1. The Paradigm Shift from Producer to User Innovation



the following content is provided under a Creative Commons license your support will help MIT OpenCourseWare continue to offer high quality educational resources for free to make a donation or view additional materials from hundreds of MIT courses visit MIT opencourseware at ocw.mit.edu so I'd like to I'd like to jump right in to the course content and then at the end I will take 15 minutes to talk about the paper and so on and so forth and what the rest of the course will be about but I want to begin by telling you that this course is focused on the largest paradigm shift in the innovation process since the Industrial Revolution it's a huge change it's happening on your shift so I get to admire and watch it and you get to have to do something about it and so that seems like a fair exchange of effort and so what I want to do is is explain to you in this first class what it's about give you an overview and then you can sort of have a sense and then from there what we will do in other classes which follow is we will talk about specific kinds of techniques you can use specific kinds of processes and also we will have visitors who are expert in those processes so that you'll get a sense of the art involved as well as sort of the conceptual material ok so let me begin then by saying in in in one one slide which is even more compressed what's going on with respect to the innovation process so historically at least your lifetimes historically since it's let's say 1934 Schumpeter ah producers have been thought to be the center of the innovation process you know GE probably says find a need and fill it or we bring good things to life and I had personal experiences uh that caused me to doubt this years ago I was a my father was a professor at MIT also and he used to drop me off ever since age 12 in the halls he sort of released me into the halls and people at MIT are very tolerant as you probably figured out and so I as a 12 year old go running around and I look in different laboratories and I'd say what you doing and they'd say oh you know I'm looking at sort of frogs eyes and and neurons and frogs eyes or whatever and one of the things that you could always see when you were running around and talking to scientists and engineers was that they were developing their own equipment you know they weren't standing around waiting for a manufacturer to come and rescue them they were doing what they needed to do for themselves now that conflicted in my mind with the view the conventional wisdom as I say about the manufacturers being the center of the innovation process so what is that view about the traditional view if you if you look at this as a curve which is a marketplace curve and you look at the middle and all those circles are potential or actual customers what you see is that there are a lot of customers at the middle and so what do you think to yourself if you're an economist you look at that and you say well you know a producer can spread R&D costs across all those users so a producer can spend more developing a responsive product so it must be the case that producers are the ones who develop the important innovations that we see they can simply spend users they have therefore can hire more expertise and so on and so forth it must be a producer centered process now implications that come out of that for practice and policy are enormous one thing that you will notice if you join a company is that companies have marketing research departments right because what are those marketing research departments doing the company the producer is trying to ask users what they want so that the producer in its R&D department can create it so for example you know I would look at you and now marketing research and I would look at you very carefully you see and I would give you questionnaires and I'd look deep into your psyche and I would say ah you want rum flavored toothpaste and then I would go off to the R&D department and they would make it okay and we would supply it to you and you would be grateful that's the idea now policy related measures that have something to do with that are that producers are protected by intellectual property rights and so on so that they are investments in R&D which they are presumably making to create these products will be protected right from others who might scavenge them now what's happening well remember what I told you about my experience at MIT the interesting thing is that if you look at the beginnings of a market it's not so that there are many many users at the beginnings of the market the need is small and what is exactly needed is uncertain now producers hate small and uncertain markets for the very reason that the economists talk about namely they have to spread their their costs over a bunch of users so they sure better get a bunch of people buying their products so they don't want to do that well so who innovates what see is that at the beginning of the market where new things start it is the user that innovates and the next thing that happens is if other users find this to be a desirable thing other users will pick it up and what's happening then is that first you have some user innovating and then you have other users picking it up and if nobody picks it up it drops away and so what you're getting here is a stronger and stronger signal through users DIY activity do-it-yourself activity as to what is really wanted and eventually producers will enter so this is a very different view of the innovation process but let me make it concrete for you with a specific example and by the way what I'm going to do in a little while is I'm going to ask you for examples of user innovation that you know about so you'll you'll have that task in mind and you'll have to talk to your neighbor about it but beyond that nobody will will ask you to – well we might ask you to tell a class as a whole we'll see okay so here's a specific story that relates to the general pattern I just told you about the specific story is about heart-lung machines basically in the 30s 1930s our children were getting a rheumatic fever and one of the side effects of romantic fever can be damage to the heart valve and basically sometimes the damage get is scarring sometimes the damage can be fixed you know you you cut open the flaps and so on so they continue to function but sometimes the damage is so severe that you really have to replace the heart valve somehow you can't do that on a beating heart so what do you do well at that time there was nothing