Friday, June 17, 2005

Democratizing Innovation - Eric von Hippel

Way cool innovator:

Eric von Hippel, Professor and Head of the Innovation and Entrepreneurship Group at the MIT School of Management

Apart from having patented inventions, von Hippel also studies the economics of innovation - a fascinating subject. Check out his online book on democratizing innovation.

In 1986, Von Hippel created a formula for the measurement of whether or not a company should pursue innovation: b=(v x r) - c - d.
b --> decision about whether or not to deploy new product
v --> dollar volume of business derived from innovation
r --> rate of profit resulting from innovation
c --> cost of switching to new method
d --> loss of "old benefits" when doing "new thing"

In this month's Wired magazine (ahhh...the open sharing of information...why do I bother paying for my subscription, I wonder), Bruce Sterling writes an in interesting article about the shift (?) in perception of innovation from the benefits (v x r) side to the cost (-c-d) side. Sterling argues that this shift arises because innovation has become a commodity. Interesting stuff, with implication for both individual innovators, large corporations trying to retain market share, and policy makers.

BTW, Sterling also blogs...


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