Holistic Innovation: Innovation Paradigm Explorations in the New Era 981198624X, 9789811986246

Table of contents :
Preface
Contents
Part I World Power in Science and Technology and Theories of Innovation
1 Duty of the Times: Development of a World Power in Science and Technology Innovation, and Theories of Innovation
1.1 China’s Exploration as a World Power in Innovation, Science and Technology
1.1.1 The Development of China’s Science and Technology Innovation
1.1.2 The Evolution of National Innovation System in China
1.1.3 China’s Innovation Development Outlook
1.2 China’s Development Pathway as a World Power in Innovation, Science and Technology
1.3 Necessity and Urgency in Exploration of Science and Technology Innovation in China
1.3.1 The “Grand Strategy” of the Nation Requires “Grand Innovation”
1.3.2 The Development of Major National Projects Needs the Guidance of Chinese Wisdom
1.3.3 The Necessity of New Development of Innovation Theory for Disruptive Technology Breakthrough
References
Part II Discussion on Theories of New Types of Innovation
2 East Meets West: Dialogue Between Classical and New Innovation Theories
2.1 Evolution of Theoretical Development in Innovation Paradigm
2.1.1 Innovation Paradigm of Schumpeter
2.1.2 Innovation Paradigm in the New Era
2.2 Classic Evolution Theories
2.2.1 Major Innovation Theories in the USA
2.2.2 Major Innovation Theories in Europe
2.3 Dialogues Between Eastern and Western Innovation Theories
References
3 China’s Innovation Theories: Emergence of Holistic Innovation
3.1 Source of Innovation in Traditional Chinese Culture
3.1.1 Traditional Way of Thinking
3.1.2 Traditional Ideas and Beliefs
3.1.3 Traditional Organizations and Systems
3.1.4 Traditional Artifacts and Technologies
3.2 Xi Jinping’s Important Instructions on Innovation Lead the Development of Theories
3.2.1 Level I: What is Innovation
3.2.2 Level II: Why Innovation
3.2.3 Level III: How to Innovate
3.2.4 Level IV: Who is Responsible for the Innovation
3.3 Proposal of Holistic Innovation
3.4 Co-deduction of Innovation Theories
3.4.1 Holistic Innovation and Qian Xuesen’s Thoughts
3.4.2 Holistic Innovation and Comprehensive Innovation
3.5 “Triangular Thinking” of Holistic Innovation and Its Transcendence of Binary Logic
References
4 Innovation Paradigm in the New Era: Theoretical Framework of Holistic Innovation
4.1 Analysis of the Connotations of Holistic Innovation
4.1.1 “Strategic Orientation” in Holistic Innovation
4.1.2 “Openness” in Holistic Innovation
4.1.3 “Synergy” in Holistic Innovation
4.1.4 “Comprehensiveness” in Holistic Innovation
4.2 Key Features of Holistic Innovation
4.3 Realization Pathways of Holistic Innovation
4.3.1 Strategic Leadership
4.3.2 Innovation Foundation
4.3.3 Institutional Empowerment
References
5 Leading Implementation in Innovation: Methodology of Holistic Innovation
5.1 The “Way” Based on Oriental Wisdom
5.1.1 Holistic Thoughts
5.1.2 Transcendental Knowledge
5.1.3 Insight and Foresight
5.1.4 Contemplation and Strategy
5.2 The “Rule” Based on Socialism with Chinese Characteristics
5.2.1 Peaceful Development
5.2.2 New National System
5.2.3 Put People First
5.3 The “Means” Based on Complex Systems Science
5.3.1 Basic Characteristics of Complex Systems Science
5.3.2 Basic Concept of SoS
5.3.3 Methods and Techniques of SoS
5.4 The “Will” Based on Diverse Meanings of Socialism
5.4.1 Late Perception of Innovation
5.4.2 Connotation of Multiple Meanings
5.4.3 Systematic Framework of Holistic Innovation Management
References
Part III Implementations and Applications of Holistic Innovation
6 Upgrade of Global Value Chain: Establishing Holistic Innovation in World-Class Enterprises
6.1 Status Quo of Innovation Development in China's World-Class Enterprises
6.1.1 Connotation of a World-Class Enterprise
6.1.2 Development Characteristics of World-Class Enterprises
6.2 Future Challenges in Innovation in China’s World-Class Enterprises
6.2.1 Transformation of Management Paradigm
6.2.2 Upgrade of Global Value Chain
6.2.3 Intelligent Manufacturing
6.3 Realization Pathways for Development of World-Class Enterprises Based on Holistic Innovation in China
6.3.1 Strategic Leadership
6.3.2 Innovation Foundation
6.3.3 Institutional Empowerment
6.4 Holistic Innovation Strategies for Development of World-Class Enterprises in China
References
7 High Value-Added Manufacturing: Holistic Innovation in Chinese Manufacturing
7.1 Status Quo of Innovation Development in Chinese Manufacturing
7.2 Strategies for High Value-Added Manufacturing in China
7.2.1 Conceptual Connotation of High Value Manufacturing
7.2.2 Value and Significance of High Value Manufacturing
7.3 Realization Pathways for High Value-Added Manufacturing Based on Holistic Innovation
7.3.1 Strategic Leadership
7.3.2 Innovation Foundation
7.3.3 Institutional Empowerment
7.4 Holistic Innovation Strategies for High Value-Added Manufacturing in China
References
8 Pillar of a Great Power: Holistic Innovation in the Development of the Chinese High-Speed Railway Industry
8.1 Development of the Chinese High-Speed Railway Industry
8.2 Sources and Collection of Data of High-Speed Railway Industry
8.3 Development of the High-Speed Railway Industry Based on Holistic Innovation
8.3.1 Concepts, Supplements and Propositions of “Strategic Orientation”
8.4 Concepts, Supplements and Propositions of “Opening”
8.5 Concepts, Supplements and Propositions of “Collaboration”
8.6 Concepts, Supplements and Propositions of “Comprehensiveness”
8.7 Concepts, Supplements and Propositions of “Chinese Context”
8.8 Theoretical Framework of Holistic Innovation in the Chinese High-Speed Railway Industry
References
9 Urban Internet: Holistic Innovation in Smart Cities
9.1 Development of Urban Internet in China
9.2 China’s Unique Town-Level Urban Internet
9.3 iTown Development Pathways Based on Holistic Innovation
9.3.1 Strategic Leadership
9.3.2 Innovation Foundation
9.3.3 Institutional Empowerment
9.4 Integrated Structure Standards and Frameworks in iTown Development
References
10 Rural Revitalization: Holistic Innovation in Rural Construction Experiences
10.1 Rural Innovation Systems
10.1.1 Rural Innovation System and Urban Innovation System: A Comprehensive Analysis Framework for Urban–Rural Dual Innovation
10.1.2 Path Mechanism for “Trinity” Construction of Rural Innovation System to Drive Rural Revitalization
10.2 Experiences of Rural Construction in China
10.2.1 Traditional Chinese Culture as the Soul
10.2.2 Agriculture as the Basis
10.2.3 Farmers as the Center
10.2.4 Scientific and Technological Innovation as the Guide
10.2.5 Rural Governance as the Means
10.2.6 Intermediary Organizations as the Carrier
10.3 Realization Pathways for Rural Construction Based on Holistic Innovation in China
10.3.1 Strategic Leadership
10.3.2 Innovation Foundation
10.3.3 Institutional Empowerment
10.4 Implementation Frameworks of Holistic Innovation in China’s Rural Revitalization
References
11 Earth 6.0: Integrated Contemplations in Global Development
11.1 Trends in Global Development
11.1.1 Thinking About the Fate of Mankind
11.1.2 Industry 4.0
11.1.3 Society 5.0
11.2 China’s Experiences on Global Development
11.2.1 A Community of Shared Future for Mankind
11.2.2 Five Development Concepts
11.2.3 China’s Role in the UN Sustainable Development Goals
11.3 Earth 6.0 Program Based on Holistic Innovation
References

