Transcript An Overview Of Innovation

An Overview Of Innovation
Characterization, Models and
Factors for Success
Innovation and Knowledge Management
Ana Sofia Mascarenhas
Nuno David
Kline, J. and Rosenberg, N (1986), “An Overview of
Innovation”, in R. Landau and N. Rosenberg (eds), The Positive
Sum Strategies: harnessing Technology for Economic Growth,
Washington DC, National Academic Press, 00.275-305.
18th of February 2002
Presentation Overview
Introduction
Characterization
The linear model
The Chain-linked model
Uncertainty
Life cycle
Economics of innovation
Conclusions
"Daring ideas are like chessmen moved forward; they
may be beaten, but they may start a winning game."
Johann Wolfgang von Goethe
Introduction
Commercial innovation is controlled by two distinct sets of forces that
interact:
- Market forces
- Forces of progress
If we are indifferent to cost considerations, innovation could lead to failure
Ex: Concorde
We cannot satisfy the marketplace if we don’t have technology to back it up.
Ex: metallurgical practice
SUCCESSFUL INNOVATION
 Technical and market needs must be satisfied
 Right timing
 Feedback signals from users are very important
Introduction (continued)
Innovation  Sophisticated technology
EX: Containerization
Characterization
What is innovation?
It can be a new product, a new process of production, substitution by
cheaper material, reorganization of production leading to increased
efficiency,...
Economist
Technologist
inputs
• Nature of the market
problems and constraints
Technological
innovation
outputs
Technological
innovation
• State of knowledge
• Nature and the potential
profitability of the output
Characterization
Innovation is difficult to measure
Innovations will often generate benefits far from the industries where they
originated.
Ex: How can me measure the impact of computers or of metallurgy in
the world economy?
Effect of a rapidly expanding industry on it’s suppliers. Ex: Automobile
Industry / Petroleum Refining
Innovation is not always of a visible sort. (Ex: alloys with higher melting
points)
Innovations go through drastic changes over their lifetime, these changes
may transform there economic significance.
Whether it is worth spending money on innovation depends also on the
alternatives. Ex: Synthetic Rubber / Natural Rubber
The Linear Model
The conventional “linear model” of the linkage of research to production
This model distorts reality of innovation in
several ways:
Production
• There are no feedback paths from sales or
individual users
• The central process of innovation is not
science but a design. Innovation draws on
science, but also forces the creation of
science . Ex: Edison and the parallel circuit
Marketing
• The notion that innovation is initiated by
research is wrong most of the time.
Research
Development
• When the science is inexistent we can still
create innovations. Ex: Bicycle
• The linear model shortchanges
importance of process innovations
the
The Chain-linked Model
Research
Knowledge
Invent
Redesign Distribute
Detailed
and/or
Potential
and
and
design
produce
Market
market
analytic and test produce
design
The Chain-linked Model (explained)
Five major paths of activity
•Central-chain-of-innovation
•Feedback links (central chain & market feedback)
•Research path
•New science push
•Feedback from innovation
Uncertainty
Uncertainty has a major influence
Change auto color
paint (GM)
Evolutionary
Moon Landing
Revolutionary
Low
High
Drug development
Q: But how to reduce it?
Market sampling, Proof of concept, pretest production
methods, incorporate learning, testing...
Uncertainty can be reduced at every feedback link!
Technical performance
Lower-cost production
Rough overall time
schedules and budgets
Detailed
Science
Set milestones/goals
Descriptive
Management
Planning
Focus
Life cycle
Stabilize design
Rules and hypotheses
Taxonomic
Early stages
Predictive models
Prevent loss of ability to
create radical innovation
Later stages
Economics of Innovation
Rising development costs (ex: Boeing’s new aircraft)
Resistance to radical innovation
(ex: Chemical Industry)
Financial Risks (ex: Some pharmaceutical products)
Coupling the technical and the economic
USA
Japan
(ex: Microsoft)
US and
Japanese
car
production
cycles
Source: http://www.sprl.umich.edu/GCL/notes2/technol.pdf
Conclusions on Innovation
As a study it is new and as such it is still maturing.
Innovation is Inherently uncertain.
The initiating step is design rather than research.
Research is needed only when the available sources of
knowledge are inadequate for the task at hand.
Personnel reduction, specialization, routinization drive
revolutionary innovation almost impossible.
“Guided empiricism” methods are still essential since
science lack predictive models in many areas.
Must be viewed as a process of change in technology,
market environment, production facilities, knowledge and the
social contexts of Innovating organizations.