Grass-roots Innovation Management Module on basic concepts, definitions and implications

Lecture presented by Professor Tim Turpin Professorial Fellow, Centre for Industry and Innovation Studies, University of Western Sydney
1. Outline of the lecture (slides 1 2) This lecture is designed to provide a set of concepts and definitions that are useful for managing the innovation process. The first section will cover the basic concepts and definitions. Well introduce some examples to illustrate how these concepts can help and how they might be useful in turning to the specific issue of managing grass-roots innovation. Well then move on to discuss how knowledge, embedded in technological outputs can be owned and how this concept might be extended to the concept of community ownership. There is then a section that deals with the concept of S&T policy. This covers an extensive possible range of government interventions, some of which may be useful for supporting the development of grass-roots innovation. Finally two examples of grass-roots innovation are presented as short movie clips (courtesy of the Australian Broadcasting Company television program The New Inventors). A set of questions have been devised to think about and discuss in the context of these two examples. Two texts are recommended at the end of these notes for further reading.

2. But first, what is the context in which we are concerned with innovation studies? (slides 3 5) Innovation has long been understood as a prerequisite for economic development. As an academic pursuit it is helpful to understand how innovation works. What are the fundamental requirements that enable innovation to occur? Who are the main players and who benefits? From a policy point of view these are important questions because the answers will enable governments to devise policy strategies to promote innovative activity.

We know that sometimes the incentives out there in the market place are insufficient to encourage people to invest time and resources in innovation. After all, why should someone or a firm invest their scarce resources in the development of a product or process that others may simply copy or use with very little investment. The latter are the free-riders. So in policy terms there is the possibility of government intervening to overcome the problem of market failure. An example of this might be the case of developing new technologies for converting solar power to electricity using domestic housing roofs as collectors. There would be a clear benefit to the environment and potential reduction in the overall cost of production. But, unless there is a government incentive to encourage home owners to invest in the technology there is only a limited market. In order to study these sorts of cases and provide information and policy option to government there is a need to generate research into innovation processes. That is what we do at my centre at the University of Western Sydney, and that is one of the purposes of todays lecture to offer some tools for understanding and managing the innovation process. In this particular case, that of grass-roots technology.

3. The process of innovation (slides 6 9) Innovation is often thought of as the development of a new technology: perhaps a new type of mouse trap, or a new photographic technology such as the digital camera. These are certainly innovations but it can be different types of innovation such as process or product innovations. There can also be incremental (gradual improvements on a basic technology or process) or radical innovations such as a totally new process for smelting aluminium or a digital navigation system (although it is important to remember that even these technologies had their beginnings in other technologies. So let us think about the process that leads to innovation. In slide 6 we have a schematic presentation of the innovation process. Here the concept of learning encompasses the whole process. Without learning there is no feedback loop. And, without feed-back it is difficult for innovation to progress. Secondly there are pro-active linkages. That is, linkages between different agents involved. For example developing a new pesticide for maize production requires linkages between farmers, agricultural scientists, chemists, pesticide producers and the market. An innovation organisation, whether it is a firm, a community group, a research centre laboratory, or a farming organisational unit is necessary as an organisation within which the ideas are developed into practice. Finally, in this schema there is an ongoing process, with feed-back loops that we call: search (looking at an considering the options); strategic selection (choosing an option for development and testing); and implementation (carrying the ideas, information and knowledge

into action). Well come back to this shortly and consider how this might vary for what we are calling grass-roots innovation. In slide 7 we have a definition of the business model of innovation. A business definition: the introduction of any new or significantly improved good or service and/or implementation of any new or significantly improved operational and/or organisational/managerial process. So here we have consideration of product and process innovation. In addition the technology involved may be complex and sophisticated such as in development of the digital camera, or it may be simple and easily reproduced, such as a mouse trap. And, as we observed earlier, the level of change may be radical (overturning the way everything was done before, as in the case with electricity) or incremental, just doing things in an improved way, such as developing the two or three pin socket for electrical appliances. But what about grass-roots innovation? Does that follow a similar process and are there similar variations in types of innovation. Lets think for a moment about the key components of grass-roots innovation (slide 9). Well go into some of the following concepts in more detail shortly, but for now, well just focus on the core features. First, there is a need for knowledge and how to understand the problem. Secondly there is a need for some creative ideas. Experimentation is necessary to find out what works and why and what doesnt work and why. Thirdly there is a need for resources to convert ideas into application and problem solving. Resources might include some raw materials, some specific tools and certainly time. Finally there is the application of a technology or process that requires making the final innovation or process actually putting it into practice. This process is illustrated schematically in slide 10. Notice that the three key components: ideas; information; and knowledge; require continual feed-back. When the innovation is fully developed it can be pressed on into application or production. This is where there may be a significant difference between a business innovation outcome and a grass-roots innovation outcome (although this is by no means the rule). A grass-roots innovation be conceived to solve a particular problem, with little thought about whether this could lead to a marketable product. Well turn to this distinction shortly but first lets look at n example. 4. An example of grass-roots innovation (slide 11) As you watch this short movie clip think about the ideas, information and knowledge that were necessary for this innovation to be created. 1. What types of knowledge were used here?

