THE CYCLIC NATURE OF INNOVATION: CONNECTING HARD SCIENCES WITH SOFT VALUES ADVANCES IN THE STUDY OF ENTREPRENEURSHIP, INNOVATION AND ECONOMIC GROWTH Series Editor: Gary D. Libecap Recent Volumes: Volume 10: Legal, Regulatory and Policy Changes that Affect Entrepreneurial Midsize Firms, 1998 Volume 11: The Sources of Entrepreneurial Activity, 1999 Volume 12: Entrepreneurship and Economic Growth in the American Economy, 2000 Volume 13: Entrepreneurial Inputs and Outcomes: New Studies of Entrepreneurship in the United States, 2001 Volume 14: Issues in Entrepreneurship: Contracts, Corporate Characteristics and Country Differences, 2002 Volume 15: Intellectual Property and Entrepreneurship, 200 4 Volume 16: University Entrepreneurship and Technology Transfer: Process, Design and Intellectual Property, 2005 ADVANCES IN THE STUDY OF ENTREPRENEURSHIP, INNOVATION AND ECONOMIC GROWTH VOLUME 17 THE CYCLIC NATURE OF INNOVATION: CONNECTING HARD SCIENCES WITH SOFT VALUES EDITED BY GUUS BERKHOUT PATRICK VAN DER DUIN DAP HARTMANN ROLAND ORTT Faculty of Technology, Policy & Management, Delft University of Technology, Delft, The Netherlands Amsterdam – Boston – Heidelberg – London – New York – Oxford Paris – San Diego – San Francisco – Singapore – Sydney – Tokyo JAIPressisanimprintofElsevier JAIPressisanimprintofElsevier LinacreHouse,JordanHill,OxfordOX28DP,UK Radarweg29,POBox211,1000AEAmsterdam,TheNetherlands 525BStreet,Suite1900,SanDiego,CA92101-4495,USA Firstedition2007 Copyrightr2007ElsevierLtd.Allrightsreserved Nopartofthispublicationmaybereproduced,storedinaretrievalsystem ortransmittedinanyformorbyanymeanselectronic,mechanical,photocopying, recordingorotherwisewithoutthepriorwrittenpermissionofthepublisher PermissionsmaybesoughtdirectlyfromElsevier’sScience&TechnologyRights DepartmentinOxford,UK:phone(+44)(0)1865843830;fax(+44)(0)1865853333; email:permissions@elsevier.com.Alternativelyyoucansubmityourrequestonlineby visitingtheElsevierwebsiteathttp://elsevier.com/locate/permissions,andselecting ObtainingpermissiontouseElseviermaterial Notice Noresponsibilityisassumedbythepublisherforanyinjuryand/ordamagetopersons orpropertyasamatterofproductsliability,negligenceorotherwise,orfromanyuse oroperationofanymethods,products,instructionsorideascontainedinthematerial herein.Becauseofrapidadvancesinthemedicalsciences,inparticular,independent verificationofdiagnosesanddrugdosagesshouldbemade BritishLibraryCataloguinginPublicationData AcataloguerecordforthisbookisavailablefromtheBritishLibrary ISBN:978-0-7623-1336-5 ISSN:1048-4736(Series) ForinformationonallJAIPresspublications visitourwebsiteatbo oks.elsevier.com PrintedandboundintheUnitedKingdom 07 08 09 10 11 10 9 8 7 6 5 4 3 2 1 CONTENTS LIST OF CONTRIBUTORS vii PROLOGUE ix INTRODUCTION Gary D. Libecap 1 PART 1: THEORETICAL FRAMEWORK CHAPTER 1 INNOVATION IN A HISTORICAL 7 PERSPECTIVE CHAPTER 2 CONNECTING TECHNICAL 25 CAPABILITIES WITH SOCIETAL NEEDS: THE POWER OF CYCLIC INTERACTION CHAPTER 3 FROM PASTEUR’S QUADRANT TO 49 PASTEUR’S CYCLE; LABELING THE FOUR BASIC CYCLES OF CIM WITH CHAMPIONS PART II: INTERACTIONS WITH OTHER SCIENTIFIC AREAS CHAPTER4 INNOVATIONTAKESTIME:THEROLE 71 OF FUTURES RESEARCH IN CIM CHAPTER 5 MARKET ANALYSIS TO ASSESS THE 87 (cid:1) POTENTIAL OF BREAKTHROUGH TECHNOLOGIES (cid:1) Co-authored by David Langley and Nico Pals v vi CONTENTS CHAPTER 6 THE ROLE OF INTELLECTUAL 105 PROPERTY IN