CIO — In today’s economy, particularly in the high-tech sector, companies must innovate or die. It’s simple: Time is short, and a once brilliant idea can be copied too easily, too quickly if the idea doesn’t evolve.

Eric von Hippel, a professor at the Massachusetts Institute of Technology (MIT), and Karim Lakhani, a former MIT student, have been studying the process of how innovation works in the development of open-source software, with particular consideration to the Apache HTTP server. Their research, which they have presented at conferences and which appears on MIT’s website (www.mit.edu), has important implications for any company interested in developing functionally novel breakthroughs.

As professor of innovation management at MIT’s Sloan School of Management, von Hippel focuses his research on developing strategies to identify new ideas and innovations systematically and quickly. Lakhani, who has a master’s degree in technology and policy from the MIT School of Engineering, is a consultant with The Boston Consulting Group. He specializes in strategy issues in high-tech and e-commerce companies.

In addition to the Apache server, other prominent examples of open source, or freeware, are the Linux operating system, Perl programming language and the e-mail program Sendmail. Open source grew out

of the free software movement started by Richard Stallman, founder of the Free Software Foundation, in the mid-1980s. Members of the self-described open-source "tribe" advocate the unrestricted and free release of software—including the underlying code—liberating users from slavish dependence on proprietary software, as well as enabling users to make modifications to meet their own needs and to contribute to the development of the software. (For more on this, see "Free Radicals," CIO, March 15, 1999, or visit the CIO archives on CIO.com.)

Freelance writer James Barron recently talked with the two researchers at von Hippel’s MIT office about their research and how open-source software can help organizations discover hidden ideas and concepts.


CIO: Eric, your work challenges prevailing wisdom regarding innovation. That model assumes that the product manufacturer almost always drives innovation. Your research asserts that functionally novel products and services tend to be developed by "lead users." Would you explain what you mean?
von Hippel: First let me describe what I mean by the term "users." Users may or may not be direct customers of the manufacturer. They may be in different industries or segments of the marketplace, but they are out in the field trying to do something, grappling with real-world needs and concerns. Lead users are an innovative subset of the user community displaying two characteristics with respect to a product, process or service. They face general needs in a marketplace but face them months or years before the rest of the marketplace encounters them. Since existing companies can’t customize solutions good enough for them, lead users go out there, patch things together and develop their own solutions. They expect to benefit significantly by obtaining solutions to their needs. When those needs are evolving rapidly, as is the case in many high-technology product categories, only users at the front of the trend will have experience today with tomorrow’s needs and solutions.

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