to do because there was no heart-lung machine there was no way to sustain the pain while they were installing a valve and so doctors in those periods were coping and children were dying on their operating tables and the story goes that a particular young patient uh died on on John Haitian Gibbons operating table and he had had enough and so he said we have to devise a heart-lung machine and he went to producers and he said to the producers look we've got to have a heart-lung machine and they said well you need techniques with a heart-lung machine you know you need to be able to actually replace valves can you do that well I need a heart-lung machine in order to do that well so you haven't developed these techniques yet no how do we know you can well I'm really good at vascular surgery yeah but but how do you know and you know other people will pick up that technique and so on and so forth now at the end of these meetings and he had quite a few on this vein they would withdraw the tea and cookies that they'd offered him and say in effect come back when you've got a heart-lung machine now this is absolutely opposite of the conventional wisdom that the producers are pioneering so they said go away he went away what you see over here is that 20 years later he worked with charitable donations is on from IBM among others and 20 years later he who was not an engineer had built the first functioning heart-lung machine and then what happened well what happened was this pattern that I explained to you before what happened was he was successful right and saved some patients and other surgeons heard of it and therefore they came to observe what he was doing and they then said well I'm going to send my technician to make a copy and he said fine one of the things that users generally do is share rather than sort of restrict others we'll get to that and then what happened was somebody said you know these the you know silly each technician making a machine from scratch why doesn't somebody start a little company so that we can get this stuff made in a more efficient way and the thing began to take off and then some number of years later big medical firms started to come in right so notice what's going on here two things one is the innovation at the start where everything has to start small at the start of things it's the users who innovate and what happens is the users are also providing to the producers signals as to what's good the producer I mean I I had a company years ago and you know and it made fax machines probably know what a fax machine is anymore but it made fax machines and um I had people I ran engineering there and I had people coming in trying to give me ideas and they would come in and they would say well this is a really good idea I remember particularly because it was so crazy some person came in and said I've invented a rubber bowling pin which I thought did not have a close relationship to the fax market and I said well yeah he said well there's going to be a shortage of hard wood and then they'll have to make the pigs out of rubber and I've got the first one in you should manufa well anyway so the point is that a lot of people come to producers and say they want this or that or you should really make this or that or the other thing the producer often doesn't know nor can the producer really figure it out without a huge amount of effort so it's not so stupid that the producer is sitting there saying I'm not getting involved till something happens I'm not criticizing producers I'm just saying that the ven tional paradigm isn't what it should be and so what you see here is that users are not only innovating but they're basically acting like a filtration system by the imitation that they do to separate the wheat from the chaff okay so they're doing those both those things and then the producers are doing what they do which is picking up the successes now what we really have then is to innovation paradigms that are active in the economy the traditional one which people have sort of talked about and which which policy is organized around is the one on the bottom that is the one that says you know in mousse this is called the linear innovation model sometimes it has market research at the beginning sometimes it has R&D at the beginning and what happens is that supposedly markets or R&D advances drive a producer to decide there's an opportunity then what the producer does is develop something then what he does is produce it then what he does is sell it that's the paradigm now the thing that has been invisible and I will show you that basically because people thought that the only people who are active in this system were producers the thing that's been invisible in the economy is this parallel user innovation paradigm and it's sort of fascinating basically you'll see when it seems to be in terms of activity pretty much as large or larger as the producer one but what it involves is that story I told you users innovate they collaboratively evaluate it replicate and improve think about Linux for example and then they diffuse peer to peer for free so that was the story you saw in the case of john haitian given right he innovated other people began to pick it up and improve it and saw it and copy it and it was peer-to-peer diffusion it was not marketplace diffusion it was given away okay now that red arrow there is kind of interesting because what happened there with the red arrow was that at a certain point as you saw producers began to make the heart-lung machine so in other words it shifted when they saw there was sufficient demand from the user innovation paradigm to the producer innovation power and users started to buy the machines from a fabricator because of economies of scale they could get a cheaper and so on and so forth instead of buying it from or making it themselves from the user thing but here's a critical point the whole system of heart operations also involves techniques how do you do it the machine is no good which was the point about the companies in the beginning without the techniques and the technique still diffused by the top barrel the techniques are surgeon to surgeon teaching for free so what you've got when you focus on this arrow is you've got first of all only part of the innovation activity and you've got something that case is in a sense codepen and parasitical are complementary to things that have to travel through the upper system for the things you saw on the bottom system to make any sense so another example are that's very a consumer oriented a skateboard is