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Eric von Hippel was interviewed by Gartner Fellow Tom Austin on 9 March 2007
Gartner: I enjoyed your book, "Democratizing Innovation," and talked with several of my peers about it. In fact, you had corresponded with a few of them, like Nick Gall, both about the book and about your work. I found it intriguing. I was impressed by the rigor and breadth of content and felt that our clients (and anyone else who comes to our Web site — as we have agreed, this interview will be published on an open part of our site) would be intrigued by your position, because it has heavy implications for how companies might exploit innovations from their users. von Hippel: So, where would you like to start? Gartner: Let's just start with the title. It's a teaser in a way: "Democratizing Innovation." Bill Gates talks about democratizing software, and when he says that, he means driving the price down low enough, so that everybody can buy it from them, which, coincidently, wipes out competitors who don't have the same market share to leverage. But I don't think that's what you mean when you write about democratizing innovation. von Hippel: No, I do mean something different. I mean that the tools for high-quality innovation are getting so cheap and so ubiquitous that individuals can innovate for themselves at a steadily higher quality and at a steadily decreasing cost. Because of the Internet, it is also true that people can innovate collaboratively at a steadily lower cost. Open-source software projects are a great example in the arena of information products, but the same thing is happening for hardware too. When innovation becomes democratized, many traditional assumptions about innovation and the best ways to innovate are upended. For example, the advantages that the traditional machinery firms have in place with respect to innovation come into question. When innovation resources are cheap and well diffused, what firms ought to do is let a thousand flowers bloom, as they say, and then select the best flower. It no longer makes sense for corporate marketing researchers to go around asking passive consumers what kind of flower they would like, if only they could have it and then, after huge process efforts, decide to develop that flower. Gartner: It's sort of the emergent-market model versus the central-planning model? von Hippel: Yes, except it's the emergent solution and emergent market model. What really happens is users develop solutions - and manufacturers can therefore build their new product ideas by examining user-developed solutions as well as user needs. When we trace the sources of innovation in our research, we find that users actually are the ones that typically develop the functionally new products that later become major commercial successes. The first heart-lung machine, for example, and the first skateboard as well, both were first prototyped and applied by users. When you think of it, it makes great economic sense that users would be the innovation leaders in the development of products that define new markets. Manufacturers always prefer to serve larger and more-certain markets - so who but users will be willing to be the pioneers? And as I say, user innovation is getting more and more frequent, as the cost of the investment innovating users must make to achieve their goal steadily drops. Gartner: So, if you project forward 10 years from now, based on your thinking around democratizing innovation (letting a thousand solutions bloom and so forth), how's the world going to be fundamentally different? von Hippel: Innovation activity is going to move into the user layer. Nowadays, we have Microsoft developing Web server software for users - and employing tens or hundreds of engineers to do that. In contrast, in the user layer, we have a few - two or three engineers each from hundreds or thousands of user firms (and firms that supply complements like Red Hat) - contributing to the development of Apache Web server software. This will be an even stronger pattern in 10 years. It's not like engineers go away when users innovate; they simply move up into the user layer. And that's the real competition for a firm like Microsoft. Gartner: So, when I read your book, one of my emotional reactions (until I thought more deeply) was, this man is an apologist for the open-source software movement. But it turns out your research dates back 20 years before open source and 10 years before the Electronic Freedom Foundation. Why don't you talk a little bit about how you got started in this thinking? von Hippel: Well, when I first came to MIT, ideas about how new products and services should be developed were based upon a manufacturer-centered innovation model. This model, in essence, instructs manufacturers to "find a need and fill it." The basic idea is that it is the manufacturer's job to accurately understand your needs, and then make the perfect product for you. In fact, this is still the standard model of the innovation process taught in business schools today, which is one reason that understanding of user-centered innovation is still at such an early stage. Before I went for my Ph.D., I was an inventor and participated in a startup - and tried to rely on the manufacturer-centered innovation model as I had been taught to do. Full of confidence, I went off to talk to suppliers saying, "Well, here's a need I have for a new product you do not currently make." The uniform