Innovation and Entrepreneurship

Choice and Challenge

Otto Chui Chau Lin

• Publisher: WSPC
• Year: 2018
• eBook ISBN: 9789813146624
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

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This book discusses practical issues of innovation and entrepreneurship. It first outlines the basic factors contributing to economic growth in the knowledge-based economy. Portraying wealth creation as taking scientific research results from lab to market, it identifies two interlinking components of the innovation process: turning scientific research to industrial technology and nurturing an eco-system conducive to technology business. Thus, it clarifies the position and role of four institutional players of the national innovation system: university (U), technology institute (T), government (G) and business (B). Making these players interact synergistically provides a fertile environment for innovation and entrepreneurship. The development of Silicon Valley, Hsinchu, Shenzhen and Singapore are illustrated as examples.

For the technology entrepreneur, having a novel technology or unique product does not guarantee commercial success. It requires an effective business model, ability to execute business plan and entrepreneurial culture, all related to the soft power attributes of the entrepreneur team. The competitiveness of innovation and management of entrepreneurship are analyzed based on the concepts of Laozi and Confucius.

Every entrepreneurship must learn to manage the challenges brought about by the changing business environment. The competitiveness and sustainability of a business is reflected by its ability to manage the change, both in bad and in good times. Every choice it makes will bring about new challenge. This is a definite, continuous and cyclic phenomenon occurring to all types of business. Some case examples of success or failure in managing challenges are given. They include: Alibaba Group, Ardentec IC testing, Cisco Systems, Delta Electronics, Eastman Kodak, Epistar HBLED, Fairchild Semiconductors, General Motors, GIANT carbon fiber bicycles, Tencent Holdings, TSMC, Volkswagen and others.

This book is based on the author's practice and observation in technology and economic development especially in the Asia Pacific region during the post-1990s period. It is intended to be a reference of best practices for entrepreneurs, corporations and countries striving to make its mark in the knowledge-based economy.

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Caption: Prof Otto Chui Chau Lin hosting Premier Goh Chok Tong of Singapore in ITRI, 1991.
Caption: Prof Chui meeting with Premier Zhu Rongie, China. Zhongnanhai, Beijing, March 25, 1993.
Caption: Prof Chui at the Congregation at HKUST. Hong Kong, 2000. With Prof. C N Yang (Nobel Laureate, Physics, 1967). Contents:

• Back to Basics:
  • Driver of Economic Growth
  • Innovation
  • Technology Entrepreneurship
  • Business Model and Business Plan
  • The Innovation Process
• Making It Work:
  • The National Innovation System
  • Role of the University
  • Role of Business
  • Role of the Government I
  • Role of the Government II
  • Role of the Technology Institute
• Challenge and Change:
  • The Power of Real and Virtual: Laozi
  • From Self to Society: Confucius
  • Managing Change
  • Culture of Entrepreneurship
• Best Practice:
  • Silicon Valley: The Trailblazers
  • The Industrial Technology Research Institute in Hsinchu: A Conscious Choice
  • Shenzhen: Formation of a City of Entrepreneurship
  • Singapore: Developing a Country of Innovation
• Role Models:
  • GIANT: Carbon Fiber Bicycles
  • Epi-star Optoelectronics: HBLED
  • Ardentec Corporation: IC Testing
  • Delta Electronics: Parts and Components
  • McDonald's Hong Kong
  • Alibaba Group
  • Tencent Holdings Limited

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Readership: Students, researchers and practitioners who are interested in learning more about the practical issues of innovation and entrepreneurship in the Asia Pacific region, especially about Taiwan.
-->Keywords:Innovation;Entrepreneurship;Innovation System;National Innovation System;Knowledge Economy;Knowledge Transfer;Technology Transfer;Technology Diffusion;University-Industry Interaction;Commercialization of Scientific Research;Roles of the Government;Roles of the University;Roles of Technology Institute;Environmental Factors of Innovation System;Innovation Helix;Innovation Quartet;Science Parks;Incubation;Incubator;Competitiveness;Innovation Competitiveness;Hard Power;Soft Power;Sustainable Innovation;Entrepreneurial Spirit;Globalization Age Competition;Management of Change;Hsin-Chu Science Park;ITRIReview: Key Features:

• This book treats the subject of innovation and entrepreneurship from principles learned through life examples
• It uses the language that layman can relate to
• The suggested actions, for government and individual, can be readily understood and practiced

Part One

Back to Basics

What drives progress from an agricultural to an industrial to a knowledge economy?

How did physical strength become overtaken by machine power and brainpower in the economy?

How were riches made? Who received the most benefit in different phases of economic development?

Can knowledge be the generator, distributor and eventual equalizer of wealth?

This book is about man and his effort to enrich his livelihood. It focuses on the elements of his endeavors: the tools, skills, methodology, mindset, social network and the environment. These fall within the realm of technology.