sold right users develop skateboards same story users develop them they share them other people pick them up they all made them at home eventually manufacturers come in but a skateboard nothing without the techniques that you do with it and those techniques still refuse peer-to-peer you'll see kids around there showing each other you don't have the University of skateboarding although that might be a really good idea but that'd be cool all right so that's the general principles now let me go into some specifics and then I'm going to go into some examples and then I'm going to ask you for your examples ok so the first thing that we have to make really clear here this is called the functional source of innovation an innovation is a user innovation when the developer expects to benefit from using it it's a producer innovation when the developer expects to benefit from selling it ok so a user can be an individual or a firm for example Boeing when they make a new machine tool to better make airplanes that say to machine metal or something their user innovators because they're not expecting to sell that thing when Boeing makes a new airplane they're a producer innovator because they're expecting to sell that thing all of you have worked for companies that basically use some things and if they improve them their user innovators for instance you use software in your firm and also that same firm produces something software hardware whatever produces services and it's in that case both a user and a producer innovator now users innovation motives are are you know when you actually survey these users like like the the surgeons or something what you see is that really they really are needing that thing for themselves and they also have process benefit this is sort of like divide a hundred points up and tell us what your motivations were for innovating and what this was in this particular one it was a sports area kayaking whitewater kayaking why did you innovate and what you see is that over half is personal need for the innovation but there's something else really going on interesting too amongst consumers which is many times they find it really fun that's processed benefit you know wow it's really it's great to develop this new technique I really had fun doing it and in the end I get to use it ok very different than I did it to sell it now I want to also connect this up you've all heard of open innovation and I want to make a clear distinction here we are going to refer to open innovation but there are two ways that term is defined the first way as it were is let's take the second one first Procter and Gamble's connect and develop what Hank chess Perot and Procter and Gamble and so on are talking about is you should buy and sell innovations rather than develop them all yourself it's an RD market thing it's open in the sense that you as a firm should be permeable to buying and selling stuff so Procter & Gamble for instance will say well we want to right this is an actual example we want to write messages on our potato chips you always knew that was a need and so instead of developing some sort of an inkjet thing to do that we'll look around and we'll see if somebody else has done something like that so they looked around and they found somebody who is squirting messages onto the top of cupcakes and they licensed that and that from their perspective was open innovation what we're talking about here is open innovation in a different sense we're talking about open innovation as an open source as in free information information that you can adopt it's part of that user paradigm I told you about users generally as you'll see give stuff away they develop why do they do that because they can get benefit from in-house use they don't have to sell it if you develop a mountain bike for yourself you know it's hard work to patent that thing nobody will pay any attention to you anyway it's more fun to show other people and let them copy it and so on and so forth so you tend to give it away and if you don't somebody else will give away something like it so basically it tends to be that users because they are rewarded in other ways tend to be able to give stuff away okay now how did we figure out and we're about to get two examples how did we figure out that users are the important innovators because it's easy to say it but how do you prove it well what we did was many studies first in specific fields here's an example we said okay let's take the most this is scientific instruments this particular one this is for types gas chromatography and three others important types of scientific instruments and we said let's take the most important innovations that have occurred in these fields over 30 years and let's trace back where they came from is it the producer innovation paradigm or is it the user innovation param what's going on here and so what you see is that this pattern whatever we uncover is the pattern that firms will care about because individual product lines and the innovations that effect them are things that firms care about so if we found out who innovated we would also have some understanding of where they should look next and how they might change their practice right so we took a sample like this and then we tracked back so for instance temperature programming in gas chromatography was a particular important innovation we went to the first and I remember doing this you know we had we had two really good summers with quite a few students and a great deal of volleyball as I remember as well as a data collection so you go to the first company to manufacture whatever it was like let's say the temperature programming innovation in GC you can find that from journals and you say well ok so where did you get that innovation from and they say well we developed it my son or my daughter depending on who had gone to see them you said oh and I was think to myself there goes tenure right it's a producer world after all but we then pursued it we said ok so tell us how you did it Wow we improve this and we improve that and we shined it and man it was incredible and then we being people of very poor taste we would sort of press them and say yeah yeah but we're the original prototype come from and say wow we polished it we shined it so yeah but and finally they'd say something very odd like well you know one day the ceiling opened up and a prototype fell out yes ah it's the prototype very Hoonah but the point was eventually what we discovered was that users had done it in eight out of ten cases of these most important