supplier answer was, "No, you don't. You need what we sell." It was just so funny. For example, once I needed a fan that was higher-performance and smaller than anything out there. And so, I asked this company to develop it and sell it to me. I said, "I need it." And they said, "No, you want our standard one," and I said, "No, I don't." And then they said, "Well, it is impossible to build what you want - it's against the laws of nature - so you have to take what we have." So, I went to Princeton with my problem and I got an aerodynamic specialist there to design me the fan. I then took it to the manufacturer who said, "Well okay, we'll make it, but you have to buy the tooling. And you have to pay for them 10,000 at a time, and so on and so forth." So, we did all that. The fan was wonderful; it did exactly what we needed in the fax machine we were designing. (The startup I worked for made fax machines.) A few weeks later, the fan company reps called me up and said, "You know, it turns out a lot of other people want your fan too. Can we use your tooling to produce it for them?" I said, "Sure, talk to our manufacturing guy, and I am sure he will arrange something." The arrangement was made, and shortly afterwards that company put out these ads saying, in essence, that "via our deep understanding of your needs, we knew you needed this new type of fan. And so, of course we developed it for you, our beloved customers." I found this so interesting. I thought to myself, clearly the manufacturer-centered innovation model did not work in this instance. But there is such a strong belief in that model that the fan supplier thinks it did. Anyway, I brought that insight with me to MIT. I began my own research with the idea that, probably, it was really the users who were the innovators, and often not the manufacturers. That was way back in 1976, and things just built from there. I then realized that I had to join with other innovation researchers to build a big enough playground of data and concepts in the arena of user innovation to make it attractive for other people to be able to do their own work. That is, we had to generate enough findings related to user innovation, and create a robust outline of a theoretical framework, so that other people would be interested and would start to plug into it. All that took a long time, but eventually, we got here. Starting about 2000, user innovation related to the Internet, blogs, and open-source software began to become very visible. As a result, many people began to think, "Oh gosh, maybe the manufacturer-centered innovation model isn't the only way to go. Maybe innovation is really user-centered, and 'user-developed content' really does matter!" At that point I and my academic colleagues were in a position to offer an academic framework to help people in their early efforts to make sense of a user-centered world. Anyway, that's my view of how things have evolved. As my colleagues can also tell you, it has been a really long slog. Wonderful colleagues who have helped are many. Some who have been very important during the past several years are Professors Dietmar Harhoff, Nikolaus Franke, Joachim Henkel, Christian Luethje and Karim Lakhani. It's much more fun to do this kind of early work with good friends. We can cheer each other up when our work gets dissed, as it regularly did in those days. Gartner: You had a really insightful comment - one of many in your book. But the one that relates directly to this was your comment about cluster analysis, market research, market segmentation and so forth. And, if I remember correctly, I've gone through the same experience that you talked about there: You go out; you collect data from the market; you do the cluster analysis; you find the three, four, five clusters that seem to characterize the market; and so you come up with: "All right, so therefore, we need three, four or five products." But you explain very clearly, I think, in your book, why that model was defective. Would you just explain that in simple terms? von Hippel: Well, that model is not necessarily defective from the manufacturer's point of view. I mean, a mass manufacturer wants to sell a lot of the same product or service to many people. It, therefore, wants to find big clusters of reasonably homogeneous demand, maybe like the economy-car buyer or whatever. Cluster analysis will show people at the center of that cluster to be perfectly satisfied with a particular solution. But then, as you move toward the edge of the cluster, people will be less and less satisfied, until finally, you reach the edge where people will switch to something else or won't buy at all. But if enough will buy, the manufacturer is satisfied. But recall that many people in these clusters really are not happy with a standard solution, and if they can build it for themselves - which they increasingly can - that will be the option they choose. So, the clusters of "uniform" demand that mass manufacturers used to rely on are eroding, and user innovation is increasing. Probably in dollar terms, user innovation expenditures greatly outweigh total development expenditures by manufacturers. User innovation is currently "the dark matter of innovation" in the sense that it is both tremendously large and currently largely not visible in the government statistics on innovation expenditures. (Basically what happens here is the government is tracking manufacturer expenditures, but the things that the