1 - Sources of Innovation

Pioneering Innovation and Management in the Tech Industry

Fall 2024
Kuancheng Huang
Topic Outlines - Sources of Innovation
• Innovation Sources, a System Viewpoint
• Creativity
• Translating Creativity into Innovation
• Innovation in Collaborative Networks

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Sources of Innovation, as a System

The linkage is more important!

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Individual Creativity
• Creativity, the ability to generate new and useful
ideas, something imagined or pictured in the mind.
• Individual creativity is a function of:
– Intellectual abilities for creative thinking
• Look at problems in unconventional ways
• Analyze which ideas are worth pursuing (or not)
• Convince others that ideas are worthwhile.
– Knowledge

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Individual Creativity (cont'd)
• Individual creativity is a function of:
– Intellectual abilities
– Knowledge
– Style of thinking (e.g., choose to think in novel ways)
– Personality
• self-efficacy (confidence in own capabilities)
• tolerance for ambiguity
• willingness to overcome obstacles and take (reasonable) risk
– Motivation (e.g., intrinsic motivation)
– Environment (e.g., support and rewards for creative ideas)

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Organizational Creativity
• Organizational creativity is a function of:
– A simple aggregate of the creativity of its employees?
– Structure, routines, and incentives could thwart or amply
the creativity of its employees .
• Idea collection systems
– John Patterson, founder of NCR (National Cash Register),
created the suggestion box program in 1895.
– How may ideas were submitted in 1904?
– How may of them are adopted?
– How to reward?

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Inspiring Innovation at Google
• Google uses a range of formal and informal
mechanisms to encourage its employees to innovate,
including:
– 20% Time (all engineers are encouraged to spend 20% of
their time working on their own projects)
– Recognition awards (by managers)
– Google Founders’ Awards (with stock grants)
– AdSense Ideas Contest
– Innovation reviews

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Translating Creativity into Innovation
• Innovation, more than the generation of creative
ideas, is the implementation of those ideas into
some new device or process. It requires combining
creativity with resources and expertise.
• Who does it?
– Inventors
– Innovation by Users
– Research and Development by Firms
– Universities and Government-Funded Research

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Characteristics of Inventors
• They typically,
– Have mastered the basic
tools and operations of the
field in which they invent,
but they will have not
specialized solely on that
field.
– Are more interested in (re-
defining) problems than
solutions.
– Question the assumptions
made in previous.
– Seek global solutions rather
than local solutions, and will Segway, invented by
be generalists by nature. Dean Kamen
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Innovation by Users
• Users
– Have a deep understanding of their own needs, and
motivation to fulfill them.
– Innovate often initially purely for their own use, while
manufacturers typically create innovations to profit.

Indermil Tissue Adhesive

Snowboard from Superglue
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Research and Development (R&D) by Firms
• Research refers to both basic and applied research.
• Development refers to activities that apply
knowledge to produce useful devices, materials, or
processes.
• A firm’s R&D intensity (R&D expenditure/revenue) is
found to be positive correlation with sales growth,
sales from new products, and profitability (Roberts,
2001).

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Type of R&D by Countries

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Fundamental Difference in R&D Approaches
• Science Push: Scientific discovery → invention →
manufacturing → marketing
• Demand Pull: Customer suggestions/needs →
invention → manufacturing

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External vs. Internal Sourcing of Innovation
• External and internal sources are complements.
– Firms with in-house R&D are also heaviest users of
external collaboration networks.
– In-house R&D may help firm build absorptive capacity that
enables it to better use information obtained externally.

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Linkages with Customers, Suppliers, and others

(Roberts, 2001)

• How about complementors?

• How about competitors?

Palm, an example of the mixed role (device and OS) for

the PDA market!
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Other Sources of Innovation

Percent of R&D Funds by Source and Country

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Types of Collaborations
• including (but are not limited to):
– Joint ventures
– Licensing and second-sourcing agreements
– Research associations
– Government-sponsored joint research programs
– Value-added networks for technical and scientific exchange
– Informal networks
• Collaborative research is especially important in high-
technology sectors where individual firms rarely
possess all necessary resources and capabilities/

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Global Alliance Network
StressgenBiotechnologiesCorp

Seven-ElevenJapanCoLtd

ElanCorpPLC

IBMCorp
BayerAG
MatsushitaElectricIndustrial

HitachiLtd SunMicrosystemsInc
MotorolaInc

Hewlett-PackardCo MicrosoftCorp

MonsantoCo

CSIRO

MagazineHouseCoLtd

QUALCOMMInc

T oyotaMotorCorp

1995 2000

• The collaborative network influences the diffusion of

information and other resources
• The size and structure of this network changes over
time due to changes in alliance activity.

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Some Related Concepts and Terms
• “Technology Clusters” (e.g., Silicon Valley, lower
Manhattan for multimedia, and Modena’s knitwear
district) are regional clusters of firms that have a
connection to a common technology/industry.
• “Technological Spillovers” occur when the benefits
from the research activities of one entity spill over to
other entities.
• “Knowledge Brokers,” a pivotal role in the innovation
network, are individuals or firms that transfer
information from one domain to another in which it
can be usefully applied. (Thomas Edison is a good
example.)

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Some Related Concepts and Terms (cont'd)
• “Agglomeration Economies”
– Proximity facilitates knowledge exchange.
– Cluster of firms can attract other firms to area.
– Supplier and distributor markets grow to service the cluster.
– Cluster of firms may make local labor pool more valuable
by giving them experience.
– Cluster can lead to infrastructure improvements (e.g.,
better roads, utilities, schools, etc.)

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