2.0 Discovery and Invention
- 2.1 Definitions
- 2.2 Incentives
- 2.3 Interactions
The starting point for making proposals that increase the rate of innovation
in firms is to discuss closely related social processes of discovery and invention.
In this section we will first define discovery and invention. Then, we will
examine the incentives that promote these activities. Finally, we will consider
the interactions between the two.
2.1 Definitions
Definitions in this chapter will be indicated by "italics ". The
first two definitions to consider are discovery and knowledge. A discovery
is a new increment to knowledge 1
that is defined as understanding the behavior of observable natural phenomena
as well as understanding the structure of logical relationships. These observable
natural phenomena consist of all physical, biological, and social processes
that can be directly or indirectly observed. Logical relationships, on the other
hand, are described by the study of pure logic, mathematics, statistics and
computer science.
Knowledge of behavior can be further partitioned into theoretical models and
empirical relationships. Theorists create models to explain and forecast behavior
and empiricists observe behavioral relationships. Their pursuit of knowledge
varies from the most theoretical to the most practical, or alternatively, from
deep to surface. For example, theorists create models which vary from intuitive
qualitative models to formal mathematical models, whose predictive capacity
depends on how well the behavior being modeled is understood. Similarly, empiricists
make observations using methodology which varies from carefully controlled experiments
to casual unstructured observations.
With definitions for discovery and knowledge, the relationship between these
two concepts can be clarified. Some examples of discoveries are the creation
of a new theory, the observation of a new behavioral relationship or the development
of a new skill. Current knowledge is the sum of prior discoveries which are
stored either in human memory or on a human record such as printed material.
Thus, not all prior discoveries are part of current knowledge because some discoveries
are forgotten. Examples of forgotten discoveries are skills associated with
obsolete technology such as the techniques for constructing stone-age tools,
which modern archaeologists are trying to recreate2.
The next definition to consider is an invention. An invention is
a new manmade device or process. A new device which qualifies as an invention
may take such forms as a new physical product, a new biological lifeform or
a new piece of software. A process, on the other hand, is a chemical, physical,
or biological chain of events that produces a product or service. To be patentable,
an invention must meet a test of originality. But the fact that an invention
may qualify for a patent, does not guarantee that the invention will be profitable
to produce. Each year inventors create numerous inventions, of which only a
small percent will be profitable to produce. Corporations, in fact, focus much
inventive effort on making improvements to existing products and processes.
These improvements will be considered minor inventions, regardless of whether
or not they could be patented.
2.2 Incentives
The incentive for discovery is fame. Scientists who make important discoveries
or develop new theories become famous and simultaneously receive material rewards
in the form or professorships and prizes. The pursuit of fame by researchers
promotes the free flow of ideas as researchers compete to first present their
work at conferences and in publications. Thus, new discovery is based on prior
discovery and the rate of discovery is increased by the rapid dissemination
of new results that anyone can use without charge.
In market societies, intellectual property in the form of patents, trade secrets,
and copyrights have been developed to create better economic incentives for
inventive and artistic endeavor. A patent gives an inventor exclusive use of
an invention for a finite period of time. A trade secret enables a firm to sue
for damages if an employee reveals economic secrets of the firm, and a copyright
provides writers and musicians exclusive use of their creations for a finite
period of time. Over time, innovations are needed to adjust these intellectual
property rights to fit the changing needs of the political economy3.
For example, in recent years copyright protection has been extended to software
and integrated circuit masks.
These two incentive systems also have their weaknesses. Fame, for example, does
not create an incentive system to finance basic research. And, while intellectual
property creates strong incentives to invent, it creates a chasm between discovery
and invention. Until inventors receive a patent on their invention, they are
by necessity very secretive about any discoveries that they made in the process.
Thus, their discoveries are not available to researchers in the field. We shall
explore different aspects of this chasm throughout the chapter.
2.3 Interactions
Once discovery and invention have been defined, the next step is to describe
the two-way interactions between these activities. For example, discoveries
frequently lead to inventions, but in many cases the full economic development
of an invention requires major new discoveries. Also, invention can lead to
a large increase in knowledge accumulation. Fortunately, because the knowledge
required for invention can be compartmentalized a successful inventor has to
understand only a portion of this knowledge accumulation. Finally, the difference
in incentives between discovery and invention impedes the necessary interaction
between discovery and invention.
To illuminate these relationships, let us start with the interactions within
the process of discovery itself. An important component of discovery is the
direct pursuit of basic knowledge by scientists and mathematicians. Science
has become a specialized activity which advances through the interactions of
specialists such as empiricists, theorists, mathematicians and engineers. Empiricists
discover new phenomena, which stimulate theorists to explain with new models
and theories. Theorists then use formal mathematical methods to deduce the implications
of their models. Empiricists either confirm or reject these implications on
the basis of experiments and hypothesis testing. In addition, engineers using
new discoveries create new instruments such as new observation devices and computers,
which in turn promote further empirical and theoretical studies. Similarly,
mathematicians in discovering the structure of formal relationships, create
new tools that theorists can use in constructing formal models of behavior.
