In September 2013, we read in this site Professor E. Yamaguchi's artile "FUKUSHIMA Report (2): The actual reason why this accident could not have been avoided' 
. In October 2014, I met Professor Yamaguchi for the first time at ICSTI2014 Symposium and impressed with his talk on innovation.
Then I read his book "Innovation -- Paradigm Disruptions and Fields of Resonance" (NTT Press, 2006) (in Japanese). He investigated the cases of innovation of transistors and blue LEDs and discussed about the structure of innovations. On December 8, I asked him for one or two of his introductory papers (in Japanese and in English) to be posted in this Web site. He kindly sent me two papers published in Japanese (2004) and in English (2006). Since they are important and timely, I am quickly posting them here.
Tonight (Dec. 10, 2014), three Japanese researchers, Professor Isamu Akasaki, Professor Hiroshi Amano, and Professor Shuji Nakamura are to be jointly awarded the Nobel Prize in Physics 2014 "for the invention of efficient blue light-emitting diodes which has enabled bright and energy-saving white light sources". The process of their innovation was analyzed in the present article by Eiichi Yamaguchi.
The author, Professor Yamaguchi, argues that the case of LED innovation (and many others) is not the type of Christensen's Disruptive Innovation (of decreasing the performance for some other needs/purposes) but the type of Paradigm-Disruptive Innovation (by disrupting/changing the basic/physical paradigm). He discusses how such paradigm change can be achieved, and why big excellent companies often fail in front of such a paradigm change. -- I am very happy to learn and post these important papers by Professor Yamaguchi, especially at the best timing.
Contents (of PDF) :
1. Innovation dilemmas
2. The blue light emitting diode
3. Paradigm disruptive innovation and large firms
4. Towards a new innovation system
References
Rethinking Innovation
[The Blue LED case and Paradigm Disruptive Innovation]
Eiichi Yamaguchi (Doshisha University)
Chapter 9 in "Recovering from Success: Innovation And Technology Management in Japan",
edited by R. Cole and D. Hugh Whittaker, Oxford University Press (May 2006)
Japan’s technology companies suffered collective convulsions on 30 January, 2004, when the Tokyo District Court ordered Nichia Corporation to pay 20 billion yen to former employee Shuji Nakamura as compensation for his patent (Nakamura 1991) relating to the blue light-emitting diode (LED). The figure represented the full amount claimed by Nakamura, and had he claimed more, it is likely he would have got it. The court estimated his contribution at 60.4 billion yen, or half the benefits the company was expected to earn before its key patents expired. It argued that Nakamura made the invention ‘with his individual power, based on utterly original thinking’ despite the fact that he was ‘working in a poor research environment at a small company.’
The court was mistaken on several grounds – the extent to which the invention of the blue LED resulted from Nakamura’s heroic, individual efforts, the poverty of his research environment, the significance of support from the top management and subsequent investment decisions, and even the significance of Nakamura’s patent in the production process (cf. Yamaguchi, 2004 for details). Irrespective of the intellectual property rights dimension, the Nichia/blue LED case also encapsulates some fundamental insights about innovation (in a theoretical and practical sense), and the structure of innovation. This chapter explores these theoretical lessons, how these relate to the decline of innovation in Japan, and offers some preliminary suggestions about what might be done to reverse the decline.
Cf. Yamaguchi, 2004, for details. On January 11, 2005, the suit was settled amicably at the Tokyo High Court, where the judge recognized problems in the earlier Tokyo District Court ruling. The final amount of compensation was \600 million yen not only for the patent of the lawsuit, but all the contributions by Nakamura. The patent portion can be estimated at \10 million yen according to the formulation suggested by the High Court, which is 1/6000 the amount ordered by the Tokyo District Court.
It starts by re-examining Christensen’s concept of disruptive technology, categorizing this as ‘performance disruptive technology,’ and introducing a further basic type – ‘paradigm disruptive technology’ – to create a two-by-two quadrant. To illustrate paradigm disruptive technology, we return to the innovation process leading to the blue LED, and the breakthroughs which were necessary. Some of these were initiated by researchers in large corporations who had their research terminated, in part because it flew in the face of accepted paradigms. Instead, it was in the tiny company from the island of Shikoku that the final breakthrough was made.
Note: ‘Paradigm’ is used in the original meaning given by Thomas Kuhn (1962).
This, in turn, illustrates the difficulties of pursuing paradigm disruptive innovation in large firms, which were exacerbated in the 1990s when large companies restructured their R&D operations and cut back on their core researchers. Since 80% of Japan’s R&D expenditure takes place in private companies, most of it in large companies, the damaging effects on Japan’s innovation system can easily be imagined. The chapter concludes with some suggestions for rebuilding the innovation system, not by attempting to turn the clock back to the ‘golden age’ of linear innovation, but cognizant at least of conditions conducive to supporting paradigm disruptive innovation.
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Innovation Paper
