The Change started - Journey for 40 years (between the 1940’s till the 1980’s)

The first organizational change, which was recorded from history, had a problem that we now called as a loosely coupled system. In this type of system, both sides are more involved in their personal problems rather than common problems and thus problems came up between them. Leaving too much ancient talk, it is sufficient enough to take the models and business from the time from where the market and meaning of business and strategies were known to mankind.

1. Technological Push: An Overview:

In 1945, the year when the Second World War ended, it left a lot of debris of memories and lots of scope of innovation and invention (Wikipedia, Aftermath of World War II, 2015). Countries needing the development and evolutions of the new market segments were found. Thus the light of hope was seen and inventions and innovations started working together for the organizations and thus building the pillars for the market are, of course, different market segments. “The Second World War caused unprecedented hardship, but it also accelerated change” (MacMillan, 2009). After the First World War finished, many companies evolved and during the Second World War, the already developed technologies were used. Many new organizations such as Volvo and SKF were founded during this period and started their business with lead. After the end of the Second World War, during the first 20 years or so the economic, business and strategic understanding increased. Industries and other sectors of business used this understanding to grow and secure their future. The growth was mainly industrial as if there was a technology push in the world (The National WWII Museum). In the description of the models and generation studies, many theories were linked together and then technology push. There was a boom in the development of the industries due to the abundant presence of technological opportunities and resources around. This technological up-gradation also happened with the existing industries and they started rising more and more in the market (Rothwell, Towards the Fifth-generation Innovation Process, 1994). During this period the organizations intended generally towards the scientific approaches and industrial innovations. Thus technological innovation became an important part of the Business Model and strategies of the industries and the organizations. These developments were majorly seen at the government level and for the existing public technologies, the focus was totally towards the supply side that is totally towards the R&D (Rothwell, Towards the Fifth-generation Innovation Process, 1994). During this period complete attention towards the technology push was seen keeping market ignored and innovations were more. They started investing more in R&D to get more and more successful products and so that the market can be captured by the industries. With one or two exceptions, which were clearly visible in the group of organizations, a very little attention was paid to the process of transformation of the business environment (Carter & Williams, 1957) or to the role of the marketplace in the process of business (Cook & Morrison, 1961). Here during this period, it was very visible that industries did not think of what is coming next in the long run. They became much dependent on technological development and almost every one adopted the notion of technological innovations that existed at that time in their Business Model and in their strategies.

During this period many authors and writers came forward with their analysis and few models and principles were developed for the company such as Neil Borden’s four principles of the marketing mix (4P rule, 1960) and PEST analysis (understanding the operation of meso-organization and macro-organization, 1950-1959). Everyone was talking about technology booming and even models were much related to technological development. These tools were developed by researchers to study and observe the trend and scope of the organization and monitor the growth but on technology innovations. Sooner they realized that Market perspective and the demands of the customer were majorly ignored and suddenly the demand of the customers started changing. The realization of the importance of integration between individuals and organizations was seen. After these tools were found organizations slowly drifted towards the understanding of market and customer needs and then change was seen in the Business Models and strategies of the organizations.

2. Market Pull: An Overview:

After the start of the 1960s, the organizations and industries started their voyage of change of their Business Model and strategies by making it more oriented towards market and customer needs and demands. The tools and analyzing the companies profile was more towards technological innovations and technological development and not balanced with other factors in business such as marketing and customer demands. To become grand in the market became the most important aim for the organizations. Manufacturing units were continuously growing in different countries but the employment in the manufacturing units became constant or grew at a very reduced rate. Instead of industries growing towards their technological area, the corporate domain of the industries and organizations also got influenced and started growing. While many new products were still being introduced in the market, these were based largely on technologies, which already existed, and in many areas, supply and demand were more or less in balance. During this period when the competition was intensifying, investment emphasis began to switch from new product development and related expansionary technological change towards rationalization technological change (Clark, 1979; Mensch et al., 1980). Due to which the total existing Business Model was hit and needed a change. Further in this period strategies and Business models for development and capturing of more and more market share took place. Innovation and development seemed to shift towards the demands of the customer and occupying the market place. Here the scenario started changing and the Business Models and strategies were directly affected and needed to improvise.

