03.dmst12 tim
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Innovation managementTRANSCRIPT
The Rough Guide to Technology and Innovation Management
Stefano Brusoni
Professor of Technology and Innovation Management
Table of contents
A long and distinguished
history, in a few words.
Science push vs. demand pull
innovation
Open vs. closed innovation
Exploration vs. exploitation
(gone mad!?)
:
Technology and Innovation Management, I
Technology and innovation management is the field of scientific enquiry focused on the analysis of how a socio-technical system of interconnected elements changes over time, whether by emergence or through design, and how such changes can be leveraged to generate value in a sustainable way.
Technology and Innovation Management, I
Technology and innovation management is the field of scientific enquiry focused on the analysis of how a socio-technical system of interconnected elements changes over time, whether by emergence or through design, and how such changes can be leveraged to generate value in a sustainable way.
Technology and Innovation Management, I
Technology and innovation management is the field of scientific enquiry focused on the analysis of how a socio-technical system of interconnected elements changes over time, whether by emergence or through design, and how such changes can be leveraged to generate value in a sustainable way.
Technology and Innovation Management, I
Technology and innovation management is the field of scientific enquiry focused on the analysis of how a socio-technical system of interconnected elements changes over time, whether by emergence or through design, and how such changes can be leveraged to generate value in a sustainable way.
Technology and Innovation Management, I
Technology and innovation management is the field of scientific enquiry focused on the analysis of how a socio-technical system of interconnected elements changes over time, whether by emergence or through design, and how such changes can be leveraged to generate value in a sustainable way.
Technology and Innovation Management, II
} The study of ‘stress’ points in complex systems
} What systems? } Human organizations, designed and managed to achieve relatively
well specified goals through cooperative and coordinated work } Large and small } Public and private } Profit and non-profit
} What stress points? } Science push vs. demand pull } Open vs. closed } Exploitation vs. exploration
VS.
So what?
TIM – A bit of history
T. A. Edison
TIM – A bit of history
F. W. Taylor ‘There are three causes for [slow work], which may be briefly summarized as:
§ First. The fallacy, which has from time immemorial been almost universal among workmen, that a material increase in the output of each man or each machine in the trade would result in the end in throwing a large number of men out of work.
TIM – A bit of history
§ Second. The defective systems of management which are in common use, and which make it necessary for each workman to soldier, or work slowly, in order that he may protect his own best interests.
§ Third. The inefficient rule-of-thumb methods, which are still almost universal in all trades, and in practising which our workmen waste a large part of their effort.’
‘In order that the work may be done in accordance with
scientific laws, it is necessary that there shall be a far more equal division of the responsibility between the management and the workmen than exists under any of the ordinary types of management.’
TIM – A bit of history
And then came Henry Ford …
} The Highland Park Plant in Detroit } Development effort which led
to Model T (1908-1914) } Elimination of craft-made
components } Moving assembly line } Interplay of organizational,
managerial and physical innovations
Three great debates …
} Science/technology push vs. demand pull } Sources of ideas, IPRs, R&D, university-industry links, TTOs … } From Edison to …
} Open vs. closed innovation } Firms’ boundaries, networks, incentives to innovate, users … } From Ford to …
} Rules vs. creativity } Routines, formal structures, hero entrepreneurs, exploration vs
exploitation, ambidexterity … } From Taylor to …
1) The linear model of innovation
Vannevar Bush (1945) Science – The endless frontier
‘New products and processes are founded on new principles and conceptions which, in
turn, are developed by research in the purest realms of science’ (p. 19)
TIM – Science Push vs Demand Pull
Basic research is performed without thought of practical ends. It results in general knowledge and an understanding of nature and its laws. This general knowledge provides the means of answering a large number of important practical problems, though it may not give a complete specific answer to any one of them. The function of applied research is to provide such complete answers.
The scientist doing basic research may not be at all interested in
the practical applications of his [sic] work, yet the further progress of industrial development would eventually stagnate if basic scientific research were long neglected.
(Bush, 1945: http://www.nsf.gov/about/history/vbush1945.htm#ch3.5)
TIM – Science Push vs Demand Pull
TIM – Science Push vs Demand Pull
Did it work?
TIM – Science Push vs Demand Pull
Souvenirs from the Moon …
Source of all pictures; http://space.about.com/od/toolsequipment/ss/apollospinoffs.htm, last accessed August 27, 2009, 4.35pm
TIM – Science Push vs Demand Pull
But also …
} Civil application of nuclear energy followed its military development } The Manhattan project
} Both the Apollo program and the Manhattan project explain a lot of subsequent developments in microelectronics.
