Innovation: consumers spend twice as much as business to innovate, survey says

Study of 1,200 consumers speculates that consumer ideas may be the mysterious 'dark matter' of innovation.
Written by Joe McKendrick, Contributing Writer

We've all come across examples of products seeing a second life: amped-up PCs, restored or repurposed furniture, souped-up cars,  renovated houses. Or there are simple things, such as using baking soda to reduce odors inside of refrigerators. But has anyone ever sat down to calculate how much investment is going into all this beyond-the-factory discovery and innovation?

Some researchers at MIT did attempt to do such a calculation, and it appears that consumers are the big-time investors when it comes to innovation the second time around in the product lifecycle.

A team out of MIT confirms that more innovation comes from the consumer side than from business. As reported by Patrica Cohen in The New York Times, Eric A. von Hippel, a professor of technological innovation at M.I.T.’s Sloan School of Management, conducted a survey of close to 1,200 consumers in the UK and came to the conclusion that they're expending a lot more time and money in innovation than the companies they purchase products and services from:

"The amount of money individual consumers spent making and improving products was more than twice as large as the amount spent by all British firms combined on product research and development over a three-year period."

In business, the conventional wisdom has been the more innovation encouraged within the walls of the enterprise, the greater the benefits to customers or consumers, and thus the greater the returns. Hippel speculates that consumer-driven innovation may be the mysterious "dark matter" of the magical mix of innovation and perspiration that makes some companies extraordinarily successful.

There's been plenty of interest and movement to community-based innovation, such as crowdsourcing. Also, there's acknowledgment by many business leaders themselves that most innovation will come from outside the four walls. In the MIT report, von Hippel draws a distinction between community based innovation versus that of the lone wolf. "Innovation by single users differs in fundamental ways from innovation carried out by users within communities having a shared innovation interest: community innovation is likely to be both tightly-focused with respect to subject matter and cumulative over time." A single individual's innovation may be driven by the need of the moment, or simply motivated by the sheer fun of it.

The innovation doesn't just pertain to high-tech gadgets, either. von Hippel's survey finds "consumer product innovation spans a wide range of fields, from toys, to tools, to sporting equipment, and to personal solutions for medical problems: clearly, consumer innovation is not a niche phenomenon." A copy of von Hippel's paper on the topic can be found here.

This post was originally published on Smartplanet.com

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