users are doing are typically not tracked, because they don't fit the government definition of R&D.) . Gartner: One of the summary statements I took from your book is that it's the application of the application that produces the innovation. It's how the technology is applied that is where much innovation happens. And there's a conundrum: Our clients at Gartner are typically IT managers of some kind, or directors or CIOs, and they have this challenge. On the one hand, to minimize their cost for supporting users, they want everything standardized - locked down, no change, no innovation. Meanwhile, I think what you're arguing - and what we see at the edges of the marketplace - is, there's a tremendous amount of innovation that the users do, if they have the opportunity to do it, because they have a lot of pride in their job and in the accomplishment around doing an innovation. But how do you begin to balance the trade-off between controlling cost and setting users free, between protecting intellectual property and allowing innovation to happen? von Hippel: Well, IT departments understandably want to standardize things, and users want to have options, because each side wants to make their job easier. For example, do you remember in the earlier days, IT departments would only allow you to use two or three kinds of software? Users responded by smuggling in other software under their coats, right? Well, that is a reasonably healthy tension, because you do need a balance between innovation and some standards. Gartner: Yes. von Hippel: Interestingly, a risk to the needed balance between innovation and standardization today is coming from the IT department's improved technical capability to do things like periodically reimage everyone's disk and wipe off all nonauthorized software. For example, in a company I won't identify, people in some corporate groups have greatly improved the standard software for handling certain things like customer returns. And always the central people would come and reimage their disks. Every Wednesday or so, corporate IT would reimage every computer in the firm and knock out all unauthorized software. I mean, it was horrible. They had a new horrible tool to beat down user innovation with. So, it's not a pleasant picture. (Did I mention I tend to be on the side of the user?) Gartner: Well, we're seeing a dichotomy in the market. So, we're seeing dogma and policy from management that says, "This is what we should do" - even from Gartner, recommending things. "Here are the processes and procedures we must follow." Yet the practices are, "Don't ask, don't tell," because otherwise, there's going to be a rebellion in the ranks. von Hippel: Well, maybe you should start promoting compromise positions. For example, in clinical chemistry analyzers, some users are specifically authorized to modify the software. To avoid liability issues but also encourage innovation by users they say, "Well, these users can fiddle, but those can't." GE does the same thing with its MRIs. GE gives cheap MRI machines to people who they think are lead users who will evolve the software in valuable ways. And they lock down the systems of others to avoid liability. Gartner: How broadly does that happen with GE and MRI machines? von Hippel: It's much narrower than it should be. They're letting maybe 100 flowers bloom instead of 10,000, because most machines are locked up. But still, 100 is a lot better than what they had, and most of their innovations come from these users. There's a list of maybe 50 important innovations in MRI software, most of them done by the users. So, the system works for GE. Gartner: You wrote a book 10 years or so ago about lead users, a certain category of user, unlike the general user, who's most likely to create these types of innovations. How do you characterize these people, and how do we find them? von Hippel: Lead users are defined as being ahead of an important market trend, and also having a high need for a solution. Take Tim Berners-Lee, for example - he worked at CERN (the European Organization for Nuclear Research), and he created the World Wide Web to solve problems that CERN was encountering. Well, the world was getting increasingly networked, but CERN was a lead user organization with respect to networking - it was hell of a lot more networked, a hell of a lot earlier than most. In contrast, the bulk of Microsoft's market did not face that problem yet - so Microsoft felt no demand to create a similar innovation. In any field you choose to think about, it works the same way. Needs diffuse in from the leading edge of markets. Not all users encounter a need at once - lead users encounter it first. Think, for example, about animation software that eventually ends up as a commercial product. Who first developed all those functions? The answer is that they were developed years earlier by lead users like the people at Pixar, who had a desperate need early for things that later become routine. Lead users innovate to solve their own strong needs - and are the ones who develop the early versions of new animation technologies that later are produced and sold by manufacturers to benefit the rest of us. Gartner: So, if you're an executive in a large corporation - a major automobile manufacturer - is there some way that you can exploit the lead-user phenomenon? Or are those companies of a character that can't really exploit this? von Hippel: They could, if they wanted to. For example, in