Citation preview

Holistic Innovation

Jin Chen

Holistic Innovation Innovation Paradigm Explorations in the New Era

Jin Chen School of Economics and Management Tsinghua University Beijing, China Research Center for Technological Innovation Tsinghua University Beijing, China

ISBN 978-981-19-8624-6 ISBN 978-981-19-8625-3 (eBook) https://doi.org/10.1007/978-981-19-8625-3 Jointly published with Science Press The print edition is not for sale in China (Mainland). Customers from China (Mainland) please order the print book from: Science Press. ISBN of the Co-Publisher’s edition: 978-7-03-065773-2 Translation from the Chinese language edition: “整合式创新——新时代创新范式探索” by Jin Chen, © Science Press 2021. Published by Science Press. All Rights Reserved. © Science Press 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publishers, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publishers nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publishers remain neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

Ever since the 1990s, scholars represented by Xu Qingrui and Fu Jiaji have conducted substantial explorations and promoted development in the realms of innovation economy, innovation management, innovation policy and innovation system methodology, gradually forming the “Chinese innovation school” that has pioneered technological innovation research in China and stimulated the development of innovation theory with Chinese characteristics. Concurrently, they have made outstanding contributions to the establishment of major national projects, breakthroughs in disruptive technology, formulation of innovation-driven development strategy and proposition on building an innovation-oriented nation. “Innovation” is becoming and will surely become the “number one driving force” that spearheads China’s development. I have the honor to study under Prof. Xu Qingrui of Zhejiang University, an academician of the Chinese Academy of Engineering, beginning in 1989. Under his meticulous guidance, for over three decades, I have been focused on undertaking studies in the field of technology innovation management, teaching and nurturing talents, and with special attention dedicated to the scientific research and engineering application of innovation theory and paradigm with Chinese characteristics. After more than 30 years of in-depth study in the field of technology innovation management, I have come to realize that integrations of contextual elements such as Chinese traditional culture and system are imperative in guiding the development of technological innovation in Chinese enterprises. From the building of an innovationoriented country, to the nation’s core development and major construction projects, China has long been a world leader in many relevant aspects such as national policies, financial expenditures, technology talents and early research achievements. Nevertheless, many feats in management studies originated from the West, in particular research achievements in technological innovation management. However, Western academic system, discourse system and even cultural connotation can neither fully explain nor guide China’s innovation practices. In addition, with the backdrop of a new round of scientific and technological revolution, the competitive environments encountered by enterprises both at home and abroad embody new development trends with ambiguous, nonlinear, exponential and ecology-like characteristics. v

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Preface

Enterprises urgently need to unshackle themselves from the traditional liner growth mindset and homogeneous development model, aim for complete transformation from closed indigenous innovation to an open, collaborative and comprehensive holistic innovation based on autonomy, employ a coherent, holistic and nonlinear approach in adjusting mission, vision and strategic positioning, move at a faster pace to achieve breakthroughs in disruptive technologies and enhance capacity for sustained innovation and global competitiveness. Thanks to my extensive experience in long-term enterprise research practice, I understand profoundly that the establishment of innovation theory and paradigm with Chinese characteristics is a key to smooth advancement in the innovation endeavors of Chinese enterprises. All these years, I have conducted in-depth studies on indigenous innovation, comprehensive innovation, open innovation, collaborative innovation and enterprise innovation ecosystem, and have been broadly engaged in management consultation work for some of China’s most renowned enterprises for innovation (including Huawei, Haier, CRRC, CNPC, China Aerospace Science and Industry Corporation, China Electronics Technology Group, etc.). This thought-provoking experience has gradually shaped and bulwarked my insights innovation paradigm of the new era, ultimately leading to the birth of “holistic innovation”. The proposition of holistic innovation is the fruit of my constant contemplation and development of technology innovation management theory. It is an innovation paradigm founded on the basis of indigenous innovation, open innovation, collaborative innovation and comprehensive innovation, with “strategic guidance” prioritized in the leading position, and emphasis placed on thinking from an elevated dimension and overall view. Holistic innovation is an innovation paradigm of overall innovation and substantial innovation, the essence of which is a holistic, systematic approach, focusing on major innovation and breaking away from the atomistic mindset of traditional innovation concepts actualized through establishing a triangular mindset. By going beyond and surpassing binary logic, and reaching an organic integration of all elements of innovation through strategic guidance and strategic design, holistic innovation provides theoretical support for enterprises and the nation to achieve breakthroughs and innovations in major fields and technologies. The hope is that the proposal of “holistic innovation” can furnish enterprises, industries and the nation with new inspirations and insights for innovation development. Here, I would also like to specially express my genuine gratitude to my tutor, Prof. Xu Qingrui of Zhejiang University, academician of the Chinese Academy of Engineering, and his wife, Ms. Shen Shouqin. Though already past the age of 90, Prof. Xu remains deeply engaged in academic and still works diligently in the frontline of scientific research, leading the development of China’s technological innovation management, and endeavoring to solve major technological innovation problems and needs of the country. This has inspired me all to pursue excellence, continuously seek progress and keep refining myself on the path of innovation research. At present and in the future, science and technology innovation will continue to become the focus of national, regional, industrial and corporate competition, and I will continue to carry the torch and uphold my determination of

