User-led innovation: New report suggests a framework to structure forms of interactive value creation

strong>"User-led Innovation: A New Framework for Understanding Business and Social Value" is a new report published by the Smart Internet Technology Research Group in Australia.

The report reveals some of the major drivers of user-led innovation and explores how it is affecting organizations' relationships with key stakeholders. It investigates how user-led practices generate business and social value through a major case study of the virtual world Second Life.

A first part by Darren Sharp presents a comprehensive analysis of the structural changes behind the rise of user-led innovation, and develops a model of an emerging ‘User-led Services Ecology’. The second part by Mandy Salomon presents a practical case study of the 3D virtual world Second Life, an important site from which to explore advanced user-led practices, business strategies, and new forms of social engagement.

A nice feature of the report are extensive quotes from interviews with some of the key persons in the user innovation world, including: Eric von Hippel (MIT), Yochai Benkler (Harvard), Jimmy Wales (Wikipedia), Siva Vaidhyanathan (Virginia), John Howkins (Adelphi Charter), Michel Bauwens (P2P Alternatives) and Mitch Kapor (Linden Lab).

The report distinguished between four different fields where user-generated value creation unfolds:

"Widespread convergence of participatory culture, DIY media, collaboration and open exchange, along with decreasing processor, bandwidth and storage costs, have all driven the development of user-led practices across a range of disparate fields. This is leading to the emergence of a post-industrial innovation system that brings with it new production processes, content models, service platforms and licensing agreements.

In contrast to various forms of market-based transactions, user-led practices encompass their own distinctive value systems, motivations and principles governing cooperative forms of social exchange.

This report identifies four ‘user-led niches’ which have become sophisticated enough in their own right to warrant further investigation. Each niche embodies a major driver of the new post-industrial innovation system in the present era of distributed capitalism. These drivers play an important role in shaping the future development of user-led services, and comprise their own unique internal logic, economic model, source of value and objective."

The four user-led niches identified are:
- Social Currency Niche
- Collaborative Niche
- Extractive Niche
- Hybrid Niche

For a summary of the characteristics of these niches, see the picture or read the entire report. I enjoyed the structure and think it provide a nice way to evaluate current developments in the field of interactive value creation. The report is available for download here.