the case of cars, improving collision avoidance capabilities is currently a big deal. So, the manufacturer should ask: "Who needed the types of collision avoidance innovations years ago that we need now?" Interestingly enough, one answer turns out to be that a lot of people in the military have been spending years causing and avoiding collisions between munitions and vehicles of various types - airplanes, tanks and so on. So, the military is a lead user for these types of innovations. Once the firm knows this, and if its technical people are willing to embrace lead user innovation, they can say, "Gosh, you know, maybe we can apply some of the collision-avoidance ideas from the military innovations to cars rather than trying to start from scratch." Of course, the same pattern applies in IT. For example, years ago in computers, fault-tolerant computers were developed by leading-edge banks - not by computer manufacturers; not the mainstream software vendors - because it was the banks that couldn't afford to lose the transactions if the computer went down. Gartner: An interesting sideline in your book is where you talked about product innovation failures. You talked about products failing, and my first reaction was, "My gosh, these statistics from the '70s, '80s and '90s look just like the statistics for IT project failures." They fail just about as often as these innovative products do. Typically, four out of five IT projects either fail or take dramatically longer and more money than ever projected. So, I started thinking about that - the failure of new products, and your whole line of thinking around lead users and democratizing innovation. How might lead users and democratizing innovation - all these concepts - apply to reduce the frequency of failure of either IT projects or of innovative new products and so forth? Have you thought about that? von Hippel: It is important to understand that a lot of user innovations fail too. But users don't succeed or fail on the manufacturer's nickel. Lead users feel compelled to solve a problem they encounter. A lot of users try, and the manufacturer can sit there, in effect, and wait for some demonstrably good solutions to arrive. The users are doing both prototyping and field testing for manufacturers, if only the manufacturers are clever enough to look for it. They're doing all these tests and so on, and then say, "Okay, we select these." User innovation doesn't necessarily reduce the amount of failures - it just takes them off your budgets. Gartner: That's interesting, because the advice that I give my clients who have a lot of these Web 2.0 technologies is don't pick the right one for your users; give them an envelope to operate in, let them go try whatever they want and let them fail, and the best ones will emerge out of the broth. von Hippel: Exactly. And notice what happens, because not only are the users innovating, but they're collaboratively filtering out the best ones. It may turn out manufacturers will learn to rely on users for innovation prototyping, and on the collaborative filtering efforts of user communities for a good piece of their marketing research. Gartner: You even had a comment around users' freedom from manufacturers' involvement. What was that point? von Hippel: Users can benefit from not relying on manufacturers to perform vital services for them, because they can reduce agency costs. Gartner: What does that mean? von Hippel: Basically, when you do something for yourself, you know you have your own best interests at heart and will do your best to serve those interests exactly. When somebody or some firm works for you, he or it becomes your agent and doesn't necessarily have the same interests as you do. If he has different interests, one form of agency cost you must incur is the cost of watching your agent like a hawk, so that he'll actually do what you want him to do rather than following his own interests. Another form of agency cost comes when you face the consequences of not watching him like a hawk. You then have to incur extra costs to adapt to or correct what he did, because he didn't deliver exactly what you wanted. Gartner: So, let's go back to the basic question: What is your reasoning around freedom from manufacturer involvement? von Hippel: Well, the point is that a manufacturer is a user's agent. If you, as a user, can do without that agent - if you can "do it yourself" in an economical way - you can avoid agency costs. Gartner: Do you have some examples of users doing without manufacturers? von Hippel: Yes, consider the kite surfing community in Chapter 9 of my book. Kite surfers developed their own kite designs initially - and developed and built exactly what they wanted. When the market grew, manufacturers came in and began to develop what they thought the users wanted. The kite surfers got together in a user community, and the quantity of what they did vastly outweighed what any individual manufacturer, trying to outdo its competitors instead of sharing, could do. The net result was they drove manufacturers back out of the kite-design business into the manufacturing of kites. Professors Carliss Baldwin at HBS (Harvard Business School), Christoph Hienerth at Copenhagen Business School and I wrote a paper explaining how this works recently. (It was published a few months ago in Research Policy and can be downloaded from SSRN [the Social Science Research Network].) Companies need to know when they can compete with