Innovation Cultures and Theories- Module1

Innovation Cultures and Theories

Module One: Basic Concepts About the Social Dimension of Technological Innovation

Prof. Paolo Volonté, Alessandro Ricotti, Paolo Bory, and Sahar Tavakoli

23/02/2023

Our Subject is Innovation

«In an essential sense, innovation concerns the search for, and the discovery, experimentation, development, imitation, and adoption of new products, new production processes, and new organizational set-ups» (Giovanni Dosi). It is obvious that Giovanni Dosi was coming from the economic field because, from the perspective of design, some information is missing regarding the production not just of new products but also of new services. Innovation is not just a discovery, finding something new; it is a really long process which involves many different actors.

By being an economist, Giovanni Dosi was mainly focused on industrial innovation; however, innovation can also happen outside the industry. It can also be a behavioral change of the population, a new policy, etc. It’s not easy to define the difference between an invention and an innovation. Leonardo Da Vinci was an inventor or an innovator? He was both at the same time. At that time he was working for the duke of Milan in a really wide range of fields (military or flying machines). Most of these flying machines didn’t even work in real life, but they were technologically advanced. Even if they didn’t work, they had a great impact on society and people's lives since he opened new perspectives. The point is that an invention is not an innovation until it starts having an impact on society.

Innovation is not about changing the world. Leonardo Da Vinci also played an important role within the construction of the locks (barriers) for the canals in Milan, systems through which it’s possible to overcome differences in the level of water. He contributed to the improvement of locks quality; nowadays there are two that are still working. Canals were really important at that time; let’s also think about the Duomo, which was built by using marble coming from Lago Maggiore. To transport it, they needed canals. All these examples make Leonardo Da Vinci an inventor, while flying machines make him an innovator. In 1400, the canal system in Milan started from Naviglio Pavese where all kinds of merchandising (very rough materials and primary goods) were coming from different cities to be then processed in that area.

Let’s keep in mind that we care about these two topics (invention and innovation) considering them as phenomena, not just as names. A second definition of innovation comes from Jan Fagerberg. «An important distinction is normally made between invention and innovation. Invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out into practice. Sometimes, invention and innovation are closely linked, to the extent that it is hard to distinguish one from another. In many cases, however, there is a considerable time lag between the two. In fact, a lag of several decades or more is not uncommon» (Jan Fagerberg). This is to say that an idea needs something before becoming an innovation. What could make the difference could be some technology user needs or even the scope/scale.

What separates an innovation from the invention on which it is based?

• An organization (usually an industry) capable of absorbing the invention and reproducing it on a socially appreciable scale. The scale is really important when talking about an innovation because we must refer to mass production to have a widespread impact on people and in general on society.
• A system of other innovations or inventions necessary for large-scale reproduction (e.g., miniaturization of microchips). Humans needed to design smartphones first to then produce microchips.
• An adequate economic and financial basis, for an innovation lots of people are required to be influential.
• A market willing to welcome it, and therefore also a system of needs to which it can respond.
• Time, all the previous categories need time to be developed.

The main difference between an invention and an innovation is that the second has obtained social and/or economic relevance. It’s important to remember two principles: the first one is that not every innovation is based on an invention. In most cases, innovation arises from a mere rearrangement of known elements. The second principle has to do with the fact that innovation is a process, therefore something that happens over a rather long period of time. It is not an instantaneous change, but the addition of a series of small minor innovations that lead little by little to the greatest innovation.

Product Innovation vs. Process Innovation (First Dichotomy)

• Product innovation refers to a change in the product. It can be an improvement in the performance of a product or it can involve new features in a product.
• Process innovation involves improvement in the process of producing a product (productive chain). It includes e.g., improved inbound logistics, better media planning, or improved manufacturing process.

This distinction apparently just concerns product, process, and innovation but in reality, it also includes two main economic issues, each one related to product innovation or process innovation:

• Asking consumers to increase spending refers to product innovation. This approach is preferred by companies during expansion phases when consumers are richer and therefore ready to buy new products, substituting old products with new ones. Product innovation is typical of young industries in developing and recent sectors such as that of augmented reality. As a consequence, this approach leads to an increase in employment since companies need more people. As a disadvantage, product innovation can be easily imitated since you have to show your idea. The only way to protect your product is through patenting it (patent).
• Reducing costs of production refers to process innovation. This approach is preferred by companies during recession phases, so basically when the economy gets lower and lower and companies are in loss. As a consequence, they have to reduce costs since they are poor. Process innovation is typical of consolidated companies in mature sectors. The effect of the application of this approach is an immediate decrease in employment. On the other hand, an advantage is that it is not easily imitated because it’s something that happens on an internal level, so it’s difficult to access the private industry (industrial secrecy) and see which changes they’re making on the production process.

