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THE SOCIAL DIMENSIONS OF CREATIVITY,
INVENTION AND TECHNOLOGY
EDITED BY
SVEN B. LUNDSTEDT
E. WILLIAM COLGLAZIER, JR.
FOREWORD BY
FRANK PRESS
PUBLISHED WITH THE ASPEN INSTITUTE FOR HUMANISTIC
STUDIES AND THE OHIO STATE UNIVERSITY
PERGAMON PRESS
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Copyright © 1982 Aspen Institute for Humanistic Studies and Sven Lundstedt
Library of Congress Cataloging in Publication Data
Main entry under title:
Managing innovation.
"An Aspen Institute book."
Includes index.
1. Technological innovations-United States-
Addresses, essays, lectures. I. Lundstedt,
Sven B., 1926- . II. Colglazier, E. William
(Elmer William)
HC110.T4M275 1982 658.4'06 82.293
ISBN 0-08-028815-4 AACR2
All Rights reserved. No part of this publication may be reproduced,
stored in a retrieval system or transmitted in any form or by any means:
electronic, electrostatic, magnetic tape, mechanical, photocopying,
recording or otherwise, without permission in writing from the
publishers.
Printed in the United States of America
Unless there is a speeding up of social invention or a slowing down of
mechanical invention, grave maladjustments are certain to result —From
Recent Social Trends in the United States, Report of the President's Research
Committee on Social Trends, 1932.
Not everything new, of course, comes from mechanical invention. There
are social inventions also, as, for instance, proportional representation,
social insurance, the holding company, and the League of Nations. Some
social changes originate then from social inventions. Social inventions may
have been precipitated by mechanical inventions, as, for instance, the In
terstate Commerce Commission was caused by the railroads. The connec
tion between the social invention and the mechanical is not so close in the
case of the juvenile court, which results from changes in the urban family
due in turn to the mechanical forces that produced city life. Some social
inventions are so far removed from mechanical inventions that any con
nection is scarcely discernible. Such would be the case with the invention
of the parole of prisoners. On the other hand, some social inventions cause
mechanical inventions. Thus, a sales tax may bring out a new token money.
A zoning law, as in New York, may force architectural devices to be used
to modify the skyline, or an antinoise campaign may cause the invention
of a rubber horseshoe used in connection with milk wagons on early-
morning deliveries. . . . Indeed, the more one studies the relationship be
tween mechanical and social inventions, the more interrelated they seem —
William Fielding Ogburn, Journal of Business of the University of Chicago IX, no.
1 (January 1936).
For innovation means the creation of new value and new satisfaction for
the customer. Organizations therefore measure innovations not by their
7
scientific or technological importance, but by what they contribute to mar
ket and customer. They consider 'social innovation as important as 'tech
nological innovation/ Installment selling may have had greater impact on
economies and markets than most of the great 'advances in technology' in
this century —Peter F. Drucker, Wall Street Journal, Friday, February 6, 1982.
FOREWORD
A
fter some twenty years of talk but no action, the nation seems
ready to address the issue of technological innovation. The public
is now concerned about U.S. technological lag, perhaps due to the com
petitive prices, high quality, and advanced design of imports in con
sumer electronics, integrated circuits, automobiles, cameras, airplanes,
and other middle and high technology products. Labor is concerned
about growing unemployment in low and middle technology industries,
and is increasingly critical of management's lack of investment in mod
ern equipment and production lines. Industry, in addition to its criticism
of government economic and regulatory policy as impediments to in
novation, is now examining the impact of its own policies, particularly
its management reward systems and their effect on innovation. Perhaps
most important of all, Congress and the Executive Branch are more
worried than ever about productivity and inflation and seem ready to
address the government's significant impact on these matters. It is quite
likely that regulatory, tax, patent, antitrust, trade, and R&D policy will
see major changes, motivated primarily by concern over the related
issues of innovation, productivity, inflation, unemployment, and bal
ance of trade. The nation seems poised to act on these matters and
benign neglect will be replaced by a debate on the question of what we
should do.
Should we disinvest in noncompetitive industries and transfer re
sources to the high technology areas? What about retraining and pro
viding in other ways for dislocated workers? Should tax policy generate
capital growth and spur investment generally or should tax benefits be
targeted towards innovation and productivity improvements? To what
extent should economic impact be a predominant factor in analyzing
proposed regulations, and can we attach confidence to and use risk
analysis methodologies? Should we initiate incentives and policies to
spur exports? Can we develop new institutional relationships between
government, universities, and industry to enhance innovation? Can we
ix
X Foreword
help developing countries with their modernization plans without plac
ing our own industries at risk in the years ahead? These are among the
issues we will be debating in the years ahead as we enter a second
industrial revolution, one based on new technologies and new attitudes
towards innovation and industrial policy.
