews stranded and idle; at great cost. Consequently it is cheaper and faster for the construction to fabricate the required panels on-site. The quality of innovation between users and manufacturers was also found to be qualitatively different. Users created more novel innovations, while manufacturers provided innovations that improved convenience or reliability. Users created solutions that enabled instruments to do new things for the first time in eighty-two percent of situations studied. The users who innovated in this manner predominantly also did it as either part of their professional background, or because it was their hobby. Opensource software is a good example of professionals innovating in their specialization outside of the manufacturing environment. One motivation for this was that people innovated to solve issues they had encountered, or been frustrated with in their professional career or hobby. It is direct innovation, from empirical experience. Sharing The authors studied why innovators are so free in sharing their innovations with others. The diffusion of this knowledge saves others having to re-invent the wheel and is a more efficient use of social resources. A study in 1983 called this phenomenon "collective invention" and traced it back to the English iron industry of the eighteenth century. The innovations of higher chimney height and increased temperature of combustion air improved the energy efficiency of the furnaces used. The professionals who came up with these innovations freely revealed their findings in meetings for professional societies. More of these instances were found as researchers focused on them. Richard Tevithick developed a new type of high-pressure steam engine in 1812, and didn't bother patenting it, instead publishing his design. Others innovated with his design, and also freely published their results and findings. This resulted in rapid diffusion. One reason for diffusion the authors found was that secrets were impossible to keep. Information on development decisions ended up in rivals hands within a year. This is partly because of the number of contractors and professionals understand the innovation in a mobile labour market. The alternative is to patent the innovation (or copyright source code), but the authors found that innovators do not think that patents are useful;
The real-world value of patent protection has been studied for more than 40 years. Various researchers have found that, with a few exceptions, innovators do not think that patents are very useful either for excluding imitators or for capturing royalties in most industries. (Fields generally cited as exceptions are pharmaceuticals, chemicals, and chemical processes, where patents do enable markets for technical information (Arora et al. 2001).) Most respondents also say that the availability of patent protection does not induce them to invest more in research and development than they would if patent protection did not exist.From my own experience with the Australian patent system, it is cost prohibitive and brings no guarantee of return. I attempted to patent a keyboard design in the early 1990s after I suffered from bad tendonitus in my fingers and hands. I created a design that took that strain of my tendons. The cost of patenting was too high. I thought like an inventor. I realize now I should have ignored the patent system and thought like a manufacturer - selling the product, not protecting it. Free revealing is often the best course of action for innovators. For instance in software development, contributing to a project can raise a developer's worth on the job market. I can attest to this, one job interview I went on was impressed with my contributions to opensource. Unfortunately the NSA put a stop to me getting that position, certain data in the job was restricted and a green card isn't the same as being a citizen. The book focuses on other benefits of free revealing, such as the business or individual earning a reputation in that area for innovation with this having flow on effects. For instance greater service work. Another is network effects. The example used is telephones. The value of a telephone increases with each one bought. The more people that can be contacted on the network increases the value of the telephone. A third advantage to free revealing is the innovation becoming a de-facto standard. U2U The book also looks at User-to-User effects. These include innovation communities and user-to-user assistance. Opensource software is used as the example. An interesting part of their research is the discovery that user-to-user assistance came from the community, as opposed to the lead innovators. I can attest to this as well. In the opensource projects I became involved in, I originally lurked on their mailing lists, before helping others as my knowledge improved, until finally contributing source code. These are necessary steps on larger projects, as becoming intimate with their design is often daunting and complex. By the same token, source contribution can be mercenary as well. There have been two other projects where I have contributed patches without becoming involved with the project at all. Both those patches were accepted. Social Welfare The study the social welfare outcomes of this style of innovation. They come to the conclusion;
Government policy makers generally wish to encourage activities that increase social welfare, and to discourage activities that reduce it. Therefore, it is important to ask about the social welfare effects of innovation by users. Henkel and von Hippel (2005) explored this matter and concluded that social welfare is likely to be higher in a world in which both users and manufacturers innovate than in a world in which only manufacturers innovate.Their studies found that user innovation improves manufacturer's success rates. Manufacturers have low success rates for products, often as low as 27%. This is due to a poor understanding of customer's needs. User innovations improve manufacturer's information on a user's needs. A good example of this is the gaming mod communities. Many moons ago I developed and published an unofficial patch to Red Baron 3D. This was a World War I flight simulator. I put in the several new air forces, including the Australian Flying Corps. I also added new aces, modified the the aerodromes of some squadrons, plus added "historically accurate" schemes for the aircraft. From this patch and others, Dynamix got feedback on what the flightsim community wanted from a game. Unfortunately with the consolidation of the game distributors, and production shops, a French company bought Dynamix and stopped production of their innovative "Desert Fighters" game. Their beta's of this game promised to redefine the dynamic campaign engine. Conclusion This book is well worth a read. It attempts to quantify many of the emerging methods by which innovation is achieved. The long, long tail won't go away; the abundance era is forever with us. Software is the first mainstream industry to be entirely based on abundance - where the cost of construction and distribution is zero. Other industries will morph to this model as abundance technologies are developed and become ubiquitous. The democratization of, and pace of, innovation will only increase. This is a wonderful time to be alive. cam
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