commercial and scientific innovations in this field 80 percent what we would find when we tracked back is that five to seven years earlier than any producer had made such a thing users had made it first just like John Heysham given so for example they wanted to measure led in blood more effectively than could be done by the present instrumentation and then what happened was they had to do it themselves because the manufacturer said nobody wants to do that resolution and then other people would pick it up and eventually people would start hammering away at the innovation company saying for God's sake why do we buy your equipment then we you have to modify it once you make it right in the first place and they'd say something like oh all right and would begin to produce it now notice the second interesting point here was that the producers didn't know this they weren't necessarily lying to us so the two fascinating things here one is that the users are the innovators the second one is that the firm's don't necessarily know it which is fascinating so here you are and you've got an R&D department in your commercializing instrument company busily working away and what's happening is occasionally from a service man or something like that who says you know the customers are grumbling why don't we do this you get these inputs entirely out of the ordinary system that say things like well here's your next new product so we began to wonder here's the data on this we began to again as I told you is about 80% and this is not just that user had the idea this is not co-creation with the user this is the user doing it first okay now we then became curious as to why on earth the companies didn't know this you know what on earth is going on here and that's why I want you by the way in a few minutes to come up with your own examples because it's easy to look at this but until you try it with your own experience you won't necessarily view it one way or the other you won't know whether you believe it or not so why didn't these people believe it well something very interesting this is a user innovation okay this is a particular scientific instruments this first completely automated radio immunoassay system which was used in saying certain things in patients and and a doctor in the university of virginia had said i'm going to do a 30,000 patient heart study and he looked at his residence he said all we have to do is 30,000 manual manual assay and you know you yourselves know that you can you can you can ask your students to do something once or twice but if you ask them to do with thirty thousand times the law to me and so that's what happened and what happened was they went around the lab and they grabbed pieces of things that were around they scrounge and they put it together so they didn't start with an ingot of steel and work from the left they sort of said hey here's a sampler from something here's a pump from something here's a time-delay coil here is the counting well where you measure the reactivity and a computer and so on and that's what they did and that's what was copied now in contrast what the producer made was this now this is inside this but this looks a lot glitzier right it's got a slopey front that's always important room for the logo I mean and it's also more reliable I'm sure and has an operator's manual you know and things like that and the interesting thing is that in these companies the people who were quote R&D or product developers so their entire job in effect was going from here to there so when you ask them who invented the product they said we did why because that's a product and that's not right and then of course what happens next is that marketing picks it up and says by our excellent XYZ and before you know it life is good and the producer GE is again bringing good things to life now once you see this you see it all over the place this is farming most farming innovations things that John Deere might say they did were done by users so gps-guided tractors and all that stuff done by users no time in the winter on your farm and this was the first center-pivot irrigation system and it was conceptually a big deal because you know you've if you've flown across the country you've seen these big circles and you know about right that's what's causing them it's not crop circles or fairies and it's the same principle here what goes on is they used to take that kind of irrigation pipe that you see there and they used to lay it out on the ground and irrigate and then pick it up and move it over 50 meters and do it again and move it over 50 meters and do it again that's what they would do so this farmer said well you know what tube wells are now cheap there's certain kind of well that you just sort of push into the ground with a big pipe and we've got an aquifer that's 50 meters down across hundreds of miles we can push in a well wherever we want and what we'll do is we'll set up this sort of pivot thing and each one has a well in the center and it was quite an innovation this person did it was stuff that was around but it was sophisticated so what you see here is that's the pipe that he used in the previous way of irrigating these are wheels from old farming implements that's a piston and what he did was he drove water through this thing and he would drive it to the in part to the sprinkler heads and in part to this thing here that piston would drive and move the the wheels these wires this was before microprocessors these wires would basically sense a bend in the pipe and turn on the next valve so the whole thing would sort of go around like this now that's spread amongst farmers and I think it was Iowa and then this happened and this is the commercial version and you can see it's considerably glitzier right that rubber tires hey we're not messing around but it's the same damn thing conceptually right so I and my students we specialized in bad taste those social graces whatsoever we called up the Valmont bini which is this company here and we said so who developed this device you or someone else and they said we did my son and we pushed the point we said did you get any input from users living or dead they said certainly not and when you send us our plaques be sure to spell our names right so we said ok but we also asked did you know about this so yeah what about it so what isn't that it hello no he said why and they said you should have seen the crappy quality of that farmers welding which is you know we're all proud of what we do right and what these people do is the share of the innovation