Chapter 12

Summary

Many aspects of innovation communities as discussed thus far are relatable to those of information communities. In fact, von Hipple argues that innovation communities are a subset of information communities. Improvements in technology are making it easier for such communities to form via easier and faster forms of communication. Such communities are developing very rapidly, offering conveniences and sometimes vital information to many people. An example von Hipple gives is that of websites in the medical field that make it possible for patients suffering from rare diseases to network with other patients and to find specialists that can help. Both users (patients) and doctors participate in such websites.

The science community is an information community that is very closely related to innovation communities. Scientists regularly offer up information that could have proprietary value, to the benefit of the whole community. Sociologists have studied this phenomenon and found that scientists do so because reputation is very important to them and they want to be the first to find and reveal information. Von Hipple argues that innovation communities are able to flourish without subsidy, unlike science communities, because user-innovators benefit directly from their own innovations. Thus they need to external monetary support.

Von Hipple argues that domestic user-innovators are very important to a nation’s competitive advantage. A large base of knowledge from users gives a large boost to manufacturers that can spur the economy in significant ways. AT&T offers a good example of a group of user-innovators that happened to invent the transistor. The company went out and gave a boost to many manufacturing businesses when they could not meet needs in-house. Several of the manufacturers they used when on to have success producing semiconductors.

A major problem facing companies seeking useful innovation is a misattribution of success. Companies often overlook the work done by users, assuming that all the work is being done by R&D departments simply because that is the way things are supposed to work. Users’ ideas are frequently used by companies after many stages of translation between the user, the initial designs by the company, and the final product.

Reflection:

I found this chapter to be a good way to wrap up the ideas of the book and give some closure to von Hipple’s ideas. He gives good examples of studies and applications of user innovation. He also demonstrates benefits to all parties when it comes to open information, which is important to the advancement of information and innovation communities. He gave good comparisons between innovation and information communities, but I think that part would have been more useful at the beginning of the book to help tie-in readers’ understanding of information communities throughout the book.

Chapter 11

Summary

In this chapter, Hippel explores the many benefits of toolkits for developers and innovators. Like Ockham’s Razor, the explanation is simple: toolkits allow average users to tailor custom a product to their specifications without requiring extensive knowledge from the user. It also saves time in developing the product because of its ease of use – in fact, development time for custom semiconductors were cut by 2/3 or more when using toolkits, instead of building them manually.

Von Hippel argues that ‘toolkits’ are not new: any engineering firm/company in any point in time have utilized their own set of tools to create products they specialized in. The present-day user toolkits differ in that they were created for users without the extensive back knowledge needed to create work intensive design projects. With this in mind, there are five important attributes: 1) it enables learning through trial/error 2) have enough flexible options to create the product they want 3) have a low learning curve 4) contain libraries and modules that are required to make custom designs 5) the creations made on the system must be manufacturable on a production scale.

The rest of the chapter goes on to describe each of the 5 requirements in detail, but Hippel’s point is clearly made: toolkits help innovation in allowing ease of use and efficiency for users wanting to create custom product.

Reflection

As far as the message of the chapter goes, it seems pretty simple and straight-forward: toolkits are inherently good for user innovation because it creates an easy to use interface for product design. Although Von Hippel does not give any examples of products, there are plenty that I can think of: one that stands out is Adobe Photoshop. Much like Paint having more than one option for brushes, Photoshop

Chapter 8

Summary

Chapter 8 addresses the need for both user and manufacturer innovation to work synergistically in order to have optimal products out on the market. Manufacturers, in general, have a poor sense of what the users want because they operate at a level so detached from the common user – in order to complement their lack of aptitude in the area, it’s imperative for the manufacturers to get closer to the user innovations.

The amount of user innovations on the market could also lead to a problem of over and underprovisioning. The term overprovisioning implies that if there are too many items on a market, thereby increasing the level of diversity on the market, the amount of manufacturing on the market goes down. The trade off can be seen as: variety products on the market vs quantity of products on the market.

