Embed Size (px)
Citation preview
Innovation Paradigm In Transition
Tuomo Uotila, professor
Lappeenranta University of Technology
Lahti School of Innovation
STRUCTURE OF THIS LECTURE
1. Definitions of some key concepts• innovation / innovation policy (national vs
regional) / innovation system
2. Changing innovation paradigm
3. Networked innovation processes
OBJECTIVE OF THE LECTURE
− To give an understanding of some key concepts relating to topic− To highlight recent changes in innovation policy (open innovation, practice-
based innovation)− To highlight the role of networks in innovation policy
1. DEFINITIONS OF SOME KEY CONCEPTS
INNOVATIONS: NEW IDEAS TAKEN INTO PRACTICE
• Many different types: product, process, oganisational, social, system, service…
• Combining knowledge, expertice and technology in novel ways.
• They are often developed in complex, interactive and continuous priocesses.
• They are not a marginal phenomenon but a part of everyone’s life
DEFINING AN INNOVATION
− The distinction between innovation and invention can be elaborated by an example used by Schumpeter, who when referring to technological change defined invention as the creation of new technologies, innovation as the commercial introduction of new technologies and diffusion as the spreading of new technologies (Arthur, 2007; originally Schumpeter 1911).
− …new creations of economic significance and primarily carried out by firms (but not in isolation)… (Edquist et al 2009)
− Lambooy (2005, 1142) defines innovation as “the result of an iterative process of interaction between individuals, organizations, systems and institutions, using price signals and other signals to find the direction in which to develop”
− Dosi (1988, 222) defines innovation as “the search for, and the discovery, experimentation, development, imitation, and adoption of new products, new production processes and new organisational set-ups”
WHAT IS AN INNOVATION?
Distinctive characteristics of an innovation:− a new or improved product, production method or service− substantially different or unique technological properties− products realised launched on the market (product innovations),
production methods introduced (process innovations)or new services available (Tekes 2004)
− Invention: absolutely new− Innovation: contextually new
WHY ARE INNOVATIONS IMPORTANT?
• Cornerstones of competitiveness:
• Productivity• Productivity is not everything but in the long run it is almost everything
(Krugman 1994) (80/80-rule)
• Innovativeness• Production and use of knowledge is at the core of value-added
activities, and innovation is at the core of growth (Archibugi and Michie 1995)
ORIGINS OF INNOVATION?
Evaluation of Finnish NIS 2009
Share of Finnish companies engaged in innovative activity that consider the source in question as being a very important (or important) contributor totheir innovative activity.
ORIGINS OF INNOVATION?
• Science-based (4 %)• Science, technology, innovation (STI)
• Practice-based (96 %)
• Doing, using, interacting (DUI)
INNOVATION SYSTEMS, WHAT ARE THEY?
− Definition: Metcalfe (1995) defines a system of innovation as ”a set of distinct institutions which jointly and individually contributes to the development and diffusion of new technologies and which provides the framework within which governments form and implement policies to influence the innovation process”
− National / Sectoral / Regional: …”regional innovation systems (RIS), that can be thought of as the institutional infrastructure supporting innovation within the production structure of a region” (Asheim & Coenen, 2005)
− ….”a set of interacting private and public interests, formal institutions, and other organizations that function according to organizational and institutional arrangements and relationships conducive to the generation, use, and dissemination of knowledge” (Doloreux, 2003)
− Innovation systems thus provide a conceptual framework in which innovation processes are promoted and facilitated by means of innovation policy and where new innovation policy instruments are developed
INNOVATION POLICY
− Innovation policy is concerned with stimulating, guiding and monitoring knowledge-based activities within a political jurisdiction; typically a nation or a region. The goals of innovation policy are economic, although they are also stated in broad welfare terms (de la Mothe 2004).
− Kuhlman et al. (1999) define innovation policy as the entire scope of related public measures of science, research, technology policy, overlapping also with industrial, environmental, labour and social policies.
− Innovation policy can also be seen as a complex process, not a single product. It is a result of a set of programmes and policies, all involving institutions (Kuhlmann & Edler 2003; de la Mothe 2004).
