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Tuesday, May 29, 2007

Changing Economic Paradigm & User Centric Innovation

While traveling back home from Marco Island last week, my colleagues drew my attention to the ascending influence of Second Life. While the discussions began to center around Avatars and business implications, I was thanking myself to be in the company of incredibly smart people – being in the company of such smart people, always takes discussions and understanding to a different level. Nissan embracing second life is quite an endorsement of the power and reach of Second Life, so went the discussions.Coming right after being part of a global summit focussed on innovation,the discussions were more interesting.

In this age of contribution economy – a phenomenon that we are seeing ever since the Internet started to connect everyone to everyone else all the time, people from around the world can more easily contribute leading to exploding results - caused by the coming together of energy, ideas, and knowledge. Some of the more familiar examples of these collaborative efforts include blogs, open-source software, podcasts, and even the nonprofit online encyclopedia Wikipedia. We are also seeing customers leading the charge of innovation and the economist article on user led innovation exemplifies a new form of collaboration. The rise of online communities, together with the development of powerful and easy-to-use design tools, seems to be boosting the phenomenon, as well as bringing it to the attention of a wider audience, says Eric Von Hippel of MIT, author of the well known book Democratizing innovation.

Eric Von Hippel in this Gartner Fellow Interview opines that the economy clearly is in a major paradigm shift - - shifting from manufacturer-centered to user-centered innovation at a great rate. He shares interesting points.

He points out that 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.He would like to see this as the emergent solution and emergent market model. Here, users develop solutions - and manufacturers can therefore build their new product ideas by examining user-developed solutions as well as user needs. While tracing the sources of innovation, he claims, we find that users actually are the ones that typically develop the functionally new products that later become major commercial successes. He gives a few interesting examples:

A. The first heart-lung machine and the first skateboard as well, both were first prototyped and applied by users.

B. 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.

He argues that 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, he asks.

Finally he finds that user innovation is getting more and more frequent, as the cost of the investment innovating users must make to achieve their goal steadily drops.

The interview is extremely insightful, focusing itself on the evolution, growth and management of innovation and in looking through what conventional collaborative mechanism in fusion with powerful mechanisms like internet enabled collaboration could help achieve –all these point to a world of immense possibilities. With a dominant number of internet users poised to take a dip in the virtual world, the virtual world could become more and more real!!

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
"All views expressed are my personal views are not related in any way to my employer"