Awaiting user innovation in business software markets

There’s an increasing interest in user-driven innovation, and how this phenomenon can be leveraged in other industries. I posted on it a few weeks ago, and Dominic Basulto of the Business Innovation Insider points to a detailed evaluation of how user designs were integral to the creation of an entire industry (want to learn more than you ever thought you could about the rodeo kayak industry? click here).

All the literature I’ve seen on this topic deals with consumer products. But what of products for business? What is the state of user innovation in those markets?

At one level, business customers have a tremendous ability to innovate–they have resources, technical skills, and subject-matter knowledge, all in house.

Yet the authors of the rodeo kayak user innovation study (Carliss Baldwin, Christoph Hienerth, and Eric von Hippel) point out several prerequisites for user innovation that the business markets definitely lack, and may never achieve:

  1. A “nonrival” environment – the rodeo kayak enthusiasts willingly shared their designs with each other, which promoted further refinement and innovation. It would take a really progressive group of companies to overlook their competitive rivalries and share so openly.
  2. Passion – the rodeo kayakers love for their sport drove them to want the best equipment and devote lots of time to improving it. Companies on the whole are not passionate. They are be risk averse and bound by inertia. Corporate workers fear bad outcomes more than they desire great outcomes.
  3. “Dominant design” – Baldwin et. al. define this condition as necessary for the flourishing of user-directed innovation. A dominant design is “a standard architecture that almost all firms in an industry adhere to.”And for most business products, there are not dominant designs. Rather (think SAP, Oracle, Peoplesoft as an example), there are proprietary designs and license terms that restrict users (and anyone else) from altering them.

On the good side, companies are investing in open source work like Linux and the like, and this forms an early basis for the kind of cooperation needed for user-driven innovation. But for the near future, don’t expect the rodeo kayak scenario to be repeated with your salesforce automation software.

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