} Nixon’s ‘War to Cancer’ + the development of biological weapons of muss destruction contributed to the ‘molecular biology revolution’ } National Cancer Act in 1971 } Note that War to Cancer, overall, did not achieve its promises
TIM – Science Push vs Demand Pull
Science/technology-pushed innovation
} Simple relationships } New technologies are the application of previously acquired scientific
knowledge } Huge emphasis on R&D activities
} It works, sometimes } Electrical, electronics (some), chemicals, pharma
} It is consistent with current emphasis on ‘appropriability’ considerations } Patents, licenses, academic entrepreneurship, Technology Transfer!!
TIM – Science Push vs Demand Pull
The evidence for demand-pull
} Economic historians devoted considerable attention to the sources of innovation
} Schmookler, 1960s } Pioneering work on US data in sectors such as railroads, petroleum
refining, construction etc
} Main conclusion } Invention and innovation are essentially economic activities, given
that shifts in the allocation of resources to invention and innovation reflect shifts in market demands
} (enter the social scientists) } Demand as ‘incentive’ and demand as ‘knowledge’
TIM – Science Push vs Demand Pull
Demand as incentive to innovate
} Invention takes talent, hard work and money… } Invention is an economic activity } Incentives to invent are positively affected by prospective rewards
(i.e. expected profitability)
} It is easier to undertake an innovative project when it is riding a rising trend and in the earlier phases of this trend
} Prospective rewards are ultimately determined by the volume of sales, i.e. the expected demand or, stated differently, the size of market
TIM – Science Push vs Demand Pull
Additional evidence
} Marquis and Meyers (1969): survey of innovators to discover that 75% of ideas come from would-be customers
} Freeman 1974 (the SAPPHO Project): importance of attention to users’ needs in distinguishing successful from unsuccessful products
} Von Hippel (mid 1970s) on the role of users in developing innovation ….
TIM – Science Push vs Demand Pull
Demand as knowledge, I
} Innovation is an inherently uncertain process } Useful knowledge about market needs reduces uncertainty
} Knowledge about customers’ needs increases the probability of introducing a successful innovation, the expected profits and, ultimately, the incentive to innovate
} Demand is the main source of new ideas and technology lags behind
TIM – Science Push vs Demand Pull
Demand as knowledge, II
} Users actually change the technology to solve their problems } Medical devices } Surf boards } Open source software } Robotics } Etc etc.
} Very popular nowadays, also referred to as: } Crowdsourcing } Virtual customer environment } Participatory design } Professional amateurism } Open innovation model
} von Hippel, Eric (2005), Democratizing Innovation, MIT Press } Georg von Krogh’s work à http://www.smi.ethz.ch/
TIM – Science Push vs Demand Pull
Open issues
} Very important questions focus on: } The role of IPRs in academic research } The role of TTOs and, more generally, the management of technology
transfer } Academic entrepreneurship
} Can users deliver radical innovations? Or is it simply about incremental innovation? } The engagement of customers through Internet-based technologies } The emergence of platforms for innovation
2) Open vs. closed innovation
} The case of Free/Open software
} A specific development model based upon the collective work of a distributed community of independent programmers who agree to share the source code through a General Purpose License. } Viral close
} Open source approaches differ from the proprietary model of software licensing by allowing other individuals and organizations to view, modify and redistribute the source code.
} The ‘Cathedral’ and the ‘Bazaar’ } Raymond 1999
TIM – Open vs. closed innovation
Source: Wikipedia, http://it.wikipedia.org/wiki/Unix, TIM – Open vs. closed innovation
Four ‘problems’ with F/OSS
1. Open source software should be prone to the free–rider problem; } how can open source software projects encourage the active participation
of talented developers who are not directly rewarded for their efforts?
2. Why do profit–motivated firms collaborate in open source projects? } E.g. IBM!
3. How have loosely coordinated networks of "hackers" been able to manage complex development projects? } Against forking!
4. What is the impact of this specific institutional arrangement on the rate of technological innovation? } Does it matter, in the end?
TIM – Open vs. closed innovation
Another case of collective innovation
Lessons from Cornwall …
} No consolidated understanding of the working of the
‘artefact’ (e.g. steam engine)
} Reputation mechanisms which provide incentives to disclose technical information } Job market issues } Problem 1)
} Disclosure does not prevent appropriation } Average aggregate performance } Create sufficiently large installed base } Problem 1) and 2)
TIM – Open vs. closed innovation
} ‘Given enough eyeballs, every bug is shallow’ } Attributed to Raymond
} Debugging vs. kernel-level modifications } Modularity
Coordination in F/OSS and collective invention
TIM – Open vs. closed innovation
Coordination in F/OSS and collective invention
} Two different and hierarchically ordered ladders in GNU/Linux } The kernel space (the quasi ‘integrated cathedral’) } The user space (the ‘modular’ bazaaar)
} Delegation to few trusted lieutenants to check proposed patches to kernel } Few and trusted!
