The Principles of Distributed Innovation

Abstract

No matter who you are, most of the smartest people work for someone else" is known as Joy's Law in the high-tech industry.Attributed to Sun Microsystems cofounder Bill Joy, this "law" emphasizes the essential knowledge problem that faces many enterprises today, that is, that in any given sphere of activity most of the pertinent knowledge will reside outside the boundaries of any one organization, and the central challenge for those charged with the innovation mission is to find ways to access that knowledge.The causal explanation of Joy's Law is provided in the seminal work of economists Friedrich Hayek and Eric von Hippel on the distributed and sticky nature of knowledge and innovation.Hayek 1 , in 1945, arguing for the importance of the market economy, emphasized that at the macro level knowledge is unevenly distributed in society, and that centralized models for economic planning and coordination are prone to failure due to an inability to aggregate this distributed knowledge.Thirty years later, micro-level studies by von Hippel 2 began to suggest that in many industries users were the originators of most novel innovations.Users' dominant role in originating innovations reflects the fact that knowledge is not only distributed but also "sticky," that is, relatively difficult and extremely costly to move between locations, thus shifting the locus of innovation to where it is the stickiest. 3Users generate functionally novel innovations because they experience novel needs well ahead of manufacturers, and manufacturers develop dimension of merit innovations (that improve the performance of existing features) because they specialize in producing products for the mass market. 4oy's Law is exacerbated by the explosion of knowledge in most scientific and technological fields.In the online database of the US National Library of Medicine (Medline), for example, between 1955 and 2005, the number of academic papers published in the life sciences increased approximately six-and-one-half-fold, from 105,000 to 686, 000. 5 Even in relatively narrow and obscure fields, tissue engineering for instance, 6,131 academic publications were authored by 17,044 individuals between 2004 and 2006. 6 In the face of this explosion of knowledge, most organizations will have difficulty keeping up with significant trends and identifying and locking up key sources of knowledge for competitive gain.