Preface

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performing research on innovation theories and methods. I will make further efforts to study in depth the theories presented in this book and apply them to policy-making and industry consultation, and I will endeavor to contribute to the development of more innovative enterprises, the establishment of an innovation-minded country, and the realization of innovation development of the Chinese nation. Beijing, China June 2022

Jin Chen

Contents

Part I 1

Duty of the Times: Development of a World Power in Science and Technology Innovation, and Theories of Innovation . . . . . . . . . . 1.1 China’s Exploration as a World Power in Innovation, Science and Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1 The Development of China’s Science and Technology Innovation . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.2 The Evolution of National Innovation System in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.3 China’s Innovation Development Outlook . . . . . . . . . . . . 1.2 China’s Development Pathway as a World Power in Innovation, Science and Technology . . . . . . . . . . . . . . . . . . . . . . 1.3 Necessity and Urgency in Exploration of Science and Technology Innovation in China . . . . . . . . . . . . . . . . . . . . . . . . 1.3.1 The “Grand Strategy” of the Nation Requires “Grand Innovation” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.2 The Development of Major National Projects Needs the Guidance of Chinese Wisdom . . . . . . . . . . . . . 1.3.3 The Necessity of New Development of Innovation Theory for Disruptive Technology Breakthrough . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II 2

World Power in Science and Technology and Theories of Innovation 3 3 3 7 10 16 28 28 32 36 40

Discussion on Theories of New Types of Innovation

East Meets West: Dialogue Between Classical and New Innovation Theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Evolution of Theoretical Development in Innovation Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Innovation Paradigm of Schumpeter . . . . . . . . . . . . . . . . . 2.1.2 Innovation Paradigm in the New Era . . . . . . . . . . . . . . . . .

45 46 47 59 ix

x

Contents

2.2

Classic Evolution Theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.1 Major Innovation Theories in the USA . . . . . . . . . . . . . . . 2.2.2 Major Innovation Theories in Europe . . . . . . . . . . . . . . . . 2.3 Dialogues Between Eastern and Western Innovation Theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4

5

China’s Innovation Theories: Emergence of Holistic Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Source of Innovation in Traditional Chinese Culture . . . . . . . . . . . 3.1.1 Traditional Way of Thinking . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Traditional Ideas and Beliefs . . . . . . . . . . . . . . . . . . . . . . . 3.1.3 Traditional Organizations and Systems . . . . . . . . . . . . . . . 3.1.4 Traditional Artifacts and Technologies . . . . . . . . . . . . . . . 3.2 Xi Jinping’s Important Instructions on Innovation Lead the Development of Theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Level I: What is Innovation . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2 Level II: Why Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.3 Level III: How to Innovate . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.4 Level IV: Who is Responsible for the Innovation . . . . . . 3.3 Proposal of Holistic Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Co-deduction of Innovation Theories . . . . . . . . . . . . . . . . . . . . . . . . 3.4.1 Holistic Innovation and Qian Xuesen’s Thoughts . . . . . . 3.4.2 Holistic Innovation and Comprehensive Innovation . . . . 3.5 “Triangular Thinking” of Holistic Innovation and Its Transcendence of Binary Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Innovation Paradigm in the New Era: Theoretical Framework of Holistic Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Analysis of the Connotations of Holistic Innovation . . . . . . . . . . . 4.1.1 “Strategic Orientation” in Holistic Innovation . . . . . . . . . 4.1.2 “Openness” in Holistic Innovation . . . . . . . . . . . . . . . . . . 4.1.3 “Synergy” in Holistic Innovation . . . . . . . . . . . . . . . . . . . . 4.1.4 “Comprehensiveness” in Holistic Innovation . . . . . . . . . . 4.2 Key Features of Holistic Innovation . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Realization Pathways of Holistic Innovation . . . . . . . . . . . . . . . . . . 4.3.1 Strategic Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 Innovation Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.3 Institutional Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

69 69 71 71 76 83 83 84 86 88 90 92 92 93 94 97 98 103 103 106 108 111 115 115 115 117 118 121 122 127 127 129 130 132

Leading Implementation in Innovation: Methodology of Holistic Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 5.1 The “Way” Based on Oriental Wisdom . . . . . . . . . . . . . . . . . . . . . . 136 5.1.1 Holistic Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

Contents

5.1.2 Transcendental Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.3 Insight and Foresight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.4 Contemplation and Strategy . . . . . . . . . . . . . . . . . . . . . . . . 5.2 The “Rule” Based on Socialism with Chinese Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Peaceful Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.2 New National System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.3 Put People First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 The “Means” Based on Complex Systems Science . . . . . . . . . . . . 5.3.1 Basic Characteristics of Complex Systems Science . . . . 5.3.2 Basic Concept of SoS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.3 Methods and Techniques of SoS . . . . . . . . . . . . . . . . . . . . 5.4 The “Will” Based on Diverse Meanings of Socialism . . . . . . . . . . 5.4.1 Late Perception of Innovation . . . . . . . . . . . . . . . . . . . . . . 5.4.2 Connotation of Multiple Meanings . . . . . . . . . . . . . . . . . . 5.4.3 Systematic Framework of Holistic Innovation Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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137 138 140 141 141 149 158 161 161 162 163 165 166 167 174 178

Part III Implementations and Applications of Holistic Innovation 6

7

Upgrade of Global Value Chain: Establishing Holistic Innovation in World-Class Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Status Quo of Innovation Development in China’s World-Class Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 Connotation of a World-Class Enterprise . . . . . . . . . . . . . 6.1.2 Development Characteristics of World-Class Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Future Challenges in Innovation in China’s World-Class Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.1 Transformation of Management Paradigm . . . . . . . . . . . . 6.2.2 Upgrade of Global Value Chain . . . . . . . . . . . . . . . . . . . . . 6.2.3 Intelligent Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Realization Pathways for Development of World-Class Enterprises Based on Holistic Innovation in China . . . . . . . . . . . . 6.3.1 Strategic Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Innovation Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.3 Institutional Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Holistic Innovation Strategies for Development of World-Class Enterprises in China . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

