When is an innovation opportunity viable for a single free innovator?

Figure 3.1 illustrates the innovation opportunity viability zone for a single free innovator. Project design costs (d) are represented on the horizontal axis, project communication costs (c) on the vertical axis.

The pattern we see is simple but interesting. Recall that the effort of innovation is worthwhile for a single free innovator in the case of a specific design opportunity if v is greater than the individual's cost of design plus cost of communication: Vi > di + c. Recall also that Baldwin and I defined communication cost as the cost of transferring design- related information among project participants during the design process, or to accomplish diffusion.

Under this definition, communication cost is zero in the case of design development by a single free innovator because that individual "does not have to talk with anyone” to benefit from developing and using the innovation. For example, if I have the capability to develop a

Figure 3.1

The viability region for an individual free innovator.

medical device or a type of sporting equipment to meet my own needs, I can "just do it,” not communicating with anyone as I work on the project. I can then also use my improved equipment, again without the need to incur communication costs. In other words, our viability equation is reduced to v, > d, in the case of design development and use by single free innovators. Because communication costs are zero, these individuals can find innovation development viable even if communication technology is very primitive, or if the costs of communication are very high for other reasons. This is why the shaded viability zone for single developers shown in figure 3.1 extends upward to include areas of high communication costs.

Note that single free innovators can choose to incur communication costs by investing in actively diffusing information about their innovation to potential adopters. However, they need not do this. Our definition of free innovation requires only that free innovators do not protect their design-related information—a choice that does not require investment in communication.

Even though single free innovators have no communication costs, they do have to expend time and money on design. An innovation project, therefore, will be viable for a single free innovator inside the vertically striped zone in figure 3.1, where v, > d, but will not be viable outside that zone. That is, I would be willing to spend only up to di to respond to a specific innovation opportunity to improve my medical device, in view of the benefit of vi that I expect. Of course, these values may be different for different individuals. If you need the same medical device somewhat more than I do, your v, and therefore your d, would be somewhat higher than mine.

 
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