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Int. J. Technology Management, Vol. 34, Nos. 3/4, 2006

Innovating the innovation process

A.J. Berkhout*, Dap Hartmann,
Patrick van der Duin and Roland Ortt
Delft University of Technology
Faculty of Technology, Policy and Management
Jaffalaan 5, 2628 BX Delft, The Netherlands
E-mail: a.j.berkhout@tbm.tudelft.nl
E-mail: l.hartmann@tbm.tudelft.nl
E-mail: p.vanderduin@tbm.tudelft.nl
E-mail: j.r.ortt@tbm.tudelft.nl
*Corresponding author
Abstract: In the innovation literature, the development of innovation models is
subdivided into generations. Until now, we distinguish three generations.
Because current models provide a poor representation of what happens
in todays open innovation networks, there is a growing need for a
fourth-generation concept. So far, requirements for next-generation concepts
have been discussed but well-defined models have not reached the open
literature yet. This paper describes a fourth-generation innovation model,
which describes the innovation regime by a circle of change. It links
changes in scientific insights, technological capabilities, product design and
manufacturing, and markets. The model replaces the traditional chain concept
by a circle with four nodes of change, connected by four interacting cycles of
change. Collectively, they may be seen as the arena of opportunity with
processes crossing traditional boundaries. These processes have a cyclic nature
and are representative of todays open innovation.
Keywords: innovation; change; creativity; entrepreneurship; knowledge
management; knowledge economy innovation management; innovation
economy; sociotechnical; socioeconomic; Lisbon strategy.
Reference to this paper should be made as follows: Berkhout, A.J.,
Hartmann, D., van der Duin, P. and Ortt, R. (2006) Innovating the innovation
process, Int. J. Technology Management, Vol. 34, Nos. 3/4, pp.390404.
Biographical notes: A.J. (Guus) Berkhout started his career with Shell in
1964, where he held several international positions in R&D and technology
transfer. In 1976, he accepted a Chair at Delft University of Technology in the
field of geophysical and acoustical imaging. During 19982001, he was a
member of the Board, responsible for scientific research, knowledge
management and intellectual property. In 2001, he also accepted a chair in the
field of innovation management. Professor Berkhout is a member of the Royal
Netherlands Academy of Arts and Sciences (KNAW) and the Netherlands
Academy of Engineering (NFTW).
Dap Hartmann received his PhD in astronomy from Leiden University in 1994.
Subsequently, he was Visiting Scientist at the Harvard-Smithsonian Center
for Astrophysics (Cambridge, MA), at the University of Bonn, and at the
Max-Planck-Institut fr Radioastronomie. After returning to Holland, he

Copyright 2006 Inderscience Enterprises Ltd.

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founded Cygnus Consulting, providing expert advice in Science and

Technology. Since 2003, he is Assistant Professor in Intellectual Property
Valorisation and Innovation Management at Delft University of Technology.
Patrick van der Duin is a Research Fellow at Delft University of Technology,
Faculty of Technology, Policy and Management, Section Technology, strategy
and entrepreneurship. He receives his master in economics from the University
of Amsterdam. He was a Researcher and Senior Advisor at KPN Research
where he participated in future studies research on use of telecommunication
services and products. Currently, he is finalising his PhD on the use of
qualitative methods of futures research in innovation processes in large
corporations.
Roland Ortt studied economics and specialised in the analysis of high-tech
markets. He was an Assistant Professor and received a PhD from the faculty of
Industrial Design Engineering of Delft University of Technology. His thesis
was devoted to developing market analysis methods for a breakthrough
communication technology, the video telephone. He has worked as an R&D
Manager at the research institute of KPN (the incumbent Dutch telecom
operator). Currently, he is Associate Professor in technology management
at the faculty of Technology, Policy and Management of Delft University
of Technology.

