August 11, 2008

Five steps for encouraging user innovation

Among the pool of user innovation researchers, a few have been studying sporting goods — and most of them were represented this week at HBS during the UOI 2008 conference.

In Boston for the conference were Sonali Shah and Nik Franke who wrote in 2003 about sailplaning, canyoning, boardercross (extreme snowboarding) and handicapped cycling. On Tuesday, I finally got a chance to meet Christopher Hienerth, author of an interesting 2006 paper on “rodeo kayaking.”

On Tuesday, I heard a great paper on user innovation in sailboats. I really liked the paper for three reasons: it’s about sailboats (more later), it has 50 years of longtitudinal data on user innovation, and some great take-home messages applicable to all user innovation. The paper by Christina Raasch and Cornelius Herstatt of TU Hamburg-Harburg about the International Moth sailing class was presented by Raasch.

Readers should contact the authors for the paper, but let me highlight the five factors they found that influenced (positively or negatively) the degree of user innovation:
  1. Technological complexity: users withdraw from hulls due to new materials that are not practical for individuals to handle.
  2. Regulatory barriers: new sailboat one design “Moth Europe” limits modifications, reduces tinkering benefits, and penalizes innovation through exclusion, although a few innovators persist.
  3. Customer satisfaction. As innovators improve technology, this increases dissatisfaction with fixed class design, so user innovation returns and experiments resume.
  4. Technology maturity. At times there are breakthrough innovations that make experimentation attractive. For example, when below-water foils first appear they are a breakthrough. Foiling technology is breakthrough, but as the technology matures then there are declining returns to innovation and thus less experimentation.
  5. Market concentration, in this case the advent of a mass-produced standardized design. The dominant firm (Bladerider) doesn’t support experimentation, and then users split into pro-standardization and pro-innovation groups.
I had a nice visit with Raasch at dinner Tuesday, which brought a final irony. It turns out she’d never sailed until recently. So while I had assumed (as had at least one other attendee) this was a junket to do sailing field research, actually the causality (of study to personal hobby) went the other way.

Photo credit: KiwiSpy.com

Update: The research was published as a book chapter: Christina Raasch, Cornelius Herstatt and Phillip Lock, “The Dynamics of User Innovation: Drivers and Impediments of Innovation Activities,” in Stephen Flowers and Flis Henwood, eds., Perspectives on User Innovation, London: Imperial College Press, 2010.

August 8, 2008

Reflecting on 54 hours of user innovation

The User and Open Innovation Workshop 2008 is now over and I’m safely back in California. This was my first time at the workshop. I was ambivalent about going given the distance and cost (vs. just driving down to Academy), but I’m really glad I did.

Authors presented 55 papers in 11 tracks (3-4 parallel tracks per session). Both these authors and the 28 (scheduled) research abstracts also did a brief introduction of their paper for the whole conference. To fit it all in, the workshop extended across 2½ days, with HBS picking up the sizable tab.

Given the strong European following of von Hippel and his user innovation paradigm — and the dominant European presence at the previous workshops — a few of the organizers wondered if any Americans would show up. They needn’t have worried. Sorting the registered participants by e-mail domain and home institutions shows 53 attendees from US institutions, counting the 10 from HBS and 6 from MIT.

However, another 84 were scheduled to attend from outside the US. (There were about 10 no-shows, mainly due to illness). As with previous years, there was a lot of opportunity to brush up on your German, with 19 from Germany, 16 from Austria and 3 of the 12 Swiss from Zürich. (Of course, home institution is not a proxy for nationality, particularly for EPFL which brought a Dutch, American and German participants)

Other highly visible countries were Denmark (9), UK (8), Japan (5) and Nederlands (3). There were also 2 each from Canada, France, Singapore and Spain, and 1 each from Australia, Belgium, Italy and Norway.

The workshop has come a long way since the 20 attendees at the first workshop in Vienna and 60 last year at Copenhagen Business School. I am grateful that they opened up the workshop more broadly to those without direct MIT-HBS ties. The “open innovation” part of the conference was pretty small, but I suspect that was the self-selection of applicants to the formerly UI-only workshop.

