Background

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1. Introduction

1.1. Background

Competition under globalization is fierce. As competing companies constantly release similar technologies or products, they are forced to lower prices to retain their market shares. This always leads to price wars. In 1992, Acer’s then-chairman, Shi Zhenrong, proposed the smile curve in Reconstructing Acer: Founding, Growth, and Challenges as the company’s competitive strategy. In the three components of the smile curve as shown in Fig.1, the left segment represents technology and patents; the middle, assembly and manufacturing; and the right, branding and service. The overall curve represents profits, which are low in the middle region but high at the two extremes. The significance of the smile curve is that efforts to increase the company’s net profits are in fact wasted on assembly and manufacturing, and should instead be focused on the left and right segments of the curve.

Figure 1: The Smiling Curve, Stan Shih Proposed in 1992

Since the introduction of Apple’s first iPhone model in June 2007, the world has been swept away by a succession of innovative electronic products, bringing considerable profits to companies. By 2013, Apple held USD 147 billion in cash, with a debt ratio of zero. Richer than the U.S. government and in possession of 10% of the total cash holdings of all U.S. businesses,

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Apple became the most valuable technology company on the planet. The success of Apple is attributable to its complete implementation of the smile curve strategy.

It was previously assumed that a company should use resources to establish its core competitiveness, and then extend that position to different areas to establish a competitive advantage in the market. However, experts observing various companies have recently found that this strategy lacks one important link: deployment. When it comes to similar products, two or more companies may have comparable levels of core competitiveness, but differences in their respective deployment strategies may lead to vastly different results.

In recent years, news related to patent lawsuits has become commonplace. Many companies will go to great lengths to avoid being sued in an American court, not because of the high legal cost but, rather, because being found guilty of a patent rights violation may lead to a loss of market competitiveness through: (i) a product being removed from the market, (ii) products being banned from import or export, (iii) the defendant company or downstream customers having to pay huge compensation fees, or (iv) customers changing their purchase orders.

Previously, companies typically assumed that the only purpose of acquiring patents was to protect one’s own products, technology, and R&D findings. However, the value of patents is not only in acquisition for defense but also in attack. This requires the adoption of a new concept for today’s world: a strategic program of legal patent deployment that allows companies to use a superb patent defense system to safeguard an effective hold on technology, thereby resisting the attacks of their competitors and allowing the company to reap the greatest profits. Along with global competition and deployment in the technology industry, patents have always had an important link with commercial strategy. Many companies frequently use patent lawsuits to ease product entry into a new market, eliminate competitors, or defend an existing market.

Although innovation is not everything, it is an important element for corporate success.

However, companies have always approached problems based on past experience, knowledge, and inertial thinking methods, progressing through repeated trial and error in pursuit of a path leading to the answer. Often resorting to conventional solutions, companies believed that invention is something for geniuses or resulting from sudden inspiration. Invention and patents

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anything. Thus, the saying goes: Genius is one percent inspiration combined with ninety-nine percent perspiration. People believed that this is a random process that is not systematically replicable and relies solely on individual talent – an approach limited by personal knowledge, expertise, inspiration, and luck. Engineers spend many years learning the facts and technical details of their discipline, yet there is generally no specific training provided for creative thinking skills. Creative thinking is a critical skill required by engineers and inventors, yet it is generally done by trial and error, which is basically guessing. Not only is the process of trial and error hampered by the limited extent personal knowledge, it can also require many tries and a significant amount of time, sometimes years, to identify a good idea, and thinking is constrained by what is known as psychological inertia.

However, in this era of rapid change, an important product based on a new technology appears every few years (Peter F. Drucker, 1960). No company can rely exclusively on reduction in development time, production costs, and product prices as its strategy for sustainable development. In a post-PC era, companies must transform their operational methods and ways of thinking. Creativity and innovation are increasingly important. Having long been schooled under the “recite education” approach (sometimes described as the force-feed style of education), the Taiwanese people are not adept at creative thinking. Moving beyond such past thinking habits to achieve breakthrough innovative thinking is not easy.

Further, traditional methods of innovation seem to be rather inefficient. Are there, then, other methods and tools to allow technology companies to innovate, acquire patents, and even make progress in technology forecasting and patent deployment more quickly and efficiently and, at the same time, achieve sustainable profits and survival? As demonstrated in numerous studies, the theory of inventive problem solving (TRIZ) algorithm is being used to solve technology innovation and engineering problems. Altshuller, who developed the TRIZ algorithm, believed that the application extended beyond the innovation and engineering fields (Altshuller, 2000).

Taiwan’s high-tech industry must independently innovate in R&D. Only after raising its R&D level will it be able to sustain international competitiveness and proceed toward new milestones.

An “independent innovation, methods first” innovation method is the basic source of

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the scale of imitation. As Chinese people say, “tools are very important to a project’s success,”

and “to do a good job, a craftsman needs the right tool.” TRIZ is precisely the right tool for superb innovation.