The competition between the industrial democracies in the newly
formed high technology industries is likely to be fierce. Trade barriers,
impediments limiting scientific communication and information flow,
and pressures on multinational corporations may be among the nega
tive consequences of the new high technology era. We hope these issues
can be addressed before they create economic havoc and political dis
unity. On the other hand, new innovations such as production sharing,
in which various segments of the total product are each in a different
country which can handle its segment most economically, may help
reduce protectionist pressures.
Few doubt that the United States cannot perform superiorly in science
and technology—the beginning of the innovative process. By almost any
criterion, the United States remains the world leader in scientific prog
ress; almost every important scientific advance with commercial poten
tial has been developed here. The steps that follow R&D in the devel
opment of new products and processes—steps that depend on the
availability of capital, wise investment decisions, and benevolent gov
ernment policy—will now be addressed by the nation, and an industrial
policy fostering innovation and investment will emerge.
Now that there appears to be a national readiness to do the right
things to foster innovation, this volume is particularly timely. The col
lection of papers includes contributions by historians, economists, en
trepreneurs, government officials, and scientists and engineers—each
author viewing the innovation process from a different vantage point.
An important feature is the beginning discussion of the relationship
between the social aspects of innovation, (e.g., the organizational, man
agement, and human aspects) and artifact invention and innovation.
Although anecdotes abound involving technological advances, which
because of social decisions have led to commercial successes or failures,
the entire process of innovation with adequate recognition of the role
of social invention has been insufficiently studied. In broadening the
conceptual basis of technological innovation to include social aspects,
this volume makes a special contribution to the bountiful literature on
the subject.
Frank Press
PREFACE
T
he concept upon which this book is based recurred to me during
the summer of 1979 while in residence at The Aspen Institute for
Humanistic Studies in Aspen, Colorado. Technological innovation and
its relationship to industrial productivity and economic growth has al
ways been an important subject. But an aspect of it seemed to be un-
deremphasized in the mainstream of that line of thought. Sufficient
attention has not been given to social invention and innovation. How
people respond creatively to artifact invention and innovation with so
cial invention and innovation is also of critical importance.
Social inventions and innovations are ubiquitous. Yet, because they
are often obscured by other names, or taken for granted, their value is
not always recognized. We do not have to look far for typical examples.
The modern corporation is a particularly successful social invention and
innovation. It is one of the foremost reasons why technology has been
so effectively exploited in this century. Technological, industrial and
economic development have also brought on social inventions and in
novations which have served to reduce the unwanted side effects of
such development. Trade unions and government regulation are ex
amples. The Taft-Hartley Law is a particularly interesting social inven
tion and innovation for managing indu7strial conflict. The National
Environmental Policy Act was ''invented ' to limit environmental dam
age coming from industrial productivity. Much legislation is social in
vention and innovation; the distinction between invention and inno
vation will become clear later in this book.
This collection of original papers calls attention to the synergism which
exists between these different kinds of invention and innovation and
their relation to industrial development and economic growth. A basic
thesis of this book is that such growth will be more successful when
there is a creative balance between these different forms of invention
and innovation.
A grant from The Atlantic Richfield Foundation has enabled this book
xi
xii Preface
to be prepared, and enabled a developmental conference to be held
which served initially as a starting point for this enlarged volume of
papers. The book has become a separate project apart from the confer
ence so it is not in any sense merely a conference proceedings. The
original conference was held November 7-9, 1980 at The Aspen Institute
Wye Plantation campus on the Eastern shore of Maryland in cooperation
with the Institute's Program in Science, Technology and Humanism.
We wish to recognize and to thank the following distinguished con
ference participants who, in addition to several of the chapter authors,
took part in the discussion: Charles Cook, Senior Vice President SRI
International; William Cunningham, Economist, AFL-CIO: Paul Doty,
Senior Fellow, Aspen Institute and Professor and Director of The Center
for Science and International Affairs, Harvard University; Amitai Et-
zioni, University Professor, George Washington University; N. Bruce
Hannay, Vice President, Bell Telephone Laboratories; Paul Horwitz,
Senior Scientist, Bolt, Beranek and Newman, Franklin Lindsay, Chair
man, ITEK Corporation; Jessica Tuckman Mathews, Editorial Staff, The
Washington Post; Frederick J. Milford, Associate Director for Research,
Battelle Columbus Laboratories; Howard A. Slack, Vice President for
Technology, The Atlantic Richfield Company; Ezra Vogel, Professor of
Sociology, Harvard University; Charles Zraket, Executive Vice Presi
dent, Mitre Corporation; Abe Spinak, Assistant Director, National Aer
onautics and Space Administration; Dorothy Zinberg, Special Adviser,
Aspen Institute and lecturer, Harvard University (affiliations are as of
the time of the seminar).