185 186 186 187 191 191 192 197 200 201 201 202 205 205

High Value-Added Manufacturing: Holistic Innovation in Chinese Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 7.1 Status Quo of Innovation Development in Chinese Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210

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Contents

7.2

Strategies for High Value-Added Manufacturing in China . . . . . . 7.2.1 Conceptual Connotation of High Value Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.2 Value and Significance of High Value Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Realization Pathways for High Value-Added Manufacturing Based on Holistic Innovation . . . . . . . . . . . . . . . . . 7.3.1 Strategic Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.2 Innovation Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.3 Institutional Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Holistic Innovation Strategies for High Value-Added Manufacturing in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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Pillar of a Great Power: Holistic Innovation in the Development of the Chinese High-Speed Railway Industry . . . . . . . . . . . . . . . . . . . . . 8.1 Development of the Chinese High-Speed Railway Industry . . . . . 8.2 Sources and Collection of Data of High-Speed Railway Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Development of the High-Speed Railway Industry Based on Holistic Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.1 Concepts, Supplements and Propositions of “Strategic Orientation” . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Concepts, Supplements and Propositions of “Opening” . . . . . . . . 8.5 Concepts, Supplements and Propositions of “Collaboration” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Concepts, Supplements and Propositions of “Comprehensiveness” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 Concepts, Supplements and Propositions of “Chinese Context” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 Theoretical Framework of Holistic Innovation in the Chinese High-Speed Railway Industry . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Urban Internet: Holistic Innovation in Smart Cities . . . . . . . . . . . . . . 9.1 Development of Urban Internet in China . . . . . . . . . . . . . . . . . . . . . 9.2 China’s Unique Town-Level Urban Internet . . . . . . . . . . . . . . . . . . 9.3 iTown Development Pathways Based on Holistic Innovation . . . . 9.3.1 Strategic Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.2 Innovation Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.3 Institutional Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . 9.4 Integrated Structure Standards and Frameworks in iTown Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Contents

10 Rural Revitalization: Holistic Innovation in Rural Construction Experiences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Rural Innovation Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1.1 Rural Innovation System and Urban Innovation System: A Comprehensive Analysis Framework for Urban–Rural Dual Innovation . . . . . . . . . . . . . . . . . . . 10.1.2 Path Mechanism for “Trinity” Construction of Rural Innovation System to Drive Rural Revitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Experiences of Rural Construction in China . . . . . . . . . . . . . . . . . . 10.2.1 Traditional Chinese Culture as the Soul . . . . . . . . . . . . . . 10.2.2 Agriculture as the Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.3 Farmers as the Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.4 Scientific and Technological Innovation as the Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.5 Rural Governance as the Means . . . . . . . . . . . . . . . . . . . . . 10.2.6 Intermediary Organizations as the Carrier . . . . . . . . . . . . 10.3 Realization Pathways for Rural Construction Based on Holistic Innovation in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.1 Strategic Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.2 Innovation Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.3 Institutional Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 Implementation Frameworks of Holistic Innovation in China’s Rural Revitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Earth 6.0: Integrated Contemplations in Global Development . . . . . 11.1 Trends in Global Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1.1 Thinking About the Fate of Mankind . . . . . . . . . . . . . . . . 11.1.2 Industry 4.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1.3 Society 5.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 China’s Experiences on Global Development . . . . . . . . . . . . . . . . . 11.2.1 A Community of Shared Future for Mankind . . . . . . . . . 11.2.2 Five Development Concepts . . . . . . . . . . . . . . . . . . . . . . . . 11.2.3 China’s Role in the UN Sustainable Development Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 Earth 6.0 Program Based on Holistic Innovation . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Part I

World Power in Science and Technology and Theories of Innovation

Throughout the history of the world, there have been many shifts in the center of world civilization and technology; meanwhile, innovation theories have also evolved with the development of science and technology, and innovation practices. Exploring the world’s and China’s development pathways in science and technology innovation is not just driven by the desire to understand those glorious and interesting historical periods, but instead, there are greater values in grasping the fundamental laws and patterns of global innovation development, and for the creation of new opportunities. This exploration aims to contribute China in shouldering its duty of the times and enable China to stand higher and look further amidst new opportunities and competitions, thus establishing her global standing in the world of technological innovation. Part I, World Power in Science and Technology and Theories of Innovation, mainly introduces China’s exploration and implementation of science and technology innovation as a world power, and the mission bestowed on China by the times to conduct studies on science and technology innovation theories, thereby revealing the historical backdrop for the proposition of holistic innovation.

Chapter 1

Duty of the Times: Development of a World Power in Science and Technology Innovation, and Theories of Innovation We must clearly recognize that, while some historical crossroads can occur over and over again, thus imparting a powerful and lasting effect, other historical crossroads can be fleeting, thus resulting in missed opportunities. —Xi Jinping. (May 28, 2018, the 19th Meeting of Academicians of the Chinese Academy of Sciences and the 14th Meeting of Academicians of the Chinese Academy of Engineering).

In recent years, China has witnessed drastic and earthshaking changes in her economic development and social outlook, with the Chinese economy expanding to the second largest in the world, continual rise in national innovation capacity and the emergence of a series of significant international innovation achievements. As such, China has climbed into the top echelon in many frontiers and directions of advanced technology and has gradually caught up to and surpassed competitors in various arenas. Nevertheless, in order to solidify a foothold at the global forefront of science and technology, lead the way in worldwide development of cutting-edge technologies and realize the goal of becoming a world power in science and technology, it is necessary not only to carry on with science and technology innovation implementation, but also to incessantly explore science and technology innovation theories with Chinese characteristics, so as to satisfy the real-world demands for the development of China’s innovation theory.

