About the dispute between Open and User Innovation

I think lead users create value for the specific set of early adopters so as a consequnce, UI can capture the value from the early adopters. I could also see the number of cases where these UI ultimately worked as catalyst for product innovation and consequently contributed to boost the value capture. Kayak and surfboard cases show how UI contributed to the proliferation of value capture. Point here is, User Innovation and User Innovation driven business model is different subject. Business model constitues the value creation, value capture and value network that eventually mediates the firm's relationship with other firm on the value creation and capture. Equally Open Innovation and Open Business model is different subject.

Anyway, Professor Joel West has been observed the difference between UI and OI and finally published the perspective on UI/OI and Cumulative Innovation. Enjoy the reading. CH.


About the dispute between Open and User Innovation
Written by Alexander Schroll 22 January 2010

If you are working or researching in the area of innovation, you will propably know Eric von Hippel (MIT, Sloan School of Management) and Henry Chesbrough (UC Berkeley). Both represent a stream in innovation research. Although, the scientific world should pull together, it is quite interesting to find both groups separating themselves from each other. This is true on individual level, but also on university level.

On the one hand we have the user innovation community, which is led by Eric von Hippel. He pioneered research work on Lead Users (his books Sources of Innovation, 1988 and Democratizing Innovation, 2005 are available for free download!) and today the research community is dealing with topics like Lead Users, User Entrepreneurship, Innovation Communities, free revealing of IP (Intellectual Property), Toolkits for Innovation and Design, and Open Source. Leading schools in this area are MIT, WU Vienna, RWTH Aachen but also TU Berlin, Bocconi (and many more). On the other hand we have the open innovation community, which is led by Henry Chesbrough. He coined the term 'open innovation' and wrote several books about open innovation. Interests of this research community are mostly focusing around the organization and process of open innovation within the firm, Intellectual Property Rights, Innovation Intermediaries, and regional/national innovation systems and policies. Leading schools in this area are the UC Berkeley, Hasselt University, San Jose State University, Copenhagen Business School, WHU Koblenz, University of St. Gallen, and Imperial College London.

In academia, researchers often belong only to the one group which is dominant in the specific university. To my knowledge only few researchers are working in both fields simultaneously, for instance Joel West (with his work open source) and Frank Piller (with his work on toolkits).
User Innovation (UI) is the older concept and is still very popular in the academic world. But since creation of the term 'Open Innovation' (OI), OI has received a lot of awareness and is actively discovered and used by firms - because they finally recognize how they can benefit from User Innovation. But the subliminal controversy between these research steams cannot solely be accounted to a difference in industry awareness and the resulting jealousy. There are also other major differences.

Open Innovation = value capture, User Innovation = value creation. Both research streams were born (or profited) from the socio-economic changes in the last decades: shorter product-life cycles, more complex technologies, increasing difficulty to identify consumer needs and the emergence of new technologies (internet, mass customization). Although both research streams have similarities; they greatly differ regarding the business model.

For instance, the user innovation researchers have written a lot about value creation through lead users and online communities at LEGO. But there was never written something about value capture at LEGO. The whole research stream mostly focuses on methods for value creation (through toolkits, communities etc.). Hence, it seems that value capture is not an interesting question for the user innovation researchers. Chesbrough argues that some researchers even find it highly inconvenient that companies are now using user innovation to make money (this seems to be the direct critique of von Hippel).

Chesbrough's observation is certainly true. Last year, at the User and Open Innovation Workshop in Hamburg, von Hippel really didn't seem to be happy about the way things are going with open innovation, especially how open innovation is perceived by companies.
In the 1980's, von Hippel was the first one realizing the great potential of user innovations. But today companies are increasingly using and commercializing user innovation (and then also protecting the innovations through patents), which is a trend that became even stronger with the rise of the open innovation concept. And von Hippel doesn't seem to like this commercialization of innovations that were created in the locus of the user. According to his latest book, I think that he would prefer free revealing of user innovations with no IP protection (e.g. open source).

On the other hand, Chesbrough doesn't like the non-presence of value capture in user innovation research. Although Chesbrough highly recommends reading 'Democratizing Innovation', he criticizes that the word 'business model' is not even mentioned in the index. Actually, the word is mentioned only 8 times in the whole book (220 pages). In the 2006 book 'Open Innovation: Researching a New Paradigm', the word is mentioned around 30 times - just in the first chapter!
But user innovation researchers are not only 'forgetting' about the important dimension of value capture. I would even assume deeper underlying differences of the involved researchers on socio-economic or political level.

How to combine User and Open Innovation?Obviously it would be better if both research communities would work together. Therefore, the next big advancement in user and open innovation research will be the combination/consolidation of these two literature streams. A first step is done by Joel West and Marcel Bogers with their paper 'Contrasting Innovation Creation and Commercialization within Open, User and Cumulative Innovation'. In this paper they introduced the term 'distributed innovation'. They define distributed innovation as a metacategory for prior research on innovation processes that cross organizational boundaries or take place entirely outside an organization. The paper is definitely worth reading and has some very interesting thoughts in it. But personally I don't think that we need yet another term for open and user innovation.

A major part of the OI concept describes the acquisition and the commercialization of IP. Although open innovation is profiting from collaborative activities (including free revealing from users), OI describes a much broader concept than UI does. Therefore, I would describe open innovation as a generic strategy of the firm (hence, the main focus is value capture) and user innovation (lead user method, toolkits, communities) is one method or tool for OI (hence, a strong focus on value creation). Consequently, user innovation would be a part of open innovation. Although there is no personal judgment about the importance of each research stream in this categorization, I am sure that some researchers on UI wouldn't be too happy about being a substream of OI.
This article represents my personal opinion and far be it from me to vilify someones work. Please consider this article as a summary of the evident differences between OI and UI and as an invitation to further collaboration between OI and UI researchers. If you feel insulted or if you disagree with me, please contact me by email.

Source: open-innovation.net, http://www.open-innovation.net/blog/79-about-the-dispute-between-open-and-user-innovation.html