During 2016, the National Museum of American History has adopted “America Participates” as its theme. Naturally, my own thoughts have turned to how Americans have participated in innovation, both yesterday and today. In Part 1 (1800s), I described how the democratic features of the United States Patent System enticed a broad spectrum of the American population to become inventors in the 19th century. In Part 2 (2000s), I’ll describe how a more recent series of technical, social, and strategic business developments have again drawn more Americans into the process of innovation.
The turn of the 21st century has witnessed many new opportunities for American inventors, especially independent (i.e. individual, non-corporate) inventors. To borrow some terms from economics, a combination of increased demand for inventors’ ideas and improved supply-side conditions have (again) enticed a diverse spectrum of Americans to participate in innovation over the last 10 to 15 years.
DEMAND SIDE FACTORS
In recent years, corporate R&D labs have begun to open up a “closed” approach to new product development, creating more demand for inventors’ ideas. Around 1900, several large firms such as General Electric (GE), DuPont, and American Telephone & Telegraph (AT&T), established the first research and development (R&D) laboratories. Over the past century, teams of Ph.D. scientists at these and other firms have developed new technologies (such as transistors, lasers, and synthetic fibers) with all resulting patents assigned to the company. This proprietary approach has certain advantages. For example, the R&D lab’s personnel have access to the firm’s capital reserves and well-equipped laboratories. Corporate scientists are also familiar with the firm’s specific technical challenges and can direct their inventive work accordingly. Finally, within a vertically integrated corporation, industrial scientists can easily coordinate with a firm’s legal, manufacturing, sales, and marketing departments to patent and commercialize any resulting inventions.
On the other hand, the primary disadvantage of this closed approach occurs when long-serving corporate scientists succumb to isolation, insularism, and an unconscious organizational inertia (“we’ve always done it this way…”) that can slow the pace of innovation.
Beginning in the late 1990s and early 2000s, many firms (as well as governments and non-profits) began to embrace an “open innovation” strategy, in which they developed some of their own in-house technologies, while simultaneously “outsourcing” for external inventions acquired from other firms and independent inventors. For example, General Electric has invited independent inventors to “co-create” a series of next generation home appliances through its FirstBuild initiative. Likewise, Procter & Gamble’s “Connect + Develop” initiative has leveraged outside ideas to launch several successful products (like Olay Regenerist skin care creams and the Swiffer Duster) while doubling P&G’s innovation success rate.
Prizes and Challenges
Meanwhile, a host of “innovation matchmakers” have emerged in both the private and public sectors to connect solution “seekers” with individual “solvers.” For example, in 1998 pharmaceutical giant Eli Lilly developed its InnoCentive website to solicit solutions to especially tough problems that had frustrated its in-house researchers. The exchange was so successful that Lilly eventually spun-off InnoCentive in 2001. Through the site, organizations pay Innocentive to post a problem specification, or “challenge,” and offer cash awards to outside inventors who can successfully solve them. As of 2016, Innocentive has posted approximately 2,000 challenges and enrolled more than 375,000 individual solvers, resulting in 59,000 submitted solutions and more than $48 million awarded in prizes. Similarly, the X Prize Foundation has worked with corporations and philanthropists to co-sponsor several high-profile, big-money challenges, including the Google Lunar X Prize, which will pay $20 million to the first privately funded team to land a rover on the moon.
Federal agencies have also embraced open innovation, thereby increasing the demand for the solutions of independent inventors. In 2003, NASA inaugurated its “Centennial Challenges,” a series of competitions designed to stimulate space-related innovations by offering cash prizes to individual inventors and small startups. From 2007 to 2009, lone inventor Peter Homer won two separate challenges and $450,000 for developing a next-generation spacesuit glove, assembled in his dining room with a sewing machine. In 2010, Congress re-authorized the America Competes Act, which gave all government agencies broad authority to enact these kinds of crowd-sourcing initiatives. At the www.challenge.gov prize clearinghouse, solvers can submit solution to government challenges covering everything from healthier school lunches (Dept. of Agriculture) to devices that capture and convert energy from ocean waves (Dept. of Energy).
Collectively, the recent turn toward open innovation—via individual firms, private sector and government idea exchanges, and high-profile prizes—has increased demand for new ideas, and thus inspired more scientists, engineers, and independent inventors to participate in innovation.
SUPPLY SIDE FACTORS
At the same time, inventors now enjoy easier access to the funding, tools, and community interaction necessary to propel their thinking. As Rachel Nuwer wrote recently in the May-June 2016 issue of Popular Science:
We are living in a golden age of invention. Makerspaces and online creator communities abound; information is abundant and free; equipment is affordable and available; and crowdsourcing platforms offer a great way to test interest and build excitement around a new idea—as well as to fund it. Because barriers to entry are practically nonexistent, these days anyone can be an inventor.
Easy Access to Startup Capital
In recent years, aspiring inventors have enjoyed something of a revolution in the ways they acquire venture capital. Historically, inventors have relied on friends and family members, wealthy individuals, or professional angel investors and venture capitalist to raise startup funds. These funding methods required either a generous, wealthy uncle or a certain level of social and professional connections. However, the emergence of “crowd-funding” websites—such as Kickstarter and Indiegogo—have democratized the process of acquiring capital. Aspiring inventors (and other “creatives,” such as authors and filmmakers) post the details of their projects and their funding goal; friends, complete strangers, and other backers can make small investments online via credit card. While these pledges do not purchase an equity ownership stake in the project, inventors will typically offer their backers project-based rewards, such as one-of-a-kind experiences, limited editions, or copies of the creative work being produced. Since Kickstarter’s launch in April 2009, more than 10.8 million backers have pledged over $2.3 billion in project funding for more than 105,000 creative projects.