Intellectual property is another debate: because grants and patents are costly and time consuming to get, most innovators don’t stop to think about getting a patent for every innovation they create, because most innovations are minor. The amount of minor contributions, as we learned in previous chapters, is what fuels the greater innovations to come. One example is open source software, namely Linux. By nature, Linux is open source, meaning anyone can make any change on the software, regardless of its impact. Because by nature, most tweaks and changes are minor in nature, the changes accumulate into one large, innovative piece of software.

What does this have to do with intellectual property? It shows that, regardless of the lure of being able to control your innovations, innovators have their own private rewards which outweighs the benefits of having private intellectual property.

Chapter 9

Improvements in technology and more readily available equipment are making it easier for users to become high quality innovators. Easier access to information means users also have an increased ability to make use of vast libraries of useful documentation. The modern advances apply to all kinds of industries. Low cost of design and prototyping makes the allocation problem of user innovation much less significant.

Manufacturers may be forced to adapt to user innovation. It becomes increasingly difficult for large companies to keep up with innovating and producing. Many companies adapt by only manufacturing items that have been designed and shared by users. In markets such as kite-surfing, it has been generally accepted that designs by users are generally as good as designs made by manufacturers. In this instance, a company began producing designs created and shared by users and it was able to do so at lower prices than companies that were focused on both design and production. In some cases, as with the creation of open source software, manufacturers (or large companies) are not at all necessary in the creation of new products.

It is now a more common occurrence for manufacturers to work with the community and lead users in particular, to produce cheap and effective solutions. This is especially relevant in the sporting goods industry. Manufacturers may have varying levels of interaction in product design, from modifying user made creations, to custom machine shops or foundries, which make customer designed products to order.

A trend of supplying toolkits and platform products to users is very common. This allows software companies to create products that are very customizable for the user, without revealing core information. However, there are some problems when users wish to make modifications to the core program to better suit their needs. A similar trend can be found in the gaming industry. “Mods” are user created add-ons to games, many of which attract many users. Products offered complementarily to free ones give manufacturers an ability to make profit and thus benefit from open knowledge. An example is IBM created servers that are shipped with open source software installed.

Reflection:

This chapter helps clarify the way user innovation works with respect to manufacturers and profit seeking entities. Von Hipple gives some good examples though some are outdated. It was often difficult to tell just how widespread certain business strategies are and whether or not they have remained successful.

Chapter 6

This chapter attempts to reveal why innovators are willing to freely reveal information.

When an innovator decides to freely reveal, the information is not always made available to the public with no cost. For example, the information may only be accessible via a magazine or other type of subscription. What does change is the creators ability to sell that information and make a profit from it. Von Hippel sites a few studies that show sharing of important and advantageous information by profit seeking companies dating back to the nineteenth century. New ideas and techniques were often published in trade journals. Free revealing has also been found frequently in more modern businesses such as IBM, though there is often a slight delay between implementation and publishing of the information.

Von Hipple argues that attempts to keep innovations secret may be easily circumvented. Companies often have "similar information" that can lead to the same breakthrough, or a slightly different one. The author backs up his argument with a study done by himself and Lakhani (see pg 82) about Apache help-line websites. Many trade secrets are also discovered by piecing together several forms of readily available information. Secrets held by one or few are very difficult to keep secret. In many cases contractors and business partners gain access to private information in order to do business with an individual or company, making leaks of information very probable.

Some studies have found that patents are not as useful for protecting information as they were once thought to be, though a few companies make substantial profits from licensing information.

Active efforts to make innovations made known serve as evidence that there are in fact benefits to freely revealing information. Programmers often do so in order to bolster their own personal portfolio. People are eager to make their information known quickly in order to promote widespread adaptation of their work. There are also many intangible benefits such as satisfaction and expression of creativity that motivate programmers to work on open source software outside of their paid careers.

Reflection:

I found this chapter to be interesting and important because of its look at the underlying causes of free revealing. The benefits of free knowledge are obvious for society and markets, but without motivation for innovators, almost all profitable knowledge would be locked away. Some of von Hippel's arguments were not very well backed up but all of his points were thought provoking and relevant.