1.1 China’s Exploration as a World Power in Innovation, Science and Technology 1.1.1 The Development of China’s Science and Technology Innovation National science and technology innovations have accompanied the growth of the People’s Republic of China through a tough and extraordinary path of 70-plus years. © Science Press 2023 J. Chen, Holistic Innovation, https://doi.org/10.1007/978-981-19-8625-3_1

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There are five important milestones in the development of science and technology in China for over that span of roughly seven decades (Xu 2019). (1) In 1956, the CPC Central Committee, with Comrade Mao Zedong at its core, convened a national conference of intellectuals. At the meeting, Comrade Zhou Enlai put forward the call for a “marching toward science.” This is the first time after the founding of the People’s Republic of China that issues concerning intellectuals and the development of science and technology had been formally raised. (2) In 1978, Comrade Deng Xiaoping suggested that “science and technology are productive forces” and “intellectuals are members of the working class,” putting forward science and technology as the primary driving forces for economic development for the first time in Chinese history. (3) In 1995, Comrade Jiang Zemin proposed the strategy of “rejuvenating the nation through science and education advances,” clearly identifying the significant role played by science and technology development in economic and social advancement. (4) In 2006, Comrade Hu Jintao highlighted the development strategy of “taking the road of indigenous innovation with Chinese characteristics, building an innovation-oriented nation,” upholding indigenous innovation as a crucial banner in science and technology. (5) In 2012, the report of the 18th National Congress of the Communist Party of China explicitly stressed the need to “strictly adhere to the path of indigenous innovation with Chinese characteristics” and “implement the strategy of innovation-driven development.“ It is exactly due to the intense and vigorous implementation of these science and technology strategies that prominent technological innovation achievements continue to emerge. Ever since Comrade Xi Jinping took up office as General Secretary of the CPC Central Committee in 2012 and President of the People’s Republic of China in 2013, the national leadership he led has elevated science and technology innovation to the key position in national strategy. During the 18th National Congress of the Communist Party of China held at the end of 2012, the commitment to resolutely follow the path of indigenous innovation with Chinese characteristics and implement the strategy of innovation-driven development1 was clearly stipulated. This is a significant policy decision that adopts a global perspective, anchors itself on the overall situation and looks forward into the future. In March 2015, the CPC Central Committee and the State Council issued the Guidelines of the CPC Central Committee and The State Council on Deepening Institutional Reform and Accelerating the Implementation of the Innovation-Driven Development Strategy, providing guidance for the deepening of institutional reform and accelerating implementation of the innovation-driven development strategy. At the National Science, Technology and Innovation Conference, the Meeting of Academicians of the Chinese Academy of Sciences and Chinese Academy of Engineering, and the Ninth National Congress of the China Association for Science and Technology held on May 30, 2016, Xi Jinping delivered an important speech, sounding the call for the building of a world

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Please see general interviews about “implementing innovation-driven strategy and accelerating pace of transformation” of the 18th National Congress of the Communist Party of China held in Beijing on November 8, 2012.

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power in science and technology. He stated, “The goal of Chinese science and technology development is to turn China into an innovation-oriented country by 2020, to position China as a leading innovation-oriented country by 2030, and to transform China into a world power in science and technology by the centenary of the founding of the People’s Republic of China.” In his speech, President Xi Jinping emphasized the importance of strengthening the strategic orientation of science and technology innovation in building a world power in this domain, as well as solving problems in science and technology innovation and development, and that the strategic direction must be grasped correctly in order to genuinely drive toward breakthroughs in science and technology challenges (Xi 2016). Later, at the 19th National Congress of the Communist Party of China held on October 18, 2017, President Xi Jinping further pointed out: We should target the frontiers of science and technology, strengthen basic research and achieve major breakthroughs in forward-looking basic research and pioneering original achievements. We should strengthen basic applied research, expand the implementation of major national science and technology programs and focus on key generic technologies, cutting-edge technologies, modern engineering technologies and disruptive technological innovation, providing strong support for establishing China as a world power in science and technology development, quality, aerospace, cyberspace, transportation, and digital technology, and an intelligent society (Xi 2017). On May 28, 2018, at the 19th Meeting of Academicians of the Chinese Academy of Sciences and the 14th Meeting of Academicians of the Chinese Academy of Engineering, President Xi Jinping stated: We have to persist in the “two-wheel drive” approach in science and technology innovation and institutional. innovation, adhere to a problem-oriented and demand-oriented mindset, and work hard on substantive implementation, institutional arrangement, policy guarantee and environment creation. We shall continue to endeavor in fostering innovation entities, foundations, resources and environment, strengthen national strategic science and technology capability and enhance the overall effectiveness of the national innovation system. The work force in China’s science and technology sector should gain understanding about overall trend, seize opportunities, face problems head-on, rise up to challenges, take aim at the frontiers of global science and technology and steer the nation toward science and technology development (Xi 2018). From the strategy of rejuvenating China through science and education, to the strategy of building an innovation-oriented country, and then the strategy of innovation-driven development, China has recorded a steady yearly increase in total investment in science and technology, laying a solid resource foundation for the formation of a world power in science and technology. From 2000 to 2008, the growth rate of China’s R&D expenditure has kept pace with the growth rate of its gross domestic product (GDP), as shown in Fig. 1.1. According to the 2018 Statistical Bulletin of National Economic Development and Social Development released by the National Bureau of Statistics, China spent RMB 1.96779 trillion on R&D, a jump of 11.6% over the previous year, including RMB 111.8 billion for basic research, indicating that China’s spending on R&D exceeds the average figure of 15 member states of the European Union. China also ranked first in the world in the number of R&D personnel and in the number of invention patent applications and

yuan

Fiscal budget for scientific research/100 million

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GDP/100 million yuan

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Year Fiscal budget for scientific research

Fig. 1.1 Comparison between China’s GDP and national financial expenditure on scientific research from 2000 to 2018. Source National Bureau of Statistics

grants, together serving as solid evidence of the contribution of science and technology as the “primary driving force” of innovation-driven development (National Bureau of Statistics, 2019). Success in technology innovations has played an important role in major national engineering projects such as manned spaceflight, deep-sea engineering, high-speed railway, high-speed computing, West-to-East power transmission and South-to-North water diversion, and Chinese innovations in the area of commercial application of the Internet are endless. In the past seven decades, China has been experiencing an evolution of innovation paradigm of self-determined innovation and open indigenous innovation, and the country is in the process of stepping into a new phase of comprehensive indigenous innovation and comprehensive self-guided innovation (Chen 2019d). At present, the absolute value of R&D investment in China is increasing year by year, with significant improvements realized in promoting innovation capacity. There has been a gradual narrowing of the gap in the levels of science and technology development between China and those of developed countries, and currently, China ranks in the forefront among developing countries in this regard, occupying an important position in the global layout of science and technology development. However, upon comparative analysis in a worldwide scope, China does not have many reasons to cheer in terms of competitive advantages of science and technology innovation. Comparing with the superpowers in science and technology, China still has a long way to go in basic research capability, and the period from 2020 to 2035 is anticipated to be a turning point in China’s endeavors to become a world power in science and technology innovation. Some serious issues to tackle include: Insufficient detailed strategic deployment and institutional design as a world power in science and technology, and problems remain in propelling the leap from a great

