The Positive Sum Strategy Harnessing Technology for Economic Growth (1986) / Chapter Skim
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An Overview of Innovation
An Overview of Innovation
Pages 275-306
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From page 275... ...
Innovation is complex, uncertain, somewhat disorderly, and subject to changes of many sorts. Innovation is also difficult to measure and demands close coordination of adequate technical knowledge and excellent market judgment in order to satisfy economic, technological, and other types of constraints all simultaneously.
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From page 276... ...
The systems used in innovation processes are among the most complex known (both technically and socially) , and the requirements for successful innovation vary greatly from case to case.
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From page 277... ...
More recently, the aircraft industry offers another important example of how excessive preoccupation with purely technical performance characteristics can be a recipe for financial disaster. The Concorde is a brilliant engineering achievement, but also a veer costly commercial failure.
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From page 278... ...
And one ignores the social aspects of the operating systems at no less peril than He technical. Economists have, by and large, analyzed technological innovation as a "black box" a system containing unknown components and processes.
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From page 279... ...
There is no need to belabor the point that technological innovation is absolutely central to economic growth and to improvements in efficiency. If there is any residual doubt, one need only think back 100 years to 1885 and ask, "Would any commercial firm operating as it did then survive in today's economy?
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From page 280... ...
The median private rate of return was a good deal lower about 25 percent before taxes. There is a further critical aspect of the innovation process that is not illuminated by the black-box approach.
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From page 281... ...
As noted, the impact of a technological innovation is often difficult to
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From page 282... ...
First, there is a tendency to identify technological innovation with major innovations of a highly visible sort electric power, automobiles, airplanes, television, antibiotics, computers, and so on. There is no reason to complain about an interest in highly visible innovations unless this leads to a neglect of other important aspects of the innovation process that happen to be less ~risible.
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From page 283... ...
In measuring the benefits for each new process he distinguished between Me "alpha phase" (or the cost reductions that occurred when the new process was fist introduced) and the "beta phase" (or cost reductions flowing from the subsequent improvement in the new process)
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From page 284... ...
It is also worth noting ~at, once the investment in the development of synthetic rubber had been made, for wartime purposes, and the unit cost reduced along the learning curve of cumulative production, a stable market did develop within the peacetime economy in many applications. This also illustrates the different priorities between the military and commercial sectors.
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From page 285... ...
MODELS OF INNOVATION There have been a number of attempts in recent years to impose some sort of conceptual order on the innovation process, with the purpose of understanding it better and providing a more secure basis for policy formulation. Unfortunately such attempts, often by scientists and by spokesmen for the scientific community, misrepresent He innovation process by depicting it as a smooth, well-behaved linear process.
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From page 286... ...
STEPHEN J KLINE and NATHAN ROSENBERG RESEARCH _ — 1 DEVELOPMENT ~ PRODUCTION MAR KETI NO Bible.
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From page 287... ...
The illustrations just given, showing that innovation often creates science and the need for feedback, ought to be enough, in themselves, to warn that something is wrong, but they are only some of the reasons for rejecting the simplistic formulation of the linear model. The idea that innovation is merely applied science is so Fanny entrenched and has been so often repeated that it is worth a few sentences to define science, so that we can see its important but [united role more clearly.
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From page 288... ...
Had the idea been true that science is the initiating step in innovation, we would never have invented the bicycle. In addition to these shortcomings, the linear model shortchanges the importance of the process innovations blat play a crucial role via learning during continued production.
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From page 289... ...
Some discussion of each of these paths follows. The first path of innovation processes (see Figure 3)
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From page 290... ...
We have already seen Mat modern innovation is often impossible without Me accumulated knowledge of science and Mat explicit development work often points up Me need for research, Mat is, new science. Thus the linkage from science to innovation is not solely or even preponderantly at the be
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From page 291... ...
In sum, the use of the accumulated knowledge called modern science is essential to modern innovation; it is a necessary and often crucial part of technical innovation, but it is not usually the initiating step. It is rather employed at all points along He central-chain-of-innovation, as needed.
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From page 292... ...