Chapter 5

Summary

From this chapter, we learn the basic steps to product development. It’s actually surprisingly simple and comprises of only 4 steps: Design, Build, Run and Analyze. In breaking down the 4 steps, I will attempt to explain and give analogies to building a new car:

In the design phase, firms use existing designs to create a new and novel solution. The existing designs do not have to be flawed, but little improvements over time could be made. In this phase of our imaginary car building, a car design firm uses a newly refined metal for the car’s body to reduce its weight, and subsequently, its fuel efficiency. Next comes the build phase, where models or prototypes are created to be ran in experiments. Our car firm then sends blueprints and schematics to the nearest laboratory and a prototype is built. The run phase consists of the test model or prototype is simulated for use in real environments. This is where all the experiments occur, and raw data is recorded. The analyze phase is when the findings are assessed and improvements are made.

Throughout the entire process, we stumble onto the idea of ‘Sticky’ information. The idea of sticky information comes from the cost to transfer one piece of knowledge or information to another place; the greater the cost to transfer the information, the more sticky it is. The important role of sticky information comes from the idea of private knowledge and information: millions of dollars are spent every year on research, and many companies are not so eager to give away their private knowledge for free. For example, the stickiness of information creates a ‘catch-22’ of sorts for a small upstart circuits company: if a firm doesn’t know much about circuit design, they would have to pay for sticky information to get a start, but if the firm does not have the budget, then they are at a dead end.

Reflection

Through reading the chapter, I’ve realized that sticky information is almost everywhere. Last summer for example, my parents owned an old Panasonic TV in their bedroom that cut out parts of the image. Being the technology wiz in the house, I promised that I would help fix it. After spending an entire afternoon researching the model of the TV, I found out that the service manual was readily available online – except at the cost of $24.95. It seemed ridiculous to me that a 500kb pdf file would set me back $25!

In the end, I did purchase it under my parents’ rationale that spending $25 to be able to service the TV through a set of keycodes was better than spending $250 on a newer TV. I knew the practice of costly information existed but I never thought it would affect me, albeit in a small, trivial fashion.

Chapters 3-4

Studies are beginning to show users are first to develop and make significant modifications to products. The results also show that the rate of innovation by users is affected by the degree of commitment to or interest the users have in the product they are helping to improve. For example, university surgeons are likely to innovate when it comes to their instruments because they are very invested in the performance of those products.

There is evidence that product innovation is concentrated among “lead users.” This is because they are typically at the leading edge when it comes to market trends and they anticipate high benefits from obtaining a solution. Many lead users have access to products before the general public so they can detect problems early and help make changes that will benefit most users. They are also very useful at finding problems because of their vested interest in a product or industry. As intensity of hobby interest goes down, it’s likely that rates of user innovation drop too.

Libraries provide an excellent example of user modification. Many libraries found it difficult to find outside vendors that would provide needed/desired modifications to Online Public Access systems (“OPACs”). It became increasingly common for libraries to then hire their own in-house programmers to make needed modifications. Libraries that made their own modifications were found to have the qualities of being lead users. Many of the improvements made by libraries were later used by the manufacturers themselves to improve the OPACs.

Users are often highly heterogeneous when it comes to specific needs. They may differ for many reasons such as available resources and pathway from original state to preferred condition. The diversity of needs among users suggests a need for highly heterogeneous products. This makes things very difficult for manufacturers because they have many considerations when designing products that they want to appeal to many users. In some cases, the most important or most desired characteristic of a product may be unique per user. Users must decide between developing their own solution and paying for someone else to develop it for them.

Several studies have attempted to estimate how much users are willing to pay (WTP) for innovations. The problem with such evaluations is that results often tend to overestimate WTP. In a study involving von Hipple, it was found that costs of improving software often prevent users from making changes to their versions of Apache to the point where they would be completely satisfied.

It is often more cost effective to innovate than to hire a manufacturer when there is only a small amount of affected users or customers. This often saves time and money that would be wasted contacting, creating specifications for, and contracting a manufacturer. It may not even be worthwhile to the manufacturer unless a hefty price is paid.

User-innovators receive additional benefits from innovating for themselves. Much like a puzzle is not valued for the end-result, programmers were found to work on open-source software for intellectual stimulation, to improve their own programming skills, and for the creative experience. The programmers surveyed also mentioned that having control over their own work made the process more appealing and rewarding.