} Vast majority of F/OSS projects are stillborn. } Very strong reputation effects
TIM – Open vs. closed innovation
Four ‘answers’ about F/OSS
1. Open source software should be prone to the free–rider problem; how can open source software projects encourage the active participation of talented developers who are not directly rewarded for their efforts?
• Reputation effects
2. Why do profit–motivated firms collaborate in open source projects? • Installed base; average aggregate productivity argument
3. How have loosely coordinated networks of "hackers" been able to manage complex development projects?
• Kernel and modularity
4. What is the impact of this specific institutional arrangement on the rate of technological innovation?
• Positive
TIM – Open vs. closed innovation
Open issues
} Business model innovation } How do people make money out of this? } Bundling of products and services
} Can you really see it in practice, outside of the software sector? } Steve Jobs, certainly not an ‘open’ innovator } Product architectures as strategic levers for selectively ‘open and close’
} Corporate entrepreneurship } Established organizations intentionally generate large numbers of spin outs. Why?
} Can it be open before being closed? } A traditional life cycle argument? } The role of pioneers and technological leaders
TIM – Open vs. closed innovation
3) Rules and creativity
} A long tradition, going straight back to Taylor } What role do rules play in explaining innovation and change? } Do they kill creativity or foster change? } Is it about key individuals? Or is it about great committees?
} A new breed of micro-level studies } Exploitation and exploration } Ambidexterity
TIM – Rules and creativity
Exploration and exploitation
} Exploitation } Refinement, production, efficiency, implementation …
} Exploration } Variation, risk taking, experimentation, play, flexibility …
} Adaptive systems which emphasize exploitation are likely to get stuck in sub-optimal equilibria. } The failure of established organizations
} Adaptive systems which emphasize exploration are likely to be unable to gain the benefits of their innovative endeavours } XEROX PARC!
TIM – Rules and creativity
} Returns from exploration are uncertain, more remote in time, and organizationally distant from the locus of action and adaptation } E.g. the R&D lab!!
} Returns from exploitation are reliably linked to the time and place in which they take place. } E.g. the manufacturing unit
} How to switch from one to the other? } And bring Edison back in the analysis
Exploration and exploitation
TIM – Rules and creativity
Behavior at organizational level
exploitative explorative
T. A. Edison reinterpreted
Source: Laureiro et al JNPE 2010
explorative
Behavior at individual level
exploitative
T. A. Edison reinterpreted
Source: Laureiro et al JNPE 2010
broad
Attention focus
narrow
T. A. Edison reinterpreted
Source: Laureiro et al JNPE 2010
LC mode
tonic
Attention mode
phasic
Behavior at individual level
Behavior at organizational level
Source: Laureiro et al JNPE 2010
T. A. Edison reinterpreted
Learning, reward perception, perseveration
Attention control regions, planning, idea generation, switching.
Source: Laureiro et al 2012
Why does it matter? Exploitation and Exploration
} Entrepreneurs do NOT explore more } What matters is ‘how’ they explore
} Entrepreneurs routinize their exploration more than managers } They develop simple rules to select their next move!
} Routinization and performance are significantly correlated } Nelson and Winter proved right!
} Entrepreneurs’ performance is significantly better } Higher cumulative payoff
Source: Laureiro et al 2012
Why does it matter? Entrepreneurs vs. Managers
Cognitive control regions Bilateral FrontoPolar Cortex
Bilateral parietal cortex
Intraparietal sulcus
Locus coeruleus (LC)
Cognitive control, routinization and performance
Routinization
Exploration-exploitation Performance CCCs
Decision-making performance
Routinization Entrepreneurs correlations ~ 0.313 to 0544***
Entrepreneurs corr. ~ 0.505 to 0.671***
Entrepreneurs corr. -0.623***
TIM – Rules and creativity
Open issues
} Neuroscientific techniques are widely available, but they are built on specific theories and methodological assumptions } Small sample research, repetitive tasks
} Much can be said also with more traditional techniques } Interviews, case studies, surveys etc.
} The fact that we can, does not imply we should } Ethical issues
} And anyway, how do we go from Edison to Menlo Park really?
TIM – Rules and creativity
Conclusions
A long and distinguished
history, in a few words.
Science push vs. demand pull
innovation
Open vs. closed innovation
Exploration vs. exploitation
(gone mad!?)
:
Thanks! [email protected]