Sources of Innovation

Chapter 4

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 Objectives
When you have completed this class you will be able to:
• Review the innovation process;
• Distinguish different ways in which the innovation
process can commence;
• Analyse the diverse sources of innovation;
• Identify recent changes in the relative importance of
particular sources of innovation;
• Evaluate the relative importance of different sources
of innovation.

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 Sources of innovation
• Individuals
• Corporations
• Users
• The State

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 Individuals
• Schumpeter Mark 1 – originally stressed the role of individual in
innovation
• The “garage” model of innovation i.e. start at home
• e.g. 367 Addison Avenue, Palo Alto, California
• Why still going strong?
• Growth of small firm sector
• New organisational arrangements e.g. strategic alliances
• Availability of financial support e.g. business angels
• Role models

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 Individuals and their
innovations
Product Link to
Individual Product Reference
name innovation
Waterproof Parsons & Rose
Bill Gore Gore-Tex Work experience
fabric (2003)

Ron Portable
Workmate Hobby/Leisure Landis (1987)
Hickman workbench

Dyson Dual Bagless vacuum Problem-

James Dyson Dyson (1997)
Cyclone cleaner solving/User

Problem- Campbell-Kelly
Dan Bricklin VisiCalc Spreadsheet
solving/User (2003)

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 Corporations
• Schumpeter Mark 2
• Now highly technological – so Corporate Labs
• Famous examples
• e.g. AT&T’s Bell Labs; Xerox’s PARC
• Basic principle is corporations do Research & Development (R & D)
• Aim is new discoveries that lead to new products
• Part of an age of mass production
• The era of large vertically integrated businesses
• Still widely used but declining
• Signs of a switch to ‘Open Innovation’

What do corporations often find it difficult to develop new

breakthrough/ new technologies?

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 Users
• First identified by Von Hippel in US in 1970s
• Scientific instruments developed by scientists
• Found high proportion invented & developed by scientist users
who then got a manufacturer to produce it
• Particularly noted role of ‘Lead Users’
• Lead users are ones who employ product in demanding cutting
edge applications and have lots of experience
• Also Shaw in UK in 1980s
• Medical/surgical instruments developed by
surgeons/consultants, funded by research councils,
tested/validated by hospitals, then built by manufacturer
• More recently identified in a range of business sectors

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 The State
• Correcting market failure
• Funding “blue skies” research
• Uncertainty over potential returns
• When the ‘social’ return is greater than the ‘private’
return

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 Role of the State
Funding activities such as:
• Basic/”blue skies” research
• Demonstrator projects
• Proof of concept projects

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Sources of technologies in Apple
products (iPod)

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 Other sources
• Employees
• Outsiders
• Spillovers
• Process needs

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 Outsiders
• Provide a different perspective
• Lateral thinking?
• Not held back by inhibitions or ‘conventional wisdom’
• Not tied (not aware of?) to existing paradigm
• More willing to challenge existing assumptions
• e.g. Dyson and the manufacturers who liked making bags for
vacuum cleaners
• More likely to have broad range of external contacts
• e.g. Aerospace contacts when McLaren made first composite F1
car
• ‘Not-invented-here’ syndrome in corporations
• e.g. Apple’s single button mouse

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 Outsiders as innovators
Innovation Company Innovator Date
Haloid Chester
Photocopier 1938
Corporation Carlson

Steve Jobs &

Personal computer Apple Computer 1977
Steve Wozniak

McLaren- John Barnard 1981

Carbon fibre
International
Formula One racing
car

Internet bookstore Amazon.com Jeff Bezos 1995

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 Spill-overs
• Where research by one firm ends up benefiting others
• Example of the VisiCalc spreadsheet
• Likely to occur ‘appropriability’ is problematic
• May be associated with a region
• e.g. Silicon Valley
• Often linked to staff mobility
• The so-called staff churn and associated knowledge mobility

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 Process needs
• Where a bottleneck occurs
• Intense pressure builds to ‘cure’ the bottleneck
• Very strong incentive for innovation
• Often potential for massive cost reduction

Examples
Ford: Moving assembly line; Pilkington: Float glass

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