Measuring User Innovation in the UK: the importance of product creation by users

Innovation activities have been traditionally considered the domain of specialist producers who design, develop and commercialise new technologies that are then passively adopted by users. This producer-centred model, inspired by the pioneering work of Austrian economist Joseph Schumpeter, is linked to a specific set of policies to encourage innovation through the use of intellectual property rights and government subsidies for these producers. However, there is a growing body of research showing that users – both firms and individual consumers – play a much more active role in processes of innovation than it had been generally believed. Users create and modify products and services to serve their own needs, and often make these innovations freely available to each other, as well as producers. Many successful products in the market were initially developed by users, and eventually adopted and commercialised by producers. This suggests a shift in the locus of innovation in advanced economies such as the UK: technology and market trends are changing the way innovation gets done, and by whom. For example, as design and communication costs decline due to rapid improvements in computer-based design tools and Internet technologies, user and open collaborative innovation models are beginning to complement, and in some cases supplant, traditional, producer-centred innovation processes over a steadily wider range of conditions. These findings and trends represent fundamental challenges to producer centered models of innovation and to policies – including the current intellectual property rights framework – that are related to that model. To date, most studies of user innovation have focused on specific consumer and industrial categories. But cross-industry studies of the phenomenon are needed to build a robust evidence base for policy making, and to support managerial decision-making. This report sets out to address this gap in the understanding of the role of users – including individual consumers and business firms – in processes of innovation across a range of sectors. It presents findings from a world-first survey of product innovation by consumers, and from the first cross-industry survey of user process innovation by UK firms.