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nation in science and technology innovation to a world power in science and technology innovation; core technologies and equipment in strategic high-tech areas such as aircraft engines and high-end CNC machine tools are heavily dependent on imports; no obvious headway has been achieved in addressing the control of core technologies in key areas in the hands of other nations, while the proportions of core chips and basic software made in China remain very low. Broadly speaking, China’s industry still lingers at the low end of the international division of labor, and Chinese development relies too much on resource, energy consumption and expansion; thus, there is an urgent need to turn to innovation to achieve transformation and upgrade. At the same time, the dependence on traditional science and technology innovation must be forcefully eradicated in order to design a pathway of industrial core technology breakthrough by overhauling macro-systems and mechanisms, and clearly prioritizing innovation-driven breakthroughs in core technologies.

1.1.2 The Evolution of National Innovation System in China The national innovation system theory is a classical theory developed on the basis of innovation system theory that aims to foster understanding of and advancement in the development of national innovation. In 1997, the Organization for Economic Cooperation and Development (OECD) proposed the hitherto widely accepted definition of a “national innovation system,” that is, “the national innovation system is a network composed of various institutions, including the public sector and the private sector, and the activities of these institutions and their interactions determine a country’s ability in knowledge and technology diffusion, thus influencing the country’s innovation performance” (Chen and Yin 2019a). The concept of “innovation system” is undergoing a top-down theoretical development and evolution. After studying technological innovation cases of 17 countries, American scholar Nelson (1993) pointed out that supporting enterprise development with institutions and policies based on “techo-statism” is the core element to enhancing a country’s technology innovation and competitiveness. British scholar Freeman (1987) proposed the concept of “national innovation system” by drawing on industrial development experiences from Japan and emphasized that effective government intervention in technology innovation is an important factor to improve the innovation capacity of a country. Danish scholar Lundvall (1999) proposed an interactive national innovation system with “learning oriented economy.” Etzkowitz and Leydesdorff (2000) further proposed the well-known triple helix theory, underscoring that the combined interaction of “government, industry and academia” is the key to the construction of a national innovation system. With the further deepening of the national innovation system theory, Cooke et al. (1997) proposed and developed the concept of “regional innovation systems,” emphasizing clustering and diversity of regional innovation governance, and the important value of regional innovation networks in the creation, flow and application of knowledge. Malerba

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and Mani (2009) proposed and developed the concept of “sectoral systems of innovation,” which stresses on interactive learning of market and non-market with reference to industrial system knowledge, technological needs and intermediaries, and the process by which new technologies and products are created. Chen (2017) proposed and developed the concept of “enterprise innovation system,” which underlines that enterprise technological innovation is produced and evolves in a dynamic process whereby all elements of the technically complex system share synergy. As urban and rural areas occupy increasingly prominent roles in coordinated regional development, the research group on The Strategy of Transforming and Expanding the Function of Science and Technology in Central Cities under the New Situation (2000), and Chen and Huang (2018), respectively proposed the concepts of urban innovation system and rural innovation system, and these have enriched and improved the theory of regional innovation system, providing a new perspective for promoting urban–rural integration and coordinated development. However, with the rapid development of informatization and economic globalization, it is difficult for enterprises, regions or even a country to carry out innovation activities independently within a closed system. The process of innovation is increasingly complicated, and the outcome is increasingly more uncertain and unpredictable. In addition, open innovation has progressively become a paradigm and concept widely accepted by innovation entities, and “innovation ecosystem” has evolved into a new trend of national innovation system development (Adner 2012). From national innovation system to national innovation ecosystem, the connotation of the triple helix theory is expanded, while the concepts of sustainable development, dynamic evolution and win–win co-existence are further highlighted. This is of great significance in global sustainable development and the healthy, efficient operation of national innovation system. The formal exploration of constructing a national innovation system in China began in 2006. The Chinese national innovation system is improving steadily in tandem with the entire process of national science and technology system reform and the opening up of the country. The Chinese government officially put forward the strategy of building a national innovation system with Chinese characteristics in the Outline of the National Medium- and Long-Term Science and Technology Development Program 2006– 2020. In 2012, the CPC Central Committee and the State Council issued the Opinions on Deepening the Reform of Scientific and Technological System and Speeding up the Building of National Innovation System, stipulating specific directive guidance on deepening the reform of the science and technology system and accelerating the construction of a national innovation system. In 2016, the 13th Five-Year Plan for National Science and Technology Innovation was formulated and released, further setting forth the goal of building an efficient and coordinated national innovation system. In 2017, the 19th National Congress of the Communist Party of China once again emphasized the significance of establishing a national innovation system in the establishment of an innovation-oriented nation, proposing the promotion of constructing a national innovation system construction and strengthening strategic science and technology. Specific contents included “to deepen the reform of science

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and technology system; establish a technology innovation system featuring enterprises in the lead, market as orientation, and in-depth enterprise-academia integration; strengthen support for innovation of small and medium-sized enterprises and intensify the transformation of scientific and technological achievements; advocate a culture of innovation and strengthen the creation, protection and application of intellectual property rights; cultivate a large number of world-class strategic science and technology talents, leading science and technology talents, young science and technology talents, and high-level innovation team” (Xi 2017). The Notification of the State Council on Printing and Distributing the Construction Plan of the National Technology Transfer System issued by the CPC Central Committee and the State Council on September 15, 2017, stated that “the national technology transfer system is an ecosystem that enhances the continuous generation of scientific and technological achievements, promotes the diffusion, flow, sharing, application and realization of economic and social values” and acknowledges medium- and long-term strategic objectives, including “initial establishment of a national technology transfer system adapted to the new situation and an interconnected technology market by 2020” and “full establishment of a well-structure, fully functioning national technology transfer system with sound institutions and efficient operation by 2025.” Thanks to a series of measures, China has accomplished considerable feats and highly effective progress in building its national innovation system: Up until 2017, the ratio of R&D investment to GDP continued its rise up to 2.13%, surpassing the average level of EU countries; the total number of Chinese scientific and technological papers has surpassed that of the USA in 2016 to rank number one in the world, with the papers exhibiting a continuous improvement in quality and international influence; China continues to lead the world in the number of new patent applications and has become the main source of new patent applications worldwide; the number of Chinese papers and patents in the strategic emerging field of artificial intelligence both topped the world in 2017, and Beijing has overtaken Silicon Valley as the world’s most active region for AI investment in 2018; corporate R&D investment accounts for over 70% of total R&D investment in China, and innovation entities have continued to solidify their presence, as exemplified by the appearance of a large number of internationally renowned leading enterprises such as CRRC, Huawei, Gree Electric Appliances, Haier, Xiaomi, Alibaba, XCMG, China International Marine Containers (Group) Ltd. (CIMC), Geely and JD.COM, among others. Even though China has continuously promoted institutional reform and improved its national innovation system since the reform and opening up in 1978, its levels of investment and output of original, important and basic research are still rather low. Hampered by a weak indigenous innovation capacity and excessive reliance on foreign technology, the overall innovation capacity of Chinese industries would demand further improvement. Behind these problems are a number of shortcomings, namely the function of each innovation entity in the national innovation system is not sufficiently clear, efficient coordination between innovation entities is absent, the degree of integration between science and technology innovation, and mass innovation and entrepreneurship is weak, and the pace of science and technology system reform is not abreast of the requirements of innovation efficiency, among other issues.

