Doug Schaefer pondered recently:

Is this the only way innovation happens, i.e., in closed environments. How much innovation really happens in open source projects or at least how efficient is it? Realistically, it's a lot less than you'd think. Innovation happens when get get a crack team together in a highly collaborative environment where you don't need to spend time working with a community of diverse interests. So while open source helps make a technology popular, I don't think it's possible to create it there. But maybe that's stating the obvious.

He has a point, but only to a point. Innovation when you involve a large group of people can come to a screeching halt. You have too many cooks in the kitchen and things tend to get bogged down in politics. Innovation can and does happen most effectively when the team that is involved is small and are given ample room for experimentation. This does not matter whether they are in a closed source commercial environment, or an open source community environment. Let's take Drupal for an example. It was started by one person as a message board. Nothing unique about that. However it's only when it was released as an open source code that the innovation within Drupal took off.

Ruby is another example. Implemented by one person in 1993, Yukihiro Matsumoto. Yes, Ruby has been around since 1993. It was the inspiration of one guy, and was released to a newsgroup posting thus sparking the community involvement.

Innovation is not about commercial or open source. It is about people implementing ideas and new ways of doing things. Making the impossible, possible. It happens daily. Not everything takes off. However, inventors will always find a way to invent. Whether that be in a commercial environment, or tucked neatly away on Sourceforge.net. Which by the way, is where I have found many hidden gems. Some of which are now incubating eclipse projects.
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