Innovation

Joseph Schumpeter was the pre-eminent innovation theorist. He was an Austrian economist who, in the 1940's, laid out some central core ideas related to innovation.

Five categories of innovation:

1.       A new product or a qualitative change in an existing product.

2.       A new process for creating an existing product. The best example is the assembly line production method, as employed by Henry Ford and his automobile plant in the 1920s in Detroit. 

3.       A new market for something. Ear-piercing for men was a new market.

4.       A new source of input, a new type of material used to create an existing product. A good example of this is tennis rackets made by carbon composite or eye glasses made of titanium

5.       Organizational innovations, the methods and processes used to run an organization. We can organize our firm vertically (hierarchically) or horizontally.

Using a different schema, three categories of innovation:

1.       Offensive versus defensive innovations.

This is a business perspective for understanding innovation. When we innovate as an offensive strategy, we try to break out from the existing mold of operation, trying to create something new.  We are attacking, trying to win. If we use the analogy of a game, we are trying to score. We are engaging in what Joseph Schumpeter himself would call creative destruction. In contrast, in defensive innovation, we're simply defending what we have and we’re not trying to break out from the old mold of doing business. We're innovating to survive by following the leader and not being leaders ourselves. By engaging in this tactic, we are keeping up with the rest of the industry. We maintain a position within the industry with lower risk because we are not spending a lot on R&D.

2.       Radical or incremental innovations based on historical or societal impact.

Radical innovations are disruptive innovations and refer to finding something completely new and unrelated to the past. Incremental innovations are based on previously held knowledge. Radical innovations have a much larger impact on society. Incremental innovations are more subtle. Most innovations are usually incremental to varying degrees since we create new knowledge cumulatively by using previously held knowledge. It is very rare that we break out completely from the past, creating something new that has no antecedents in history. We see further because “we are standing on the shoulders of giants”, to use Newton's quote.

3.       Product innovation (with tangible products and services) or a process innovation (involving new ways of doing things, an intangible process).  

Process innovations involve skills, knowledge, services, ideas, and organizational innovations.

Why do people innovate?

A company usually earns a large amount of profit by innovating. Firms can undertake innovation as offensive and defensive strategies either to increase market share or to hold onto existing customers. It's very rare now that you'll find large firms that do not innovate. Look at the R&D budgets of the Fortune 500 companies. A comparison to help understand innovation is a biological one. Innovation creates diversity. Innovation is similar to mutation in biology. The market process is a natural selection process.

The idea of technological paths or trajectories describes new ideas/technologies becoming fixed in certain directions. We are unable to break out from the previous mold. This happens for a number of reasons. Commercial firms want to be able to use the knowledge that they already have and not waste already acquired resources. This is known as lock-in-effect. We have a certain standard or a certain way of using a technology that is very difficult to break away from. QWERTY keyboards, right or left hand driven cars, the USB standard, Windows operating system are examples of technologies or innovations that have created a lock-in-effect. It is very difficult to break from these technologies and therefore we become stuck in a technological path. We might innovate within Windows operating system or within QWERTY keyboards but those are incremental innovations and it is very difficult or very expensive or both to break out from that technological path.

How can we summarize what science is and what technology is?

Science refers to a systematic body of knowledge about the observable world. Technology, on the other hand, refers to material goods, methods, or knowledge used to carry out human ends. An important point about technology is that there's an element of functionality associated with technology. Technology helps us achieve some goal or some objective. It helps us complete some task. If we're trying to understand why something works or acts the way it does in the natural world that is science. Technology is trying to understand how something acts or works the way it does.

Using the scientific method, also known as the falsification method, we use our minds to do science, to understand why the natural world works. Traditionally, we use our hands to make technology.

Science is usually overestimated and technology is usually underestimated. Often, in society, in practice, in academia, in different spheres of society, we give more emphasis to science. Technological knowledge, compared to scientific knowledge, is usually downplayed. Scientific knowledge is usually considered to be more important. However, technological knowledge does not necessarily have to be considered inferior to scientific knowledge. Technological knowledge has a tradition of its own. Not all technologies have a scientific foundation. It's important to understand innovation using a multidisciplinary perspective. Similarly when we're trying to understand technology, we should be open to other inputs and not just science alone. Science does not have a monopoly on technology. Examples of this are the plane and gun powder. 

Science is very important in creating new technologies. Science is able to provide input to the creation of new technologies but not all new technologies have a scientific foundation.
from Coursera course, Science and Technology and Society in China. Week 1. by Naubahar Sharif, The Hong Kong University of Science and Technology