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In this era of global innovation, competitions among countries, industries and enterprises are no longer limited to a single domain, but rather a co-opetition based on the innovation ecosystem. Accordingly, construction of national innovation system urgently necessitates a shift from open to independent integration, and the development of a new national innovation system with Chinese characteristics. Therefore, the connotations of the new national innovation system are to bring into play the advantages of holistic, systematic and global thinking of Chinese philosophy and culture; integrate China’s institutional advantages of concentrating powers to undertake major endeavors and resources advantages characterized by open and win– win cooperation; give full play to the role of enterprises in innovation investment, platform collaboration and application leadership in major scientific and technological breakthroughs, crucial basic research areas and strategic emerging industries; strengthen the dominant position of enterprises in science and technology innovation; and advance innovation by relying on the “dual engines” of scientific research institutions and enterprises.

1.1.3 China’s Innovation Development Outlook The Chinese economy has sustained rapid growth covering a period of 32 years, from the launch of the Chinese reform and opening up to 2010, creating a miracle of world economic expansion. However, there is an obvious slowdown in Chinese economic growth after 2010. After decades of leaning on the extensive growth model, the existing model of economic development no longer meets the needs of Chinese socio-economic development, and China is left with an “innovation-driven approach” as the only suitable choice for pursuing further progress. The 18th CPC National Congress held at the end of 2012 clearly stated that “science and technology innovation is a strategic support for improving social productivity and overall national strength, and must be placed at the core of China’s overall development,2 ” underlining the insistence on following the path of indigenous innovation with Chinese characteristics and implementing the strategy of innovation-driven development. This is a significant policy decision that adopts a global perspective, anchors itself on the overall situation and looks forward into the future. Following the implementation of the innovation-driven development strategy3 proposed by the 18th CPC National Congress, there have been progressive deepening of science and technology system reform and vigorous implementation of innovation-driven development strategy. The world has witnessed substantial and abundant accomplishments in China’s effort

2

Hu Jintao. Unswervingly advance along the path of socialism with Chinese characteristics and strive to finish building a moderately prosperous society in all aspects—report at the 18th National Congress of the Communist Party of China [EB/OL]. http://cpc.people.com.en/18/n/2012/1109/ c350821-19529916-4.html, 2012-11-09. 3 See Footnote 2.

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to position itself as an innovation-oriented country, and a number of noteworthy landmark Chinese scientific and technological achievements have sprung up. From 2012 onward, China has been dedicating its effort in putting the innovationdriven strategy into practice, having implemented a series of significant measures (Chen and Zhang 2018). 1. Formulation of the Opinions on Deepening Institutional and Mechanism Reforms and Accelerating the Implementation of Innovation-Driven Development Strategy On March 13, 2015, the CPC Central Committee and the State Council formulated and issued Opinions of the CPC Central Committee and the State Council on Deepening Institutional and Mechanism Reforms and Accelerating the Implementation of Innovation-Driven Development Strategy (Zhongfa 2015 No. 8). It stated that “in the face of the historical tasks and the demands of achieving the “two centenary” goals, we must deepen institutional and mechanism reforms, and accelerate the implementation of the innovation-driven development strategy.” The Opinions of the CPC Central Committee and the State Council on Deepening Institutional and Mechanism Reforms and Accelerating the Implementation of Innovation-Driven Development Strategy highlighted several key aspects: First, the general thinking is to ensure that the market plays a decisive role in the allocation of resources. Second, the main objective is to focus on the construction of a basic setup of innovation-driven development. Third, the key contents are divided into nine chapters, putting forward 30 reform measures from nine aspects, including “general thinking and main objectives,” “construction of a fair and competitive environment to encourage innovation,” “establishment of a market-oriented mechanism for technological innovation,” “strengthening the function of financial innovation,” “improvement in incentive policies for the transformation of achievements,” “building a more efficient scientific research system,” “innovating mechanism for cultivating, utilizing and attracting talents,” “promoting the creation of a new situation of deeply integrated and open innovation” and “strengthening comprehensive innovation policy coordination”. Overall, the opinions embody the four features of being relevant, systematic, groundbreaking and actionable. Being relevant refers to the emphasis on the problem-solving orientation; being systematic refers to the highlighting of the comprehensive deployment of reform works; being groundbreaking refers to identifying bottlenecks that lead to practical solutions; and being actionable refers to ensuring that reform measures are feasible and executable. 2. Promulgation and implementation of the Outline of the National InnovationDriven Development Strategy On May 19, 2016, the CPC Central Committee and the State Council issued the Outline of the National Innovation-Driven Development Strategy. It declared that innovation is the primary driving force for progressive development, and science and technology innovation must be placed at the core of the nation’s development as a whole. The Outline of the National Innovation-Driven Development Strategy put forward a significant three-step strategy for the new era.