Moreover, if we are concerned with commercial success, systems and process research not only are necessary ingredients but often play a more important role than science in cost reduction and improved system performance. All these matters are explicit in the chain-linked model, but missing from the linear model.
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From page 293... ...
, plus increasin=, capabilities to model physical processes accurately and to locate optima, it is nearly certain that we will see in the coming decades a merging of analytic design and invention that will constitute a more powerful method for initiating, technical innovations than anything we have known in the past. This merging will not happen suddenly, and it is hard at this stage to predict how far and how fast it will go.
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From page 294... ...
Where a given task lies along this spectrum of uncertainty has a major influence on many aspects of what is appropriate innovation. The chain-linked model of innovation processes shows clearly that there are many points at which He uncertainty of the end product and processes of production and marketing can be reduced.
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From page 295... ...
For the technical parts of the innovation process, it is also important to recognize that the state of knowledge in the underlying science and technology strongly affects the cost and time requirements of innovation projects. Knowledge in Be physical and biological sciences tends to move through recognizable major stages.
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From page 296... ...
It follows that the same departmentalization of function that is so desirable for high-volume production may become a major deterrent to successful innovation. When the relevant knowledge is not in a predictive state, the best source for new designs is usually He practice found to be successful in old designs science may be largely or wholly irrelevant There is little doubt that Be failure to make this distinction about the state of knowledge underlies many fruitless arguments about the value, or lack of value, of science in innovation; in some instances science is essential, a sine qua non, but in other instances it is wholly irrelevant; and there is evening in between.
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From page 297... ...
Like fundamental research, radical innovation is inherently a learning process. The best initial design concepts often turn out to be wrong dead, hopelessly wrong simply because not enough is yet known about how Me job can (and cannot)
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From page 298... ...
Finally, managers of innovation must be very clear about He differences in nature between innovation processes and those of production and other business activities. ECONOMICS OF INNOVATION The preceding parts of this chapter have mainly characterized the process of technological innovation.
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From page 299... ...
These rising development costs involve an escalation of the financial risks that are associated win innovation, and they therefore pose a serious threat to an organization's capacity to undertake innovation in the future. In the case of the commercial aircraft industry, there is currently only one firTn—Boeing—that is an active innovator of aircraft of substantially new design.
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From page 300... ...
At worst, they may deter or altogether stop promising innovative work that lies beyond their range of experience. Financial Risks Many high technology industries appear to be confronting technological trajectories that offer opportunities for rapid improvement, but also high and rapidly rising development costs.
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From page 301... ...
But this search activity is shaped and structured in fundamental ways not only by economic forces that reflect cost considerations and current supplies of resources, but also by the present state of technological knowledge, and by consumer demand for different categories of products and services. Successful technological innovation is a process of simultaneous coupling at the technological and economic levels—of drawing on the present state of technological knowledge and projecting it in a direction that brings about a coupling with some substantial category of consumer needs and desires.
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From page 302... ...
Innovation is also difficult to measure and demands close coordination of adequate technical knowledge and excellent market judgment in order to satisfy economic, technological, and often other types of constraints all simultaneously. Any model Hat describes innovation as a single process, or attributes its sources to a single cause, or gives a Duly simple picture will therefore distort the reality and Hereby impair our thinking and decision making.
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From page 303... ...
An improved model of innovation, summarized in this chapter, indicates not one, but rawer five major pathways that are all important in innovation processes. These paths include not only He central-chain-of-innovation, but also the following: · numerous feedbacks that link and coordinate R&D with production and marketing; · side-links to research all along He central-cha~n-of-innovahon; · long-range generic research for backup of innovations; · potentiation of wholly new devices or processes from research; and · much essential support of science itself from He products of innovative activities, i.e., through the tools and instruments made available by technology.
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From page 304... ...
If there is a single lesson this review of innovation emphasizes, it is We need to view the process of innovation as changes in a complete system of not only hardware, but also market environment, production facilities and knowledge, and the social contexts of We innovating organization. REFE=NCES AND BIBLIOGRAPHY Constant, Edward W., II.
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From page 305... ...
1984. Technological knowledge without science: The innovation of flush riveting In American airplanes, cat 193~ca.
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