CIM PART III: NEW BUSINESS APPLICATIONS CHAPTER 7 CIM APPLIED TO THE MOBILE 125 TELECOM INDUSTRY CHAPTER 8 CIM AND THIXOMOLDINGs: 139 REGIONAL ASPECTS OF AN INNOVATION (cid:1)(cid:1) SYSTEM CHAPTER 9 REVOLUTIONIZING CHEMICAL 153 (cid:1)(cid:1)(cid:1) PRODUCTION PROCESSES USING CIM EPILOGUE 173 (cid:1)(cid:1) Co-authored by Matthijs Kok (cid:1)(cid:1)(cid:1) Co-authored by Maaike C. Kroon LIST OF CONTRIBUTORS Authors Guus Berkhout Faculty of Technology, Policy & Management, Delft University of Technology, Delft, The Netherlands Patrick van der Duin Faculty of Technology, Policy & Management, Delft University of Technology, Delft, The Netherlands Dap Hartmann Faculty of Technology, Policy & Management, Delft University of Technology, Delft, The Netherlands Roland Ortt Faculty of Technology, Policy & Management, Delft University of Technology, Delft, The Netherlands Co-Authors Matthijs Kok Accenture, Amsterdam, The Netherlands Maaike Kroon FacultyofAppliedSciences,DelftUniversity of Technology, Delft, The Netherlands David Langley TNO Information and Communication Technology in the Netherlands, Groningen, The Netherlands Gary D. Libecap Bren School of Environmental Science and Management,UniversityofCalifornia,Santa Barbara, CA, USA, National Bureau of Economic Research, MA, USA, and Hoover Institution, CA, USA Nico Pals TNO Information and Communication Technology in the Netherlands, Groningen, The Netherlands vii This page intentionally left blank PROLOGUE The purpose of innovation is to create new business. In industry, methods and tools are developed on how to organize and manage innovation processes with the objective to better control added-value, risk and cost. Employees, suppliers and customers are principal actors in the process. In academia, information from observations and case studies is transformedintoscientificknowledgewiththeobjectivetobetterunderstand the successes and failures in innovation and, ultimately, to improve the predictability of the outcome. Throughtheyears,innovationmodelshavebeenimproved.However,we notice from practicethat current models arestill toolimitedto describethe diversity and dynamics of the real innovation world. This observation is confirmed by the fact that the rate of failures in innovation remains high, despite the extensive research in this field. NEW BUSINESS Innovationrequireschange,i.e.changeinthewaywethinkandthewaywe act. These changes may be small or big. Fig. 1 schematically shows our business development view on this matter (Berkhout, 2005). In life cycle management (right-hand side of Fig. 1), the ambition is to makecontinuous improvementsonexistingproducts and services. Changes are incremental. In this way the life cycle can be extended for many extra years.Inindustrythetypicalway ofdoingthisismaking useofacompany suggestion box: employees on the shop floor are invited to come up with ideasfortheimprovementofexistingsolutions.TheJapaneseareverygood in this. They call it Kaizen. In innovation management (left-hand side of Fig. 1), the ambition is to comeupwithnewconcepts.Thismeansmovingawayfromexistingsolutions. Asaconsequence,innovationshortensthelifecycleofexistingproductsand services. Schumpeter calls this property ‘creative destruction’: life cycle management (LCM) and innovation management (IVM) are in competition with each other. This may cause major dilemmas in business development. ix