a user community and when they can't. Another example: Lego is thinking of becoming a publisher of user designs rather than designing their own, because they have maybe 50 in-house designers and 20,000 users outside the company who are very serious model designers. Gartner: That's the story of the second generation of Lego Mindstorms line. It was done by a community of outside users rather than by the company. von Hippel: Not entirely. The company designers and the user-designers collaborated. Gartner: You had another metaphor - an analogy in your book - or a look at innovation in terms of the role of silicon foundries. Can we talk a little bit about that? von Hippel: Silicon foundries are a similar story. Companies that used to design custom chips for users now produce chips that users have designed for themselves. Users do this with the aid of what we call innovation toolkits. (I talk about these in Chapter 11 in "Democratizing Innovation" - which can be downloaded for free from my MIT Web site.) It's difficult to understand what a user wants. So, it's often more economical to give that user a toolkit. Then the user can design exactly what he wants, and in a way that's compatible with your manufacturing technology, and you don't have to invest in accurately understanding his needs. Gartner: We're seeing, with the Internet and with communities on the Internet, a variety of different social techniques that are going on there - just an explosion in this collaboration. Would you expect that there'll be an explosion in new economic opportunities and new products and new services coming out of that? von Hippel: Well, manufacturers are lucky that physical things still have to be made, because on the information side, it's not clear that manufacturers have a central role anymore. I mean, they can take peripheral roles, like Red Hat, but they will increasingly lose their central roles in innovation design. Again, it is important to point out this is not an economic problem in the long run - although there will be major dislocations in the short run. Recall, as we discussed before, the economic activity of design will not disappear - it will instead move up into the user layer. Gartner: And what does that do for all of us, when, for example, I can create my own custom shoes whenever I need them. von Hippel: Yes, won't it be great? Gartner: Yes. If you think about it - and I'm not trying to be political - we've gone from a relatively small number of homogeneous parties, and lines of thought, and broadcasters and publishers - which was a scale model that evolved, really, in the 20th century - it didn't exist prior to that. And we're now going back to fragmented models. So now, we have hundreds of thousands of different blogs that people follow, and little political-interest groups and different publications, and mass media is losing its appeal. And mass parties are losing their appeal. And mass publications are losing their appeal. So, we're going back to sort of the fragmented world, which may not be good, by the way, in certain ways. von Hippel: Do you know Yochai Benkler? Gartner: Yes. von Hippel: He's a wonderful guy, and he's talking about a major advantage that many sources of news offer. A major one is until recently stories only existed when the mass press thought they were interesting. You remember this whole flap about voting machines and how they could be tampered with? Gartner: Yes. von Hippel: Initially, according to Yochai, mass media reporters didn't think this was an interesting story and didn't push it. It took students and so on to keep pushing the story forward on blogs. It finally did grow into a major story covered by major media, and a risk to the future validity of elections is being seriously addressed as a result. So, my own view is that many people outside of the established press publishing multiple views is a good thing ... Gartner: But you do wind up still with other entities, like little hate groups that could form. A community of Nazis, for example, that previously couldn't get together. von Hippel: But then you have a community of anti-Nazis too, so ... [laughs]. Gartner: That's true, and they tend to balance each other out. And you were talking about communities in your book. I think you used the term "brand communities." von Hippel: Well, a professor named Al Muniz at DePaul University and a colleague were, I think, the inventors of the term "brand communities." They observed people coalescing into communities around brands. Brand communities exist more broadly than you might at first imagine - some people form communities about Saabs and talk about them with intense passion, for example. It's not just a few very interesting products that get attention paid to them and user innovation. It's many or most products. Gartner: There another interesting story, sort of the dark side, of these communities. Chevrolet Motor division of General Motors tried to create a community around Chevrolet, and they gave the people who were participants in this community video clips so that the people could combine them and put messages with them and so forth. And what people did on that site was they created very much anti-Chevrolet and anti-General Motors clips - exactly the opposite of what the manufacturer, in that case, wanted. So, sometimes when the manufacturer gets too deeply involved in this, it can backfire on them as well. von Hippel: Yes. Well, it is important to understand that a user