User-led Innovation: A New Framework for Co-creating Business and Social Value
February 11th, 2008

This is a new research report authored by Darren Sharp and Mandy Salomon of

  • The report explores: what the key drivers of “user-led innovation” are.
  • Organization relationships with stakeholders.
  • What the most effective strategies are  for  engaging user participation

The research  consists of qualitative interviews conducted with Eric von Hippel (MIT), Yochai Benkler (Harvard), Jimmy Wales (Wikipedia), Siva Vaidhyanathan (Virginia), John Howkins (Adelphi Charter), Michel Bauwens (P2P Alternatives) and Mitch Kapor (Linden Lab).’

Also, it contains interviews with several lead users from the popular Second Life online 3D world application.

This is a rich paper, but one of the best insights I took away from it was that businesses can establish business models that are based on adding value to where users are interested in innovating the most.  An example given from the report talks about how Linden Lab’s revenue model shifted from a monthly subscription for enhanced access to Second Life, to a model that is based on buying virtual land, which is needed for user-built objects to have permanence in Second Life.

The paper also discusses Linden Lab’s decision to open source the software and protocols that make Second Life work. The paper discusses how this decision has helped to direct the energies of the hackers who inevitably appear in 3D online games into a positive enhancing production factor for the whole system (not to say that Second Life has not suffered from hackers. But the paper has a point that Second Life wants to you to alter and play with it, while other games do not, and this is a profound shaping factor in the nature of the user community).

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