I think that the libre software specific innovation is not about how you develop the software, but in the libre software licenses. Libre software licenses allow forks: to clone the original source code and then follow a different roadmap: create a new community and promote and even sell this “derived work”. This is forbidden and even penalized in the proprietary software world (and I think it is a big disadvantage against libre software).
With the free licenses, the possibility of forking the software is a “feature” that makes innovation appear, both in the original project and in the “forked” projects, becasuse of the coexistance/fight of two streams:
- One stream to openness in the original software, trying to avoid the fork. Fork is seen as lossness for the original project, since some developers will not work anymore in the original project, and go to work to the fork. To avoid forks, feedback about the original software, contributions and new ideas are welcome, so innovation (internal and external) is possible and easier.
- One stream to closeness in the original software, trying to preserve the spirit of the original project, and feeling that forking is not a traumatic process, but the open door for the people wanting to do other things with the software. If this stream is strong, you may find forks of the original software that add competitiveness and diversity to the scene. Innovation is needed in the survival fight.
Innovation is a risky thing, and a hard task. Some products or ideas will create new things and success. Other projects will suffer and die. Waste of time, money. Some people loose their jobs. Other people open new doors, new jobs.
If you look from an individual perspective (the software you use or you develop, your job, your company), innovation is good or bad depending on the result and people affected. If you look from a global perspective (state of the art, progress of the TIC sector, social benefits), innovation is always good, I think.
Long time ago, these processes were slow, so one could not make any move and survive. But nowadays this is not like that anymore. You can take popcorn and watch, or take part and maybe die, but with your boots on!