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Shifting Paradigms in Innovation

Posted By Scott Marchese, Tuesday, December 15, 2009
Updated: Thursday, January 24, 2013

Luddites aside, everyone likes innovation- particularly those in the business community who stand to profit from innovative new products and services. As a form of change, innovation is one of human culture's constants, yet the technological and social incentives structures surrounding potential innovators and their products are themselves in a constant state of flux. In today's economy, then, how do such structures affect the innovation process?

According to professors Carliss Baldwin and Eric von Hippel, (of Harvard Business School and MIT-Sloan, respectively) rapidly falling design and communications costs represent a paradigm shift-or at least, a shifting paradigm-in the incentives guiding innovators. The combined powers of digitization, large-scale computer access, modularization of design, and the Internet have diminished the relative importance of the traditional mode of innovation, where a single producer creates new products based on expected sales profits. Increasingly, the authors argue, single-user and open/collaborative forms of innovation can compete effectively with traditional corporate/mass-production-style innovation, particularly in newer, high-tech areas of the economy such as biotechnology and software. Familiar examples from the Internet include hugely popular websites and browsers like Wikipedia and Firefox, the various incarnations of Linux, and content-management systems for websites like Joomla and Drupal.

According to the article, the key for open and collaborative processes to hold a competitive advantage lies in low communications, production, and transactions costs. Open-source software, for example, may be copied and downloaded ('produced'), modified and discussed ('communicated'), and shared among any number of users ('transacted') at an extremely low cost. These characteristics allow relatively decentralized, collaborative projects to produce highly useful goods and services at an economically competitive level, particularly if enthusiasts contribute time and effort for reasons of personal interest, educational experience, or for other social benefits.

It appears to this author that the production and dissemination of knowledge, manifested in the research process, has also benefited from the increased viability of this collaborative form of innovation. Researchers were cooperating extensively long before computers and the Internet, of course, but the IT revolution has dramatically increased the potential for various contributors and outsiders to access, deploy, and augment the fruits of others' intellectual labor. Consider, for example, the Open Courseware Consortium, a group of universities providing free, online course materials and lectures: a potentially invaluable resource for educators at very low cost to the 'producers'.

What's the relevance of all this for business schools in the developing world? Considering that this type of innovation and collaboration pretty much depends on a high-tech infrastructure, the importance of a wired and technology-literate environment is further underscored; here we see yet another lost opportunity for those who are trapped on the wrong side of the digital divide. Fortunately, though, once people do get access, the nature of these innovations often implies free and cutting-edge access. Professors and students can tap into modularized work and research, especially where they can make a unique contribution based on their background or country of residence. International digital networks of voluntary association may ferment and spread ideas and opportunities, making the so-called 'marketplace of ideas' more useful and navigable.

Communication costs imply not only incurred monetary costs, but also the time and effort that a given participant must expend to find or share something useful. It is in this sense that GBSN hopes to foster mutually beneficial innovation and collaboration amongst its member schools with the upcoming members' web portal, a centralized platform for sharing all manner of materials. By lowering barriers to effective communication, the portal should make its own small contribution to fostering innovation and development amongst the world's business schools.

Here is the article, a very worthwhile read.


Scott Marchese was an intern at the Global School Business Network.

Tags:  innovation 

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