Host Aidan McCullen welcomes back Eric von Hippel for Part 2 of their discussion on Free User Innovation, supported by Wazoku, a company pioneering Total Innovation by connecting people, ideas, and technology. Aidan highlights the great feedback received from Part 1 and sets the stage for a deeper dive into the division of labor between users and producers in the innovation process.

• Traditionally, innovation is associated with manufacturers, but users actually drive pioneering innovation.
• From skateboards to mountain bikes to heart-lung machines, users create solutions out of necessity, while manufacturers enter the scene later.
• Manufacturers avoid new markets because they require scale and certainty before investing resources.

• John Haysham Gibbon, a surgeon, saw the urgent need for a heart-lung machine to save children needing heart surgery.
• He approached manufacturers, but they rejected him because there was no proven market.
• Using charitable funding, Gibbon developed the machine himself and successfully used it on a patient.
• Other surgeons saw the proof of concept, replicated it in their own hospitals, and slowly created a market for manufacturers to step in and refine the machine.
• This illustrates user-driven pioneering innovation followed by manufacturer refinement and scaling.

• Employees who spot future opportunities (corporate rebels) often face internal resistance.
• Example: Ken Kutaragi, the man behind the PlayStation, initially faced rejection from Sony’s leadership.
• Change only happened when a new executive backed him, allowing the idea to flourish.

The challenge:

• CEOs see corporate rebels as resource drains on an unproven idea.
• Corporate rebels feel frustrated that leadership doesn’t recognize obvious opportunities.
• Balancing both perspectives is crucial for organizational innovation.

• The first digital camera was invented inside Kodak, but executives rejected it.
• Why? Kodak was built on film—their expertise, business model, and infrastructure all depended on film.
• Employees resisted the shift because it threatened their roles.
• The result? Kodak missed the digital revolution, proving that organizations often resist innovations that threaten their existing business model.

• Even when innovation is recognized, company structures resist change.
• Example: A head of manufacturing refused to introduce an innovation because his bonus depended on reducing scrap waste—and every new product increased waste.
• Organizations are hardwired to maintain existing incentives, even when they conflict with innovation goals.

• Users innovate for function, manufacturers innovate for refinement and scale.
• Example: Mountain bikes were first created by users modifying existing bicycles.
• Once enough demand existed, manufacturers stepped in and improved features like suspension systems.
• The orthopedic surgeon who added a spring-loaded seat post to absorb shocks is a great example of this process.

• Innovations often come from unexpected sources, but organizations fail to listen.
• Example:
  • A furniture upholsterer noticed unusual wear on waiting room chairs at a cardiologist’s office.
  • This led to the discovery of Type A personality, as anxious patients wore down chairs faster.
• Who notices early warning signs in an organization? Often, it’s not management but cleaners, frontline workers, or maintenance staff.

• In the early days of dial-up internet, hotel maintenance staff constantly reattached phone jacks that guests removed to connect their computers.
• Instead of recognizing this as a need for in-room internet, hotels initially resisted change and instead tried to physically block users from unplugging phones.
• This highlights how organizations often fight user behavior instead of adapting to it.

• Users drive pioneering innovation, while manufacturers refine and scale it.
• Corporate rebels are essential but face resistance—they must frame ideas in ways that align with company incentives.
• Organizations must actively listen to unexpected voices (maintenance staff, frontline workers) for hidden innovation opportunities.
• Systemic roadblocks (like reward structures) often hinder innovation—even when everyone agrees on the need for change.

Aidan thanks Eric von Hippel for an insightful conversation full of real-world examples. Eric reiterates the importance of recognizing and supporting user-driven innovation in all industries.