process which has to do with sort of improving stuff now I promised you that what we would do next is oh well first I'll tell you about services this all applies the services to a very quickly tell you so we're measuring services and where they came from and users in banking services for instance develop them before do for banks do and so forth and I'll give you one example of that which is so cool and fun just to give you a feeling for it and then comes your own your own you'll get a chance to talk which will be really wonderful so you know you all use internet in your hotel room right and that's a service and hotels are very proud of it now have any of you ever in the time of AOL and dial-up and all that sort of thing did any of you ever disconnect your hotel phone and connect up your computer today we do that you just thought you did that yeah yeah you did that cool all right so in effect what you were doing was supplying Internet in the room to yourself right before the hotel knew anything about it so we went and we talked to the guys at Marriott the chain who were supposed to be involved with R&D and we said well so how'd that come about they said yeah well you know first they said they did it and then sort of thinking back we said so how did that happen it is them well you know thinking back what would happen would be that uh the maid would come into the room and discover the phone in the middle of the floor because sometimes you wouldn't screw it back on would you right and what does she do well she called up maintenance and what it maintenance do they screwed it back onto the wall then what happened well it kept happening sort of like these phones are migrating right just in the middle of the night they get up and they pull them anyway so then what happened well what happened was we put on tamper proof screws so that the guests wouldn't do that it's an innovative response then what happened the guests brought special screwdrivers and kept on doing it then what happened we made steel boxes so they wouldn't cover the connection then what happened they cut the cord and stripped the wires then what happened we began to think we better find out what they're doing before they tear the hotel down you know so the point is here what you see is something very interesting first the users were doing it first but second the sensing instrumentation in the hotel was not set up to pick up the user innovation right it was maintenance who was dealing with it and it was like oh yeah the phone walked into the middle of the floor again you know God does that got to get feet off that phone and then eventually only when it escalated did it get up to somebody who began to think what was going on here okay so now what I've done is I've given you an example of a user innovation in service I've given you examples of user innovations and products I've told you that a user can be a firm or an individual now what I want you to do is to think to yourself about a user innovation either you did as an individual that you observed or that was done in your company now you can when you're sitting in your company you can think about it two ways you can say yes we had to modify such-and-such a machine or software because it wasn't good enough from so we did that or it can be the rotten customers I made this software perfectly then the rotten customer modified and I heard about it right or when you were a kid it can be something like ah you know I modified a toy or whatever it might be okay or as an adult consumer one thing I'll show you in a minute is that six percent of all the adults in the UK and the US basically modify products that's a huge number so I suspect some of you did too okay so just say hello to each other always a very nice initial thing to do and then tell each other you've got three to four minutes tell each other an example so this brings us to the idea that really there's also scale involved here so I'm going to try and experiment with you guys just just to get a sense now for scale of this phenomenon and so this might go really right or really wrong we don't know now you all have something that you carry around stuff in backpacks or whatever right how many of you have in some way modified that thing that backpack or whatever it is how many of you have any of you modified raise your hand if you've modified in some way okay now hold it up for a second let me count 1 2 3 4 5 6 7 8 9 10 11 12 13 that is 14 that is totally wild when you think about it how many of us are you a hundred people I named one product type 14% of you have done something with it I mean when you think about it that's huge so this phenomenon that has never been measured before because who would measure something that doesn't exist when you start to measure it turns out to be huge so we managed to scrape together some money while back and we began to do the first colleagues and I began to do the first representative studies of the frequency with which consumers innovated and what we found was something quite fascinating if you look the UK was the first one to do it and what you did is you do is this is really quite stringent we call them up you know on the phone we say do you innovate they say what's that you go through this conversation and you say well what it amounts to is create or modify a product you know here's some example what did you do tell us about it and so on and so forth and you know you get some large fraction like 30% saying so but then when you look at it some of them say things like I installed software that the manufacturer supplied onto my computer that's not what we're talking about so you screen that out and when you're really strict about it and you screen it up what you find out is that six point one percent of the entire population we couldn't ask people under 18 so is over 18 that's 2.9 million people in the UK when you add up the amount that they spent it's a hundred and forty percent of all the money spent by all the companies in the UK on consumer product development in other words it's big so other countries you know the country this particular measure the 140% is sort of an odd one because if your if your consumer industry as large as it is for instance in Japan and in the US then that fraction goes down but we see this also in underdeveloped countries where you know they are the ones in the Philippines and so on that developed mobile banking using phones and so forth the people who couldn't even necessarily read they used it so the interesting thing here is that it's ubiquitous and we really