Introduction

In former times, economies were largely based on the production of goods for local
markets, using the two factors of production: capital and labour. Mass globalisation has
brought about growing competition, forcing companies to produce goods with higher
performance and at lower cost. This started the knowledge economy, in which smarter
tools and machines expanded possibilities; knowledge became the third factor of
production. Workflows were designed more intelligently, and the training and education
of employees assumed ever greater importance. Today, technical know-how and
improved skills, particularly in the field of Information and Communication Technology
(ICT), have made existing work processes far more efficient.
Yet we have not mentioned the most important development in the economy. The real
changes are now taking place in the so-called innovation economy, in which besides
capital, labour and knowledge creativity is the fourth principal factor of production. The
emphasis on creativity makes the difference. In a knowledge economy logic is
predominant, while in an innovation economy everything revolves around imagination.1
In an innovation economy, processes are not only designed more efficiently (with
knowledge-intensive solutions), above all they are made more effective (with creative
solutions). Innovation starts therefore with management of ideas. Florida (2003)
correctly argues that creativity becomes the principal driving force behind economic
growth, and Brown (2003) concludes that innovation itself needs to be innovated.
We can best describe the innovation economy as a creative knowledge economy. An
apt description of the activities in an innovation economy is creative enterprise
with knowledge (Berkhout, 2000). It is not just a question of creativity or knowledge
or enterprise. It is the combination that counts: creativity and knowledge and
entrepreneurship that is what makes the innovation economy so powerful.

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In the introduction to this Special Issue, the first author argues that in large
companies strategic planning plays a dominant role in innovation management. To
minimise risks, innovation projects are managed according to a top-down strategic plan,
representing a linear stage-gate process along the innovation path. It is important to
realise that in this model, organisation of the multi-disciplinary workflows within and
between the innovation teams is not addressed. In the following, this aspect will obtain
ample attention.

Departure from linear thinking

The history of the development of innovation models is often divided into three
generations (Liyanage et al., 1999; Miller, 2001; Rothwell, 1994; Roussel et al., 1991;
Chiesa, 2001). In the traditional linear model (first generation), innovation is represented
by a pipeline of sequential processes, which starts at pure scientific research and ends
with commercial applications. This 1G model, however, incorporates market information
very late in the process, so that commercial applications are often merely technical
inventions and therefore often not adopted by the market. Next, second-generation
models emerged, which focus on the flow of information originating from the market,
essentially reversing the linear pipeline of the first generation. Here, science is replaced
by the market as the source of innovation, and processes are still largely seen as
sequential steps. A major disadvantage of the 2G models is that there is too much
emphasis on market-driven improvements of existing products (optimisation), resulting in
a large variety of short-term projects.
In the last decade, third-generation models have been introduced that show less
linearity owing to feedback paths in the chain. In these models, investments in innovation
are closely linked to company strategy. Third-generation models can be seen as open
R&D models, emphasising product and process innovation (technical), and neglecting
organisational and market innovations (non-technical). This means that 3G innovation
models tend to focus on the companys new technological capabilities rather than
including solutions for institutional barriers and societal needs. Table 1 summarises the
characteristics of the current generations of innovation models.
Table 1

Characteristics of current innovation models

Generation

Characteristics

First

Technology push, linear process with markets at the end of the pipeline, scientific
freedom is very important, no strategic goals, no chain management

Second

Market pull, linear process with science at the end of the pipeline, contract
research is very important, weak ties with corporate strategy, little emphasis on
chain management

Third

Combination of technology push and market pull, innovation projects are linked to
R&D and company goals (open R&D), strong emphasis on chain management

Note:

For more detail, see, Ortt and Smits in this special issue

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Fundamental changes in industry have generated a new commercial environment in

which business processes cross traditional company boundaries and combine across
industrial sectors. This means that innovation develops in a new direction, requiring
rethinking of the current concepts underlying innovation. This rethinking is at the basis
of fourth-generation innovation models (Niosi, 1999; Chesbrough, 2003; Christensen
and Raynor, 2003). Fourth-generation innovation models can be characterised by the
following properties:
1

Innovation is embedded in partnerships: open innovation.

Attention is given to an early interaction between science and business.

Hard knowledge of emerging technologies is complemented by soft knowledge of

emerging markets.

The need for new organisational concepts is acknowledged by emphasising skills for
managing networks with specialised suppliers as well as early users.

Entrepreneurship plays a central role.

