Academic journal article Research-Technology Management

Free Innovation by Consumers-How Producers Can Benefit: Consumers' Free Innovations Represent a Potentially Valuable Resource for Industrial Innovators

Academic journal article Research-Technology Management

Free Innovation by Consumers-How Producers Can Benefit: Consumers' Free Innovations Represent a Potentially Valuable Resource for Industrial Innovators

Article excerpt

Consumers develop many valuable products--and reveal their unprotected designs to others--as "free innovations." (1) These free innovations represent a potentially valuable resource for industrial innovators. Rather than replicating the innovation process already undertaken by these consumer innovators, producers can collect and evaluate consumer designs to identify those with the highest profit potential and apply their R&D dollars to refining these designs. They may also continue to develop products in areas where consumers are not actively innovating, but that are valuable to the business. In other words, to benefit from free innovation, producers must learn to engage in a new division of labor with consumers.

There is a massive amount of free innovation in modern economies; studies in six countries show that tens of millions of people in the household sector--consumers--spend tens of billions of dollars each year to develop and improve products to make their own lives better (Table 1). These individuals, who might also be called "consumer innovators," develop consumer products and services for reasons ranging from personal need to simple enjoyment of the development process to a desire to help others. The market in which these consumer innovators operate is an important innovation segment: consumer products and services account for the largest proportion of GDP in most countries; between 60 and 70 percent of GDP in the United States and other OECD nations is devoted to products and services intended for final consumption (Mataloni 2015; OECD 2015).

Examples of free innovation by users and communities abound; in recent years, this kind of innovation has been spurred by increasing access to free information and low-cost design tools, largely via the Internet, and by the emergence of a seemingly endless variety of online communities where innovators can connect and collaborate. For example, NightScout, a system that monitors diabetics' blood sugar levels through the night, was developed by a community of consumers dedicated to addressing problems associated with Type 1 diabetes. Many of the participants in this community either have Type 1 diabetes themselves or have children who do. NightScout's story, as told by Linebaugh (2014), is emblematic of the phenomenon:

   NightScout got its start in the Livonia, N.Y., home of
   John Costik, a software engineer at the Wegmans
   supermarket chain. In 2012, his son Evan was
   diagnosed with Type 1 diabetes at the age of four.
   The father of two bought a Dexcom continuous
   glucose monitoring system, which uses a hair's width
   sensor under the skin to measure blood-sugar levels.
   He was frustrated that he couldn't see Evan's
   numbers when he was at work. So he started fiddling
   around.

   On May 14 last year [2013], he tweeted a picture of
   his solution: a way to upload the Dexcom receiver's
   data to the Internet using his software, a $4 cable
   and an Android phone.

   That tweet caught the eye of other engineers across
   the country.

   One was Lane Desborough, an engineer with a
   background in control systems for oil refineries
   and chemical plants whose son, 15, has diabetes.
   Mr. Desborough had designed a home-display system
   for glucose-monitor data and called it NightScout.
   But his system couldn't connect to the Internet, so
   it was merged with Mr. Costik's software to create
   the system used today....

   Users stay in touch with each other and the developers
   via a Facebook group set up by Mr. Adams. It now
   has more than 6,800 members. The developers
   are making fixes as bugs arise and adding functions
   such as text-message alarms and access controls via
   updates.

[ILLUSTRATION OMITTED]

Dexcom Corporation, the glucose monitor manufacturer mentioned in the story, has learned from the NightScout design and has since added identical functionality to its products. Dexcom's management sees these new features as a valuable addition to the company's commercial offerings. …

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