The Path to Commercialization
Free innovators can also tighten the loop between the free and producer innovation paradigms by electing to become producers themselves (Shah and Tripsas 2007). Two general pathways available to free innovators who wish to become producers are commercializing the design via an existing firm and founding a new venture to commercialize the design.
With respect to commercializing a product via an existing firm, a product "publisher” model of commercialization is emerging to complement the traditional model of product acquisition by firms. For example, when an innovator elects to produce a copy of a product design by using the custom 3D printing service offered by Shapeways, that firm routinely asks the customer if he or she would like to also offer the design for sale to others. The site explains how this works and how it could be attractive: "You design amazing products, we'll help you reach a global market. Start selling today ... Simply design and prototype, and we'll take care of production, distribution, customer service, and all the nitty-gritty. ... No inventory or financial risk. We'll produce and ship your product each time someone orders it, and you keep the profits. ... [We offer] help all along the way. Global Customer Service team, in-depth tutorials, and a supportive community to guide you” (Shapeways 2016).
Founding and funding stand-alone ventures by household sector innovators are also becoming much cheaper and easier than they were in the past. Consider, for example, the fairly recent option to cheaply fund the commercialization of individual products via crowdfunding appeals (Lehner 2013; Mollick 2014). Consider also the steadily improving options for new ventures to outsource costly functions such as product production and delivery to specialized firms.
Baldwin, Hienerth, and von Hippel (2006) describe the typical pathway from free innovation to commercial production. First, one or more household sector innovators create an innovation that turns out to be of general interest. Next, a community grows around that innovation, with each participant self-supplying a copy of the innovation for personal use. Soon, some participants grow to prefer a source of commercial supply for the innovation instead of self-production. As a result, a profitable opportunity for the founding of a new venture arises.
Early responders to such an emerging opportunity for commercialization are generally start-ups formed by some members of the community that grew around an innovation rather than unaffiliated entrepreneurs or pre-existing firms. This is because early information about an innovation and about related commercial opportunities will initially be clearest to participants in such a community. Those individuals are in the best position to know from firsthand participation what is needed and how quickly demand for products responsive to the need is likely to increase. Second, new venture founders from within the community will have an advantage with respect to initial marketing, thanks to their pre-existing relationships with potential customers within their community (Fauchart and Gruber 2011). Of course, existing producers can also seek to gain early insights into emerging commercial opportunities by hiring community members as "embedded lead users” (Schweisfurth and Raasch 2015).