The Cyclic Innovation Model (CIM) is proposed as a fourth-generation innovation

model. It was developed in the 1990s as an instrument for the continuous reform of
science and industry (Berkhout, 2000). Since processes in todays innovation economy
are characterised by interaction and change, the CIM complies with the principles of
system dynamics (Forrester, 1961; Roberts, 1978). Among other things, this means that
equilibrium processes have been replaced by processes of change.2 This is why CIM
focuses on the interaction between changes of the involved subsystems without the need
for a full scientific description of the system at one specific moment in time. Using
modern system dynamics in innovation has one other major advantage. It also shows that
models must include feedback paths so that adaptive steering and learning processes can
be made more explicit. Senge (1994) used this cyclical concept to draw up a clear
framework for learning organisations.

Principle of cyclical interaction

With the addition of feedback paths, models of dynamic systems often referred to as
regimes are represented by interconnected cycles and (work) processes become
cyclical.3 It presents the basis for modern control and is the precondition for operating
in a flexible manner; it also presents the inspiration for human creativity and is a
necessary condition for sustainability. Thanks to feedback, (human) actors are constantly
confronted with the consequences of their actions, preferably through in-built early
signals. In that way quick adjustments can be made in the event of surprises. The
cyclical architecture also ensures that mistakes can be learned from, a very important
property of innovation.
In summary, cyclic interaction is a prerequisite for the model of dynamic systems as
well as for the network structure of competitive organisations: start quickly, adjust
quickly and learn quickly.

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Figure 1 illustrates the basic principle. A represents a subsystem that maintains a

cyclical interaction with subsystem B. Examples are interactions between technical
products and their users, commercial organisations and their customers, hospitals and
their patients.
Figure 1

Cyclical interaction is the basis for modern control and a precondition for
operational flexibility. It is also the inspiration for creativity and a necessary
condition for sustainability
Inside-out

B
Outside-in

The cycle in Figure 1 is proposed as an elementary building block for designing

non-linear models for innovation systems, similar to those we find everywhere in physics
and biology. In particular, non-linear models for sociotechnical and socioeconomic
change can be constructed from the basic unit in Figure 1.

Dynamics around technological development

Figure 2 shows two linked basic units the double loop in which technological
research plays a central role. The cyclical interaction processes for the development
of new technology take place in the so-called technical-oriented sciences cycle (the
left-hand side of Figure 2) with the help of a wide range of disciplines from the
hard sciences.4 Technological research in this cycle is a multi-disciplinary activity: a
package of different disciplines from the hard sciences is needed to develop a new
technology (many-to-one relationship). Similarly, the cyclical interaction processes
for the development of new products take place in the integrated engineering cycle (the
right-hand side of Figure 2). Modern product development is a multi-technology activity:
a package of different often patented technologies is needed to develop a new product
(many-to-one relationship). Like multi-disciplinary science, here too we see that many
different skills are needed to be successful. Experience shows that the skills of specialised
suppliers play an important role in making the engineering process successful.

Innovating the innovation process

Figure 2

395

The dynamics surrounding technological research changes in demand and supply of

new methods and tools are driven by the cyclical interaction between new scientific
insights into technical processes (left-hand side) and new functional requirements for
process-product combinations (right-hand side).

Scientific
exploration

Technological
research

Technical-oriented
sciences cycle

Product
development

Integrated
engineering cycle

Figure 2 visualises that in the sciences cycle technological research is driven by new
scientific insights: science push. Figure 2 also shows that in the engineering cycle
technological research is driven by new functional requirements in product development:
function pull. The dynamics in technological research are therefore driven by both new
scientific insights and new functional requirements. In technological research, scientists
and engineers must constantly inspire one another (Stokes, 1997). To achieve this,
research must be organised in a different manner. The Technological Top Institutes
(TTIs) in The Netherlands are a good example of how this can be addressed: scientists
from the hard sciences work together with engineers from industry to create new
technical functions (products). The European Commission of the EU has recently
announced plans to start a TTI at European level, based on the push and pull in Figure 2.
It is important to realise that the concept products is used here in the widest sense:
everything we design and make. Hence, it includes immaterial products such as
databases, computer software, financial instruments, governmental regulations and
governance models. This means that the concept technology is also used in the widest
sense: knowledge both implicit and explicit on how to design and make products in
the widest sense. Broadening the concept of technology and product is characteristic of
the fourth-generation innovation concept.