Many market analysts came up with a new basis of Business Model and market analysis such as SWOT analysis at Harvard by George Albert Smith and C. Roland Christensen. These analyses were focused on comparing Strength, Weakness, Opportunities, and Threats of the organization compared to its competitors and also on an industry level, from which the future strategies, designing and market segmentation were done. Now organizations were trying to find out their right customers and started fixing their market share and strategies. Thus Business Models and strategies started building on new themes known as market pull and everyone was looking into market strategies and R&D development and involvement became almost static. Some of the authors of that time also highlighted the importance and role of demand in in the process of innovation and growth: innovation is the use of invention to satisfy a demand or need (Gruber & Marquis, 1969).

This major change led many organizations to concentrate mainly upon the market strategies and thus increased long-term risks. One of the primary dangers inherent in this model was that it could lead?companies to neglect long-term R&D programs and become locked into a?regime of technological increments as they adapted existing product?groups to meet changing user requirements along maturing performance?trajectories (Hayes & Abernathy, 1980). Thus it was very evident and a good possibility that they would lose their capacity of adaptability of any radical market change and technological change. This actually happened with many organizations and finally, they changed the business in total and a few collapsed. So it was very important to understand that successful change was required keeping both strategies and open innovation. The only change in the Business Model according to current market status led to the base of the organization to become more and weaker. The link between technology and the market was missing. The presence was there but many of the organizations did not emphasize the link. Most of the organization was into sudden development and sudden change in the Business Model. No one realized and no one knew that the problem was coming soon and soon they all have to adapt new Business Models and strategies to save their business again. The resources were getting restricted and costly and products were getting matured and the only thing that was happening was the making of brand image in the market (Rothwell, Towards the Fifth-generation Innovation Process, 1994). 

3. Coupling Model: An Overview:

In the mid-1960s, the idea of coupling of technology and market was everywhere in the literature, to the point where some have qualified to couple the technology and market as not an original conclusion (Coombs, Saviotti, & Walsh, 1987).

After 1969, when the organizations drifted towards market pull, inflation was seen slowly coming in. the major oil crisis also had hit the market at the same time. Due to this, transportation costs were tremendously increased and thus leading to the price rise of the commodities and thus reducing the sale. The demands started getting saturated and as the manufacturing units were still doing their job continuously, there was an abundance of the produced units and less sale. People started losing jobs and unemployment was all over. Companies finally got forced to change their strategies and Business Model and adopted strategies of consolidation and rationalization, with a growing emphasis on scale and experience benefits (Rothwell, Towards the Fifth-generation Innovation Process, 1994).

Now the organizations were trying to find out the way out for these problems. Most of the organizations were concerned about the accounting and the finance departments. Thus they started focusing on cost control and cost reduction in their complete business. The abundance of the resources could not help much and the sale of the products became constant and products started getting matured. The organizations had to get into serious thinking for innovations. Many organizations did not survive this inflation and those who survived were big organizations. Many failed attempts were made during this period by the organizations to overcome the inflation effects. Everyone was stunned and started thinking and working hard to get new things in the market as innovation became the most important thing for them.  

During this period many surveys, many studies, and many Business Models came up. Many researchers based on various empirical studies developed new rules of strategies. Fundamentally, the results from the empirical data indicated that the technology-push and need-pull models of innovation were extreme and atypical examples of a more general process of interaction between, on the one hand, technological capabilities and, on the other, market needs (Mowery & Rosenberg, 1978). Thus the organizations realized the same and started to build the innovation system stronger and redesign the Business Model. They developed a logically sequential process that can be divided into a series of functionally distinct but interacting and interdependent stages. The process of innovation represents the confluence of technological capabilities and market-needs within the framework of the innovating firm (Rothwell & Zegveld, Reindustrialization, and Technology, 1985). Thus coupling became a word of fashion (Martin & Willens, 1967) (Rubenstein & Douds, 1969) and along with various other terms or synonyms like interface, transfer, liaison, diffusion, interaction, communication, and fusion, all the Business Models and strategies started getting rebuild on this concept.