community's interests and a manufacturer's interests are not necessarily aligned. However, companies can learn to increase the overlap. There's an interesting case of TiVo that my student Ethan Mollick has studied. TiVo is pretty supportive of its community, and the community has supported TiVo in turn. For example, hackers could download from the Internet the same channel information and time information that TiVo sells them for $10 a month. But the community knows that would bankrupt the company. So, the community protects the company, says, "No, we won't post that type of hack." Because they understand the symbiosis between the community and the company, and they want TiVo to continue. Gartner: How did your student tease out that dimension, that mind-set? von Hippel: Ethan is a very interesting guy. He actually studied some of these "phone-phreaker" communities and so on. Gartner: That goes back to the early '70s, the phone phreakers. von Hippel: Right. There are often wars between companies and their communities where the interests are not aligned. The interest of Bell and the phone phreakers weren't necessarily aligned at all. Intelligent community management involves learning to see where the interests of yours and the communities do or could align, and give the community tools that help them do the things both sides view as positive. Gartner: I enjoyed a lot of the references in your book, digging down and reading them. One of them was the book "Of Bicycles, Bakelites and Bulbs: Toward the Theory of Sociotechnical Change." von Hippel: You mean the book by Wiebe Bijker? Gartner: Yes. One of the stories that author talked about was some interaction between the earliest bicycles in England, and women wearing knickerbockers, which resulted in a court case over whether a woman in knickerbockers could show up in a pub or not. Women lost that round, but eventually social changes did happen, driven by bicycle innovation. I found that to be a really quaint, colorful interesting story from 100 years ago. You wrote a bit about this under the label "Social Construction of Technology." I was very interested in getting a sense from you of more modern examples of how technical progress has fundamentally resulted in social change in the past 20, 30, 40 years. von Hippel: Television, YouTube - I mean, all these things involve and cause great social change. Gartner: You said earlier that much of the innovation that goes on is done by users, not by manufacturers. And in aggregate, it can turn out to be a very large fraction of total economic investment in R&D, and it's uncounted or undercounted. So, if you had to just speculate, in today's economy, what percentage of R&D is being done by the users? von Hippel: People are trying to measure that now. I'm working on it too, with Fred Gault of Statistics Canada. Fred is a great colleague and expert on measurement. I wouldn't be surprised - but this is a total guess - if we find that users are spending $10 for every $1 the manufacturers are spending. I mean the indicators of it are that things like 80% of the manufacturers modify their process equipment. If we can add up all those modifications relative to the R&D budget of the machine builders, I suspect we'll find users spending a lot more than manufacturers in aggregate. Gartner: But that almost says, so now you start looking at geopolitical and global-economic issues, and people start talking about, "So, what's the level of R&D in the U.S. today?" And if you're not counting what users are doing, you're missing a huge part of the R&D going on in the American economy, and in other economies as well. von Hippel: Yes — and it is very important to improve government measures, because economists won't pay any attention, and policymakers won't pay any attention, until you can show them user innovation is really important. Once it has been proven, then policymakers can consider what governments need to do to build up infrastructure in this age of collaborative, distributive innovation. What, in other words, is the equivalent of roads in the Internet age that governments should support as infrastructure? That's the kind of thing the Danes are now beginning to think about. Gartner: Would you elaborate? von Hippel: In 2005, Denmark became the first country in the world to adopt support of "user-centered innovation" as national policy. Academic colleagues from Denmark and elsewhere are working to help understand the implications of this. Some of my colleagues and I also set up a Danish User-Centered Innovation Lab in Denmark to help. Starting in 2007, the Danish government is spending 160 million kroner a year on this - and the budget is slated to grow a lot larger over time. The logic behind the new Danish policy is that, essentially, all the government spending on innovation around the world is now technology push - R&D subsidies to manufacturers and so on. The Danes and other small countries can never win at that game; they will always be outspent by larger countries. Their new idea is to help their manufacturing firms be early at converting to the new, user-centered innovation paradigm we have been discussing in order to create a comparative advantage for Denmark. Gartner: So, what would you advise a country to do to ensure that a maximum amount of the investment they were making around what you've just described fostered discontinuous innovations created by lead-end users instead of sustaining innovations by more