Hence technology is an essential element of the economy in human history. It takes different forms and functions differently at different stages of human civilization.

Chapter 1

DRIVER OF ECONOMIC GROWTH

The Agricultural Economy

The agricultural economy was prevalent in ancient times. Classical Chinese literature has documented the teachings of Confucius (551–479 BC) who stated that the king should first act with high moral standards. This would attract people, secure land and natural resources to promote the common good.¹

People, land and natural resources were thus considered factors of production in the agricultural economy. Obviously, people with physical strength constituted the basic workforce. Land is the ground to grow crops. Natural resources — such as water — are essential to vegetation. Minerals and forestry are for the provision of better tools and methodologies.

Competitive advantage in the agricultural economy arose primarily from these factors. Wealthy landlords were usually the ones who could manipulate such factors to their advantage. On a larger scale, the richest landlord was the king. When the king felt he needed or wanted more, he waged war against another country to capture more people as labor, more land for growth and more natural resources to fulfill his ambitions.²

Knowing that, by and large, the total stock of population, land and natural resources does not change much over the span of a lifetime, competition among nations are usually a zero-sum game. In such games, there are clear winners and losers based on which players get more or less of a fair share.

In the agricultural economy, technology takes the form of better tools, seeds, fertilizers, more efficient skills and more effective uses of resources. Technological knowledge is accumulated over time, recorded and transferred through generations.

One important aspect of farming life was to learn from nature by observing and studying the earth’s relationship with the sun and the moon. The continuous cycle of change seen has been of great fascination to man. Thus the lunar calendar, a record of these changes, was an extremely useful guide.

In China, the lunar calendar is generally called the agriculture calendar. It provides detailed instruction on the 24 cyclic phases (jie qi) of the year. It forecasts with admirable accuracy when major changes in climate, humidity and temperature will occur, and, when frost and snow will begin and end. This provides guidance for farming: the suitability of doing or not doing certain things at particular times of the year. Kings and queens come and go in the course of millennia but the agriculture calendar prevails and actually improves. Interestingly enough, in America, the Farmers’ Almanac fulfills similar functions based on cumulative folk knowledge and humor. It has remained on bestselling lists for two centuries.

The Industrial Economy

The invention of the steam engine by James Watt in Great Britain in 1781 marked the high point of the Industrial Revolution and brought forth the industrial economy.³ With steam as the power source, man gradually leapt forward to the manufacturing era. Innovations in textiles, machine tools, paper-making, iron-forging, ship-building, metallurgy and chemicals have greatly enhanced the quality of life. Population, living standards and Gross Domestic Product (GDP) per capita have rapidly increased. These technological advancements placed Europe as the undisputed leader of the world’s economic development. The role of technology in the new economy was abundantly demonstrated.

A new phase of the industrial economy came in the early 1880s with the generation of electric power in Europe and America. More than a genie that can provide great power, electricity has created freedom and new options and opportunities to human beings. Men no longer need to work in open fields at the mercy of sunlight. Electricity can be generated, stored and distributed to homes, offices and various other places of work at any time. This has greatly broadened the versatility and diversity of the economy and has brought new enjoyments to life. Innovations in land, marine and air transportation have further extended man’s frontier. The world gradually turned into a global village.

Thus, in the industrial economy, the leading factors of production were gradually taken over by machinery, money and management. Machinery increases the productivity per unit of manpower, land and resources in all economic activities. More importantly, it can lead to new products and processes. Money is needed to build or procure machinery and to run the business. Management is important because all the production factors: labor, land, natural resources, money and machinery have to be organized and optimized for the greatest possible benefit to stakeholders.⁴ Thus management science has gradually become positioned at the center of the economy and is considered an essential part of knowledge.⁵

People who have accomplishments in an industrial sector become the rich of the society. Well known examples include J. D. Rockefeller in oil, Pierre Du Pont in chemicals, Cornelius Vanderbilt in railroads, Andrew Carnegie in steel, Henry Ford in automobiles, Alfred Sloan in banking and Walt Disney in entertainment. They have all garnered personal wealth matching that of kings and queens of the olden times. The center of innovation has gradually shifted from West Europe to North America.

Technology has also created a paradigm shift in social norms. Industrial economy is the economy of scale and diversity. People with different talents can collaborate to create greater wealth than they can achieve individually. Thus economic activities in an industrial economy can be non-zero-sum games.⁶ In any business process, it is desirable to seek the combination and optimization of various contributing factors to achieve the best performance. There is ample evidence that wealth can be created from none, and efficiency and effectiveness can be reached if people learn to cooperate rather than just compete.