During this period the whole system of factors affecting were divided into two groups as Project Execution and Corporate level (Rothwell, Towards the Fifth-generation Innovation Process, 1994). Organizations started preferring strong communication internal and external. Organizations started treating innovation as a corporate-wide job and thus too important for them. High-quality personnel with technical knowledge and commitment were hired and high-quality production and management was maintained. Organizations started to maintain their adaptability to the new change and they started maintaining long-term relationships. Several industries also started promoting entrepreneurs and started working with them. The basic need was to grow with innovation so organizations and industries started building and putting their more concentration in innovation. They understood that there is need to couple Research to Development and make R&D and to couple Development to Production which will concentrate towards the market (Martin & Willens, 1967), for coupling the technological, economic and human factors together (Gruber & Marquis, 1969), for coupling the technical opportunity with market demand recognition (Marquis, 1969) and for coupling the laboratory with the factory (Gruber & Marquis, 1969). Every individual was playing a key role in the innovation process with their high quality and their entrepreneurial mentality. Now came the high time for the organizations to come up through inflation. The change was seen slowly in the market. The economy was getting balanced slowly and organizations started stabilizing. The Business Model was proving effective itself in the market, but not for long. Many things were still missing in the business thinking or Business Model and strategies. Everyone agreed that the change in the Business Model and change in the strategies and involvement of innovation was efficient, but nobody knew that again a change would be needed. 

4. Summary: Push-Pull and Coupling:

From the early 40s W. Rupert MacLaurin, set out to close this gap and started to work on a theory of innovation. The first draft In 1947, MacLaurin was presented with what was later to become known as the linear model of innovation (Figure 5). Then between 1945 till mid of 1960 during these 40 years of the journey, there has been a lot of changes in the Business Models and the strategies, which means that there have been lots of changes in the working environment of the organizations and lots of changes in the business culture. Between the 1950s and mid of 1960 there were lots of technological developments. It was evident that the product pillars were being created and industries and organizations were upon capturing the market. The Business Model was based on the technology that is on R&D.

In his work, MacLaurin suggested that technological innovation was a process composed of a sequence of four distinct stages: fundamental research, applied research, engineering development and product engineering (Maclaurin, 1947). Later MacLaurin in 1951 restructured his model and break down the process of technological innovation and postulated a five-step theory (Figure 6) comprised of pure science, invention, innovation, finance, and acceptance (Godin, 2008b). Further, this model was used by the organizations and industries during technological push.

After years passed products started getting saturated even if the resources were abundant and the production was constant. The sale of the products reduced drastically and the market for the products was getting fully matured. For example case with cars and televisions. Now almost everyone who could afford the expensive cars ad televisions had one. There was a huge need for innovation. Something had to be changed. After sometime companies figured out the way. They all started segmenting the market based on customers and customers became important and they all started capturing more and more customer segments.

From the early 1960s onward, scholars from various fields began to look at innovation from a perspective of demand rather than supply (Godin & Lane, Pushes and Pulls: The Hi(Story) of the Demand-Pull Model of Innovation, 2013). At that time new products were mostly based on existing technologies (Rothwell, Towards the Fifth-generation Innovation Process, 1994). The same technology standards were being used to build the products on demand by the customers and thus technological growth was very slow and almost became static which further raised the risk for the organizations as their adaptability to other changes decreased. Now televisions and cars were affordable to other people and were made available to them based on their demands. It can be said that the engine quality remained the same only the color of the car changed. Saying only color change will be a little insulting so it can be said that sometimes, of course, the design was changed but the engine remained the same to increase the sale of the cars. The competition for market share intensified, which led to marketing and demand-side factors affected by the innovation process (Rothwell, Towards the Fifth-generation Innovation Process, 1994). Instead of the technology-push stance that the linear model postulated, some argued that the most critical forces in innovation were of a market or need or demand-pull (Figure 7) nature, that is opportunities arising from people’s needs, wants, and demands (Godin & Lane, Pushes and Pulls: The Hi(Story) of the Demand-Pull Model of Innovation, 2013). First studies were published that considered driving forces other than basic research, all of which concluded that demand and market factors indeed played a critical role in innovation (Godin & Lane, Pushes and Pulls: The Hi(Story) of the Demand-Pull Model of Innovation, 2013). Further, in time they did not realize that there could be another problem with the Business Model and strategies they are working with and no one was ready and prepared for a big change again.