ought to start to think about how to integrate it into both our theory and into our practice right it's something that just is all over the place it's also true for firms now before we get to you know so I'm going to show you some other things but I just want to show you how natural all this is it's just such a cool I'm going to show you a three-minute video what happened was that Disney you know some guy Don Welles who was under contract to Disney decided you know he didn't really like Mattel and things like this and he wanted to go out and he wanted to film games that kids had developed on their own so he went around the country filming games that kids had developed and you'll see each of them he put in a five minute clip and what you'll see is that in that clip he's showing the game and it was on the Disney Channel and he's also telling the kids how to play it but I just want to play you one of these there are a lot of those clips I want to play you one so you sort of get the flavor now what I want you to watch for is that it's not a something that evolves full-fledged you all did it as kids it's natural as breathing air it's not something that emerges full fledge what happens is you sort of figure it out collaboratively as you're going along I'm sure as you all play games when you kids you know the rules sometimes as you get older getting more and more complex you know you evolve these complicated rules and eventually yeah so anyway ad is collaborative so I just want to show you this one I just think it's really cool now when you see that you know you remember the hog time right it's not like the kids anticipate that it's not like they say ah you know preservation of angular momentum right what's going to happen is the string is going to go and then it's going to accelerate around and do no what happens is they're messing around and they're picking up and keeping the stuff that works and they're dropping the stuff that doesn't so they figure out rocks is a really bad idea they don't use rocks and then they see this thing about this hog tie thing and they incorporate it into the game right that's how users are so powerful and low-cost innovators because basically they are operating in the theatres of use and they can adjust what they want by what they're experiencing right it was the same with jumping in the air with a skateboard right so what happened was you know these skateboard decks were initially flat and then what happened was you know people jumped on the back and it gave a little air you know lift it up a little bit then they figure oh hey that's that's pretty cool and so they started to make the decks curved all users are done just so you could get more air all users are done trial and error learning improving as you do compare that with some company coming and saying what do you think you want you don't even know in the beginning right you don't even know if I mean they're trying tons of things in addition to swinging stuff around you know they come up with all sorts of stuff throwing grapefruits through their mother's window or whatever it might be and sort of the stuff that eventually they don't get punished for and that seems to be fun and so and so forth is the stuff that builds and grows organically ok so now two a couple more points here before we end for the day so now do this so now you start to think about this in terms of theory you start to think and say well yeah so users innovate a lot are they going to innovate more are they going to innovate less what's going to happen here and so Carlos Baldwin and I and I think it's on your list to read by the way I'm not going to chase you about stuff that you're supposed to read you just hopefully will read it and so on so if we look here what we have is communication cost on one axis and design cost to the other now john Heysham given is this guy here's a single user innovator and basically what happens is john haitian given here's design cost john haitian given can afford to innovate up to the point that he can pay for by in-house use or charity or whatever it might be okay so he can only make a design this big on the other hand John Haitian Gibbon doesn't care at all about communication cost because he's doing it all himself right these costs can be higher low he's sitting there for 20 years working away you know not an issue now beyond this we have the green namely if the product was bigger than that before users began to collaborate what happened was that the producer had to do it because again aggregation of demand distribution across now what users would often do is come up with something that was a small and cheap version of something that again the manufacturers would come up with later but now what happened well with the internet and so on communication cost has dropped like a stone and so what has happened is also understanding a modularization has expanded design design tools are increasingly digital and so on and user-friendly and powerful and so what happens is that a project that is huge gets divided up amongst users like Linux and all of a sudden you can do huge stuff so what happens here is in a sense the producer is still in there and he's basically producing dimension of merit improvements typically where he understands the market but increasingly what's happening is collaborative users are becoming viable across more and more of the opportunity space and as design costs go down the single user is capable of more so what you have to imagine is that opportunities here are dots in this space and as costs go down all these opportunities are migrating into the space where they can be done collaboratively by users or singly by users now these kinds of tools that you see around when you look around and you see people creating apps and so on over a weekend they couldn't have done that a few years ago when you see people collaborating and crowdsourcing and so on they couldn't have done that somebody coming in with a solution from Russia somebody else coming in from Afghanistan and so on and so forth right they couldn't have done that but now they can and the result is that increasingly the producer is getting challenged and it's no longer the case that you're having to stand there and say to the producer aw gee you know what you really ought to do is be really nice to your users and co-develop with them because they are so nice and it will be therapeutic and everybody be happy because what's really happening is let me go to here what's really happening is that users are beginning to drive producers out of design