2. What is being transferred: what to where? 3. Can you identify the grass-roots community? 4. Who might be the potential producers? Yes, there was knowledge about the problems of these ball games. So it was not simply technical knowledge that was required although that was certainly necessary. And, there was a transfer of that knowledge into an invention to solve the problem. This required some tooling, some experimentation and some testing. Who were the grass roots community? Well, we can say the ball playing fraternity. But also, we might say there was a mechanically minded onlooker who could see the problem and foresee a possible solution. The issue of producers and users at this stage is unknown. If this tool was only used by this particular ball playing community, we could say the problem was solved, with a grass-roots innovation. On the other hand, it is possible that an entrepreneur might take this innovation into the market and produce and distribute it more widely. That is moving on to a different level of production. But that possibility does raise the point that a grass-roots innovation can also lead to broader scale production. A General message to remember at this point:is: People are inherently creative, as they seek newways to solve problems and put ideas into practice. The intensity of effort to this regard is usually mediated by potential for use. A key issue for grass-roots innovation is for society more broadly to benefit from grass-roots innovation. Unfortunately this is usually driven from a top-down process. Grass-roots innovations seeks to achieve benefits from the bottom-up.

5. Clarifying basic definitions (slides 15 28) Before we turn to definitions lets share some common understanding of some grass-roots innovations (slides 17 21) . The pictures shown in slides 17 shows a tablecloth produced in the Philippines made from pineapple leaf fibre. The idea is certainly innovative and intended a s a product for sale. However, slide 18 shows a further innovation, the insertion of an embroidered hole to take a sun umbrella. This is an incremental innovation that required some information about how the cloth might be used by customers as well as knowledge about how to introduce the very simple innovation into the process of fabric design and preparation. Slide 19 and 20 illustrate another very simple innovation: a sun-shade that can be easily folded and stowed for travel. The target here is tourists. There is no new radical product but a thoughtful adaptation to what might be useful for tourists. Again, information is required about what might be useful for travellers and knowledge is required to turn that information into use value.

The third innovation, shown in slide 21 is the adaptation of a water lived environment on Inle Lake in Myanmar to the production of tomatoes on floating gardens. This is an example of a long and slow process of adaptation. But the outcome is an innovation - not a product for sale but a village based enterprise. Here knowledge about the process rather than information is the basis for its sustainability. So lets turn to some definitions now. Firstly, knowledge and information have curious properties: They can be sold and enter other domains but they also remain within the domain of the producer they do not have zero-sum qualities. Knowledge can be defined in a simple way as a capacity for social action. Knowledge empowers its possessors with the capacity for intellectual or physical action. Information on the other hand is presented through structured and formatted data it remains passive until used by those with the knowledge to interpret and process it. The transfer of knowledge takes place through learning. The transfer of information takes place through duplication.

Information is knowledge reduced to messages that can be transmitted and serve to reconstitute knowledge at a later time or place and by a different individual or group of individuals. But not all knowledge can be codified as information. o Think of a recipe and consider some knowledge that might not be included in the information.

It is helpful to think of two types of knowledge Tacit and codified Tacit knowledge is associated with skills or know how and ideas; it is embedded in human action. Codified knowledge is explicit, it can be spelled out and is embedded in designs, specifications, technologies and literature.

Codified knowledge is embedded in machines, blueprints, instructions, patents and so on. It can be moved like physical products to new locations and deployed. It can also be adapted and incrementally developed. But that is part of a process of innovation and also requires tacit knowledge. The more complex the technology the deeper the skill base required to operate, service and maximise use of the technology. The status of codified knowledge in a country can be measured with indicators such as machinery imports, licensing agreements etc.

