Free Innovation: A multi stakeholder approach to Innovation?


Access to Knowledge

Open source software

2021-05-05 12:44:36 1453 0

As part of the Open African Innovation Research Distinguished Speaker Series, the Access to Knowledge for Development Center (A2K4D) invited Professor Eric von Hippel to the American University in Cairo to give a lecture about Free Innovation. Von Hippel, a professor of Technological Innovation at the MIT Sloan School of Management, and in MIT’s Engineering Systems Division. He specializes in research related to the nature and economics of distributed and free innovation. He also develops and teaches practical methods that individuals, open user communities, and firms can apply to improve their innovation development processes. In his presentation, he explained the concept of Free Innovation and argued that the free innovation paradigm yields more benefits to society than the formerly well-established producer innovation paradigm. Moreover, he discussed how these two paradigms can interact to benefit users, producers, and society. This blog explores von Hippel’s arguments and discusses how legal instruments such as free software licenses enable these interactions. Von Hippel’s pioneering argument about Free Innovation expands the dominant paradigm in economics about innovation, namely Joseph Schumpeter’s understanding of innovation as creative destruction. Schumpeter’s view on innovation is also referred to as the producer innovation paradigm. This paradigm and its various versions portray innovation as purely producer-driven and do not consider the role consumers play in innovation. However, we can look at consumer innovators here as entrepreneurs and drivers of inclusive economic development who innovate and share freely. Von Hippel explained that through product-driven innovation, producers take four main steps to innovate. First, they begin by undertaking the necessary market research to gather information about their targeted consumers to know their needs and preferences. Second, the producers invest in research and development (R&D) of the product itself to determine whether they will innovate to make a completely new product or service or develop an already existing one. Third, they start the production process of the product itself. Last, they diffuse the product in the market to reach their main goal, making profit. Von Hippel stressed the fact that producers must be paid to justify investing in that innovation. He added that the designs or the products which followed the production process are usually not shared for free, but instead copyrighted or trademarked. Free Innovation, on the contrary, is defined by von Hippel as innovations which are developed by consumers who are self-rewarded for their efforts, and who give their designs away “for free.” It is an inherently simple grassroots innovation process, not associated with compensated transactions and any form of intellectual property rights. Products or services developed by users are predominantly available for everyone to modify and use freely. Therefore, free user innovation has a completely different goal; free innovators are motivated by self-rewards and, consequently, do not expect payment or reimbursement for their innovation expenditures. He explained that free innovation consists of two simple steps. Step one: self-rewarded developers/users undertake collaborative evaluation, replication, or improvement of a certain product to suit their needs. Step two is free peer-to-peer diffusion of the innovated product or service with other users who can then replicate or improve this product to suit their own needs as well. According to von Hippel, users’ main aim is to freely share and pioneer new functions in this model. Innovations in medicine serve as a good example to explain the prominent difference between the two paradigms. Medical patients who innovate can develop products but do not want to benefit from selling these products or associated services, as producers do. Rather, free innovators are self-rewarded by their ability to use and share what they develop and for that reason they are willing to let others replicate them for free. Von Hippel explained that patients are increasingly able to conceive of and develop sophisticated medical devices and services to meet their own needs — often without any help from companies that produce or sell medical products. This “free,” need-driven innovation process enables them to benefit from important advances that the market fails to provide. These innovations can also bring benefits to companies that produce and sell medical devices and services. For them, the do-it-yourself efforts can be free R&D that informs and amplifies in-house development efforts. During the lecture, von Hippel presented the case of Dana Lewis, who was diagnosed with Type 1 Diabetes. She collaborated with a software engineer to develop what the medical industry had been promising to deliver for decades: an artificial pancreas. As patients, they sought to solve the problem of low overnight blood sugar levels, a common occurrence among patients which can be deadly. They wanted to design a system that could automatically monitor blood sugar levels every few minutes and provide the right insulin dose to keep her within a healthy range. Within months, Lewis and her co-innovators designed an artificial pancreas that used computer code they wrote themselves. The device significantly improved Lewis’s ability to manage her own blood sugar levels and calculate the appropriate amount of insulin needed, which is a complex process. She and her colleagues decided to make the design available for others online and make their software open source. This was the start of the Open Artificial Pancreas System (OpenAPS) movement. Today, multiple communities participate in this movement, multiple noncommercial DIY artificial pancreas designs are being shared, and thousands of individuals with diabetes use these DIY systems daily to monitor, manage, and improve their health. Consumers innovate and diffuse their innovations in ways that are very different from producers, von Hippel explained, and it is important to understand these differences. Unlike traditional producers, who do the usual market research and product R&D, free innovators or consumers begin by identifying something they need or want that is not available in the marketplace. To address this, they invest their own money, knowledge, and free leisure time to create a solution for themselves. Moreover, rather than seeking to protect their designs from people who can copy them, as commercial innovators do, von Hippel’s research in different countries highlighted that more than 90% of consumer innovators make their designs available to everyone for free. Furthermore, they allow other people to test and improve the initial design and make the new version available for free as well. Once a design is fully developed, it is diffused further, allowing consumers to make their own noncommercial copies. However, this can lead to a situation where producers commercialize the designs without having to license them from the consumer innovators. At times, this makes the original innovators invisible, as the product is marketed and sold commercially without crediting or acknowledging the original innovators. Another interesting argument is that as different as the user and producer paradigms may be, they are complementary rather than opposing. Von Hippel’s research shows that user innovators, producer innovators, and the wider society in general are best served when both paradigms can be used simultaneously. This works best when both producers and users can work in the right legal environment that suits their needs and encourages them to innovate. Producers can benefit from users’ innovation by adopting the product designs, which users developed and tested, for free; users benefit from producer-developed modules for DIY projects such as the artificial pancreas mentioned earlier and also from producer-developed innovations that serve mainstream needs. And, of course, society benefits when users and producers collaborate to innovate and design things that benefit everybody. One such legal instrument that played a very important role in the diffusion of the insulin pump mentioned earlier are the licenses for free software or open source software. Free and Open Source Software (FOSS) enabled Dana and her collaborators to diffuse the code, with which they built the insulin pump, so that other people were able to copy, modify, and use it to make their own versions of that pump that best suited their condition and needs. Promoting FOSS can encourage people to voluntarily improve the design of the software because, as in Dana’s case, sharing the source code under an open license allows others to use and improve the code. In addition, users played the most prominent role in driving the innovation of the pump and its diffusion. Therefore, users should be more often encouraged to participate in the decision-making and implementation of solutions to common problems. It is also important to ensure that free innovators have the legal instruments to allow others to use, re-use, or modify their innovations. This is where the field of internet governance comes into play. The interplay between user and producer innovation also allows us to draw parallels with the field of internet governance. The multi stakeholder model is the predominant model of decision making in different international fora such as the Internet Governance Forum or ICANN, a non-profit organization. ICANN stands for Internet Corporation for Assigned Names and Numbers and it regulates Internet domain names and keeps the net running smoothly. Von Hippel’s insights from the field of innovation reaffirm Internet Governance’ insistence that the best outcomes for society often require all different stakeholders to work together.