Finnish NationalInnovationSystem
(Nieminen & Kaukonen 2001)
CONCEPTUALIZATION OF (REGIONAL) INNOVATION SYSTEM / PRACTICE-BASED INNOVATIONS
(Autio 1998)
”Industrial” policy
S & T - policy
Innovation policy
“Successful innovations are usually based on the open-minded combination of various competencies, while too narrow a concept of innovation activity results in part of innovation potential remaining untapped. Correspondingly, Finnish innovation activity has largely been concentrated on industrial sectors and focussed too narrowly on the exploitation of scientific-technological expertise.” (TEM, 2009, p. 23.)
RELEVANT FEATURES OF AN INNOVATION SYSTEM
•Set of Nodes in Innovation Chains•Systemic, Interactive Linkages•Knowledge Generation Institutions (& Firms)•Knowledge Exploitation Firms (& Public sector organizations)•Soft Infrastructure•Financing•Commercialization and Marketing•Feedback and Policy Support (Philip Cooke, Lahti 2006)
INNOVATION SYSTEM FUNCTIONS
Functions, which should be promoted by an innovation system:
1. entrepreneurial activities
2. knowledge development
3. knowledge diffusion through networks
4. guidance of the search
5. market formation
6. resources mobilisation
7. creation of legitimacy/counteract resistance to changeHekkert et al. (2007, 9-
13)
2. CHANGING INNOVATION PARADIGM
THE THESES OF THE NEW INNOVATION PARADIGM
• Organizations must be able to adjust to open innovation activities
• Very practice-based contexts are the driving force of the innovations
• The role of the customer in innovation activities is changed from
object to subject
• The greatest innovation potential lies in the interfaces of different
fields of expertise
• Efficient value networks capable of implementing innovations are
necessary
• Very often organizations suffer from a communication gap that
prevents innovation and creativity
• There is a vast innovation potential hidden within the personnel of
organizations
PARADIGM SHIFTS IN INNOVATION POLICYTraditional paradigm New Paradigm
•Emphasis on technology•Focus on Supply•Closed innovation •Product innovations•National approach
Nature of Innovations •Emphasis on competencies•Focus on Demand•Open innovation•Service innovations•Global approach
•Core concept: NIS
•Sectorally fragmented•Technology transfer•Knowledge producers
•Big, established companies•R&D based innovations•National level
Innovation policy •Core concept: Innovation environment•Horizontally coordinated•Absorption of knowledge, ability to learn•Interaction of companies, private and public sector partnership•Innovative SME’s, growth companies •Practise based innovations•Local and regional level
•Delegating resources to regions•Regional/local development
•Clusters
Regional innovation policy •Identifying regional strenghts •Acting as change agent•Problem based development, cooperation between regions, global nodes•Development platforms
SOME CONCEPTS RELATED TO BROAD BASED INNOVATION PARADIGM
New innovation paradigm
Traditional innovation paradigm
Science- and reseach based innovation activites
Mode1 knowledge production
Analytic knowledge base
STI
Practise based innovation activities
Mode 2a & 2b knowledge production
Synthetic knowledge base
DUI New and traditional innovation paradigms are Complementing, not competing with each other
STI and DUI modes of innovation
− The STI mode of innovation refers to the way firms use and further develop this body of science-like understanding in the context of their innovative activities and it relates to the use of explicit knowledge. The STI mode of learning even if it starts from a local problem will make use of ‘global’ knowledge all the way through and, ideally, it will end up with ‘potentially global knowledge’.
− The DUI mode of learning most obviously refers to know-how and know who, which is tacit and often highly localised. While such learning may occur as an unintended by-product of the firm’s design, production and marketing activities, the DUI-mode can be intentionally fostered by building structures and relationships which enhance and utilise learning by doing, using and interacting.
− In European ‘innovation scoreboard’ there is a bias toward indicators that reflect the STI-mode while those referring to the DUI-mode are almost absent, thus there is a need to develop indicators of the DUI-mode to arrive at an adequate understanding of the bases for differences in innovative performance.
