Agile PLM - The CIO's Guide to Oracle Products and Solutions - page 16

7. New knowledge (external) : This is the traditional source of innova-
tion—the first car, the first computer, the printing press. This source
of information usually leads to more radical innovation than the
other six sources mentioned by Drucker. There are two types of
innovation based on new knowledge: incremental and disruptive. An
example of incremental innovation is the Pentium IV chip. There was
a Pentium III that preceded it. Therefore, the Pentium IV represents
just a slight increment of innovation over the III. On the other hand,
a radical innovation is something totally new to the world, such as
transistor technology. However, technological innovation does have
one drawback—it takes much longer to effect. For example, while
computing machines were available in the early 1900s, it wasn't until
the late 1960s that they were commonly used in business.
Drucker's framework for innovation is quite comprehensive. Most would
agree with his assessment, although many would use different categories
for the sources. Palmberg (2004) asserts that innovation depends on the
characteristics of the market and broader environment in which the firm
operates. Palmberg disagrees with Drucker's distinction between internal
and external sources, saying that the distinction is artificial, because col-
laboration and in-house activities are not mutually exclusive.
Palmberg proposes six categories: generic, science based, competitive,
customer oriented, regulatory, and technology oriented. The first com-
ponent, generic , stems from the fact that sources of innovation are related
to assimilation of generic technologies. The science-based component is
characterized by scientific breakthroughs and public research programs
as the origin of innovation. Great importance is attached to collabora-
tion with universities and research organizations. The competitive com-
ponent is marked by collaboration with competitors. Alternatively, a
firm might turn inward in their quest for sources of innovation in the
face of competitive markets. The fourth component is referred to as cus-
tomer oriented due to the importance of market niche and customer
demand, which spurs innovation. The fifth component is labeled regula-
tory because a variety of environmental, legal, and regulatory issues will
suggest sources of innovation. The final component, technology oriented ,
is characterized by sources of innovations related to scientific break-
throughs and new technologies.