20 Part 3: 4 Phases and waves of innovation
To wrap up this section I'll take a broad look at the innovation process. It's possible to think of innovation at different levels of generalisation. There are individual stages that innovations go through from invention to diffusion – these are sometimes called phases. At a higher level of generalisation each complete set of phases for a group of related technologies can be seen as a wave. Sometimes such waves appear close together and combine to have a revolutionary impact.
In another classic book, Mastering the Dynamics of Innovation, James Utterback (1994) identifies three overall phases in the innovation process: emerging, growth and maturity. In the case of disruptive innovations the emerging phase is characterised by radical new products and the appearance of completely new industrial sectors. In the past, for example, a new sector emerged around electronics. More recently information and communication technology and biotechnology sectors have also emerged. During this emerging phase many new companies appear, ready and willing to exploit the new products. They tend to be small, science-based and entrepreneurial, and prepared to take risks in a highly uncertain new market. To start with, they compete by producing specialised products tailored to the needs of a small group of customers. There are often frequent product changes as the sector struggles to perfect the new technology.
During the growth phase technological uncertainty is reduced, sector-wide standards appear and dominant designs emerge. This leads to an increase in output usually accompanied by investment in specialised production equipment. The focus for companies also turns to making changes that differentiate their products from those of their competitors. Increasing production costs and failure to compete on product performance and features can cause some firms to drop out of the sector – particularly if they are out-of-step with the sector's standard designs.
In the mature phase the main drivers are volume and cost. The focus is now on process innovation to reduce costs and investment in special-purpose, often automated, equipment makes it costly to remain in the sector. A small number of companies dominate what is now a major market and the pace of change slows.
Utterback observes that the history of a particular industrial sector doesn't necessarily end with the mature phase. Evolution can continue with further waves of technological change. Radical innovations can still appear from inside or outside the industry sector or sometimes from collaboration with other industries. In subsequent waves of innovation the tendency is for markets to become more highly defined with entrenched firms and fixed distribution channels, all of which reduce the chances of further radical innovation or significant reform of the industry. What often happens next is that a disruptive innovation comes along and sets off a whole new wave. I'll look at two of these new waves later.
You've already seen that innovations can involve differing degrees of technological change and seen the impact upon the socio-economic system. At the lowest level incremental innovations involve small-scale improvements, from a company making the manufacturing process more efficient or making changes to an existing product in response to feedback from users, to an inventor coming up with an idea that improves upon existing products. These innovations do not have a dramatic impact on the society that uses them but they do lead to steady improvements in the efficiency of manufacture, and the variety, quality and performance of products.
Radical innovations are more significant new steps that could not have arisen from incremental improvements to existing technology. They do have a more widespread impact in that they often involve a combination of product, process and organisational innovation. In Part 2 you saw how Chester Carlson's invention of xerography ultimately led to the establishment of a new photocopying industry.
Technology system changes occur when technological and organisational innovations combine to affect several sectors of the economy. So the automation of many aspects of production and assembly had a significant impact on a range of industries.
Finally there is a level of change that has a widespread impact on almost every aspect of an economy and even on the way society organises itself. Some theorists call this a change in the techno-economic regime, others a technological revolution. This involves changes in the dominant technologies, production methods and the associated patterns of social organisation that often characterise an era. The first technological revolution was based on innovations in steam power that resulted in industrialisation and people moving home to work in factories. Later revolutions have been based around innovations in electricity, chemistry, electronics, microelectronics, computing, telecommunications, biotechnology and nanotechnology.
I think the pace of change and the complexity of our relationship with technology are increasing. Do you agree or disagree? But what are the implications of this for the twenty-first century?