(Berg Jensen et al. 2007)
MODES OF KNOWLEDGE PRODUCTION
Mode 1 knowledge production is traditional knowledge production based on single disciplines. It is homogeneous and primarily cognitive - > relates to STI.
Mode 2 knowledge knowledge production, by contrast, is created in broader, heterogeneous interdisciplinary social and economic contexts within an applied setting -> relates to DUI
(Gibbons et al)
PRACTICE-BASED INNOVATION ACTIVITIES
From R&D to C&D. Open innovation philosophy.
Not wait for the waterfall approach; break the traditional chain; basic research, applied research, product development
Active use of new tools in a practical context and combination of the state-of-the-art knowledge in making innovations
Weak links and structural holes
Pay attention to the combination of different ”knowledge interests” – absorptive capacity
BRINGING STI- AND DUI-MODES TOGETHER
Mode 2 knowledge production -> DUI-mode of innovation
Mode 1 knowledge production -> STI-mode of innovation
Context of knowledge application(companies and public sector organizations)
Policy instruments and tools aiming at promoting knowledge transfer and utilization
Finland needs sectoral world level know how concentrations for STI-processes
Finland needs also to improve its DUI-processes in order to better absorp this scientific know how to facilitate innovation processes in private and public sector contexts
(Harmaakorpi, Hermans & Uotila 2010)
SCIENCE-BASED AND PRACTICE-BASED
INNOVATIONS:• Are complementing each other• Both are needed
But…..• Expertice is different• Policy Tools/instruments are different• Evaluation/measurument is different • Big challenge for regional innovation policy
SCIENCE-BASED AND PRACTICE-BASED INNOVATION
Science-based innoation (STI) Practice-based innovation (DUI)
Logics Agglomeration - Clusters – Economies of scale – Location Economies – Intellectula capital
Related variety – Innovation platforms – Economies of mid-scale – Sosial Capital
Innovations Radical innovations –Technological products and concepts
Incremental innovations – Service innovations, social innovations, organisational innovations
Origin of innovation Expert and science-based User-, employee- and practice-based
Expertise World class scientific expertice in narrow field
Brokerage – General ability to build possible worlds
Innovation environment Creation of scientific top centres Developmet of innovation capability of ”everybody”
Knowledge transfer Transferring the the knowledge from to centres to the companies
Absorbing technology signals to the companies
Logics of knowledge production Homogeneous Heterogeneous
Innovating organisations Big companies SME’s - Public sector
Education organisations Universities Lower lever
(Harmaakorpi et al., forthcoming)
“CAN BROAD BE TOO BROAD?”
(Edquist et al., 2009).
Two ways to go wrong with the broad-based approach:
•First, to downgrade the definition of innovation to include even minor changes and modifications as innovation. If anything, Finland and Finnish policies should rather do the reverse.
•Second, to label all enterprise policy – including old-style industrial policies and/or those not directly related to the generation and utilization of novel ideas – as innovation policy.
3. NETWORKED INNOVATION PROCESSES
DIFFERENT KINDS OF NETWORKS
(Smedlund 2009, 55)
CLOSED VS OPEN INNOVATION
(Chesbrough 2003)
ENTERPRISE INNOVATION PROCESS
Front end of innovation process (FFE)
Ideaevaluation
Idearefining
Ideageneration
Opportunity recoqnition
Innovation management,
strategy, culture
Concept development NPD (New product development)
Definition
Planning
Testing
Ramp up
P0 P1 P2 P3 P4 P5
(Apilo & Taskinen 2006)Focus of this presentation
CHALLENGES OF INNOVATION MANAGEMENT
Firms in many cases focussed too much either on the front end or back end of innovation process
• Front end: openness, creativity, ”degrees of freedom”, allowing, limited costs• Back end: controll, limiting, more closed, cost generating
• Focus on front end -> Problem: ideas stay as ideas, they very seldom get realized
• Focus on back end -> Problem: ideas often have limited novelty value
• Different ”management logic” on front end and vback end of innovation process
(Burt 2004)
Stronglinks
NETWORKS AND STRUCTURAL HOLES
Structural hole
Weaklinks
STRUCTURAL HOLES AND GOOD IDEAS
− …”good ideas are disproportionately in the hands of people whose networks span structural holes”….
