Now Everyone Can Innovate
This article was published at the Malaysian Multimedia Coprorate web site in September 2009.
User led innovation where users play an active role in new product or service development is exploding with the advent of digital technologies in the likes of Web 2.0.
User innovation is serious business – start up companies of this nature has been sold for hundreds of millions recently. British based Bebo, an acronym for “Blog Early, Blog Often”, was founded in early 2005 and sold to AOL for US$850 million in March 2008 – no bad for a company that is barely 3 years old! Internet radio cum social networking site Last.fm with 30 million uses from 200 countries was sold to CBS Interactive for US$280 million. Sibelius, as in the music software company, not the classical music composer, was acquired by Avid for US$23 million in cash. And the list goes on.
User-led innovation is based on the notion that new ideas do not always first appear from a formal industrial research and development. Users too are part of the development process rather than being distinct from it. After all, users are the best people to tell you what they want in the product or service since they are the ones using it and therefore know what the short comings are. Users these days are smarter and better connected than they were a generation ago. They are even able to help design, build and distribute their own solutions. This is “user led innovation”.
User led innovation is nothing new, while writing “The Wealth of Nations” back in 1776, Adam Smith, the father of modern economics, noted that machines used for manufacturing were inventions of the “common workers”. This tradition continued well in to the 20th and 21st century. Mass computing and the Internet are classic examples where a series of user-led innovations in the 1970s and 1980s that took computers out of large corporations and put them into homes and small businesses, while Tim Berners-Lee invented the World Wide Web as a means of sharing information at his workplace at CERN, the European Organization for Nuclear Research.
In the 2000s, this trend is accelerated and amplified when developments in network information and communications technologies like the broadband and Web 2.0. Combined with a much better educated global population, this has enabled a new wave of user led innovation. Better yet, these “common inventors” of today no longer work in isolation in their workshops but belong to international communities of link minded individuals. The Internet has become a global workshop where they can share ideas, tools, techniques and collaborate on project that change entire industries.
In sectors like software, music and video games – user innovation is no longer an option and user participation is vital of the success of the products. In many industries, close innovation no longer applies. Clear divisions between companies and consumers or firms and suppliers are increasingly blurred. We are all (potentially) innovators now.
User led innovation is not confined to the small startups. Big players like IBM and Sun Microsystems has been at it for decades and open source is but only one of the more recent projects or rather experiments. Even Microsoft has created a free development toolkit to encourage users to build new games for its console.
It is worth noting that there are important differences between “user led innovation” and the “traditional innovation”.
In the traditional innovation model, firms hire people in their research and development departments have they come up with new ideas and develop them into new products or services. Typically the intellectual property rights or commonly know as IP, belongs the company. Use led innovation however, has now pushed the boundaries of innovation and the issue IP ownership is blurred and this is often seen as an inhibitor.
Let’s take a closer look at what exactly is “user led innovation”. We have to remember that innovation i.e. from idea stage to a commercialized product is a process that than just the “eureka” event. In fact there may take several of these “eureka” events before an idea is eventually commercialized. The users may participate in one or more stages of the entire process. As a result, user led innovation can range from something as simple as giving feedback to creating entirely new product, services and even systems. So there are essentially five types of user led innovation – feedback, content production, modding and user manufacturing.
The first and the simplest form of user led innovation is the provision of feedback these days are often done via forums and emails when knowledgeable users are asked for advice and support by newer users. These more advanced users often probe and report flaws and weaknesses in new products.
The second is the production of content for existing products. YouTube, MySpace, Facebook are classic examples of user generated content. Firms provide the tools and platform for the users to express themselves and contribute personal and sometimes creative content. But social networking is not just confined to the giants mentioned above. Specialized communities like health portal NetDoctor (netdoctor.co.uk) and its array of forums, self-help and expert contributors, has found itself in the portfolio of British publisher NatMag (The National Magazine Company) after six years of growth and consolidation – including a substantial user-generated knowledge-base. Other similar sites include language education community like Huitalk.com and social lending places Zopa.com.
The third type is re-combining existing products and services to create new ones. For instance users can mix two different tracks of music to create a new one. Ironically, the music industry has been cited as the classic example of “how not to do it” when it comes to innovation.
The death of the traditional model can be traced to the launch of Napster in 1999. Until then, users were expected simply to play the records, tapes or CDs they had purchased. The record firms tightly controlled the means of production and distribution and users were confined to the formats produced by the industry. The old, traditional model for recorded music “purchase and consume” no longer works today. No longer just the “dumb user”, the younger generation these days prefers to sample, mix and re-mix music, as well as creating custom compilations.
