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September 14, 2010

[berkman] Erich von Hippel

Erich von Hippel is giving a Berkman lunchtime talk titled “‘Household Innoovation’ and Other Sectors.” Erich studies innovation, and is a pioneer in the study of open innovation.

NOTE: Live-blogging. Getting things wrong. Missing points. Omitting key information. Introducing artificial choppiness. Over-emphasizing small matters. Paraphrasing badly. Not running a spellpchecker. Mangling other people’s ideas and words. You are warned, people.

We have assumed, says Erich, that manufacturers must dominate the space of innovation. But at the beginning of the curve, there aren’t many users, which means that it’s not a good market for innovation. So, lead users are often the innovators. E.g., John Heysham Gibbon invented the first heart-lung machine. He first asked manufacturers to invent one, but they wanted to make sure it was possible, so he went off and created the first. [This is what Doc Searls refers to as: “Invention is the mother of necessity.”] In the case of medical instruments, users have been the innovators historically about 80% of the time.

The manufacturers don’t understand this, says Erich, because users hack things together that don’t look like products. E.g., the central-pivot irrigation system was invented by a farmer. The current manufacturer denies that anyone else invented it, even though they know about the original version. But, to them, the original looks like “a pile of crap.” That is, they focus on what they’re good at.

Where do single users, collaborating users, or manufacturers dominae design? Erich plots design costs vs. communication costs. As design costs drop and designg gets modularized, you can move toward more collaborative innovations, e.g., open open software rojects.

Erich presents the results of a study concluded yesterday. Is what’s true in scientific instruments also true more generally? So he an co-researchers did a survey of the UK population. “Have you created or modified a consumer product to make it better for you? ” 2.9M UK consumers innovate. (Results were qualified: Were you the first? Could you have bought it on the market? Did you do it for home or work?) Examples: Someone put a switch into driers to affect the cycles, created a tree-top trimmer, came up with a color system for managing children’s activites. These tended to be cheap and fast changes — typically 5 pounds and 2 days.

It’s a “cake with raisins” model: They did a survey through the cake. Raisins are special interest user communities. Within those communities, they 100% collaborate on innovations. Their innovations interconnect and communicate. Within these communities (e.g., kayakers), innovations jumps to 20-30%. E.g., among white water kayakers, 73% of the hardware innovations, and 100% of the infrastructure (e.g., mapping rivers) and 100% of the techniques came from users.

Why can user collaboratives out-innovative manufacturers? Because there are more users. Also, because it’s open innovation. When someone patents something, they can be ridiculed by their fellow users. So, it tends towards openness. Companies patent much more when it comes to product innovations as opposed to process innovations.

Christina Raasch is working with Eric, studying the social welfare impacts of coffee. (raasch AAT tu-harburg DDOT de).

Q: To what extent does this kill Coase?
A: We’re talking about the economics of design. The economies of manufacture and distribution are still there.

Q: From a policy perspective, how do you incorporate all of this? GDP is inadequate.
A: We have applications into Portugal. Finland, and the US, to develop metrics that can be regularly implemented. Until policy makers see that there is a lot of user innovation, they won’t want to change policies.
Q: Even with 3 million inventors spending 5 pounds each, that has little impact on GDP. The value of their creations is different.

Q: 90% of the value comes from 10% of the innovations.
Q: This makes Erich’s point. Users are closer to the problems and create solutions from which manufacturers choose which to productize.

Q: How are innovations transferred to manufacturers?
A: Often the manufacturers are forced. E.g., hotels resisted letting guests plug in for Net connection, screwing in obstacles, etc.

Q: How will this affect big mass culture?
A: At some point we’ll be amazed that we ever thought innovation comes from manufacturers. They’re good at producing stuff.

Q: What is innovation and how do you quantify it?
A: In the UK study, it’s self-reporting. And there is no lower limit for triviality.

Q: If the key to our nation’s future is in innovation. What policies would help turn this innovation into value?
A: The patent/copyright system gets in the way. Before you can release an innovation, you have to check to see if you’re violating anyone’s rights.
Q: [terry fisher] I have a hypothesis: Manufacturer responsiveness to the community of users is mediated by user pressure. E.g., lots of innovation in the wood workers community. There’s a lot of evaluation and criticism of professional products. Hypothesis: Rate of innovation among the producers correlates positively with this. Further, users aren’t inhibited by patents and copyrights, but we should enhance the requirement for manufacturers to give credit to user-creators.

Q: In some of these groups, user innovations are at odds with what the manufacturers are doing. Is there a correlation with acceptance of user ideas?
A: Great topic for research. Also: Sometimes employees come to a company with ideas as users of their products, and frequently they’re rejected.

Q:[wendy] A counter hypothesis to Terry’s idea that IP reform isn’t needed. Just when users are getting together and deciding to productize, they come to the attention of the owner of the IP. It can be a barrier to the aggregation of user innovation.

Q: So, what is the problem here? Users innovate, manufacturers take up some ideas and manufacture them. The system works!
A: The playing field is not level. Who you give research money to, how aggressively to roll out the Net infrastructure…

Q: What’s the evidence that manufacturers don’t innovate? How about IDEO?
A: Manufacturers tend to do dimension of merit innovation. IDEO is a design firm that often surfaces innovations from users.
Q: You’re assuming that what the manufacturers do isn’t valuable.

Q: If user innovators feel that they aren’t being recompensed…
A: There are many barriers at the policy level, which people take for granted and don’t complain about. E.g., we don’t widely disseminate ideas because we have to worry about violating an unknown patent.

Q: The problem is that there is an untapped potential in the market.

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