Traditionally, we have tended to think of businesses (or individuals who then start businesses) as the principal source of innovative new products or services in a market economy. But, in a thought-provoking new working paper, Carliss Y. Baldwin of Harvard Business School and Eric von Hippel of the MIT Sloan School of Management argue that sources of innovation are changing in today’s economy.
In particular, the professors make the case that, as a result of declining design and communication costs and increasing use of modular design architectures, two other types of innovation are competitive in more and more situations. Those two types? Innovation by users and open collaborative innovation projects (like open source software projects, for example).
Shifting Paradigms in Innovation - Improvisations - MIT Sloan Management Review