− …”people who stand near the holes in a social structure are at higher risk of having good ideas”...
(Burt 1992)
STRONG AND WEAK TIES IN NETWORKS
− The strength of a tie is a combination of the amount of time, the emotional intensity, the intimacy and the reciprocal services which characterize the tie
− Strong ties are characterized by common norms and high network density. These strong ties are easier for innovation, since they include normally a relatively high amount of trust, common aims and the same kind of language to communicate.
− However, weak ties are reported be more fruitful for innovations, because more novel information flows to the individuals through weak ties than through strong ties
(Granovetter 1973, 2005)
DISTANCES IN INNOVATION NETWORKS
Distance Source Innovation potential
Geographic Physical distance between actors Geographic proximity does not automatically lead to innovations, but it may, for instance, facilitate social proximity.
Cognitive Differences in ways of thinking and knowledge bases
A certain degree of cognitive distance enables creation of new innovations.
Communicative Differences in concepts and professional languages
When making a new idea understandable, concepts from other fields or sciences, for instance, may be utilized.
Organisational Differences in ways of coordinating the knowledge possessed by organisations and individuals
An organisation should have both strong and weak links in its network.
Functional Differences in expertise in different industries or clusters
It is useful to obtain novel information also from outside of one’s own field of operations. In such cases, the information often needs to be adapted to the field of operations in question.
Cultural Differences in (organisational) cultures, values etc.
The challenge is to get people working in different organisational cultures to collaborate.
Social Social relationships and the amount of trust included in them
Innovations require interaction among different kinds of actors. Trust helps in creation of radical ideas.
Temporal Differences in ability to imagine possible, potential futures
The challenge is to acquire and assimilate future-oriented knowledge so that it could be exploited in a proactive manner.
(adapted from Harmaakorpi et al., 2006; temporal distance added)
CATEGORIES OF KNOWLEDGE
1. Explicit knowledge: Knowledge expressed as words or numbers. This type of knowledge is codified and well defined.
2. Tacit knowledge: Knowledge expressed as insights, intuitions and hunches. This type of knowledge is highly personal and hard to formalize.
3. Self-transcending knowledge: The ability to sense the presence of potential, to see what does not yet exist. It can also be described as tacit knowledge prior to its embodiment.
(Uotila & Melkas 2007)
INFORMATION VS KNOWLEDGE TRANSFERIN NETWORKS
− Distinction between the concepts of “information” and “knowledge” − Knowledge defined as “interpreted, understood and internalised information in a
certain context”
− “Complex knowledge resists diffusion even within the social circles in which it originated” (Sorenson et al. 2006)
− When actors in networks communicate along strong ties and across short distances, then what is communicated, is more “knowledge-like, ready-to-use inputs” for learning and innovation processes.
− When communication takes place across greater distances and along weak links, then what is communicated is more “information-like” inputs, and much greater effort and resources are needed in the interpretation process in new contexts, before these inputs can provide support for learning, new knowledge generation and innovation.
− Brokers can provide the necessary extra resources for contextualization, and thus they may help also the innovating actors of a network to cross greater distances.
(Parjanen, Melkas & Uotila, 2011)
INFORMATION / KNOWLEDGE BROKERING
− Brokering activities aim at reaching a suitable overlap to stimulate the information exchange between actors in the innovation network
− If overlap is too high, the transferred information does not have a novelty value
− If overlap is non-existent or too thin, information is not transferred and and theres a structural hole in the network (Burt 2004)
− The required overlap between two actors depend on the absorptive capacity of the respondent
− Brokering activities should aim to optimize the right ”amount” of overlap between the actors in the innovation networks to ensure the transfer of information and knowledge
BROKERING AND OPTIMAL DISTANCE
Brokering of the information/knowledge transfer process
A.
A. A.
B.B.B.
A.= ”owner of innovation process”B.= new knowledge brought into the process
LOOKING FOR STRUCTURAL HOLES:
CROSSING THE DISTANCES
”Traditional” metal industry
Biotechnologyresearch
Information technology research
Nanotechnology research
.
(Harmaakorpi)
