Attention Companies: Your Users Are Your Competitors

MIT innovation expert Eric Von Hippel is putting economic rigor behind the intuition of a generation of technologists that the Internet and computing more generally were leveling the playing field between large producers and other types of innovators.

In a talk on Tuesday at the Berkman Center for Internet and Society at Harvard University, Von Hippel will lay out his idea that individual users of products and open source collaborations are becoming more competitive with the traditional manufacturing engines of the economy.

The Berkman Center is a leading institution for important research into the uses and impacts of digital technologies. We'll be previewing their regular brownbag lunches here on The Atlantic Technology Channel.

Economists have long looked at big producers with many users -- say, a car company -- and said that the reason they built individual innovators is that they can spread their costs over a large number of users. "A manufacturer can spread his costs over all his users and that means that the manufacturer should be able to innovate more by spending more money than users," Von Hippel told The Atlantic.

But the two major components of innovation -- designing something and telling people about it -- are both dropping.

"I can design with tools as good as those that the car companies use, that Intel uses. It's just cheap software that lets me design, simulate and test," he said. "Communication costs are also dropping because of the Internet. That lets users actually undertake bigger problems because each one does a chunk of the work. I can do part of Linux. You can do another part of Linux."

The net effect is that you need less money to accomplish the same amount of innovation -- and producers are no longer the only route towards accomplishing some product goals. New areas are opening up where individuals and groups of people can compete head-to-head with large companies in the pursuit of making new things.

The shift is already underway, Von Hippel thinks, and that's a good thing. Now the government needs to play policy catch-up to support small and open innovators, particularly around intellectual property laws.

"What's happening is that the whole IP system is placing a tax on open people," he argued. "People who want to be open have to prove that somebody else doesn't own the damn thing. So, yes, there are in-built biases in the system. The system was designed for big-company, industrial kind of things and policy is not properly designed for this new era."

Even if you've heard similar arguments before, what's important about Von Hippel's work is that he's translated technologist jargon into economist jargon. He's formalized what small and open innovators do and why they're important.

If you'd like to hear more about Von Hippel's ideas, check out the livestream on Berkman's website tomorrow at 12:30 p.m. EST. You can also check out Von Hippel's most recent paper, Modeling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innobation.