Chapter 2. Literature Review
2.2. Innovation concept
People have always engaged in innovative activities to improve their lives, and allow life to be richer and more interesting. Whether they are tangible products or intangible services, all great inventions or ideas are proof that people engage in innovation. In 1934, scholar Schumpeter proposed the interpretation of “innovation”.
It was his belief that innovation is related to economic development, and defined innovation as “the re-combination of productive resources” (Schumpeter, 1934). Since then, the study of “innovation” has prosperously developed. In recent years the concept of innovation has become more integrated, and is no longer just the result of a specific activity. We have organized the related literatures and found some of the descriptions in the library database, and listed them as follows. These scholars’
descriptions of the innovation concept may not be the most complete, but can still be used for reference. Please see the cited literature for more details.
Innovation is a “problem solving” process (Dosi, 1982).
Innovation is an interactive process; it is related to the relationship between itself, the enterprise and different individuals (Kline and Rosenberg, 1986).
Innovation is a diverse learning process. Learning uses different methods:
learning while applying, learning while working, and leaning while sharing.
It is also the result of absorbing and integrating internal and external knowledge (Cohen & Levinthal, 1990; Dogson, 1991).
Innovation is an expressed or implied knowledge exchange process (Patel &
Pavitt, 1994).
Innovation is a learning and exchanging interaction process between the
“innovation system” or “innovation group” creator and an individual (Edquist, 1997).
Effective business innovation refers to “the process of an individual responding to the environment with his/her innovative capacity due to environmental changes. This process may go through technical and production procedure improvement, and new product design and development to allow the product, process, or procedure to become different or better” (McAdam, 2000) .
Innovation is used to improve a product, service or technology. The enterprise will have the competitive advantage and continue to survive and grow through the innovation of products, processes and services (Tidd et al.,
2005).
Innovation is the process that introduces a new product or service to the market. The involved scope includes marketing, quality management, production management, technology management, organization behavior, product development and strategy management (Hauser et al., 2006).
A few scholars have also proposed different points of view in regards to the overall innovation idea. The representative works are listed as follows.
Peter Ferdinand Drucker proposed the concept of “Knowledge Worker” in
“The Age of Discontinuity. Guidelines to our Changing Society” (Drucker, 1969). Since then, knowledge has become a major force in the economic system; it is treated as a valuable resource, which can be accumulated, transformed and inherited. Enterprises need to compete for the best creativity and application of knowledge. Professional knowledge and skill, in addition to being accumulated, can also be specifically presented in the daily organization operation procedure and in software and hardware. The proposal of this book has allowed many of the innovation related studies to be related to the creation, accumulation and inheritance of knowledge.
Leonard-Barton proposed an overall framework of innovation studies in her book, “Wellsprings of Knowledge” (Leonard-Barton, 1995). It describes enterprises building and sustaining innovation sources. Leonard thinks that only core or strategic capabilities will provide the company with the competitive advantage. In the innovation framework proposed by Leonard, the core capacity of an enterprise is based on the creation and accumulation of knowledge. Enterprises can strengthen their core capacity through problem solving, implementing and integrating new tools or new methods, experiment and prototype design, and introducing/absorbing external new knowledge, etc. methods. Knowledge is definitely one of the major forces of innovation. However, the innovation and value creation of enterprises is not only limited to the management and creation of knowledge. The creation and accumulation of knowledge can enrich the enterprise core capacity, improve enterprise quality, and assist enterprises to setup a good foundation in the innovation and value creation process. Leonard’s framework completely explores the creative activity and method of knowledge, and the development of core capacity, but has disregarded how to see potential domains (potential knowledge, needs and competences). As for value creation, Leonard neglected to perform in-depth exploration on
“how to further develop the value of knowledge and competence”. In fact,
potential domains must be explored further to “integrate knowledge and competence, and develop value”, and satisfy people’s potential needs.
Christensen proposed the concept of “Disruptive Innovation” in his book,
“The Innovator’s Dilemma” (Christensen, 1997). It pointed out that the traditional enterprise operating rule is to “use all funds and technology to concentrate on the development of products that are greatly needed by existing major customers to obtain the greatest amount of profit”, however this kind of sustaining innovation is often less competitive than other
“disruptive innovation” strategies applied by some new market entrants. It uses cheap and poor functioning (but adequate) products to obtain low-end customers of major manufacturers, and once the technology is improved, and the product function is gradually enhanced, they will be able to enter the high-end market with their low price advantage, and replace the old product. This kind of innovation strategy has allowed enterprises with the entrepreneurial spirit to master the industry growth trend and rise.
“Disruptive innovation” stresses on looking for opportunities from non-mainstream customers. This kind of concept happens to coincide with the concept of “finding customers from potential domains, and satisfying the needs in potential domains” in habitual domains.
Shapiro organized 7-R steps focusing on the organization innovation in his book, “24/7 Innovation: A Blueprint for Surviving and Thriving in an Age of
Change” (Shapiro, 2001). It established an innovative framework of
Rethink, Reconfigure, Re-sequence, Relocate, Reduce, Reassign and Retool, however the framework only proposed recommendations focusing on the improvement of enterprises (supply), and seldom mentioned the consumers (demand). Stan Lai (賴聲川) interpreted creativity and innovation with the perspective of an artist in his book, “Stan Lai’s Creative Learning” (賴聲川的創意學) (賴聲川, 2001). Lai proposed the concept of a “creative pyramid” to interpret the process of innovation. He divided creative learning into
“creation” and “learning”, and used “wisdom” and “method” to respectively represent these two co-existing fields. Creation includes content, inspiration, and knowledge; learning includes forms, tools, and techniques. Lai explores innovation with the nature of philosophy; many of his perspectives are similar to the concept of habitual domains, such as the innovation dynamics framework proposed by the study used the habitual domains as a basis to emphasize that the process and result of innovation must be able to satisfy human nature. This perspective is very consistent with the perspective of
“starts from your heart”, stressed in his book.