This distinction between the concepts of product innovation and process innovation has some limitations:

• It does not allow us to grasp the process dimension of change. Every innovation depends on time and context so they should really be taken into account in this distinction. For example, robots that are used in the automotive sector, at the exact moment in which they are produced, so at the beginning, they represent product innovation. Once they are applied to the industry and used in the production chain, they represent more process innovation.
• It does not highlight the differences that arise from different analysis perspectives. From the point of view of producers, robots are product innovation, while for the customer they are process innovation.
• It hides the systemic nature of technological evolution, the fact that innovation is normally a composition of product and process innovation. Product innovation usually requires process innovation to be on demand. At the same time, it happens the contrary so they are linked one to the other.

Both types of innovation can be designed and unexpected (even if process innovation is less unexpected).

Incremental Innovation vs. Radical Innovation (Second Dichotomy)

• Incremental innovation concerns limited improvements: the extension or updating of a process or product, the reorganization of work. Companies are constantly looking for it, so it can be a continuous process. Let’s think about hybrid cars. They represent incremental innovation since they haven’t radically changed cars, they just improved the process.
• Radical innovation produces profound changes such as the creation of a new product with characteristics, attributes, and components that differ significantly from the previous ones, or the invention and realization of a new production process. This kind of innovation is the one that changes the world and it can also be discontinuous since they are events that happen sometimes. Let’s take the example of smartphones; these devices radically changed our lives.

In the technological environment, it is typical to distinguish radical and incremental innovation depending on the degree of technology that is inside the product. The limit of this logic is that it considers technology as the creator of innovation which is not true. We could even have a super technological product but then it doesn’t have an impact on people, it doesn’t produce a social change, then it can’t be considered an innovation. The point here is to not look at the amount of technology in a product but just at what happens because of the use of a certain technology.

02/03/2023 - Technology Push Innovation vs. Market Pull Innovation (Third Dichotomy)

• Technology push innovation: Innovation is considered "pushed" by technology when it is thought that it was a technological development (or a scientific discovery) that triggered the change, and subsequently, thanks to its intrinsic qualities, it imposed itself on the market. The idea is that if a new technology is good it produces innovation. This kind of innovation always arises when new materials appear, since they enable new technologies (synthetic fibers for example or even the Internet that has revolutionized our world). There are some scholars saying that technology is the main trigger of innovation.
• Market pull innovation: Innovation is considered "market-driven" when it is thought that the manifestation of new needs induces the technological-industrial system to do research in a certain direction and to develop new technologies capable of responding to those needs. In general, demand pull is better than market pull. There is a broad discussion between these two approaches to innovation. The professor, together with some scholars, thinks that both these approaches are extremist and unsustainable. These approaches and their distinction, if radicalized, are deterministic, which means that they are based on the idea that innovation is one single source, which is not right. Innovation is the result of multiple factors influencing technological development. The development of coronavirus was an incredible example of technological development. Would we consider it as a case of technology push innovation or market pull innovation?

The professor agrees with thinking that it is mainly a case of market pull innovation (scientists choosing to address this problem to society) however it would have been impossible to develop such developed technology in such a short time in the past. Only the final step of the coronavirus process was technology push.

Limits of the Market-Pull Innovation Approach:

