Users are transforming innovation
Eric von Hippel and Michael Schrage
Published: July 10 2007 17:38 | Last updated: July 10 2007 17:38
Pincered between the US’s established technical prowess and Asia’s growing dynamism, the European Union has declared innovation a policy priority. Entrepreneurship is encouraged as never before. The roles of research and development and higher education are stressed.
Unfortunately, these important initiatives undervalue perhaps the most important transformation now redefining the world’s innovation economy. Ingenious leading-edge users – not everyday consumers or profit-focused producers – are becoming the economic engines that drive innovation. In sectors as diverse as software, biotechnology, medical instrumentation, telecommunications and sports equipment, users are spurring growth.
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Academic researchers are rapidly converging on the notion that the most effective form of user-centred innovation involves design collaborations among many, widely distributed contributors via the internet. Technology dissolves once-meaningful distinctions between “innovators” and “customers”. Policymakers must take note.
The rise of open source software as a business phenomenon rivalling SAP, Microsoft and IBM, for example, offers policymakers at the national, regional and global level a superb model and challenge. Intellectual property agreements based on compulsory licensing and code-sharing have fostered vibrant global communities that openly reveal and share their innovations. Sophisticated software users with a need for better solutions – not proprietary software developers – have been the dominant innovators here. These users have crafted intellectual property rules, informal networks and peer review mechanisms that transcend borders.
Their success has prompted a fundamental rethink of digital business models. Proprietary software incumbents have been forced to respond and adapt. Competition from open source has made them more innovative and responsive to customers.
Is this success an aberrant one-off, or does open source represent the tip of a user-driven innovation iceberg that will further shatter policy assumptions? Europe led the world in promoting user-driven innovation infrastructures. When Tim Berners-Lee spun off the world wide web network software collaboratively developed at Europe’s Cern particle physics laboratory to support the world’s high-energy physics community, he proffered digital designs that made users into digital developers. The rise of the internet has been a tale of user-driven innovation. This shift towards digital design and prototyping tools is rapidly being extended to all fields, from sports equipment design to the design of complex biological molecules.
Courageous entrepreneurs and brilliant engineering polymaths are hardly irrelevant or minor players in this environment. But policymakers seeking to encourage sustainable innovation environments simply cannot afford to ignore users. The opportunity to transform innovation requires policymakers to take them seriously.
Denmark has been the first nation to turn this into policy. In 2005, the Danish government established “strengthening user-centred innovation” as a national priority. Sweden’s tradition of “participatory design” has positioned several of its industries to take good advantage of this phenomenon. Britain’s National Endowment for Science, Technology and the Arts has begun funding policy research in user-driven innovation. These early efforts are important and more will follow.
The policy point here should not be to invite new subsidies for innovative users. The issue is “empowerment” not subsidy. Policymakers need the intellectual honesty and common sense to examine where existing innovation policies subsidise more traditional and more proprietary approaches at the expense of user-driven innovation. Policies discriminating against users undermine an economy’s ability to innovate and grow.
Certainly, national governments and the European Union could use their procurement power and standards-setting influence to ensure that in healthcare, digital technologies, public education and energy networks, user-driven innovation infrastructures are granted parity with proprietary vendors. Patent-holders should not be allowed to smuggle protected property into a common space and later claim damages when that property is innocently used. The right to modify products that have been purchased must also be clarified; open standards must be supported.
Neither “open source” nor “user-centred” means free. Manufacturers fighting rearguard actions against user-created content should look instead to the new business models being developed by companies such as Google. There is great wealth to be grown from proffering platforms for user-developed innovation. Semiconductor production companies, for example, have long profited by offering user-friendly toolkits to enable users to design their own high-quality circuits. General Electric – realising that users are the real developers of new medical MRI functionality – profits by opening up its MRI equipment to selected users. It even supplies specialist engineers to assist user-innovators, with the expectation of benefiting from preferred access to developed innovations.
Europe has an extraordinarily well- educated population all-too-frequently frustrated by institutional strictures and intellectual property constraints that make innovation more difficult than it needs to be. Rather than over-rely upon the past century’s innovation mechanisms of venture capital, targeted subsidies and national champions, policymakers should treat this global trend as an innovative opportunity. The rise of user-driven innovation is about the democratisation of innovation – an act of economic empowerment. Boosting economic empowerment is a powerful way of boosting growth. Policies that facilitate greater diversity and democracy of growth are good politics and good economics.
Eric von Hippel is T Wilson professor of management and Michael Schrage is a researcher at the MIT Sloan School of Management
Copyright The Financial Times Limited 2007
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