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Bill St. Arnaud is a consultant and research engineer who works with clients around the world on a variety of subjects such as next generation Internet networks and developing practical solutions to reduce CO2 emissions such as free broadband and dynamic charging of eVehicles. He is an author of many papers and articles on these topics and is a frequent guest speaker. For more details on my research interests see

Wednesday, October 31, 2007

The democratization of Innovation - the Economist

[The latest issue of the Economist has an excellent report on "Innovation". One the main themes from the report is that ICT and the Internet are transforming the way innovation is done, and the speed at which it is happening. Innovation used to be largely the purview of "white coat" researchers at universities and industry labs. Governments have poured billions of dollars into university research, but have seen little in return in terms of innovation and new products or services. But now thanks to the Internet and SOA, Web 2.0 tools, open source business models etc a much larger community can extract this knowledge from academic research and be full participants, if not leaders, in the innovation process. This will be a significant advantage for entrepreneurs and small business and will have significant transformative process on our economy. Thanks to Craig Dobson for this pointer. Some excerpts from the Economist report- BSA]

Democratization of Innovation

Economist Report

How globalisation and information technology are spurring faster innovation

Now the centrally planned approach is giving way to the more democratic, even joyously anarchic, new model of innovation. Clever ideas have always been everywhere, of course, but companies were often too closed to pick them up. The move to an open approach to innovation is far more promising. An insight from a bright spark in a research lab in Bangalore or an avid mountain biker in Colorado now has a decent chance of being turned into a product and brought to market.

That is why innovation matters. With manufacturing now barely a fifth of economic activity in rich countries, the “knowledge economy” is becoming more important. Indeed, rich countries may not be able to compete with rivals offering low-cost products and services if they do not learn to innovate better and faster.

The move toward open innovation is beginning to transform entire industries

Mr Chesbrough's two books “Open Innovation” and “Open Business Models” have popularised the notion of looking for bright ideas outside of an organisation. As the concept of open innovation has become ever more fashionable, the corporate R&D lab has become decreasingly relevant. Most ideas don't come from there (see chart 4).

IBM is another iconic firm that has jumped on the open-innovation bandwagon. The once-secretive company has done a sharp U-turn and embraced Linux, an open-source software language. IBM now gushes about being part of the “open-innovation community”, yielding hundreds of software patents to the “creative commons” rather than registering them for itself. However, it also continues to take out patents at a record pace in other areas, such as advanced materials, and in the process racks up some $1 billion a year in licensing fees.

For a business that uses open and networked innovation, it matters less where ideas are invented. Managers need to focus on extracting value from ideas, wherever they come from.