One such user by the name of Shawn Fanning tapped into this unmet need and turned the industry upside down. Drawing on a series of technological innovations including widespread Internet use, mass PC ownership and the development of systems for file compression like MP3, Fanning’s creation helped redefine the distribution and consumption of music. The 26 million user Napster was eventually shutdown in July 2001 due to legal action from the music industry, only to be replaced with growing number file sharing sites!
Following an initial reluctance to embrace this new form of music consumption, the music industry is rapidly developing more open offerings and adapting its business model to reflect the new market reality. Since then bands like Nine Inch Nails (NIN) released a number of tracks for remixing, and has since created a website that enables fans to download, remix, rate and discuss fan created NIN remixes.
Eric Nicoli, CEO of the EMI Group in 2007, captured this new attitude well :
“In this internet age, the consumer is using music content more than ever before – whether that’s playlisting, podcasting, personalizing, sharing, downloading or just simply enjoying it. The digital revolution has caused a complete change to the culture, operations and attitude of music companies everywhere. It hasn’t been easy, and we must certainly continue to fight piracy in all its forms. But there can be no doubt that with even greater commitment to innovation, and a true focus on the consumer, digital distribution is becoming the best thing that ever happened to the music business and the music fan.”
The fourth category of user innovation has to do with the modification of existing products. ‘Modding’ (modifying) takes two main forms: making minor adjustments to the operation of existing products; and the re-engineering products to add new functions. Case modding for example is the practice of modifying the chassis (or case) of a home PC or video game console. Case mods often involve adding lighting, custom paint jobs, or even the creation of an entirely new custom-designed chassis. An active subculture exists around case modding and an entire industry has grown up around this activity.
Perhaps the most prevalent and well known mod is that of the modern video games industry. The creation of modified versions of games by users has become a significant source of innovation. The scale of such modding activity is huge – ModDB.com is an internet site devoted to games modding for various platforms; from PC, X360, Wii, PSP and PS3. It has over 220,000 members and makes available over 500 user-created games, nearly 4,000 user-created major game modifications (‘mods’) and over 1,200 user-created minor game ones.
Over the past 15 years, video game firms have changed how they develop and publish games in order to harness this source of innovation. The relationship between the firm and the user community continues to develop as individual mods and entire versions of games developed by users are adopted by firms. Individual users also find employment within the games development industry on the back of their modding work.
Even the traditional old economy companies are getting at it. Toy maker Lego launched its Mindstorms in 1998 as a programmable toy that could be used to build simple robots and other devices. Although the product was originally designed for Lego’s core children’s market, it quickly became clear that it was being purchased by technically gifted adults, an entirely different demographic, who were able fully to exploit and extend Mindstorm’s capabilities.
Within a short time, Mindstorms became a cult item within user communities. They reverse engineered and dramatically extended the original designer’s specifications. Lego was faced with a difficult choice: to try and stop this activity, much of it breaching copyright or to embrace and work with it. Ultimately, Lego chose the latter. The firm encouraged users to innovate with its product, with the result that sales continued for far longer than would normally be the case. Lego took this a stage further when it recruited a series of leading users to participate in the design of the next generation of the product, Lego Mindstorms NXT, released in 2006.
Finally, the most extensive user-led innovation is the production of novel products. This occurs when individual users or user communities create their own novel systems, products or services – for example in developing major open source software systems such as Linux. Users in case have become manufacturers. Such undertaking usually involves a large group of dedicated users and requires good amount coordination and management.
User led innovation is undoubtedly one of the biggest trends in the “democratization of product use and development” and there is no sign of slowing down. Firms should harness on this phenomenon to its advantage rather than getting too preoccupied with IP rights and in the end, lose sight of the big picture.
But that is not to say firms should not ignore these issues entirely. For guidance, they can refer to the Creative Commons, a US-based charitable corporation aiming to change aspects of the current system of copyright that act against creativity and innovation. The organization has created a series of model licenses that enable authors, scientists, artists, educators and other creatives clearly to identify the rights they wish their work to carry. The intention is to increase the number of creative works that are available for others legally to share, remix and reuse.
The good news is that studies have shown that user innovators are often passionate about their particular area of interest and prepared to devote extraordinary amounts of time and energy to developing their ideas. In this environment, intellectual property may be viewed as less important, or set aside entirely – being interest-driven, users will often set aside all issues concerning IP. IP may even be viewed as an impediment to creativity and innovation.
Therefore firms should embrace and collaborate with these user communities and forum to facilitate innovative activities between members, providing education and development for newcomers.