Dynamics around market transitions

Figure 3 again shows two linked cycles, but in this case it is the world of human needs
rather than the world of technology that plays the central role. The cyclical interaction
processes for the development of new insights into emerging and receding socioeconomic
trends (market transitions) take place in the so-called social-oriented sciences cycle
(left-hand side of Figure 3) with the help of a wide range of different disciplines from
the soft sciences.5 With these insights new sociotechnical solutions can be developed

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faster and with less economic risk. Anticipating successful market transitions is very
much a multi-disciplinary activity: a package of different disciplines from the soft
sciences is needed to explain and predict transitions in markets in a scientific manner and
to establish new solutions while knowing what the underlying socioeconomic forces are
(many-to-one relationship). This is often called futures research.
Figure 3

The dynamics around market transitions (changes in demand for and supply of
sociotechnical solutions) are driven by the cyclical interaction between new
scientific insights in socioeconomic processes (left hand side) and new investments
in product-service combinations (right-hand side).

Scientific
exploration

Social-oriented
sciences cycle

Market
transitions

Product
development

Differentiated
service cycle

Likewise, the cyclical interaction processes required to serve the changing society
with new product-service combinations take place in the differentiated service cycle
(right-hand side of Figure 3). Experience shows that in this cycle, early users play an
important role in making the innovation process successful (Von Hippel, 2005); this
means using the creativity of customers. It is interesting to note that in recent years the
services sector has expanded considerably, not only because of the greater demand for
services from the consumer but also because industry has outsourced many of its support
processes. This trend is still going on. If a branch of industry disappears, it is important to
realise that the accompanying services would disappear with it.
In the sciences cycle, market transitions are seen as a dynamic socioeconomic process
in which the changing demand for product-service combinations is determined by the
dynamics of the needs and concerns of society. On the other hand, in the service cycle
market transitions are seen as a dynamic commercial process in which the change in the
supply of product-service combinations is determined by the innovative capacity of the
business community. In an innovation economy both components, scientific insight into
changing demand (left-hand side of Figure 3) and commercial investment in changing
supply (right-hand side of Figure 3), should be constantly inspiring and reinforcing
one another.
In industrial innovation programmes a lot of implicit knowledge concerning
technological research is created in the engineering cycle, and the task of the hard
sciences cycle is then to make this knowledge explicit. Likewise, a lot of implicit

Innovating the innovation process

397

knowledge about market research is created in the service cycle and the soft sciences
cycle then has the task of making this knowledge explicit. The explication of implicit
knowledge is a crucial role for science in innovation.
No equivalent of the aforementioned TTIs has yet been established with the aim
of trying to understand, influence and exploit the regime of socioeconomic changes.
This confirms the current imbalance between investment in knowledge of emerging
technology and in knowledge of emerging markets, where markets are seen as an integral
part of society. The recent Franco-German initiative to create a European top economic
institute as a counterpart to the American Institute for International Economics presents a
too-limited view on this issue. Insight into societal changes cannot be created from an
economic point of view only.

Model of the innovation arena

If we compare Figures 2 and 3, the dual nature of scientific exploration and product
development becomes clear: science has both hard and soft aspects and product
development has both technical and social aspects. Figure 4 combines Figures 2 and 3.
The result is a systems view of the cyclical change processes and their interactions as
they take place in a successful innovation arena: hard and soft sciences as well as
engineering and commercialisation are brought together in a cohesive system of
creative processes. Entrepreneurship plays a central role: without entrepreneurship there
is no innovation.
Figure 4

System model showing the fundaments of the innovation economy, a circle of mutually
influencing dynamic processes: the Circle of Change. In the model, changes in science
(left) and industry (right) and changes in technology (top) and markets (bottom) are
cyclically interconnected. Here, entrepreneurship is given a central role.