Putting these numbers in context, Kickstarter’s $2.3 billion raised over seven years (2009-2016) pales in comparison to the $58.8 billion invested in a single year (2015) by the professional venture capital community. However, in today’s digital economy, inventors do not need that much startup capital in order to launch a business.
Easy Access to (Cheap) Tools
Historians of technology have described the long process of modern industrialization in three phases. The first industrial revolution occurred during the 1700s and 1800s, and featured the first use of fossil fuels, steam power, and the mechanization of agriculture, manufacturing, and transportation. A second industrial revolution occurred at the turn of the 20th century, as university and corporate scientists applied the lessons of physics and chemistry to develop the electrical power system, synthetic plastics, and near instantaneous communications. Since the late 1960s—and since the 1990s in earnest—we have been living through a third industrial revolution, which is actually an information revolution, driven by mainframe and personal computers, the Internet, mobile smart phones, satellite-based global positioning systems, and the leveraging of Big Data.
The tools and processes in the first two revolutions were large in scale; they included railroad locomotives, automobile assembly lines, and massive hydro-electric dams. In other words, the tools and projects of early industrialization were capitally intensive and required the accumulation of resources that could only be marshaled by corporations and government agencies. On the other hand, beyond the Internet-satellite infrastructure, most digital tools are comparatively cheap (sometimes free!) and easily accessible by individual inventors. As dorm room innovators like Facebook’s Mark Zuckerberg have proven, today’s aspiring innovator can buy a pretty good laptop for $1500, download a free software developer’s kit, and build a new web-based business or smart phone app with very little upfront investment. Beyond the digital realm, the recent emergence of 3-D printers is making it much easier for inventors to engage in rapid prototyping and “additive” manufacturing. Meanwhile, for about $150 per month, aspiring hackers can access over $1 million worth of drill presses, laser cutters, welding stations, and design software at TechShoppe, a growing chain of “open access” workshops.
Easy Access to Spaces and Inventive Communities
But “maker spaces” like TechShoppe provide more than just access to tools and space; they also provide inventors with a supportive community. At TechShoppe (and increasingly thru dozens of free YouTube videos), an aspiring inventor can take courses in drafting, sewing, laser cutting, and marketing to learn the skills of the trade. At an ever-growing number of maker faires, hackathons and tinkerers’ repair clubs, inventors can lean on like-minded hackers for expertise, feedback, advice, and support. Is this invention any good? Is it patentable? Do you think it will sell? And by the way, how did you mill that part out of carbon fiber?
Quirky, a self-proclaimed “social product development” firm based in New York City, built up a virtual community of 1.1 million inventors after its 2009 founding. Quirky promised to harness the latent talent of America’s armchair independent inventors, the wisdom of crowds, and the firm’s own design and marketing expertise to turn simple napkin sketches into finished products on retail shelves. “We started the company to make invention accessible,” Quirky’s brash young founder, Ben Kaufman, told Yahoo! Finance in 2013. “People come to our site, submit their ideas, and the best new ideas make their way all the way to retail shelves and we do all the heavy lifting in between.”
As Kaufman told Fast Company in 2013, “Makerbot, Kickstarter, and Quirky rose to serve totally different people,” meaning, inventors with different levels of entrepreneurial ambition. According to Kaufman, “MakerBot helps you go from zero to one. Then you’re basically left with a choice: ‘Do I want to start a business?’ If so, raise money; you have Kickstarter. Or if your choice is ‘No, I like what I do for a living, I don’t want to have to figure out all this crap,’ then go to Quirky.’” Like many startups, Quirky went bankrupt in 2015, but not before launching 150 consumer products and paying out $10.1 million in royalties to its inventor community.
Nevertheless, Kaufman’s overall point remains true: improved supply-side access to startup capital, tools, and community over the last decade have lowered the barriers to entry and drawn more Americans into inventing. At the same time, the turn toward open innovation, prizes, and challenges has increased the demand for inventors’ ideas. As a result, according to Popular Science, nearly half of American adults now refer to themselves as “makers.”
Here at the Lemelson Center, we have adopted an ambitious vision statement: “We envision a world in which everyone is inventive and inspired to contribute to innovation.” Indeed, with so many encouraging developments in the past 10-15 years, we remain optimistic that more and more Americans are participating in innovation.
- Chesbrough, Henry. Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston: Harvard Business Review Press, 2005.
- Chupfka, Kevin. “Quirky Allows Anyone to Become an Inventor.” Yahoo! Finance, 17 September 2013, viewed 2 February 2016.
- “The Crowd Takes Over.” Fast Company, October 2013, p. 60.
- Hintz, Eric S. “Creative Financing: The Rise of Cash Prizes for Innovation Is a Response to Changing Business Conditions–and a Return to a Winning Strategy.” Wall Street Journal, 27 September 2010, p. R8.
- Huston, Larry and Nabil Sakkab. “Connect and Develop: Inside Procter & Gamble's New Model for Innovation.” Harvard Business Review, 1 March 2006, viewed 20 May 2016.
- Innocentive. “About Us,” viewed 16 May 2016.
- Kickstarter. “About,”and “Stats,” viewed 20 May 2016.
- McKinsey & Company. “’And the winner is…’: Capturing the promise of philanthropic prizes,” July 2009, viewed 20 May 2016.
- National Venture Capital Association and PriceWaterhouseCoopers. “$58.8 Billion in Venture Capital Invested Across U.S. in 2015, According to the MoneyTree Report,” press release, 15 January 2016, viewed 20 May 2016.
- Nuwer, Rachel. “The Inventor’s Handbook.” Popular Science, May-June 2016, viewed 20 May 2016.
- TechShoppe. “Home Page,” viewed 20 May 2016.
- “The Third Industrial Revolution.” The Economist, 21 April 2012, viewed 23 May 2016.