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December 24, 2009 Vol. 2, Issue 12

 

Trends in technology are shifting the landscape for innovation, according to scholars from Harvard and MIT.

Since the 1930s, most innovators have belonged to single, non-collaborating firms that gain a profit by selling their products. Change is afoot, however, write Carliss Baldwin of Harvard Business School and Eric von Hippel of MIT’s Sloan School of Management in a working paper.

In the past, individual design was expensive, communication wasn’t cheap or rapid, and modular design methods were not well understood. The introduction of new technologies like powerful personal computers, standardized design languages, and quick, cheap Internet communications is driving down design and communications costs, which in turn is expanding the playing field for innovation. Today, there are benefits to openly sharing innovations, including the opportunity to improve upon an original design and expand networking opportunities. Two noteworthy models are single user innovators and open-collaborative innovators.

Single user innovators include single firms or individuals that create an innovation in order to use it. Athletes like record-breaking Scottish track cyclist Graeme Obree, who modified his bike to suit his racing style, fit into this category of single user innovators.

Open-collaborative innovators are individuals who contribute to and share the work of generating a design. Contributors to open source initiatives like Wikipedia and World Wind Java are two examples of this model. Participants in open collaborative innovation are not rivals and do not intend to sell their products or services.

According to Baldwin and von Hippel, these two modes of innovation have been hindered by government policies like patent protection. These policies have been a part of our country’s framework since the ratification of the Constitution, which sanctioned the creation of intellectual property. Even so, protecting innovations through secrecy or intellectual property rights is expensive and difficult for most industries.

Baldwin and von Hippel suggest rethinking government policy to encourage open sharing, like providing tax credit incentives to single user innovators who share their intellectual property. The authors conclude that we are in the midst of a paradigm shift, where single user and open collaborative innovation are gaining in prominence. Technology has altered a long-standing innovation equilibrium, but changes in our policy infrastructure and innovation mindset are necessary to support this shift.

Read the full working paper.

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