Hard knowledge
infrastructure

Technological
research

Integrated
engineering cycle

Technical-oriented
sciences cycle

Scientific
exploration

Entrepreneurship

Product
development

Differentiated
service cycle

Socal-oriented
sciences cycle

Soft knowledge
infrastructure

Manufacturing and
processing industry

Market
transitions

Public and private

service sector

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The first striking feature of Figure 4 is that the architecture is not one of a chain but of a
circle: innovations build on innovations. Ideas create new developments, successes create
new challenges and failures create new insights, and so the creation of value is constantly
accumulating. New macroeconomic instruments are needed to preserve the strength of
the dynamics in the circle. Large-scale failures like the recent dotcom debacle shake
confidence in the innovation economy and cause investment capital to become scarce.6 In
terms of CIM: the processes of change are decoupled. The economy enters a phase of
stagnation in which companies focus on more of the same at lower cost (life-cycle
management) until confidence returns and investment capital becomes available again to
spur innovation. The dynamics in the circle then accelerate again.
Figure 4 also shows that the proposed model portrays a system of dynamic processes
Circle of Change with four creative nodes of change: scientific exploration,
technological research, product development and market transitions. More importantly,
though, between these nodes there are cycles of change which ensure that the dynamic
processes in the nodes influence each other; in other words, they inspire, correct and
supplement each other (first-order dependency).
This produces a system of linked cycles, which in turn also influence each other
(higher-order dependencies). The result is a more or less synchronised regime of
interconnected dynamic processes that spark a creative interaction between changes in
science (left-hand side) and industry (right-hand side), and between changes in
technology (top) and market (bottom). In a successful innovation economy, there will be
few barriers between nodes and cycles: institutions and organisational structures facilitate
the change processes (Volberda, 1998). Throughout the circle there is a continuous
exchange of ideas and concepts, of knowledge and information, of capital and labour, of
products and services, and of technical and socio-economic values.
Note that autonomous social transitions manifest themselves in markets as changes in
the need for products and services (the demand). Such societal changes stimulate
innovation. On the other hand, autonomous technological developments generate new
products and services (the supply). Such technological changes change society. It is the
cyclic interaction of both innovation drivers that will create maximum economic and
social value.
At a lower conceptual level of the model, it can be said that every node in Figure 4
represents a collection of different actors that form cyclical networks with other actors in
neighbouring nodes (Berkhout, 2000). So at this level it becomes apparent that innovation
processes take place along a circle with synchronised networks the so-called CIM
matrices in which knowledge suppliers, design firms, supply companies, production
companies, marketing organisations and early users reinforce each others activities (see
Figure 5). These open networks are increasingly empowered by new capabilities of the
information and communication sector. Institutional factors, in particular governmental
regulations, have a dramatic effect on the dynamics within and between the networks of
projects. Ultimately, institutional factors determine the maximum rate of circulation that
can be realised along the circle. Therefore, governments can exercise enormous influence
over this, in both a positive and a negative sense.
In the future, many innovations will be the result of combining technical capabilities
and customer needs from different sectors (transsectoral innovations). Fourth-generation
innovation models should be able to show that clearly (Berkout and Van der Duin, 2006).
In terms of CIM, take for example innovations in the healthcare sector that will be made

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399

possible by new developments in the IC sector: the top half of Figure 6 (developments in
information and communication technology) focuses cyclically on the bottom half of
Figure 6 (needs and concerns in the healthcare market).
Figure 5

CIM in terms of a multi-disciplinary project organisation; representing ScienceTechnology (ST) teams and Technology-Product (TP) teams, Science-Market (SM)
teams and Market-Product (MP) teams. Together the project teams form an open
innovation network, being driven by the opportunities in the Circle of Change
(Figure 4).
Scientific
laboratories

Product
divisions

Technology
platforms

ST

TP

Technicaloriented

Market
groups

SM

MP

Customeroriented

Science-oriented
Figure 6

Business-oriented

Example of sector-crossing innovation. The upper part of CIM shows the innovation
activities of the Information and Communication sector (IC sector); the lower part
shows the innovation activities of the Healthcare sector (HC sector). The left-hand
part of CIM shows the science-based foresight activities directed towards new
opportunities; the right-hand part shows the business-driven development activities
directed towards new socioeconomic value. CIM reveals the necessity of cyclic
interaction between what is technically possible (the leading edge of IC) and socially
desirable (value creation by HC).

Hard-knowledge
infrastructure

New
IC technology

IC foresight
cycle

Scientific
exploration

HC-oriented
IC projects

Entrepreneurship

HC foresight
cycle
Soft-knowledge
infrastructure

Information and
communication industry

New HC
products/services

IC-based
HC projects

Changing
HC markets

Public and private

health care sector

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A.J. Berkhout et al.

