I recently attended a lecture by Eric von Hippel on Democratizing Innovation. Von Hippel is Professor at MIT's Sloan School of Management and Head of its Innovation and Entrepreneurship Group. The lecture was based on his book of the same title, which is also available as a free download.
In his own words: "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-centered innovation processes offer great advantages over the manufacturing-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." The book includes a number of concrete empirical studies, as well as extensive market research and statistics to support his arguments.
There is a big distinction in the way users and manufacturers innovate. (In the term "manufacturers" von Hippel includes providers of services, not just of physical products.) Users innovate to solve their own needs. "Lead users" will generally have custom needs that are not met by the standard products and services offered by manufacturers. Their needs tend to be at the leading edge of markets, where demand is small and uncertain. The only way to satisfy their special needs is for them to do their own innovation and solve their own problems. Their needs often foreshadow general demand in the marketplace. For such lead users, necessity is the mother of innovation.
Manufacturers, on the other hand, innovate in order to develop new products and services to bring to market, sell and make money. To do so, they have to identify the needs of users, and then fulfill them by designing and producing new or improved products. The prime target markets for manufacturers include their own user base, which they are in the best position to satisfy by continuously improving their products. They are also in a good position to look for adjacent markets, perhaps now served by competitors, to which they can move and acquire new customers and users.
But manufacturers are not generally in a good position to identify the kind of small, uncertain, leading-edge markets being uncovered and developed by lead users. The wise manufacturer needs to pay attention to the needs of users who are pioneering at the leading edge, so they can move into such markets, if and when they develop, and try to grow them and establish a strong position ahead of their competitors.
I find Professor von Hippel's arguments quite elegant -- both simple and profound. They explain, for example, why it is so important for businesses to work closely with universities and research labs, where so many lead users are innovating at the edge and developing the next major set of ideas for the future. That is where so much innovation - from parallel supercomputing and genomics applications to the Internet and Linux – has originated in the past. It is also very important that businesses have their own in-house technical talent, so they can carry out innovations best done within the business, work collaboratively with colleagues in universities and other R&D labs, and generally make sure that the business is aware of new ideas sufficiently early to respond to them.
Professor von Hippel explains that user-centered innovation tends to foster the development of communities of interest that freely share their ideas and collaborate with each other. This speeds progress, particularly now that the Internet and social networks enable such lead users to find each other and work together even if they are distributed around the world. This is in sharp contrast to the traditional innovation model in which manufacturers use patents, copyrights and similar means to protect their proprietary innovations. Given the benefits to manufacturers of collaborating with and learning from leading-edge users, it is important that business innovation models now include a balance of proprietary and open innovation, as we have been doing at IBM.
Professor von Hippel believes that while the increasing shift of product innovation activities to users will be painful for many manufacturers, society as a whole -- and ultimately the manufacturers themselves - will benefit. A number of difficult issues need to be addressed . . . "but despite the difficulties, a democratized and user-centric system of innovation appears well worth striving for."
I couldn't agree more.