1. 1 Networks of Tinkerers: a model of open-source innovation Peter B. Meyer Office of Productivity and Technology, U.S. Bureau of Labor Statistics At IEHA, Helsinki, Aug 24, 2006 This work does not represent official findings or policies of the U.S. Dept of Labor.

2. 2 Open-source technologies  Definition: designs or findings are regularly shared  open source software programmers share source code Linux began at University of Helsinki  personal computers - Homebrew Club, 1975  pre-history of the airplane Clearly documented, slow, written, and fun This example used to motivate model

3. 3 Early aircraft developments  1800-1860 – George Cayley and many others try aeronautical experiments  1860s – aeronautical journals begin  Much sharing of experimental findings, conferences  1894 Octave Chanute’s Progress in Flying Machines  1903 – Wrights fly famous powered glider  1910 – many have flown. Firms are starting up

4. 4 Octave Chanute, experimenter and author Chanute was a wealthy former engineer in Chicago Experimented with gliders Described previous work in 1894 book Progress in Flying Machines.  discusses many experimenters, devices, and theories  experimenters from many countries and occupations  book supports network of information and interested people  helped define “flying machines” work, focused on kites Chanute corresponded actively with many experimenters. Chanute preferred that everyone’s findings be open.

5. 5 Hiram Maxim, circa 1894

6. 6 Lawrence Hargrave Retired young in Sydney, Australia Ran many creative diverse experiments starting in 1884  Several flapping-wings designs  Innovative engines  Box kites showed layered wings were stable and had lift He did not build every design but rather moved on Did not patent, on principle. Published hundreds of findings Chanute: “If there be one man.... who deserves to succeed in flying through the air” – it is Hargrave.

7. 7 Lawrence Hargrave’s box kites

8. 8 Lilienthal’s Wings and Gliders German engineer Otto Lilienthal studied birds and lift shapes in wind 20 years of experiments, often with brother Gustav Published book Birdflight as the Basis of Aviation, 1889 Made hang gliders Flew 2000+ times Became famous and an inspirational figure

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10. 10 Samuel Langley's technology choices Thinks that for safety: aircraft must be intrinsically stable, and pilot must sit up  craft must be rigid  makes frame from steel tubing – heavy  Needs large wings and strong engine  heavy; needs strong engine for lift  Arranges for best engine possible  Expensive

11. 11 Hard landings; lands on water Can't try twice easily Operator is not too useful, like rocket, unlike glider

12. 12 Wilbur and Orville Wright Ran bicycle shop in Dayton, Ohio, US Starting in 1899, read from Langley and Chanute Corresponded actively with Chanute Good tool makers and users. Have a workshop. Generally crafted each piece. Collaborated intensely. “I wish to avail myself of all that is already known and then if possible add my mite to help on the future worker who will attain final success.” -- Wilbur Wright, in 1899 letter to Smithsonian Institution (quoted in Anderson, 2004, p. 89)

13. 13 Wrights' technology choices Focused on wing shape, propellers, and control mechanism Built craft as kites, then gliders Materials light & cheap, wood & canvas Did not attach an engine until 1903.

14. 14 Wrights tested more than 200 model wing surfaces

15. 15 pilot lays flat  less drag intrinsically unstable, like a bicycle Pilot controlled that by hip movements which pulled wires to warp (twist) wing tips to turn glider This invented piloting skill had no future

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18. 18 Chain-Drive Transmission System of the 1903 Flyer

19. 19 Wrights’ propellers What’s a propeller for an aircraft? Standard idea: like a water propeller, it would pushes air back. Having studied wings, Wrights’ experiment with propellers that have a cross section like a wing, with lift in forward direction This produces 50% more pulling power from a given engine! This idea lasts

20. 20 This evidence is highly selected Many other experimenters and publishers would be worth mentioning if time permitted: Alphonse Penaud Horatio Phillips James Means Alberto Santos-Dumont Richard Pearse Glenn Curtiss John Montgomery

21. 21 Innovator significance in network Who did the Wrights, and historians of them, cite?  Chanute, Lilienthal, Wright family, Langley, many times Weinberg’s list from Brooks’s technological history  150 important innovations before 1910 Who did Chanute refer to in 1894 survey?  About 190 who made some “informational” contribution Math and physics; engines; kites; technical comments, authors  I am making a database of these citations  Among the most cited: Hargrave, on 19 pages; Wenham, 15; Lilienthal, 14; Stringfellow, 11; Tatin, 11; Langley 9

22. 22 Information sourcepage references Maxim, Hiram S.33 Lilienthal, Otto31 Penaud, Alphonse22 Mouillard, Louis21 Hargrave, Lawrence19 Moy, Thomas19 Le Bris17 Langley, Samuel16 Wenham, F.H.15 Phillips, Horatio14 Stringfellow, John11 Tatin, V.11 Goupil10 From Chanute’s 1894 book:

23. 23 Motivations of experimenters (1) Curiosity, interest in the problem Interest in flying oneself Belief in making world a better place Prestige Fame / recognition Wealth (conceivably)  Start company, or license patented invention  signal to employers; get hired as engineer (Lerner and Tirole, 2002)

24. 24 Motivations of experimenters (2) “The glory of a great discovery or an invention which is destined to benefit humanity [seemed]... dazzling... Otto and I were amongst those [whom] enthusiasm seized at an early age.” - Gustav Lilienthal “... A desire takes possession of man. He longs to soar upward and to glide, free as the bird... “ -- Otto Lilienthal 1889 “The writer’s object in preparing these articles was... [to know] whether men might reasonably hope eventually to fly through the air... To save... effort on the part of experimenters...” -- Octave Chanute, 1894.

