I've been reading Eric von Hippel's Democratizing Innovation, which has some interesting points related to open source/commons based peer production. von Hippel has taken the enlightened step of making the entire book available online. I bought a copy on Amazon and read that, because I want to support people who are making information available.

If you are short on time, the overview chapter does a very good job of summarizing the major points of the book. But the key hypothesis is that product innovation is concentrated in the users of a product

Open, distributed innovation is “attacking” a major structure of the social division of labor.

of particular interest are "lead users" who

are ahead of the majority of users in their populations with respect to an important market trend,
and they expect to gain relatively high benefits from a solution to the needs
they have encountered there.

Most of the book is then an elaboration on this notion, why users innovate, why users are willing to share their innovations, and so forth. The chapter on Innovation Communities is mostly about open source and will be familiar to most open source participants. I was also interested by the chapter on Toolkits for User Innovation and Custom Design, since that is what we are trying to do with the platform aspects of Chandler

Here are some quotes that stuck out to me:

More specifically, a private-collective model of innovation occupies the
middle ground between the private investment model and the collective
action model by:

• Eliminating the assumption in private investment models that free reveal-
ing of innovations developed with private funds will represent a loss of pri-
vate profit for the innovator and so will not be engaged in voluntarily.
Instead the private-collective model proposes that under common condi-
tions free revealing of proprietary innovations may increase rather than
decrease innovators’ private profit.

• Eliminating the assumption in collective action models that a free rider
obtains benefits from the completed public good that are equal to those a
contributor obtains. Instead, the private-collective model proposes that
contributors to a public good can inherentlyobtain greater private benefits
than free riders. These provide incentives for participation in collective
action projects that need not be managed by project personnel (von Hippel
and von Krogh 2003).

I like the phrase "private-collective model of innovation"

Today, in sharp contrast, user firms and increasingly even individual hob-
byists have access to sophisticated design tools for fields ranging from soft-
ware to electronics to musical composition. All these information-based
tools can be run on a personal computer and are rapidly coming down in
price. With relatively little training and practice, they enable users to design
new products and services—and music and art—at a satisfyingly sophisti-
cated level. Then, if what has been created is an information product, such
as software or music, the design is the actual product—software you can use
or music you can play.

This is a point that was made by Adam Curry during his Gnomedex presentation. His choice of words was slightly more colorful, but the spirit is the same.

These traditional processes cannot easily be adapted to systematic search-
ing for lead user innovations. The focus on target-market customers means
that lead users are regarded as outliers of no interest. Also, traditional
market-research analyses focus on collecting and analyzing need informa-
tion and not on possible solutions that users may have developed.

Take heart all you "outliers"

It would be much better still to eliminate the need for cross-bound-
ary iteration between user and manufacturer sites during product develop-
ment, and this is what toolkits for user design are intended to do.

This is true, but I also think that in the right circumstances, the open source development process itself can break down the barrier or reduce the difficulty and number of times needed to cross it.

Present practice dictates that a high-quality toolkit for user innovation
will have five important attributes. (1) It will enable users to carry out com-
plete cycles of trial-and-error learning. (2) It will offer users a solution space
that encompasses the designs they want to create. (3) It will be user friendly
in the sense of being operable with little specialized training. (4) It will con-
tain libraries of commonly used modules that users can incorporate into
custom designs. (5) It will ensure that custom products and services
designed by users will be producible on a manufacturer’s’ production equip-
ment without modification by the manufacturer.

A good checklist for Chandler

One important direction in which the open source experiment points is toward mov-
ing beyond the discussion of transaction as a key determinant of institutional design.
. . . The elegant analytics of transaction cost economics do very interesting work in
explaining how divisions of labor evolve through outsourcing of particular functions
(the decision to buy rather than make something). But the open source process adds
another element. The notion of open-sourcing as a strategic organizational decision
can be seen as an efficiency choice around distributed innovation, just as outsourc-
ing was an efficiency choice around transactions costs. . . . As information about
what users want and need to do becomes more fine-grained, more individually
differentiated, and harder to communicate, the incentives grow to shift the locus of
innovation closer to them by empowering them with freely modifiable tools. (ibid.,
pp. 265–267)

This last quote is from The Success of Open Source by Steven Weber, which is bubbling its way up to the top of my reading pile.

Having the online book available made it really easy to get quotes and also to follow up my notes -- I usually use the subscription cards that come in magazines to take notes, indicating page numbers and enough information to point back to the passage of note. Being able to jump to the page in the PDF as opposed to flipping through the book was nice.