and a really cool example of this is kite surfing so I don't know about kite surfing I don't know that Mako didn't do it but basically there was a guy named Saul Griffith and and others around and and users developed the entire sport if you don't know what it is it involves small equivalent of surfboards here and basically you've got a giant kite and the giant kite can in effect act like a reverse parachute it can lift you off the ground these people are being lifted off the ground you can go in different directions with this thing and it's kind of you know you have five control wires and it's kind of sophisticated in terms of aerodynamics entirely developed by users and you have to do it pretty well because when you're 40 meters up in the air if you come down at a rate of speed you think embarrassing that's really not good right so what happened was there were thousands and thousands of these users building these things and they were playing with them and then what happened as in the case of the producers of the heart-lung machine what happened was that the ah that the firm's decided they were going to make this stuff and so basically what they did was they said okay kids the experts have arrived to one side now we will handle it for you right and so they form companies and each hired two or three engineers and they began the sort of yearly model cycle where you know we have the coolest thing and we patent everything and we don't tell anybody else what we're doing and all the rest well this particular guy named Saul Griffith who is an MIT didn't think that was so entertaining and he didn't think the designs were very injury and so he said in this modern age he's going to put up a website it's only did he put up a website where people could post their designs and so people began to post their designs this is uh from somebody Sebastian isn't it in Argentina so it's around the world a super high aspect ratio inflatable design for mountain boarding mountain boarding is the once you've figured out that you had this kite you could use it to mountain you know to go along beaches you could use it to climb mountains basically you could go up the mountain and set it down being pulled by this kite and I've tried this thing and these kites are really powerful you know I mean they have they'll they'll pull yeah no question so then what happened behind each of these things you'll see a bunch of stuff what you'll see is the design of the kite right so those are pieces of fabric that are sewn into a 3d object but they're flat pieces of fabric these are the pieces the panels and what they did is they began to share these panels in terms of sketches and measurements but then they found out that what are called sail lofts which are cutters that cut sails are driven by a CAD system a laser cutter and so on and that's standard around the world so that basically if you publish your CAD file then anybody around the world can make an exact copy of your cut you know you simply go to your local sale often and cut out the exact to the millimeter same thing and then you can put it together and then you can experiment with it so what happened well in not too long a time there were hundreds of people on the site really expert people I mean aerodynamicists from NASA for Christ's sake who also did this and people from aerospace companies and so on and people from the top aerospace departments around the world we're doing this this was fun because it turns out that it's a fund and be sort of the aerodynamics of it or not straightforward and they brought tools you know they started to model the turbulence and so on and they started to design this thing and so on now so people were posting designs and other people were trying them and stuff like that what do you suppose happened to those companies each with two engineers well what happened was the site the designs on the site just totally blew him out of the water right I mean they couldn't compete so in other words against a bunch of people who had firms who were following the traditional model of we innovate you consume the consumers turned around and said get lost we're innovating and beat them and what the producers then began to do was adopt the user designs why wouldn't you they're free so when you think about this in terms of the economics of it what you have basically is a design space let's say hypothetically for all possible kites and what you have all those X's are users you have many more users than you do producer engineers and the users are giving away their stuff for free and the producers are trying to tie it down so what happens well this producer can't copy a good design from that producer because you know what this producer has it protected so you find the same thing when you go to a company like an automobile company Ford or whatever you might like the tailgate of the BMW and you might like the engine of the Ford and you might like the steering wheel or whatever you can't put them together they say listen like my engine by my steering wheel you know it comes as a package too damn bad and so you have to take it as a bunch but when you're a DIY user you can assemble the best sub solution from anywhere made you all alone no local motors you don't so local Motors is is a company that decided to crowdsource basically aspects the design but they crowd-sourced it you know what they were trying to do was get get popular shapes and styles but they were buying engines from certain companies and so on the components were not something they designed so uh you know then you've got style and then you've got their selection process and you think what do you think sucks the performance of the car or you don't like the style I mean they stores hundreds of designs to come up with their car what's called a rally fighter yeah and yeah if you ever seen the rally fighter that's like just the most poorly put together stylistically from you know yeah spatially cantar you're a team you don't like it well but now this is fine but meanwhile tons of users out there are designing and modding their own cars to be what they want to be so where these guys got in trouble in a sense is they're trying to select from a bunch of user innovations and choose one that they think most users will prefer and that's not working so well so one of the things you have to think about it's not the complexity of the matter because I can design my own car and do it you know and lots of people do it's rather you got to figure out now how to make this system work and we'll be talking about that later

