Professor Karim Lakhani, co-chair of the 2016 Open and User Innovation Conference, talks with Matt Tucker about how people outside the traditional boundaries of firms are radically changing the innovation process.
Tucker: Thanks for taking the time to talk to me about Revolutionizing Innovation. It’s a new book that you’ve edited with Dietmar Harhoff that curates some of the foundational research in the field of open and user innovation. To start off, I’m curious: what was the impetus for the book?
Lakhani: The book came about as a way to celebrate Eric von Hippel’s 70th birthday. There’s a tradition of academics celebrating their colleagues’ birthdays by writing papers about the impact of their work. At the 2011 Open and User Innovation Conference in Vienna, many of us that had learned from Eric were together and presented papers, and it turned out to be really the latest and greatest research around open and user innovation. That gave us the idea, and knowing Eric’s birthday was coming up gave us the reason to put the book together.
Tucker: That’s a cool tradition. I know many people consider Eric to be the “founder” of the open and user innovation field. His work has influenced so many in academia and business, and we’re seeing rapid growth of the trends he identified in user innovation and product development. Did you feel like this is such a pivotal point for open user innovation research that it merited putting a book together?
Lakhani: Yes. Our research shows up in many different journals, so the book is a way to get the leading researchers in this space together in one volume, where we can present their research and showcase the frontier. What started off in the ’70s and ’80s with von Hippel as the lone voice on user innovation has now become this large academic community, over 250 people. In many ways, the world has changed in the direction that Eric was predicting. We have democratized the tools for innovation, we have witnessed and documented the emergence of communities that innovate, and so there’s more and more of this happening in the world, in many different sectors. It was a good time to write the book.
Tucker: Is that the reason for the title?
Lakhani: Yeah, it truly is a revolution in innovation. It’s a different paradigm than the traditional economic view that only producers or manufacturers innovate. Eric was the first to question that paradigm and show the world of users as a source of innovation that cannot be ignored. Subsequently he, his colleagues, and his students have shown that in fact this is a sustainable, legitimate, economically important, policy-relevant driver for innovation.
Tucker: What are the implications of this “user revolution” in innovation?
Lakhani: There are three levels through which we want to think about the implications. The first is, companies now have the ability to access innovative ideas and solutions through a process that is not internally driven, but externally driven. It complements in many ways what firms do. In many cases, the outcomes of open and user innovation are cheaper, faster, and better than those of internal innovation.
The second implication is that it’s actually creating new organizational forms across our society, influencing almost every kind of organization from foundations to communities to even entrepreneurial startups. It’s adding to the ways in which society can do innovation. It’s no longer just for universities or companies. Now you have other organizations, ranging from informal groups to formal communities to large foundations, that can now organize around a goal or a purpose and do this kind of work.
The third implication relates to policy. The research is now showing that we should think about policy instruments that incentivize innovation in communities.
Tucker: There’s a paper in the book about when user innovators actually form firms as opposed to purely engaging in creative, innovative activity without a profit-motive. How is that related to the policy question?
Lakhani: You can think about this in a few ways. One is intellectual property rules and how they may help or hinder user and open innovation. We also know that diffusion of innovation is important, but there’s no real incentives for diffusing user-driven innovation. What might be the role of policy in that? Lastly, we know that user entrepreneurs are more effective and survive better in terms of outcomes compared to other types of sources of innovators. That has certainly an economic effect that could also benefit from smart policy as well.
Tucker: How pervasive do you think open and user innovation is right now, and how pervasive do you see it becoming in the next five years?
Lakhani: Most clearly we see the effect in the software space. Twenty years ago, nobody would have predicted that large technology firms would have their infrastructure relying on open source software, and also that they would be open sourcing their key technologies, like what’s happening in the machine learning space. Certainly, this really key and important sector of the economy, software, which is pervasive in all industries, has fully embraced and benefited from open and user innovation.
The challenge now is to see this happen in other spaces. We’ve seen this in content, where we look at Wikipedia as a great example. YouTube is another content platform that is driven this way.
As the book shows, we have seen new community-driven brands emerge, such as Muji, which is a big Japanese retailer. They are embracing open and user innovation for selecting and funding products. I think all of those elements are part and parcel of this trend.
So software is the leading candidate, but across a range of industries we see people trying these things out.
Tucker: As more software, content, and other forms of information are produced externally and distributed in a free and open way, how does that change a company’s strategy?
Lakhani: There are two strategies for companies. One is that it can greatly complement your innovation process. Apple relies on open source for the creation of their core software bits, and that’s a great example from a company that we should consider. Apple is highly proprietary, highly closed in many ways, one of the most profitable and highly valued companies in the world — and yet they rely on open source. This tells you that they have figured out how to think about open source as a complement to their activities.
Above and beyond cost savings — because Apple doesn’t need to save any money — it’s more about the fact that this is a better process that yields better solutions. If Apple, as proprietary as it is, can figure this out, surely other companies can also figure out a complementary strategy of how to use open source, contribute back to it, but also use it for their core products.
The other interesting strategy and trend that we see is companies that are “born open,” whether that be Threadless for t-shirts or Local Motors for cars. We see these companies saying, “I don’t need any R&D whatsoever, I just need an integration function and a curation function, and the rest will be done by the community.”
I think this trend will continue, that there’s going to be new startups emerging that are born open, and that’s going to raise interesting questions for companies as well.
Tucker: My last question is: what would your pitch be to readers who read the book, and what do you hope they take away?
Lakhani: Innovation practitioners and scholars are the main audience for the book. Practitioners, managers, executives, and entrepreneurs will find the book to be highly accessible and can show to them how to conceive of open and user innovation programs that they can implement in their organizations, whether that’s the different aspects of running a contest, understanding motivations, or applications in retail or healthcare. There are practical examples, but the examples are also embedded in a conceptual framework that will help them to understand and extend the practice in their own context.
The second audience are scholars who are studying innovation, company strategy, and intellectual property. If they read the book, those scholars will come up to speed on all the latest and greatest research in the field. It truly reflects the leading edge of work that people are doing.