• Technology has a long timing, while the market requires quick answers to new needs that arise. There is no matching between the timing of technological innovation and the timing of the market. Technology has a long time while the market has short times. So how do we satisfy market needs in a short time? The covid example is an extraordinary case because humanity worked together to find a solution.
• The market does not display a “demand” and that's it. It displays a demand curve, i.e., a variation of the demand with the variation of multiple facts (costs, alternative solutions, alternative needs, etc.). Market pull innovation expresses the needs to which innovation gives a response.
• The market does not manifest the generic need for innovation in a field, it manifests the specific need for a particular device (which consequently has to be already conceivable). There are needs and relative responses. But the concept of need is ambiguous: in general, needs range from fundamental anthropological needs (I want to fly) to specific personal needs (I need to be in NY tomorrow for a meeting). The first kind of need does not imply the why to solve that need (will I jump from the window to fly?) therefore these needs cannot be the needs pushing technologies because they don’t suggest any direction for innovation. On the other hand, the specific personal needs are thought of in relation to the means that we already have available (I cannot say that I want to fly to NY if I wouldn’t have known that we have flights to go there). The demand expressed by the market is never the simple expression of a need; it is a function of different variables (economic power of consumers, production system, possible alternative solutions). There are demand courts, the demanding is always changing, if I have more money in my wallets, my needs will change. Since demand is so not stable (changing trigger) it cannot be the thing which pushes innovation. Innovation is a process. For instance, the development of bicycles as means to travel was pulled by a certain demand. We need to go from here to there, but the development was possible because there were many other devices such as bicycles used for other tasks and goals. We call them bicycles but they are very similar to things that are already existing, it was conceivable because there was something similar. The point is that the bicycle is the result of a need of a consumer but it was possible because the technology was already there.
• Often innovation is not the result of successful inventions, but of the new application of technologies that did not meet any market needs. Innovation produces answers to needs but the history of technology is full of cases of failure innovation (Post-it). Several times innovation is the product of the encounter of a technology that has been developed to respond to needs which don’t exist and a technology that needs new needs.

Limits of the Technology-Push Innovation Approach:

• Upstream, it is not true that innovation always proceeds as a technological application of new scientific discoveries. There is not a linear model for innovation. Innovation has very much more complex processes.
• Downstream, it is not possible to produce innovation regardless of the entire set of variables that determine the demand curve. Demand is a curve, so it is basically telling us that both approaches of the market pull innovation and technology push innovation are simplifications. A technological invention is not enough, it must be competitive on costs with respect to other ways to solve that need. It needs economic availability from the part of the consumer. The most important thing is not to radicalize these concepts and don’t think in a deterministic way.

The Diffusion of Innovations

This is a group of important theories because if innovation is not just a matter of designers, but a process that has to be confronted with a public and a society (people more or less interested in innovation), then the first step to understand innovation is to look at the side of the adoption of innovation. Never forget that without the adoption by consumers, inventions do not become innovation, they would become just failures. We’ll see how innovations are adopted by consumers, and how they spread in the world. These theories are called “diffusion theories”. The leading figure of these theories is called Everett M. Rogers who’s the author of a book called “Diffusion of Innovations” where he summarizes results of projects related to the diffusion of innovation. He makes practical examples. We are asked to read a little number of pages taken from the introduction of the book so maybe some parts of the chapter may appear very condensed. It’s useful to read it to have an idea of what are the main points addressed by these theories. This chapter makes clear a number of factors influencing the adoption of innovation, so what happens between the design activity and its success.

Rogers' approach is characterized by a fundamental assumption to describe the process of diffusion of innovation: “at a given moment an innovation appears in the community. It has to be understood how it happens that from that moment onwards the innovation spreads in increasingly large sections of the population”. In other words: Rogers assumes that the considered innovation is stable and steady, while what varies is the rate of adoption.

It is a first important aspect to realize that the development of a new technology is not enough to make innovation successful. However, in thinking “how does it spread?” Rogers assumes that innovation is not steady and stable but varies in the rate of adoption. How does adoption change? Innovations are changing by definition since they are processes. So if we are aware that they are continuous changes of an artifact for example, then we afford the study of the diffusion of that artifact with a different attitude and awareness, we become aware that the demand curve and the adoption of innovations change depending on the diffusion of a technology for instance. The point here is that while we are studying diffusion theories we must be aware that they are over simplifying the way we look at innovation processes. Innovations are inconstant transformations. The meaning they have for people is always changing, then that artifact is no more the same.

Let’s take the example of the orange squeezer: is it an object or a decoration? So the meaning of the product can change, I can also place it in the living room to show a status or whatever. If we study the rate of diffusion of this object in our home, and we assume that the object doesn't change, then we are over simplifying the process. The real object, so what we perceive, changes very quickly. We have to always think in terms of the demand curve, so how different factors influence the diffusion of an artifact and technology so that we can call it an innovation.

Case of TV as a technological innovation: television was introduced in 1945 in the USA, it spread among consumers at that time and apparently completed its diffusion 20 years later (1960) when everybody was...