Tapping Into the Underground

Many complicated, proprietary systems attract a dynamic community of underground innovators who explore and alter them — and not always in ways that manufacturers appreciate. These individuals have little regard for the business models that companies have carefully devised to profit from those systems. Instead, they are driven by utility, curiosity and occasionally even anger, bypassing technical and legal safeguards in their drive to explore. Called by different names — hackers, phreakers, crackers and modders, among them — these underground innovators have complex and often antagonistic relationships with the companies whose products they modify. For instance, after an avid customer developed free software for Aibo to make the mechanical dog dance, manufacturer Sony Corp. responded with a threat of legal action. Did Sony miss a golden opportunity, or are the potential benefits of tapping into such unauthorized activities not worth the possible risks?

To answer that, I have studied underground innovations in various industries, including software, telecom, video games and DVDs. For this research, I monitored message boards, studied primary digital document repositories and interviewed a number of underground innovators, outside analysts and company employees. In many cases, underground innovation triggers a war between the community and the company. But if handled properly, it can also lead to cooperation between the two parties, potentially resulting in new business models and novel products.

Few companies actually plan for — let alone desire — the emergence of an underground community. Instead, they go to great lengths to secure their proprietary systems to discourage such activities. But those efforts are often futile. If an underground community finds a proprietary system worth exploring, the company can do little to prevent that activity, and the opportunities for such innovation have only increased as products have become more electronically sophisticated. Consider, for example, how microchips now control not only robotic dogs but everything from microwave ovens to automobiles. Thus, instead of expending tremendous resources in an attempt to build impenetrable products, companies should expect and plan for their systems to be breached. The goal then becomes one of peaceful — if not mutually beneficial — coexistence. To achieve this, however, companies first need to understand how underground communities operate.

Elites and Kiddies

Underground groups typically contain two distinct classes: elites and kiddies.