1. Why convergence innovation?
We have seen new innovations such as smart cars, drones, 3D printings, smart phones, nano particles, Internet of Things (IoT) and bio materials emerging almost daily. People are surprised at the amazing functions of smart phones or, alternatively, feel confused about the new jargons surrounding all the new technologies and functions. The Schumpeterian prediction (1976) that innovations will routinely emerge as results of mass R&D activities undertaken in large organizations is now socially recognized in the modern industrial world. Indeed, almost every class of business entity including small venture firms, individual entrepreneurs and medium- and large-size firms innovate by applying their particular knowledge bases. As we enter the twenty-first century, this accelerating trend of innovation promises to continue to shake up and restructure the global economy with both negative and positive outcomes for individuals, businesses and other organizations.
Some scholars have begun to call this new innovation trajectory the fourth industrial revolution: the first was water- and steam-powered mechanization; the second was electricity-based mass production; and the third industrial revolution centered on digital information and electronics technologies. The World Economic Forum (WEF) held on January 2016 in Davos, Switzerland, took the Fourth Industrial Revolution as a discussion agenda. While the third industrial revolution was characterized as the informatization of the global world via information and telecommunications technology, the fourth industrial revolution is characterized by a convergence of technologies, creating new categories of product such as smart cars, drones, 3D printings, nano, bio and new generations of smarter phones. The impact of the revolution on the economy and the society is expected to be far greater than that of the third industrial revolution in terms of speed and scope.
Technological innovation has been traditionally featured as having a variety of characteristics, from simple learning for imitation to complex learning for more advanced technologies. Modern innovations have had a strong tendency towards convergence in which information technology (IT) plays a central role across vast areas of industry creating a bewildering variety of new products and services. Going beyond IT, other technologies are also converging or being converged at varying degrees of speed and depth of integration, routinely generating new intellectual property right issues. The phenomenon of convergence is likely to further deepen and widen in the future due to intense competition among firms in global markets. This applies especially to manufacturing firms in the East, and South East Asian countries have been active in convergence innovation, in some respects, as we show below, leading the new global industrial revolution.
Looking back into the history of technological innovation, Rosenberg (1963, 1982) identified the phenomenon of convergence that had emerged at the end of the nineteenth century. He discovered that closely related technological problems were solved and shared among manufacturers of different types of machines. Machines confronted a similar collection of technological problems dealing with such matters as power transmission, control devices, feed mechanisms, friction reduction, and a broad array of challenges connected with the properties of metals. Although these problems became common to the production of a wide range of commodities, they were apparently unrelated from the viewpoint of the nature of the final product. Rosenberg called this phenomenon ātechnological convergenceā and argued that the intense specialization which developed in the second half of the nineteenth century owed its existence to combinations of technological convergence.
Almost two centuries since then, this convergence phenomenon is now flourishing in every industry and promises to shake the global economy to its core. The convergence between many user sectors and machining technology explored by Rosenberg continues. However, convergence innovations are universally arising in almost all technological fields and industrial areas (OECD, 1993; Rafols and Meyer, 2006; Roco and Bainbridge, 2002).
Convergence innovation is expected to evolve up to the point that different technologies are deeply integrated and some chemically mixed, resulting in completely new types of technologies and products in the future. As a result, firms and R&D organizations are desperately pursuing convergence in order to obtain competitive advantage. New products developed through convergence increasingly shape modern innovation processes, bringing about the fourth industrial revolution.
Surprisingly, very little research on convergence innovation has been carried out. The majority of innovation studies have centered on specific technological and industrial changes mostly conducted in the industrialized countries. However, few studies have systematically investigated the new innovations centered on convergence and their impacts on the economy and society. Innovation scholars have yet to empirically investigate convergence innovation, and, as a result, we have little in the way of conceptualization, hypothesis and theory to guide our understanding of this phenomenon. This lacuna has motivated the editor and authors of this book to investigate the issue and hopefully motivate other innovation scholars and students to research convergence innovation.
2. Conceptual guide to managing convergence innovation
2.1 Managing processes of convergence
The term āconvergenceā here indicates primarily technological convergence and can be defined as a horizontal integration of diverse technological knowledge bases.1 Horizontal integration means the absorption of diverse fields of knowledge for the purpose of creating new functions, products, processes and services. It often leads to a broadening of the scope of technological specialization and more diverse interactions with users.2 This phenomenon occurred within metal processing industries and between machinery industries at the end of the nineteenth century (Rosenberg, 1963, 1982), between electronics and machineries in the 1970s (Kodama, 1986, 1994, 1991), and more recently among a variety of industries including information and communication, chemicals, foods, machine tools, and pharmaceutical industries (Lee and Hwang, 2005).