25. 25 Motivations of experimenters (3) "I am an enthusiast, but not a crank in the sense that I have some pet theories as to the construction of a flying machine. I wish to avail myself of all that is already known and then if possible add my mite to help on the future worker who will attain final success." -- Wilbur Wright, 1899 letter to Smithsonian Institution "Our experiments have been conducted entirely at our own expense. At the beginning we had no thought of recovering what we were expending, which was not great..." -- Orville Wright, How We Invented the Airplane, [1953] p. 87

26. 26 Some observations for modeling Innovators are distinctive  motivations  capabilities, opportunities  visions of what they are making Much of what they did was idiosyncratic, wiped out I found it hard to model the “product” or “output” It is possible to model the experimenter, though

27. 27 Assumptions for micro model Assume there are motivated tinkerers  As observed Assume they have a way to make “progress”  defining progress carefully Assume total technological uncertainty  No market is identifiable  so no clear competition, no R&D  The tinkerers would share information

28. 28 The tinkerer Tinkerer has activity/hobby A. (for “aircraft” or “activity”) Tinkerer receives positive utility from A of a t per period. a 0 is known later choices and rules determine a t β is a discount factor between zero and one (assume.95) applied to future period utility. Net present expected utility:

29. 29 Tinkering rules Tinkerer may invest in ("tinker with") A Tinkerer believes tinkering this period will add p units to each future period payoff, a t  p stands for progress subjectively forecast and experienced by the agent  We assume p is fixed and known to the agent  Example:.07

30. 30 Tinkering decision Tinkerer compares those gross benefits to the cost which is 1 utility unit Tinkerer weights estimated costs and benefits Benefits forecast from one effort to tinker equal p in every subsequent period The present value of those utility payoffs is:

31. 31 Payoffs from endless tinkering Payoffs period 0period 1period 2period 3 Later Periods present value of gross payoffs of each investment at time 0 ppp...pβ/(1-β) pp...β * pβ/(1-β) p...β 2 * pβ/(1-β)... β 3 * pβ/(1-β)... Present value of all that at time zero has a closed form:

32. 32 A network of two tinkerers Consider two tinkerers with identical utility functions  p 1 and p 2 – subjective rate of progress  Fraction f of progress is useful to the other Tinkerers form an network, sharing information Present value of expected utility for one:

33. 33 Subgroups of occasional tinkerers Groups relate like individuals Group progress f(p 1 +p 2 ) is received by outsiders Group has same incentive to join other groups So the network equations scale up Examples:  Boston-area group  All readers of journal Revue L’Aeronautique  Kite people, together, as distinguished from balloon people

34. 34 Standardization (1) Fraction f є (0,1) of progress is usable to other player Suppose for a cost c s player one can adjust his project to look more like the other tinkerer’s project And that this would raise the usable findings to f 2 That’s standardization Present value of standardizing scenario is:

35. 35 Standardization (2) Key comparison is: Player one benefits more from standardizing if, ceteris paribus:  other tinkerers produce a large flow of innovations p2;  the cost of standardizing c s is small;  gain in useful innovations from the others (f 2 -f) is large.

36. 36 Same comparison supports choice to specialize If tinkerers work on different experiments, rather than overlapping, similar, or competing experiments, can raise useful flow from f to f 2. Again:  Standardization and specialization are natural in tinkerers’ networks. Don’t need market processes to explain them. Specialization

37. 37 Distinct role for “moderator” Chanute wrote a helpful book and was actively corresponding and visiting with experimenters, and putting them in touch This helped the network progress through two paths:  link in more tinkerers  improve internal communication f. So authors are another kind of specialist. In model: if tinkerer expects that writing will generate more p than experimenting, he writes.

38. 38 Entrepreneurial exits At a few points there was tension:  Ader “drops out” in 1891  Langley keeps secret wing design after 1901. (Chanute shares it anyway.)  Wrights stop sharing as much in late 1902 After some perceived of breakthrough Analogously  Jobs and Wozniak start Apple  they hire Homebrew club people as employees  Red Hat becomes a company

39. 39 Network model versus alternatives Network: a population of agents with  Interest in a problem (a 0 )  a variety of opportunities worth p to them  interchangeable information, parameterized by f generates varied experimentation and something they’d call progress Alternative innovation models  Profit-oriented research and development  Collective invention (Allen, 1983)  Hierarchically organized (e.g. Manhattan project)  Race to be first (space race; genome project)

40. 40 Entrepreneurial exits from network Suppose a tinkerer has an insight into how to make a profitable product from project A. Suppose future profits seem worth more than the present value of staying in the tinkerers’ network. Then tinkerer can exit network agreement conduct directed R&D becomes an entrepreneur enters economic statistics

41. 41 Conclusion (1) This process can help describe/explain  the rise of industrial West  with open source software, now I do not know of other models of it Key assumptions:  technological uncertainty (no clear product and market)  motivated tinkerers  some way to make progress  some way to network A specialist in publicizing or moderating can help address searching and matching An industry can spring out of this

42. 42 Conclusion (2) Airplane case makes plain certain aspects of these individuals and networks. It seems relevant to personal computer hobbyists open source software projects A model of this kind could be useful to describe or account for engineering “skunkworks” in organizations scientific advances differences between societies in speed of technology development