Through the interactions of specialists, then, new formal models for explaining
and predicting behavior are created4
.
The next step is to describe the interactions between discovery and invention.
Discovery frequently creates opportunities for invention; however, the development
of an invention generally requires further discovery specific to that invention.
Inventors can rarely invent a fundamentally new product as a pure exercise in
engineering. That is, they can rarely design a product purely from known principles,
since theory rarely provides answers to all the design questions that are likely
to arise during the process of invention. For example, in designing the airplane,
the Wright brothers had to conduct wind tunnel experiments to design an efficient
airfoil. They could not simply apply the nascent aerodynamic theory that existed
at that time.
The relationship between theoretical discovery and invention is two way. An
example of a theoretical advance that led to invention is the case of nuclear
power. With Einstein's development of a theory to explain the relationship between
mass and energy, physicists and engineers made numerous applied discoveries
first to build the atomic bomb and then to create atomic power. In contrast,
the advance of the economic usefulness of an invention from satisfying the legal
definition for patentability to widespread economic application frequently requires
a major investment in theoretical discovery5
. The development of commercial aviation and military airforces, for instance,
stimulated the advance of theoretical discoveries in aerodynamics. In like fashion,
the current efforts to develop market applications of superconductivity will
undoubtedly generate major new theoretical models of superconductivity.
The rate that applied discovery needed to make an invention a commercial success
occurs depends on the methodology of invention. The simplest methodology for
invention is trial and error experimentation by an inventor without any formal
training. All other things being equal, a more efficient methodology is trial
and error experimentation by a inventor with training in science and engineering
because such an inventor can eliminate blind alleys from theoretical considerations.
A scientifically trained inventor can also improve the speed of applied discovery
by using good scientific and statistical methodology. Finally, if a theory is
well understood it can be incorporated into a computer assisted engineering
program so that the inventor can quickly, inexpensively analyze alternatives
without having to build prototypes and perform tests.
In addition, the organization of invention and discovery affects the rate of
advance. Separating invention from production into research and development
laboratories means that inventors can devote all their time to applied research
needed to create commercially successful inventions. Nevertheless, in some cases
the separation of research and development activities from production can create
a problem in transferring ideas from the research and development laboratory
to the market. A classic example here is Xerox who developed the graphical user
interface that Apple brought to the marketplace.
Next, let us consider how the chasm between university discovery and private
invention impedes the interaction between these two activities. In the pursuit
of fame university researchers have incentives to present their ideas to other
researchers, but not to potential inventors. Thus, there is a need to create
incentives to promote the transfer of ideas from pure research to inventive
activity. Also, the research that takes place in private research and development
laboratories is frequently of great interest to university researchers, but
because of the desire to reap the benefits of intellectual property, firms prohibit
its release.
Another problem is that university researchers are generally interested in basic
research to promote their academic careers and managers of researchers in the
firm are generally interested in applied research which promises to create products
in a reasonable time horizon. There is no incentive to perform applied research
that might produce useful inventions in the long run. Such research is not prestigious
enough for university research and is too risky for research in firms.
In spite of the these problems, discovery to develop the inventions associated
with a new technology and its applications frequently leads to a significant
accumulation of knowledge in many fields. Consider, for instance, the inventions
associated with integrated circuits, computers and software. Crowding more and
more components into an integrated circuit advances knowledge of materials at
the atomic level, and designing integrated circuits advances knowledge of silicone
compilers, software used in the design process. Reducing the production cost
of computers requires discoveries to create new production techniques such as
surface mount technology. One aspect of software discovery are advances in artificial
intelligence to make programmers more efficient. The development of new applications
software is frequently based on discoveries in the respective applications discipline.
For example, the development of the mathematics of linear programming led to
the development of software for applications.
If inventors in an industry had to understand all the knowledge accumulated
in the development of technology in that industry, the process of invention
would be severely hampered by the knowledge requirements. But, because technology
generally has a modular structure, the process of invention requires specialized
knowledge and discovery. Consider, for instance, the new central processor unit,
the Pentium Pro chip, created by Intel. An inventor using this chip to invent
a new computer workstation needs to know only the operating characteristics
of the chip and not the knowledge needed to design the chip, crowd the components
onto the chip, or obtain economic yield rates. Similarly, the developer of the
operating system needs only to know the operating characteristics of the new
computer rather than information about how it is designed. Finally, the developers
of applications software knowledge of the computer are limited to knowing the
software language and the operating system. This modular specialization of technology
greatly facilitates invention by limiting the knowledge requirements for invention.
Within the modular structure of technology the depth of knowledge required for
effective invention varies greatly. An inventor has an incentive to understand
theory to the extent that this knowledge reduces the applied empirical research
needed to perfect an invention. Some inventive activity takes place by inventors
who understand how the modules work and creatively combine them. One example
is the creation of the Apple II personal computer by Steve Wozniak who used
a microprocessor designed for intelligent appliances as one of his modules6
. On the other hand, it is doubtful that a quantum effects transistor could
be developed by an inventor without a considerable formal study in quantum mechanics7.