British management guru Charles Leadbeater urged business leaders to open their minds to new forms of innovation, stating that consumers were replacing dedicated R&D teams as the drivers of product change, writes Arthur Beesley

Known as Tony Blair's favourite corporate thinker, the former financial journalist hailed the development of open innovation systems in which "communities of co-creation" came together to develop new forms of products.

As examples, he cited the development of the mountain bike and the Linux open-source computer operating system. Mr Leadbeater said multibillion dollar industries were formed around such products, which were initially developed outside the corporate realm.

Although there was a common perception that the bicycle industry developed the first mountain bikes, he said this was not the case. Rather, it was cycling enthusiasts who developed the first bicycles to merge a robust structure with the gearing system in racing bikes.

The invention, which spread first among amateurs, was seized on the bicycle industry only after critical mass began to develop. Mr Leadbeater said the US biking equipment industry was now worth $8 billion per annum, 85 per cent of which came from mountain bike users.

He noted the well-known case of the Linux system, which rivals Microsoft, but was created by a computer science student and developed by thousands of non-professional computer users.

While this system was in use in 30 to 40 million computers, Mr Leadbeater said Linux had none of the features of the traditional company. "No headquarters; no customer service; no acquisitions; no career review."

He said such developments were characterised by a distribution of labour and not a division of labour. They also featured speedy feedback and a pragmatic trial and error period.

He said they were designed to be incomplete, and so to evolve, leading to a situation where good ideas drove out the bad.

This was in contrast to systems of "closed innovation" within companies and universities.

Such systems typically involved bright people being put into special conditions, free of market pressures, to develop a pipeline of ideas for new products. Such products were routinely delivered to passive customers, he said.