Eric Von Hippel said he found the massive number of papers and participants energizing, as a way to stay on top of what’s going on in the field. However, my sense is that some people missed the intimacy of the smaller workshop (even 60), but were too polite to voice such anti-egalitarian sentiments in front of us newcomers.

If it were my conference (it’s not), I’d be seriously torn because there’s no way an invitation-only conference can identify all the interesting work, and a conference based on “Democratizing Innovation” should be fair in soliciting participation. However, the conference is clearly no longer a workshop, and it’s heading in the direction of the mega-DRUID conference.

Next year the conference is scheduled to be held in Hamburg in a room that only holds 120 people. Without the HBS sugar daddy, they’ll also have to charge a few hundred euros for meals. That will cut down on the participants — perhaps more like 90 Europeans, 25 Americans and 5 Asians.

August 6, 2008

User entrepreneurship

One of the common topics at the UOI conference has been user entrepreneurship.

Perhaps the most general talk was that by Mary Tripsas, who presented a broader typology of the phenomenon of users who become entrepreneurs, based on her 2007 paper with Sonali Shah (available free) in Strategic Entrepreneurship Journal.

Tripsas told the interesting story behind the story. They wrote a theory paper on user entrepreneurship for the leading theory journal, but it was rejected by reviewers who said “Why do we care? Users don’t start companies.”

After that rejection, they decided to augment their paper with some data. They investigated an obvious opportunity: parents who create kids stuff. They identified three categories of user entrepreneurs: those creating a new category (jogging strollers), those targeting an unmet niche need (e.g. car seats for low-weight babies), and incremental improvements on existing technologies.

Another example of user entrepreneurship was given by Lars Frederiksen, as part of his ongoing studies of the online user community hosted by Propellerhead Software to support its music editing and synthesis software. He presented a quote showing that users originally created complements for other reasons, and then realized over time that there was a business opportunity in it. (This is very similar to the market for PC freeware/shareware software that developed during the 1980s before the Internet.)

Sheryl Winston Smith also presented a paper that built on the user entrepreneurship ideas of the Tripsas & Shah paper, using examples from the medical equipment industry.

The fun thing about these examples is that the problem-solving usually came first: the users first wanted to fix something they saw broken (or make something possible that wasn’t previously possible) — then they created a business. Once upon a time, even Silicon Valley entrepreneurship was about solving unsolved (or seemingly unsolvable) problems, not about making a quick buck.

August 5, 2008

Cumulative innovation and the Wright brothers

At the UOI conference, Peter Meyer of the US Bureau of Labor Statistics talked about his research on the development of the airplane. The title of his talk was “Open Sources of the Invention of the Airplane”. He presented his written paper here at HBS last December.

Meyer presented this as an open innovation story. A bunch of hobbyist-tinkerers around the world are pushing the technology forward, communicating their ideas using the state of the art technology (written letters). Meyer had great archival data backing up his paper. Among the best sources was the 1890 book Progress in Flying Machines by Octave Chanute on the industry state of the art. This seminal book was re-issued in 1997.

I would like to know more about the firms created by these tinkerers. From the brief presentation, this seemed to me as much a Scotchmer-style cumulative innovation story, going along with Alessandro Nuvolari’s papers on Cornish pumping engines of the mid-19th century. Rivals build upon each other, and because IP doesn’t block the cumulative innovation, the technology gets developed more quickly (unlike the mutual standoff of the triode a few decades later).

Given that both Meyer’s and Nuvolari’s examples are 100 years old, this raises a policy question. Has the world changed? Is IP more enforced? Are tinkerers more interested in making money?

I look forward to engaging with Meyer further and his stream of cumulative innovation/open innovation work. An earlier BLS paper documented collective invention research on steel and the PC industry.

Cumulative, open and user innovation (II)

At this week’s HBS-MIT User and Open Innovation workshop, this afternoon I’m presenting my own work on open innovation networks (Room Hawkes 102, 2pm!).

