Part I
Models, Chasms, and Vectors
Chapter 1
Science and Technology-enabled Innovation
1.1 Defining Science, Technology, and Innovation
We start by defining what we mean by science and technology. Science and technology are often conflated in popular colloquial use, especially when technology products are being discussed. The two words are often used interchangeably in commentary and discussions about products which consumers interact with on a daily basis, for example, mobile phones, computers, and digital display devices.
Over the past decade, there has been a tendency to use the term ātechnologyā to refer almost exclusively to digital technologies and the use of these technologies in media-related products and services. Journalists, commentators, and investors, in particular, frequently use the word ātechnologyā to refer almost exclusively to digital technologies and associated products and services. From this perspective, other technologies associated with, for example, life sciences or engineering, are relegated to āother technologiesā of lesser relevance or interest. This ignores the fact that digital technologies constitute a small part of the overall technology space, and many different technologies often need to be integrated to create new products and services. New material technologies, for example, can impact bioscience, aerospace, and digital markets.
We want to reclaim the way in which science and technology is perceived: our view is based on the broader definition of science and technology which encompasses all science and technology.
Within this broad definition, we recognise that there has been serious philosophical debate between academics about the relationship between science and technology and precisely what the terms mean. The word āScienceā derives from the Latin scientia (knowledge) which is a system of acquiring knowledge based on the scientific method as well as the organised body of knowledge gained through such research. Science as defined in this way is sometimes termed pure science to differentiate it from applied science,10 which is the application of scientific research to specific human needs. Technology is a broad concept that deals with the usage and knowledge of scientific tools and crafts, and how it affects our ability to control and adapt to our environment. It is generally regarded as a consequence of science, although several technological advances actually predate the two concepts.
The definition of science and technology we use here is based on a practical operational view based on the first four categories of the Frascati classification scheme11 originally developed for global Research & Development mapping by the OECD. We use this as the basis for our science and technology coverage, ignoring categories 5 and 6 which cover Social Sciences and the Humanities. The Frascati classification was developed following a suggestion from Freeman12 that we needed a practical category model which allowed us to understand and measure the impact of political, social, economic and technical interventions in modern economies. The Frascati classification scheme sidesteps philosophical distinctions between science and technology and importantly uses definitions based on recognisable industry segments, for example, in medicine and agriculture. The Frascati classification has been extensively used by researchers over the last three decades to measure a range of inputs and outputs in the commercialisation process, for example, patents, products, industries, investment and national policies, which enables comparative measurements across markets, regions, and territories.
The Frascati classification is reviewed every few years and in detail operates at the 4-digit classification level, but we use the simplified version based on coverage at the 2-digit level. Table 1 shows our operational definition of science and technology categories. Our use of this classification has been driven largely by the need to maintain continuity with previous data collection and analysis efforts in spite of our recognition that this schema has some weaknesses. When we examine the behaviour of firms later in Chapters 5 and 6, we use market spaces as the basis for our segmentation, not the technology categories derived from Frascati.
Table 1: Science and Technology Classification Based on Frascati.
1. Natural sciences | 1.1 Mathematics |
| 1.2 Computer and information sciences |
| 1.3 Physical sciences |
| 1.4 Chemical sciences |
| 1.5 Earth and related environmental sciences |
| 1.6 Biological sciences |
| 1.7 Other natural sciences |
2. Engineering and technology | 2.1 Civil engineering |
| 2.2 Electrical engineering, electronic engineering, information engineering |
| 2.3 Mechanical engineering |
| 2.4 Chemical engineering |
| 2.5 Materials engineering |
| 2.6 Medical engineering |
| 2.7 Environmental engineering |
| 2.8 Environmental biotechnology |
| 2.9 Industrial biotechnology |
| 2.10 Nanotechnology |
| 2.11 Other engineering and technologies |
3. Medical and health sciences | 3.1 Basic medicine |
| 3.2 Clinical medicine |
| 3.3 Health sciences |
| 3.4 Health biotechnology |
| 3.5 Other medical sciences |
4. Agricultural sciences | 4.1 Agriculture, forestry, and fisheries |
| 4.2 Animal and dairy science |
| 4.3 Veterinary science |
| 4.4 Agricultural biotechnology |
| 4.5 Other agricultural sciences |
The word innovation is used in many ways and contexts, so we need to be clear what we mean when we use the word: put very simply innovation is about the creation of new value. In more practical terms, innovation is the implementation of a new or significantly improved product, process, marketing method, or organisational approach. This includes scientific, technological, organisational, financial and commercial activities which lead to the implementation of innovations.
1.2 Science and Technology-enabled Innovation
Science and technology-enabled innovation can be commercialised in a number of different ways. As Akio Morita, the driving force behind a new generation of consumer electronics products has noted succinctly āscience does not equal technology and technology does not equal innovationā.13 Science and technology-enabled innovations can be commercialised in a variety of ways.
Science and technology can be used to create innovative products and services with different functions, forms, and benefits. For example, technology innovation has enabled the creation of a whole family of mobile computing and communications devices such as smartphones, new ways of generating power from solar energy and new digital printing machines.
They can enable process innovations in a wide number of areas including manufacturing supply chains, genome sequencing and delivery of mobile-health solutions. These innovations can deliver better integration of functionality, faster processing speeds and more sophisticated functionality.
Innovations can change the nature of markets in a number of ways: by creating new market spaces, enabling the creation of new types of players, transforming the roles of existing players, and delivering entirely new classes of products and services to customers. Examples of this include the creation of new publishing market spaces, new energy markets, and new distribution systems, all enabled by digital technology. These innovations in markets can be incremental, or create new āadjacentā markets, or enable entirely new marketplaces.
The innovations can also change customer behaviour where the creation of new products, services, and marketplaces can change the way in which customers become aware of, buy and use products and services. For example, innovations in digital content creation, storage and distribution have created new groups of social media users, all fundamentally enabled by technology innovation.
Science and technology innovations have also transformed product and service distribution systems and networks. Examples of this include e-commerce networks, online retail, and extended supply chains in the automotive and aerospace industries.
Linking all these together, science and technology is enabling significant innovations in business models, for example, the creation of software as a service (SaaS) and platform as a service (PaaS) models in the media and entertainment and telecommunication industries.
1.3 Base vs Application Technologies
When looking at science and technology commercialisation, the challenge is to understand how to characterise technologies from an application or use perspective. Understanding this process in detail is critical, as Nelson14 has pointed out, because it can affect the impact and size of the commercial outcome. Most research and development perspectives have focused on the intrinsic and potential value of a technology on the one hand and the creation of formal definitions, for example, patents, on the other. Pavittās extensive work15 based on the volume of patents illustrated the inherent complexity and the difficulty of using patents as a proxy for detailed understanding of this process.
Saviotti16,17 and Dosi18 discussed this complexity and the challenge of handling co-occurrences and linkages where technology interactions could produce different outcomes, sometimes in quite different markets. For example, patents in computing architectures could impact the creation of new products and services in many different areas, ranging from navigation systems to synthetic biology. Clearly, we need a systematic and consistent approach when looking at science and technology exploitation.
The approach we have adopted here is to differentiate between base and application technologies. Following Saviotti, we define base technologies as artefacts or technology building blocks with wide applicability. We define application technologies as integrated systems or subsystems which can be directly mapped to market space value chains, which we discuss in more detail in Chapter 5.
The relationship between base and application technologies can determine the potential and range of a technology, but this relationship depends on the market space, so that the ways in which base and application technologies go to market is influenced by the specific characteristics of a market space. This relationship...