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| title | chunk | source | category | tags | date_saved | instance |
|---|---|---|---|---|---|---|
| Innovation | 3/7 | https://en.wikipedia.org/wiki/Innovation | reference | science, encyclopedia | 2026-05-05T07:11:34.249179+00:00 | kb-cron |
=== 20th and 21st centuries === A study by McKinsey & Co. notes that patterns of innovation as measured by patent applications followed the economic cycle during the first part of the 20th century, with businesses reluctant to innovate during the depression of the 1930s. Later in the century, the concept of innovation became more popular after the Second World War of 1939–1945. This was the point in time when people started to talk about technological product innovation and tie it to the ideas of economic growth and competitive advantage. Joseph Schumpeter (1883–1950), who contributed greatly to the study of innovation economics, is seen as the one who made the term popular. Schumpeter argued that industries must incessantly revolutionize the economic structure from within, that is: innovate with better or more effective processes and products, as well as with market distribution (such as the transition from the craft shop to factory). He famously asserted that "creative destruction is the essential fact about capitalism". In business and in economics, innovation can provide a catalyst for growth when entrepreneurs continuously search for better ways to satisfy their consumer base with improved quality, durability, service and price - searches which may come to fruition in innovation with advanced technologies and organizational strategies. Schumpeter's findings coincided with rapid advances in transportation and communications in the beginning of the 20th century, which had huge impacts for the economic concepts of factor endowments and comparative advantage as new combinations of resources or production techniques constantly transform markets to satisfy consumer needs. Hence, innovative behaviour becomes relevant for economic success.
== Process of innovation == An early model included only three phases of innovation. According to Utterback (1971), these phases were: 1) idea generation, 2) problem solving, and 3) implementation. By the time one completed phase 2, one had an invention, but until one got it to the point of having an economic impact, one did not have an innovation. Diffusion was not considered a phase of innovation. Focus at this point in time was on manufacturing. A prime example of innovation involved the boom of Silicon Valley start-ups out of the Stanford Industrial Park. In 1957, dissatisfied employees of Shockley Semiconductor, the company of Nobel laureate William Shockley, co-inventor of the transistor, left to form an independent firm, Fairchild Semiconductor. Eventually, these founders left to start their own companies based on their own unique ideas, and then leading employees started their own firms. Over the next 20 years this process resulted in the momentous startup-company explosion of information-technology firms. Silicon Valley began as 65 new enterprises born out of Shockley's eight former employees. All organizations can innovate, including for example hospitals, universities, and local governments. The organization requires a proper structure in order to retain competitive advantage. Organizations can also improve profits and performance by providing work groups opportunities and resources to innovate, in addition to employee's core job tasks. Executives and managers have been advised to break away from traditional ways of thinking and use change to their advantage. The world of work is changing with the increased use of technology and companies are becoming increasingly competitive. Companies will have to downsize or reengineer their operations to remain competitive. This will affect employment as businesses will be forced to reduce the number of people employed while accomplishing the same amount of work if not more. For instance, former Mayor Martin O'Malley pushed the City of Baltimore to use CitiStat, a performance-measurement data and management system that allows city officials to maintain statistics on several areas from crime trends to the conditions of potholes. This system aided in better evaluation of policies and procedures with accountability and efficiency in terms of time and money. In its first year, CitiStat saved the city $13.2 million. Even mass transit systems have innovated with hybrid bus fleets to real-time tracking at bus stands. In addition, the growing use of mobile data terminals in vehicles, that serve as communication hubs between vehicles and a control center, automatically send data on location, passenger counts, engine performance, mileage and other information. This tool helps to deliver and manage transportation systems. Still other innovative strategies include hospitals digitizing medical information in electronic medical records. For example, the U.S. Department of Housing and Urban Development's HOPE VI initiatives turned severely distressed public housing in urban areas into revitalized, mixed-income environments; the Harlem Children's Zone used a community-based approach to educate local area children; and the Environmental Protection Agency's brownfield grants facilitates turning over brownfields for environmental protection, green spaces, community and commercial development.
=== Sources of innovation === Innovation may occur due to effort from a range of different agents, by chance, or as a result of a major system failure. According to Peter F. Drucker, the general sources of innovations are changes in industry structure, in market structure, in local and global demographics, in human perception, in the amount of available scientific knowledge, etc.
In the simplest linear model of innovation the traditionally recognized source is manufacturer innovation. This is where a person or business innovates in order to sell the innovation. Another source of innovation is end-user innovation. This is where a person or company develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. MIT economist Eric von Hippel identified end-user innovation as the most important source in his classic book on the subject, "The Sources of Innovation". The robotics engineer Joseph F. Engelberger asserts that innovations require only three things:
a recognized need competent people with relevant technology financial support The Kline chain-linked model of innovation places emphasis on potential market needs as drivers of the innovation process, and describes the complex and often iterative feedback loops between marketing, design, manufacturing, and R&D. In the 21st century the Islamic State (IS) movement, while decrying religious innovations, has innovated in military tactics, recruitment, ideology and geopolitical activity.