Standard and Innovation: Management and Policy Dr. Jin CHEN Qiushi Distinguished Professor of Innovation Management, College of Public Administration, Zhejiang University, China June 27th, 2011 ICES Workshop 2011

Standard and Innovation Managing the creation process of standard: Case of Supcon Policy suggestions

Standard War for Innovation Leader

Far from being a barrier to innovation, standards can be an important driver. Standards give innovators a level playing field, allowing solutions from different suppliers to work together (known as interoperability) and competition between new and existing products, services and processes. They also help diffuse knowledge and encourage technology to be applied in new ways, which may trigger innovation. Standards provide legal security for innovative companies, creating large-scale markets and building confidence among consumers.

To promote innovation is a key issue at political, economical and professional levels. Standardization can play an important role in support of innovation management, as it plays for safety, quality, environment and interoperability.

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However, China is still lack of innovation capability, especially at standard. Standard is the weakness of innovation capability: most national standards are old dated and few international standards reached, China owns 0.21% among items of ISO and 0.28% at IEC.

Managing the Creation Process of Standard Standards creation is an important issue for the healthy development of industries at the international arena. Up to now, most extant research has focused on investigating economic, strategic rationale and conditions responsible for standards creation and economic payoffs to the stakeholders, the process of standardization has largely been ignored within the research community despite the tremendous importance of standards in modern society (Choi et al. 2004; Björk and Laakso 2010).

According to the socio-technical models, standardization process is often viewed as collaboration and negotiation processes between stakeholders and is characterized by dynamic interactions among stakeholders such as technology providers, user organizations and other standards bodies (Choi et al. 2004). In fact, it is a coalition of organizations and groups of individuals working together towards a common goal that make standards happen (Saltzman et al. 2008).

According to the innovation process models, standardization can be seen as an innovation and product development project (Björk and Laakso 2010) covering from basic research to product design, manufacturing and introduction (Miller and Morris 1999). In both regards, managing the standards creation process is to deal with the relationship with project partners at the different development stages.

we conduct a longitudinal study to explore the standards creation process in which a project team has initiated, planned and selected relative cooperative partners and organizational modes to fulfill the project.longitudinal study Specifically, the case of Ethernet for Plant Automation (EPA) standard in SUPCON based on the project management and innovation management literature.

After the stage of basic research of EPA project, SUPCON starts to make the most of its advantage in industrial application and practice. It actively makes alliance with other leading firms within the operation field,make the most of its advantage SUPCON creates a technology development club called EPA club which puts forward a lot of valuable suggestions for SUPCONs enhancement. SUPCON contacts timely the lead users to obtain feedback about technology and product to make the standard more perfect.

Under the support of SAC from the national level, the EPA technology of SUPCON had been recognized as the international standard by IEC. In October 2007, SUPCON, as the first domestic enterprise, obtains the international standard for field bus (IEC61158/ Type 14) and international standards for real-time Ethernet (IEC /CPF14) in industrial automation.

SUPCON further expands the EPA club in which at last the number of firms, universities and research institutes altogether exceeds about 100. SUPCON contracts with the club firms and provides them with preferential treatment, allowing them to using the standards at free. On the other hand, SUPCON in alliance with the main members of the EPA club continues to apply for the national research funds for standard industrialization. industrialization

Table 1 Selected partners and corresponding organizational modes along the EPA realization process Realization of EPA Technology developmentStandard application and exploitation Basic researchApplied developmentStandard application Standard exploitation Universities and research institutes Construction of joint research center with universities and research institutes Application for national 863 research funds with universities and research institutes Cooperation with universities and research institutes to acquire technical service EPA club is responsible for drafting standards with Zhejiang University dominated and SUPCON ranked second Peers Alliance with peers and creation of EPA club to accelerate the development process Expansion of EPA club with more peers Contraction with club members for standard exploitation Government Application for national 863 research funds from DRC Application for research funds with club members from MOST and DRC to ease their financial burden Application for Chinese national standard from SAC Getting support from SAC to apply for international standard Application for research funds from MOST and DRC to further exploitation Getting support from government for standard exploitation Lead users Cooperation with lead users (such as CNPC and SINOPEC) to specify their needs for technology development Cooperation with lead users to further specify needs Obtaining feedback about technology and product

Policy suggestion Standard as the first priority and new indicator for innovation capability. From R&D expenditure, patents and papers to Standard. Both at technical standard and service standard. Setting the standard patent.

Setting Standard network. Strategic Alliance of Technological Innovation in China should pay more attention to industrial standard. The Europe INNOVA Standards Networks focused on integrating standards in innovative products, services and business practices and on demonstrating the benefits of using standards in six different industry and services areas. Using existing standards better Award-winning project Standards for better products Spreading the word

Taking standard and its income as the new competitive advantage for the company. CEOs and other executives should provide strong incentive and management system for standardization, from copy cat to a vision of changing the world.

Managing the creation process for standard. The innovation project should be selective open (Henkel 2006) which in our case means the partners and corresponding organizational modes being chosen should vary at each stage and even at the single stage the openness to partners is also different.

Governments play an important role at the standard application and exploitation process which is noteworthy for high-tech firms in developing countries as it faces a lot of dilemma in resources, such as research funds, talents and international fame.

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