After 1970 there started inflation due to which all of the organizations and industries were hit. This happened due to the major oil crisis. Due to this crisis transportation cost increased and the cost of the product increased. This was the time when Business Models and strategies again failed. The organizations collapsed and some changed. Unemployment became the biggest issue during this time. Many researchers and analysts started working day and night to understand the effect and plan the future and save the economy as well as the organizations. Any organizations came up with the solution as mixing marketing and technology at the same time and involve innovations. As none of the linear models had managed to capture the inherently complex and dynamic structure of an interactive innovation process that was driven by both push and pull forces (Dosi, 1982), they coupled these push and pull to start a new decade. In support of these multi-variable explanations for innovative activity (Dosi, 1982) scholars proposed to couple everything from basic research to development (Martin & Willens, 1967) technical opportunity with market demand (Marquis, 1969), and laboratory to the factory (Gruber & Marquis, 1969). Eventually, the idea of coupling represented a major improvement compared to earlier models (Hobday, 2005). This clearly more balanced approach subsumed the previous linear conceptualizations in a complex interplay of concepts and agents with a focus on communication and feedback loops (Godin & Lane, Pushes and Pulls: The Hi(Story) of the Demand-Pull Model of Innovation, 2013). After some time the organizations came up with the idea of mixing technology as well as marketing qualities and strategies and make new business models and strategies. They had a good notion of the effect of these changes and that’s what happened. Organizations started focusing on the technology as well as the business part dividing it into project execution level and corporate level respectively. They all started working on R&D as well as the marketing part. The organization main agenda became to cut costs. This made a new Business Model, which was based on cost-cutting and cost reduction. Slowly inflation was covering up and organizations those survived the inflation started growing and gaining stability. One of the first was the model (Figure 8) brought forward by Myers and Marquis (1969) that, while still being of a sequential nature, postulated the innovation process as a symbiotic mechanism between the current state of technical knowledge, that is push factors, and the current economic and 11 social utilization, that is demand factors. Even though the model only made limited use of feedback loops, it represented the first step away from the dichotomy of push- and pull-models. Another well-known model that picked up on the idea of coupling is that of Utterback and Abernathy (Figure 9). The essence of their argument is that the characteristics of a firm’s innovative processes evolve with changes in the firm’s environment, strategy, and competition, and the current state of technical knowledge (Utterback & Abernathy, 1978). Furthermore, the stage of the development cycle influences: a) the locus of innovation; b) the type of innovation that is likely to succeed; and c) the total array of innovation barriers (Utterback & Abernathy, 1978). Further combining both push and pull forces, the model (Figure 10) depicts the innovation process at the firm level as a fusion of organizational capabilities, the science base, and the market place capabilities (Rothwell, Towards the Fifth-generation Innovation Process, 1994).

 Suddenly towards the end of the 1980s organizations saw a new trend in the market coming up and Japan started rising suddenly. They started discovering the Business Model and trend in the strategies for them and found that there exist a new form and a totally different pattern of working style from the west. Everyone was surprised by the sudden growth in the economy and growth in the technological as well as innovation in Japan. A new working model and organizational model were invented in Japan as kaizen, which took lead than countries from the west from the 1980s.

5. State advantages and credit the rise of industries and organizations:

This period of 40 years was a great period for learning and lots of inventions and innovations. Many organizations were doomed and many survived. But finally, mankind now knew technology and Business Models and strategies part and their importance and understanding as well as their co-existence. These developments became the base of the organizations and these developments and changes during these years made some pillars in the market. If it is seen in detail, it is found that the problem was that there was no long-term thinking about the existence of the organization. It is evident for mankind that when an organization is founded and production is started, it is important that the product is sold. It was sure that all the organizations would have thought about that, but the target segment of the customer for the organization was very limited and due to which it got saturated soon. There were obviously risks in organizational change, but one has to have a full-proof plan for the financial as well as the management sector. That time it was important for them to understand that learning from past and continuous improvement is also important. This is what was followed by Japanese industries, which is discussed in the latter part of this paper, and thus they grew fast and this culture and change also added a lot in the existing Business Model and strategies and made it change again.