Classification of innovations

The arena in Figures 4 and 5 shows that new innovations arise from previous generations.
New innovations are therefore a mixture of the old and the new and the ensuing changes
can therefore be large or small; the terms generally used are incremental and radical
innovations. This is not a very clear distinction. The CIM shows that innovations can be
divided into different classes. This classification may be more informative.
Class 1 innovations are the result of new developments in a single node. These might
involve existing product-service combinations where only the market concept is radically
changed. Examples are switching to internet shops, focusing on a different market
segment and responding to a new lifestyle.
Class 2 innovations are the result of new developments in two nodes. This might
involve the development of new product-service combinations together with a unique
market concept. Examples would include technical installations with intelligent sensors
connected directly to the internet (connected products). This new combination would
create significant added value since information about access, use/abuse and the physical
condition of installations becomes available wherever and whenever it is needed (early
warning signals). The result is that entirely new services become possible, which in turn
means that the traditional product-oriented market concepts will have to be replaced. A
wide variety of innovations can be expected in this area.7
Class 3 innovations follow from new developments in three nodes. They might
involve the development of new technologies, which in turn make new product-service
combinations possible, which for their part call for new market concepts. Many emerging
information and communication technologies will make spectacular Class 3 innovations
possible. Take the development of broadband communication technology, which will
bring about a revolution in healthcare, or developments in mobile identification
technology (RFID), which will bring about a major change in the battle against crime
and terrorism.
Class 4 innovations require new developments in four nodes. Science plays a crucial
role here. All important developments in the life sciences generate new knowledge for
new biotechnologies, which in turn set off a revolution in the development of new
product-service combinations in the pharmaceutical and food industries. But spectacular
progress is also being made in the nanosciences, where technical building blocks are on a
molecular scale. Nanosciences is yielding radical new knowledge for nanotechnologies,
which will in turn cause a revolution in the development of product-service combinations
in all technical-industrial sectors. An example would be nanotechnology for the new
energy era, characterised by internet-like decentralised networks.
Innovations based on life sciences and nanosciences will change society so radically
that the overwhelming increase in technological possibilities (top half of Figure 4) will
have to be accompanied by a major effort to increase our understanding of societys
needs and, above all, societys concerns (bottom half of Figure 4). This will require a
great deal of cohesion in the development of knowledge in the bta and gamma sciences.
Innovations that are from the outset active throughout the entire Circle of Change
creative enterprise with bta and gamma knowledge are ranked in the very highest
category: Class 5. In this top league all cycles of change are linked to each other in the
innovation process, continuously driven by creative entrepreneurship, like playing chess
at all levels. That is an enormous challenge, but it is where the real opportunities lie.

Innovating the innovation process

401

Economic superpowers such as the USA and Japan, but increasingly also China and
India, are investing heavily in bio and nanosciences with the aim of creating five-star
innovations. That is why the aim of the Lisbon strategy of the European Union should not
only be to achieve more competition in the internal market but rather to seek more
cooperation. After all, innovations on this scale increasingly require megainvestments.
Moreover, the real competitors in these fields are outside Europe and attention should
therefore be focused entirely on cooperation in the internal market, and competition with
the external market (Berkout, 2006).

System faults in the innovation arena

In a static society traditional institutions are principal barriers in creating value in the
circle of change, usually owing to outdated internal culture and structure. Figures 7 and 8
illustrate two notorious obstacles that are referred to here as scientific isolation and
technical arrogance.
Figure 7

A society can be excellent in science, but still underperforms economically (vertical

valorisation barrier)

Hard know ledge

infrastructure

techno
re

logical
search

Concurrent
engineering cycle

Technical-oriented
sciences cycle

Product
development

Scientific
exploration

Customised
service cycle

Social-oriented
sciences cycle

Soft knowledge
infrastructure

Manufacturing and
processing industry

Mar
tran

ket
sitions

Public and private

service sector

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A.J. Berkhout et al.