We wish to recognize the kind support and generosity of The Atlantic
Richfield Foundation for its financial support and for the additional
support provided by The Ohio State University and its School of Public
Administration and Research Foundation. I wish to also thank Mr. Jo
seph Slater, President of the Aspen Institute, for his encouragement.
And we acknowledge the distinguished endorsers whose names appear
on the jacket of this book.
Paul Doty, Director of the Program in Science, Technology and Hu
manism and William Colglazier, then Associate Director of the program,
were my venture partners. I wish to thank Harvey Brooks, William
Colglazier, Paul Doty and Paul Horwitz for serving on the planning
committee for the conference. I especially want to thank Fred A. Nelson
of The Atlantic Richfield Foundation for his helpful cooperation. I grate
fully acknowledge the contributions of William Colglazier as co-editor
and conference rapportuer, and of Harvey Brooks and Paul Doty who
shared with me the task of moderating the conference. And finally I
wish to thank my wife, Jean S. Lundstedt, for her kind assistance.
Sven B. Lundstedt
INTRODUCTION
Sven B. Lundstedt and
E. William Colglazier, Jr.
T
echnological innovation is the process that begins with an inven
tor's i12nsight and ends with a new product or technique in the mar
ketplace. Many scholars believe that technological change and new
knowledge are more important contributors to economic growth over
the long run than the classical variables of land, labor, and capital. While
the variance is large, the average rate of return on private investment
in technological innovation has been estimated to be twice that of cap
ital. Even more significant, the return to society 3h as been estimated to
be double that accruing to the private investor.
Being the world leader in technological innovation has produced enor
mous material benefits for the United States in the twentieth century.
Yet, as expressed in a recent Newsweek article entitled "Innovation: Has
American Lost Its Edge," "technocrats have begun to fear that Amer
ica's lead in innovation—and the vaunted4 U.S. technological superiority
that it spawned—may be withering." Although innovation is suffi
ciently idiosyncratic that it should be examined on an industry by in
dustry basis, some indicators of a general U.S. decline over the past
decade are lower investment in research and development as a per
centage of Gross National Product, a declining share of the world tech
nology market, a smaller share of patents going to U.S. citizens, and a
productivity growth rate5 and capital investment rate lower than that of
most industrial nations. Also worrisome is the perception that current
American management practice is weighted toward the financial rather
than the entrepreneurial, leading 6to a focus on near-term goals and an
increased aversion to risk taking.
The Carter Administration, as its four predecessors, initiated major
studies on industrial innovation but in the end recommended rather
limited policies to try to alter the situation. To the disappointment of
some of his advisors, President Carter's message on innovation did not
even mention tax and economic policies. Rather than studying the prob-
xiii
xiv Introduction
lem further, the Reagan Administration responded to the U.S. economic
malaise with its tight monetary policies and its version of ''supply-side''
macroeconomic policies. The result was tax cuts for consumers as well
as business and significant reductions in non-military government ex
penditures, including research and development. One Republican critic
stated, "You can't try to stimulate investment and research and devel
opment through tax breaks (which are themselves desirable) and then
vitiate the beneficial effects by huge consu7mer tax cuts that loosen fiscal
policy and drive interest rates sky high." Although there obviously has
not been societal consensus on the appropriateness of policies at
tempted over the past few years, politicians have generally recognized
that revitalizing economic growth through the fostering of technological
innovation is a critical imperative facing the U.S. in the 1980s.
The purpose of this book is to explore new directions that support for
industrial innovation can take through the next decade in the United
States. The special focus is on the synergism between social and tech
nological innovation, or stated more directly, how new arrangements
in social structures or processes can facilitate the use and diffusion of
new technological products or processes and thereby generate increased
productivity and economic growth.
Social invention and innovation consist of changes in the communi
cation, organizational, and power relationships among people in var
ious institutions and society. They can occur on any scale, from new
social relations or activities in small groups to new organizations or
social structures on a global scale. They are the natural and ubiquitous
companions of technological invention and innovation, but are not
widely understood or even recognized as a rule. For a variety of reasons,
a purely technological bias overshadows the effects of psychological,
social, and cultural forces that surround and often determine the form
and direction of invention and innovation. As stated by Harvey Brooks
of Harvard University,
It has been traditional to define technology in terms of its physical embod
iments, as novel physical objects created by man to fulfill certain human
purposes. . . . this is too limited a view and one that is becoming increas
ingly obsolete. . . . technology must be sociotechnical rather than techni
8
cal, and a technology must include the managerial and social supporting
systems necessary to apply it on a significant scale.
Brooks has identified two goals that can be served by technological
and social innovation in addition to improving material living standards
and economic productivity. One is to improve the quality of life as
related to the natural evironment, social relationships and a more egal-