6. Limitations and Criticisms:

There are many theories and articles written on the linear model of innovation, market pull models and coupling models. In fact, so many literature has been written that some researchers have begun to write historiography in recent years about these models of innovation. The origins of the model are many and are diverse. When the linear model is seen in general it says that it comes from Vannevar Bush’s Science: The Endless Frontier (1945), but history does not support this. According to David Edgerton (2004), a model is a straw man devised by William Price and Lawrence Bass (1969). Further, John Langrish and his colleagues from Manchester then adopted it in the year 1972. Moreover, if looking further and deeper into the literature, one finds many other names associated with the same idea and the same model claiming diversity. According to Beno?t Godin (2006), the model claims its existence to the regular and extensive work of many people and to the consistency of multiple factors over many decades. These things made the model to be used by the organizations in their Business Models and strategies.

Even if the linear model was used by many organizations, there were many opponents for it. The Charpie report in 1967 demonstrates an influential study by the US Department of Commerce in which they measured the cost of innovation and estimated the research amounts to 10% of the cost of innovation. In short, innovation is not dependent on either research or basic research specifically. The US Department of Defense also challenged this linear model. This department used a linear model to manage is program as well as the R&D department. But in the mid-1960s the Department began to defect from its previous optimism regarding investments in basic research as a factor for innovation. The Department started to question the aspects of the linear model. It, therefore, conducted an eight-year analysis of twenty major weapon technologies. Further, they concluded that only 0.3% of innovations events came from undirected science. The National Science Foundation replied with its own study and came to opposite conclusions. This organization found that 70% of the key events in the development of five recent technological innovations stemmed from basic research. These two different studies, each carrying very different message its respective community as industrialists in the case of Defense and scientists for the NSF, were among the first of a long series of debates on the aspects of the linear model of innovation and thus challenged its ingenuity.

Further other writers claimed the Demand-pull model failed to explain disruptive innovations. The theory of innovation is supposed to account for incremental as well as radical breakthroughs on existing products and processes (Dosi, 1982). Further, Mowery and Rosenberg in 1979 also explained the idea of the demand-led innovation process, which faced difficulties in explaining the radical innovations.

The range of potential needs is not limited that is infinite, which means potential demand possibly exists for almost anything, which further makes it difficult to find cause-effect relationships between these two segments one being would-be demands and another being new innovations. Thus the analytic validity of this needed to improve for which, the model, therefore, would need to distinguish market demand, an economic term, from the limitless pool of human needs, which as a term also includes societal demand (Godin & Lane, Pushes and Pulls: The Hi(Story) of the Demand-Pull Model of Innovation, 2013). This category of criticism was also addressed, as starting in the 1970s need-pull was modified to demand-pull in order to fit into the current economic theories (Godin & Lane, Pushes and Pulls: The Hi(Story) of the Demand-Pull Model of Innovation, 2013).

The model’s crude conception of technology was criticized as a freely available model. This model also ignored the complexities of scientific and technological processes (Dosi, 1982). The demand-pull approach was found out ignoring the existence of supply-side mechanisms by Mowery and Rosenberg (1979), which resulted into the changing limits and constraints of the pool of scientific knowledge (Godin & Lane, Pushes and Pulls: The Hi(Story) of the Demand-Pull Model of Innovation, 2013). Most of the studies with the demand-pull approach support this criticism as they fail to prove that need/demand is the primary driving force behind the innovation process (Dosi, 1982).

Some of the criticisms, which were raised by J.E. Forest (1991) and are pointed out here. As below:

1.    The sequential nature of the model was not valid in practice and non-linearity was often observed in the organizational culture.

2.    In the organization many activities were concurrent so the linear model was not applicable much efficiently.

3.    The presence of very little systematic evidence to verify the claims of models made it difficult to believe in the models and made it difficult for the organizations.

4.    Many other inputs from the organizational environment were not considered during the making of the models for example customers, users, suppliers, and competitors.

5.    The model which was made had very little to say about what goes on within each stage of the model.