Figure 8

A society can be excellent in technology, but still underperforms economically

(horizontal valorisation barrier)
Hard knowledge
infrastructure

Technological
research

Manufacturing and
processing industry
Concurrent
engineering cycle

Technical-oriented
sciences cycle

Scientific

Product

exploration

development

Social-oriented
sciences cycle

Soft knowledge
infrastructure

Customised
service cycle
Market
transitions

Public and private

service sector

Scientific isolation refers to a society that may be excellent in scientific research, but still
underperforms economically because of a valorisation barrier between the science and
industry community (Figure 7). The two worlds make their own choices and plans, and
throw their wishes and results to the other side.
With technical arrogance we mean a society that can be excellent in designing and
developing technical functions but still underperforms socially because of a valorisation
barrier between engineering and utilisation (Figure 8). Both worlds make their own
choices and plans; here too they throw their wishes and results to the other side.
The failure of the Lisbon strategy of the EU has to be seen above all as a consequence
of the existence of these obstacles in the European socioeconomic system. The huge
emphasis on more research and more technology is therefore a far too one-sided and
simplistic approach. The cyclic process model shows that the real problem lies elsewhere.

Conclusion

A fundamental characteristic of the proposed 4G innovation model (CIM) is that it

describes a circle and not a chain. Science is not at the beginning of a chain and the
market is not at the end of a chain. Both are part of a perpetual creative process along a
dynamic path that has no fixed starting or ending point: innovations build on innovations.
Innovation may start anywhere and anytime. The result is an endless build-up of
economic and social value that is realised by the reinforcing cycles along the entire circle.
In CIM, new technologies (for example, originating from new scientific discoveries) and
changes in the market (for example, originating from new human needs) continually
influence each other in a cyclic manner. This dual nature of innovation technical
capabilities and human needs will shape the future of sociotechnical and socioeconomic
regimes. Together with the central role of entrepreneurship, it is considered to be the key
characteristic of fourth-generation innovation models (see Figure 4).

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403

An important consequence of the proposed model is that in all industrial sectors

innovation requires early interaction between scientific discoveries and new business
ideas, as well as early interaction between technological inventions and new market
opportunities: turning scientific knowledge into socioeconomic value. These cyclic
interactions will not only cross the boundaries of traditional sectors, they will also cross
the boundaries of the different stages of innovation. This means that all nodes of the
proposed innovation model are active in all phases of the innovation path: away with the
pipeline concept in innovation models. An interesting example is the pharmaceutical
industry, where the slow and costly in-house pipeline model is gradually replaced by a
much more open concept with continuous interactions between actors along the entire
circle at all stages of innovation: playing chess at four levels at the same time. In this
way knowledge from other industrial sectors can be utilised, the long distance between
science and markets is significantly decreased short connections between new
discoveries and early users and new innovations build on old innovations.
An important consequence of the proposed model is also that the cyclic networks
between the nodes of change require multi-partnerships that can start fast, adapt fast and
learn fast. This means that in todays innovation arena the question should not be who is
available but who is needed, meaning amongst others that the organisation of labour
should be revisited: the social aspect of innovation. In fact, the proposed model makes
policy makers aware that institutional factors such as governmental rules about the flow
of capital, the flow of labour and the flow of knowledge along the innovation circle
should be redesigned to facilitate the innovation processes in a much better way. This
requires a rethinking of current governmental organisations.

References
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Notes
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It is appropriate to quote Albert Einstein here: Logic brings us from A to B, but imagination
brings us everywhere.
Equilibrium processes play a key role in the old economy; in the new economy it is change
that counts.
A cycle consists of a succession of connected processes occurring repeatedly, each time with
new starting conditions and a shifting context. The dynamics in a cycle are determined by
cycle time and change per cycle.
Disciplines from the hard sciences include the areas of specialist knowledge in the natural and
life sciences.
Disciplines in the soft sciences include the areas of specialist knowledge in behavioural and
social sciences.
In terms of the process model, a financial black hole appeared in the service cycle at the
end of the last century, which means that the circle of the innovation economy was more or
less broken.
NEDAP N.V., a Dutch supplier of product-service combinations in areas such as security,
recently launched the virtual service assistant Bob, which monitors shops fitted with Nedap
anti-theft equipment 24 hours a day without losing its temper and without making a mistake.
Bob checks whether the systems are working, whether the personnel are following the agreed
security procedures, how many customers enter the shop and when they visit, etc.