With about 80 papers, it’s not possible for everyone to present their paper to the entire conference; instead, they are split across 11 tracks. To maximize the knowledge flow, organizers have used an interesting format: each presenter gets 5 minutes to sell his/her talk to the entire plenary, so that people can decide which of four parallel sessions to attend in the afternoon.

80% of my slides this morning are summarizing my afternoon talk, but after hearing Monday’s sessions, I decided to add a slide to add plug for open innovation (which has been conspicuously absent in name and theory here).

In particular, my new slide showed the table drawn from my EURAM talk last year comparing cumulative, open and user innovation. The comparison of these three models of cooperative innovation will be the focus of my talk next Monday at the Academy in Anaheim, during the user (and open) innovation symposium organized by Marcel Bogers of EPFL.

I felt a little awkward making such a blatant plug, but (I claim) my motives were pure. My hope was that the user innovation attendees would use the terms in commensurable fashion, and perhaps take an interest in the growing body of research on open innovation.

August 4, 2008

Producer vs. open innovation: Who wins?

Today I’m at the HBS-MIT User and Open Innovation Workshop 2008, being held on the HBS campus through Wednesday.

Design Rules, Vol. 1: The Power of ModularityOne of the first presentations was by two innovation heavyweights, Carliss Baldwin (of modularity fame) and Eric von Hippel (inventor of user innovation). Baldwin demonstrated a small amount of skepticism towards her co-author’s claims for user innovation, and in particular, von Hippel’s contention that “it will take over the world.”

The focus of their theoretical paper is on the creation of large complex systems. She began with the broad brush observation that producer innovation was the only game in town from 1750-1990, while interest in “free, open innovation” via user collaboration is a “newly important” way to realize such designs. The paper is set up as a contest as to which one will dominate. Due to her co-author’s perspective, Baldwin said “the answer had to come out one particular way.”

So who wins? The answer was: it depends. Each institution (innovation regime) has its own logic and strengths, and these interact with the technological profile of the artifact being innovated.

Baldwin presented a contingency model, with a theoretical framework mapping two dimensions of a technological cooperation: communication cost and design cost. Her 2-d rendering identified 9 distinct regions and outcomes.

She hinted at an even more complex solution: 4 dimensions, 15 outcomes. However, she concluded, “I don't want to be the author of that kind of model that no one will understand.”

Update 2:20 p.m. EDT: I sat in the 15 minute talk by Prof. Baldwin and got more details, below.

User innovation is an institutional form that co-exists with producer innovation, although one may dominate for some class of problems. For example, Chandler documented that public corporations now dominate certain parts of the value chain through scale and scope, even though sole proprietorships, partnerships and family businesses have not gone away.

The model assumes that for an institutional form to survive, each party gets benefits behind its costs (benefits might be non-monetary). But in a free (non-coercive) society, no one will continue to participate if the benefits don’t exceed the costs.

There are four institutional forms that could produce such innovations: two types of producers (entrepreneurial, large firm) and two types of user innovators (single user, user community). With all possible combinations of institutional forms (other than the null set) this would make 15 possible outcomes.

To reduce the domain into a 4-space, the researcher reduced the innovation process to four stages (and thus four types of cost):
  • Design: creating the instructions for the artifact
  • Production: translating the instructions into a tangible artifact
  • Communication: explain the artifact to others
  • Transaction: the costs associated with exchange between parties (i.e. zero with individuals)
Prof. Baldwin says that there still isn’t a paper; it’s in progress. I hope to be able to blog on the finished paper later on.

August 3, 2008

Universities and open innovation

Last month I was at the meeting of the University-Industry Development Partnership (UIDP) held at the National Academies conference center at UC Irvine. I was invited to give a talk about open innovation, and so decided to write a presentation trying to use open innovation to interpret university-industry cooperation in innovation. When I was working on the talk I got feedback on the first draft from David Wood, who also has been thinking about university-industry relations.

Before blogging on my own talk, I was waiting for the slides to get posted to allow people to follow along. Then I got buried. As of today, they have slides for all but one of the UIDP talks, including mine.