Technology has many tacit elements that require a new user to build skills, knowledge and institutional routines. This includes experience know-how as well as know-how gained through formal training. Mastery of these tacit elements of knowledge is needed everywhere but is particularly important for developing countries where enterprises lack the initial base of technical skills on which to graft new technology. Codified knowledge embedded in technology can be owned and distributed through the concept of intellectual property rights. Systems of intellectual property rights (patent, copyright, design law etc) have provided for individuals, firms or organisations to be endowed with the legal right to own and exploit explicit knowledge. More recently the concept of community ownership has (somewhat problematically) attempted to provide for community ownership of intellectual property. Knowledge Communities An important part of the process of generation, accumulation, and distribution of economic knowledge is achieved through communities acting as a nucleus of competence through the daily practices of the community (Amin and Cohendet, 2004). Knowledge is reinforced, legitimised, reproduced and transmitted through community action.

Process Innovation Slides 30 and 31 illustrate a focus for process innovation. Later on well look at a movie clip that presents an innovation for managing irrigation and weed control. But for now we need to define process innovation as a new or improved service, operation or managerial process. This could be a new device or altered technology in process line production. It could be concerned with a process for delivering or supplying a product or service, such as water to a plant or field or a conveyer belt process that can travel up steeper inclines or move around corners.

6. Innovation drivers and policy options Lets consider the difference between firm based innovation strategies and grass-roots innovation strategies. Firstly, a firm based innovation strategy is generally to acquire or maintain competitive advantage by developing and selling a new product or service or improving product or process development with new efficiency and reduced cost.

Grass-roots innovation strategies are usually produced to solve a problem of production, but not entirely. They too may lead to new product or process development that is transferred to the market. So the distinctions are not cut and dried. Similarly, in a firm, an innovation may be introduced because of an idea of one or a group of employees. The idea of a suggestion box is to tap this sort of creative resource. In all cases they require some sort of incentive. So some further important questions emerge. Is innovation undertaken to solve a problem (for example to remove coal from a deeper open cut location) or, is it intended to generate profits from the sale of new products or processes? Is it core business or is it a productive spin-off, leading to new or different business?

7. Intellectual Property Rights The core legal framework protects intellectual property rights in three main ways: Patents and trade secret laws serve to protect the owner from unlicensed use of technical information; Copyright laws protect rights of creative expression; Trademark and design laws protect the use of symbols signs and shapes in which products or services are packaged. For development, copying is a creative, innovative and useful process. For example, reverse engineering is used to understand how a device was made. It can then be reproduced, but with modification and improvements. Thus incremental innovation takes place through learning and doing. Many grass-roots innovations are undertaken in this way. Copying is learning SMEs in East Java now produce good quality leather-ware. At one time, they simply copied Western designs. Their employees would watch the carousels at the airport, waiting for examples of the latest designs from the most fashionable designers. They made exact imitations, copying the brand name too. After warnings from the Indonesian government, they changed their brands so that these merely resembled fashionable brands. They have now begun to adapt the designs as well, and with change in design, they have also begun to use their own brand names.

8. Science and Technology Policy National S&T policy is about knowledge and how to capture the benefits of knowledge - local and global - for national benefit. S&T policy is not just concerned with high-tech it is concerned with deepening the knowledge base in all sectors old and new. Finally, we need to think about who are the users and who are the potential producers. More often than not the innovator (or perhaps inventor) does not finish up being the producer. They may register intellectual; property through a patent, design or trademark application. But they may sell or license the idea to a producer.

9. Two examples and some questions to work on The two following film clips present examples of grass rots innovations. We are asking you to think about these examples and making use of the definitions offered above think about the following questions. 1. Describe the nature of the problem and the process that led to the innovative outcome. 2. Who were the various interest groups that might have been involved? Who are the potential users and who might be some potential producers? 3. What sorts of knowledge and information were required to create the innovations. 4. Does the market stimulate a demand for such innovations? 5. If there is a market failure how might policy intervention replace the market in this sort of case? 6. You are a government official responsible for innovation in this area. What information would you need to design a policy that would encourage these sorts of innovations? 7. What might be some of the key features of an innovation management strategy that seeks to raise knowledge, provide access to information and promote commercialisation/ application of these sorts of new processes or products

Each of these questions is designed to engage you with the concepts and issues discussed through the lecture. It is not expected that you should write an essay in response. Rather, simply prepare notes that could potentially be used to write a longer description and analysis of the innovation activities.

Recommended texts for further reading: Ash Amin and Patrick Cohendet (2004) Architecture of Knowledge: firms, capabilities and communities, Oxford University Press. Domonique Foray (2004) The Economics of Knowledge, MIT Press, London.