12 Comments

  1. ahmad hanif ghanim said:

    Fantastic lecture!

    June 29, 2019
    Reply
  2. Hackul tuturor timpurilor said:

    Sam Harris, Jordan Peterson

    June 29, 2019
    Reply
  3. SunnyFly100 said:

    Users do not innovative. This is a bad model. Never ask user what they want. Maximum they will do – small incremental changes. There is nothing innovative in that.

    June 29, 2019
    Reply
  4. Hamlin, Hamlin & McGill said:

    I have the same course, called "Technology and Innovation Management" , but man…this is much more fun to watch! He is enthusiastic and i learn better from such an Instructor. Well done.

    June 29, 2019
    Reply
  5. 123axel123 said:

    fuck disney for not allowing a small video of kids playing an own inveted game

    June 29, 2019
    Reply
  6. Kym Fox said:

    Amazing! Thank you)

    June 29, 2019
    Reply
  7. NYC Tutu said:

    I will introduce it to my classmates.

    June 29, 2019
    Reply
  8. NYC Tutu said:

    Good video. Thanks for sharing!

    June 29, 2019
    Reply
  9. malachi simonyan said:

    Awesome Video! Thank you!

    June 29, 2019
    Reply
  10. daedra40 said:

    Thanks professor. Invaluable, and so much personality too 😛

    June 29, 2019
    Reply
  11. daedra40 said:

    UniSkate ; soon 😛

    June 29, 2019
    Reply
  12. Slade Wilson said:

    Fascinating

    June 29, 2019
    Reply

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