typical users? von Hippel: Well, we are still in the early days in terms of learning how to create the right public policies to support a shift to a user-centered innovation paradigm. Remember that in previous generations, governments around the world decided that public investment in roads was needed to help build a vital part of their national infrastructures. We still are sorting out the nature of the roads in the Internet age that need support as public goods. Policies supportive of open standards and supportive of the formation of information commons are examples of things governments can do that are likely to be very important. In addition, they have to stop supporting things that tend to damage or destroy distributed user innovation, and the ability of users to build upon the work of others. Present excesses in U.S. copyright law come to mind in this regard. Gartner: What about U.S. industrial policy, innovation policy and R&D policy? von Hippel: Again, we're just at the early stages of this. I'm working on it, and other people are - and we all wish more people were. Gartner: Yes, I mean, that's tremendous - in some ways, that's a black hole, because it's so deep when you dive into it, but the implications are profound. We have - to be arbitrary - dramatically increased innovation capabilities with the Internet and social communities and all of that. We've increased the ability for people to collaborate and create new ideas, and to disseminate those ideas and to build on top of other people's ideas - many orders of magnitude. And so, that should be producing far more innovation - goods and services that reflect that innovation and drive economic growth. That raises a question: If the speed of innovation is increasing, should the cycle time, for example, the duration of patents and copyrights, decrease or should they increase, what's the impact on the interaction between the two? von Hippel: I think many fields are on the way to building an intellectual commons, which is increasingly becoming a viable substitute for intellectual property protected by patents and copyright. It's not that anybody's going to take away Madonna's copyright; it's that alternatives for Madonna will come up, which are in the commons, and people will increasingly switch to those. If Madonna will not offer an attractive platform for people to hack - in the case of music by offering the rights to create mashups and so on - that is her right. But if other people offer platforms with similar quality that are better and hackable, available for mashups, then, hey, that's very legitimate competition for Madonna. I think basically that, over time, information protected by intellectual property law as a monopoly will only survive in increasingly isolated corners of the economy. In these corner cases - and pharmaceuticals is often cited as an example - IP will remain, but in most fields, I think intellectual commons will eventually dominate. Gartner: Two final questions for you. What are you working on now? von Hippel: Quite a few projects. In addition to the Danish project I mentioned earlier, I mentioned that Fred Gault and I are trying to document that user-centered innovation expenditures are much greater than manufacturer-centered innovation. In addition, Carliss Baldwin, a professor at HBS, and I are working on models to show that, in a fair fight, innovation by users collaborating in communities will drive out manufacturer-centered innovation in the arena of product and service design. Another really fun project is with Karim Lakhani, also a professor at HBS. He and I are working on how what we are calling "micro-distributed innovation" works. Gartner: In your mind, what does that mean for the Oracles of the world, the IBM Softwares, the Microsofts of the world, the hundred thousand other companies that make or want to make their living out of licensing proprietary software technology? von Hippel: Haven't we talked about the winds of creative destruction? Gartner: Not today. von Hippel: The winds of creative destruction. Gartner: What do they become? Or what do the successors become? von Hippel: As I said, I think activity moves up into the user layer. No one has yet worked out the economic implications of this or the implications for specific firms. There is a growing storm of interest in academia and business - so, we will find out! Gartner: It's interesting. I love the things that are out there. Now, Yahoo has this thing called Yahoo Pipes, where you can take a mashup and you can share mashups with other people so that they can then use the mashup in their mashup. von Hippel: There you go. See that? Isn't that cool? Gartner: Yes, very cool. So, think a little bit about, our client base is the CIO, and the IT manager, and so forth, and they do strategy, policy and investment around technology. Is there some question I didn't ask you, or some message you'd like to give them, or some thought based on your research you'd like to leave them with? von Hippel: Yes, the economy clearly is in a major paradigm shift - we are shifting from manufacturer-centered to user-centered innovation at a great rate. Researchers and consultants still have only the barest understanding of what this means for users and suppliers. You, as the users of the new paradigm, will have to innovate and show the way. Gartner: Fun times. von Hippel: Fun times indeed. Gartner: Thank you very much.  |
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