In my own talk, I began by summarizing a comparison of open innovation (Chesbrough), user innovation (von Hippel) and cumulative innovation (Scotchmer). This was based on my EURAM talk last year.

Innovation Policy in the Knowledge-Based Economy (Economics of Science, Technology and Innovation)Next I noted the large body of research on the economics of university innovations, with work by noted economists like
I encouraged people to read the original works, since there was no way to cover it in detail. Instead, I oversimplified this research (and the process of university innovation) down to two key choices: who pays for the research (and its associated IP), and who gets access to that research. I then summarized the characteristics of the two main commercialization model.

The familiar model is the university licensing model, epitomized by Bayh-Dole (well covered by the Mowery book) and tech transfer offices. This is quite consistent with open innovation. In a Chesbrough (or Teece 1986) sense, universities lack the resources necessary to directly commercialize their innovations — so they need to contract with private firms to realize the value of the innovations and bring them to market.

In this model, universities patent their technologies. They charge a fee for their innovations; for exclusive licensing or contract research, they effectively surrender rights to practice the associated innovations.

The other model, however, is the model of unmonetized spillovers. This corresponds to the Merton’s model of open science, as more recently elaborated by Paul David. This is best known as the way the DoD-funded Internet technologies got commercialized during the 1980s and 1990s. The idea is that if your research is being paid for, a university can allow spillovers, which greatly facilities the process of cumulative innovation.

My interest in this model was based on my own research on the commercialization of Claude Shannon’s information theory for deep space communications. (The paper will be published in the December 2008 issue of the Journal of Management Studies, as part of a special issue on “Research and Technology Commercialization”). As part of researching our book on the San Diego telecom industry, I found how MIT-trained electrical engineers (including Qualcomm founders Andrew Viterbi and Irwin Jacobs) helped NASA adapt Shannon’s theory to improve communication bandwidth with interplanetary space probes.

I didn’t mean to imply that the technology licensing model is dead, but instead to encourage participants to realize that each model has its role. Formal licensing is always going to be important in some industries (such as biopharma), but for other types of innovations, the spillover model can be more efficient. (Universities can often monetize this with donations from alumni entrepreneurs).

While at the conference, I heard an interesting wrinkle on the spillover model in the talk by Broadcom Chairman Henry Samueli. Samueli is a former UCI professor who’s giving naming grants to the engineering schools at both UCI and UCLA.

Broadcom spends about $1 million a year with universities: all their university grants are as gifts rather than research contracts, to reduce paperwork on both sides. Their goal is to identify prospective Ph.D. students to hire, but I imagine that the gifts also create considerable goodwill with the recipient universities for attracting other bright students.

August 1, 2008

Berkeley Open Innovation researcher series

The Center for Open Innovation at UC Berkeley is starting a new speaker series on Open Innovation, which is open both for Cal affiliates and outsiders.

Here’s a summary of the new series
The new Open Innovation Speaker Series is a bi-weekly series intended to provide both academic and managerial perspectives on open innovation and related subjects. The organizers are Henry Chesbrough, UC Berkeley and Siobhán O’Mahony, UC Davis. This series is sponsored by UC Berkeley’s Center for Open Innovation at the Haas School of Business, and the Graduate School of Management at UC Davis, with help from CITRIS at UC Berkeley’s College of Engineering. It is open to students, faculty, staff, and the general public. If you would like to join the mailing list for papers and other information, please email Siobhan O'Mahony. The speaker’s papers will be posted on this site as they become available.
Of course, both Hank and Siobhán are my friend and co-author (respectively co-authors of a book chapter and article). Two other friends are also presenting in the Fall 2008 speaker series.

What I find deliciously ironic is that the talks are in the Hearst Mining and Minerals building. Mining was a cutting edge technology, vital to California’s economy, when Cal’s predecessor was founded in 1866.

Interestingly, most of the talks seem to be about the issues of how the organize innovation that is not (strictly) governed by an internal organizational hierarchy. Many of these examples of extra-organizational cooperation are the result of a change in business practice, but nearly all are happening today because the Internet and other ICT allow us to organized such efforts.