The progress of the industrial economy and its generation of wealth were not without peril. With expanded economic development comes the depletion of natural resources: oil, minerals and water, to name a few. Industrial processes, more often than not, create toxic chemicals that may bring health hazards. Its exhaust can be poisonous and detrimental to the natural land or water environment. The emission of carbon dioxide, as harmless as it may seem in small quantities, can clutter the stratosphere and be present as heat barriers leading to global warming. It has been recognized that there are more hot days a year now than there were 20 years ago. The weather pattern in many continents has also become more erratic. It has created detrimental effects to biodiversity and the human habitat. There is a real worry that man may actually hasten the destruction of the earth if some human activities remain unchecked.⁷

The Knowledge Economy

The advent of personal computers and popularization of information and wireless technology have ushered in the era of the knowledge economy.⁸ Knowledge can be quickly used to generate value, both tangible and intangible. One very dramatic change this brings to life is the speed of communication. A letter from Hong Kong to New York would generally take about one week by airmail. If transmitted by email, it will be around one second, an almost 1 million-fold reduction in time! It is little wonder that new knowledge can be utilized to create new wealth or generate new value with exceptional speed.

But the same can also be said for disasters. The Severe Acute Respiratory Syndrome (SARS) virus that originated in Asia was expected to cause health havoc in the U.S. within two months; the collapse of the stock market on the New York Wall Street on September 15, 2008 spread to all stock exchanges worldwide almost overnight. It immediately caused a tsunami of global economic declines.⁹

With the transmission of information at an explosive rate, human responses are demanded proportionally. Thus vacation is no longer an excuse for delayed action. People can become busier and get more things done even on vacation.

It may be fair to say that the knowledge economy started to emerge in the 1980s and has progressed rapidly since the start of the 21^st century. The global village has created great opportunity for all.¹⁰ People all over the world are now tightly connected by webs of technical, financial, cultural and more recently, social media networks.

It has been clearly demonstrated that the driver of economic growth has changed from physical power in the agriculture economy, to machine power in the industrial economy, and, to brainpower in the knowledge economy as shown in Figure 1. The paradigm of operation has changed from competition to win, to cooperation to create, to networking to innovate.

Figure 1. Factors of Economic Production

The factors of production can now be identified as scientific exploration, innovation and entrepreneurship.^11,12

This does not mean that labor, land, natural resources, machinery, money and management, those factors instrumental in the previous economies are now unimportant. It only says that they will recede into the background in a supporting role to the development of scientific knowledge, agility in applying that knowledge and dedication to success through entrepreneurial efforts.

The heroes in the knowledge economy are entrepreneurs of exceptional dedication who can take advantage of the moment. They can be common people with humble backgrounds. Bill Gates, Steve Jobs and Mark Zuckerberg were not members of any National Academy, held no professorial honors of any sort, and did not have the privilege of owning any huge estate or powerful machinery. In fact, most did not even finish college when they were pursuing their vision. They were young adults with great curiosity and willingness to explore the unknown.¹³

They are called entrepreneurs. They are able to recognize the uniqueness of a concept, articulate its advantage, adopt and adjust a strategy, build a good team, leverage the environment and pursue their goals with exceptional diligence. They have attained success at a much higher level and in a much shorter time than leaders in the industrial economy could have dreamed of. This is the nature of the knowledge economy.

In short, the knowledge economy is one that promotes the application of knowledge to create new value, or new wealth, very rapidly. The knowledge society will provide abundant opportunities for all individuals, not just the elites. The factors of productivity in the knowledge economy will be discussed in greater detail in ensuing chapters.

The environmental problems that arose in the industrial economy continue to plague the world, especially the underdeveloped and developing nations.The carbon dioxide level in the stratosphere has accumulated over the years to an alarming point. It has led to a clear trend of global warming. Most recently, the Fourth National Climate Change Assessment (NCA4) has clearly documented that the global annually averaged surface temperature has increased by 1.8°F (1°C) over the last 115 years (1901–2016). This period is now the warmest in the history of modern civilization.¹⁹⁰ Global warming has caused the unusual climate change, melting of iceberg, land erosion and calamity in biodiversity. The average sea level has risen by about 7 to 8 inches since 1900, with about half of the rise occurring since 1993.

Several world conferences have been convened since 1992 under the leadership of the United Nations Framework Convention on Climate Change (UNFCCC) to map strategy for the control of carbon dioxide emissions. There were differences between developing and developed nations on the issue due to different social and political perspectives. But, all have agreed that the CO₂ level needs to be controlled substantially downward.^14,15

In the 2015 Paris Agreement, 195 countries signed an agreement for concerted efforts to reduce the emission of greenhouse gases in 2050 to a level 26–28% below that of 2005. This would keep global warming to below 2°C. Participating members agreed to take action: cleaner power plants, more fuelefficient cars, more green ...

Table of contents

• Cover Page
• Title
• Copyright
• Dedication
• Preface
• Acknowledgment
• Contents
• Part One Back to Basics
• Part Two Making It Work
• Part Three Challenge and Change
• Part Four Best Practice
• Part Five Role Models
• References
• Appendix
• Photographs