A terminology similar to convergence innovation was used in other innovation studies (Kodama, 1986, 1994, 1991; Lee, 2007; Lee, Yun and Jeong, 2015). For instance, Kodama argued that there are two fundamental types of innovation: one is the technological breakthrough, and the other is the technology fusion, which is a similar term to convergence innovation. While breakthrough innovations are associated with strong leadership in a particular technology, technology fusion is only possible with the concerted efforts of several different industries. Kodama placed particular emphasis on the latter because it contributes not only to the rapid growth of companies that make technological innovation possible but also to the gradual growth of all the companies in many industries. Kodamaās paper mainly featured new trends in Japanese innovations. Our book builds on Rosenbergās and Kodamaās pioneering work, expanding research into other countries and diverse industrial and business contexts and, for the first time, illustrating modern convergence innovation as the primary driver of the fourth industrial revolution.
The process of convergence needs to be better understood in order to efficiently manage its dynamics and better utilize its outputs for human beings and organizations. Convergence may be better understood by comparing its characteristics before and after the convergence episode. The overall features of convergence innovation are also likely to change during and after convergence taking place. Furthermore, the characteristics of the technical elements involved may change after convergence, whereas the complexity of products may well be reduced because some components are chemically āmelted downā or combined. Moreover, convergence may simplify the production and design processes for one generation of products but lead to more complexity and/or lock in with the next generation of products.3 Similarly, processes of convergence may reveal a creative or a radical dimension in the character of final products.
Despite the lack of study of concerning processes of convergence, Kim (2014) recently pointed to convergence innovation between printing technology and electronic technology and argued that there is continuous disequilibrium between converging technologies, which are divided into two types: āreference technologyā and āmatching technologyā. The two types of converging technologies tend to innovate at different degrees of speed generating disequilibrium between reference technology and matching technology, requiring further innovation to restore an optimal balance between the functions of the technologies. This study argues that a process of fine tuning, involving mutual matching and minute adjustments across disparate technologies, is required to achieve the performance given target. Chapter 7 of this book elaborates this explanation for the case of specialized textile machinery suppliers.
As this book shows, managing the processes of convergence innovation requires an understanding of its various dimensions not only at the technological level but also at the organization, industry and even national levels. Processes of convergence will be investigated for the case of textile machinery technology in Chapter 7, for the case of railway technology in Chapter 8, at the organizational level in Chapter 4 and at the industry and country levels in Chapter 6. These investigations are useful for supporting not only the innovation strategy of the firms concerned but also for government policy makers in charge of promoting industrial innovation.
2.2 Managing learning, networks and communication
As this book shows, one of the most important elements of the convergence process is learning. Managing learning processes well is crucial in the successful management of convergence innovation. The concepts of firm learning process and the building up of technological capability suggested by Bell (1984, 1995) are usefully applied to the understanding of convergence innovation.
The process of learning and convergence at individual and collective levels can be simply depicted as in Figure 1.1. Here, the processes of convergence begin as person A with a cognitive map interacts with another holding a different cognitive map (tacit knowledge B of person B). The individual observes, analogizes, discerns and behaves during the learning process during the accumulation of tacit knowledge. The personās interaction evolves into a collective learning process that causes the generation of new knowledge. The new knowledge also helps create another set of new knowledge (C) after it absorbs both codified and tacit knowledge generated by the third individual (person C) with other cognitive maps. This process involves socialization, externalization, and combination and internalization of knowledge, as hypothesized by Nonaka (1994). Given this active social interaction and learning, the diversity of application for any given technology becomes ever larger so that the convergence involved in creating new functions, products and services becomes possible.
As time goes by, collective learning becomes more important for convergence. On the one hand, research and development teams as collective agents learn new technological knowledge during one time period and create new functions, products, processes or services through the convergence of different technologies. This may involve incremental or a radical innovation. Well-functioning networks and communications are important mechanisms in the effective learning required to support convergence innovation. The networks linked to convergence are investigated in the third chapter of the book, and many types of technological learning at the firm level are identified in the second chapter, highlighting their importance in convergence innovation.
Figure 1.1 A conceptualization of convergence processes at the individual level
On the other hand, convergence has a feature of a life cycle like any other innovation process. It begins as researchers begin socialization activities in a research network and learn knowledge. Then, an innovation emerges as the researchers generate new knowledge that becomes the source of new functions, products, processes or services. Creative knowledge eventually becomes routine as the researchers and engineers move towards a stabilization stage that completes the life cycle of convergence. New technology created in the process of convergence innovation becomes embodied in the cognitive map of a group or an organization that is the result of collective learning activities.
Collective learning is a distinctive feature of convergence, which includes the acquisition, assimilation, integration and creation of knowledge. Social interaction is a bridge for convergence between diverse groups of people with different cognitive maps. Collective agents learn new knowledge as past knowledge becomes obsolete. Collective learning ensures the creation of new knowledge or technology through convergence innovation as with processes at the individual level.
Organizations, especially firms, get involved in the convergence process, and whether they manage the process well or not may determine the success or failure of not only their innovative activities but also their entire business. Successful firms achieve multi-product diversification through the active integration of diverse technologies. Managing convergence at the firm level is primarily a function of the creation of conditions under which learning opportunities emerge and are exploited (Tidd, Bessant and Pavitt, 2001). Large-size firms may have the capability t...