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Major forward-looking strategy for the future: Innovation-driven development. In order to turn innovation-driven development into a major future-oriented strategy, it is necessary to focus on top-level design and task implementation, identify and grasp the global science and technology development trend, the status quo of China’s science and technology development and the path to take, and put forward feasible direction, objective and priorities of future development. The Outline of the National Innovation-Driven Development Strategy clearly defines the goals, direction and key tasks for innovation-driven development in the next 30 years. It is a programmatic document on fostering innovation in the new era and an action guideline for building an innovation-oriented country, carrying immense practical substance and far-reaching historical significance. Key to innovation drive: Two-wheel drive approach, one system and six major changes. The Outline of the National Innovation-Driven Development Strategy emphasized that: becoming innovation-driven is a systematic transformation. Its layout must be proceeded in accordance with “persisting in a two-wheel drive approach, constructing one system, and promoting six major transformations,” and building a new system for powering development. The two wheels in the two-wheel approach are science and technology innovation on the one hand, and institutional and mechanism innovation on the other, and they work in harmony with each other and supply development momentum without interruption. It is necessary to clearly specify the directions and priorities for supporting development, strengthen scientific exploration and technological breakthroughs, and build a systematic capacity for sustained innovation; adjust all of the relationships of production that are not suited to innovation-driven development, and devise coordinating plans to promote institutional and mechanism reforms in the three governance areas of science and technology, the economy and government, so as to unleash innovation vitality to the fullest extent. One system refers to the building of a national innovation system. This means to establish an ecosystem in which innovation entities can collaborate and interact, where innovation elements flow smoothly and are efficiently allocated, and fashion a practical platform for innovation-driven development, supplemented by systematic arrangements and environment safeguards; to define the functional roles of the various types of innovation entities, including enterprises, scientific research institutions, universities and social organizations, build an open and efficient innovation network, and establish a military-civilian integrated platform for collaborative innovation and defense science and technology; to improve innovation governance, further specify the division of labor between the government and the market, and establish overall planning mechanisms for allocating innovation resources; and to perfect the policy system for inspiring innovation and the legal system for protecting innovation, create a social environment for encouraging innovation, and stimulate the innovative vitality of the whole society. The six major changes are the transformation in the approach to development from extensive growth dominated by scale expansion to sustainable development led by quality and efficiency; a change in development elements from domination by traditional factors to growth led by innovation factors; a change in the industrial division of labor from the lower end and middle end to the high end of the value chain; a transformation in innovation capacity from the current

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phenomenon in which China is mainly “catching up” in the “catching up, pulling even, and taking the lead” situation, to a situation in which China is chiefly “pulling even” and “taking the lead”; a shift of resource allocation from primarily focusing on research and development to an overall allocation involving supply chains, innovation chains and capital chains; and a change in innovation entity groups from predominately niche groups of science and technology personnel to innovation and entrepreneurial interaction between niche groups and the masses. New three-step strategic target: The Outline of the National Innovation-Driven Development Strategy also specifies the “three-step” strategic targets of transforming China into a world power in science and technology innovation by the year 2050. In the first step, to be accomplished by 2020, China shall become an innovative country, basically accomplish the building of a national innovation system with Chinese characteristics, and emphatically solidify the realization of the goal of forming a moderately prosperous society in all respects. In the second step, by 2030, China shall be positioned among the forefront of innovation-oriented countries of the world, achieve a fundamental shift in the driving forces of development, significantly advance its level of economic and social development and international competitiveness, and lay a solid foundation for building China into an economic world power and a society of common prosperity. In the third step, by 2050, China shall grow into a world’s science and technology innovation powerhouse, become a major science center and innovation high ground of the globe and provide solid foundation for China to develop into a prosperous, strong, democratic, culturally advanced and harmonious modern socialist country, thereby realizing the dream of the great rejuvenation of the Chinese nation. 3. The National Science, Technology and Innovation Conference sounded the call for building a world power in science and technology On May 30, 2016, the National Science, Technology and Innovation Conference, the Conference of Academicians of the Chinese Academy of Science and Chinese Academy of Sciences, and the Ninth National Congress of the China Association for Science and Technology were held in Beijing. In his keynote address, President Xi Jinping emphasized that science and technology innovation should be elevated to a position of greater importance at this new historical starting point of Chinese development, sounding the call for turning China into a world power in science and technology. To achieve the “two centenary” goals and realize the dream of the great rejuvenation of the Chinese nation, we must persist in following the path of indigenous innovation with Chinese characteristics, accelerate science and technology innovation in all realms, and seize opportunities in global scientific and technological competition. This is the cornerstone for our proposition of the building of China into a world power in science and technology. To this end, President Xi Jinping put forward the following five requirements: First, we must lay a solid foundation for science and technology and seek to rank among the world-leading powers in important fields of science and technology. Second, we will strengthen our strategic orientation and confront challenges head-on in science and technology innovation-driven development. Third, we will reinforce the availability of science and technology

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achievements to serve our main battlefield, which is socio-economic development. Fourth, we will deepen reform and innovation, and form a dynamic mechanism for managing and operating science and technology. Fifth, we will advocate the initiatives of innovation and foster a contingent of talents that can meet the requirements of innovative development.4 4. Promulgation of the 13th Five-Year Plan for National Science and Technology Innovation On August 8, 2016, the State Council officially issued the 13th Five-Year Plan for National Science and Technology Innovation. The plan is one of the 22 national key special programs ratified by the State Council, establishing a systematic strategy and forward-looking vision for national science and technology innovation over the next five years. It is a detailed implementation of the Outline of the 13th Five-Year Plan for Economic and Social Development for the People’s Republic of China and the Outline of the National Innovation-Driven Development Strategy. As the last fiveyear plan before China joins the ranks of the world’s innovation-oriented countries, the 13th Five-Year Plan for National Science and Technology Innovation highlighted top-level design with an insistence on an orderly progress, fully reflecting the cohesive demand-driven and innovation-driven initiatives. It placed special emphasis on the main thread connecting the strategic implementation of the innovation-driven development and underpinning supply-side structural reform, further defined the overall objective of establishing an innovative country and laying the cornerstone for building a world power in science and technology and clarified the deployment of primary tasks and major initiatives. First and foremost, the aim of the 13th Five-Year Plan for National Science and Technology Innovation was to function as an overall plan carried throughout the entire chain of innovation. It focused not only on scientific and technological research, reform and development, but it was also an endeavor that fully took into account the main battlefield of socio-economic development, the frontier of science and technology, and the major strategic needs of the nation. Secondly, the plan heightened attention on the leading role of science and technology and particularly brought increased attention upon innovation for the building of proactive advantages. Thirdly, the plan followed with keen interest in the new normal of the economy, industrial transformation and upgrading, among other issues. Fourthly, the plan demonstrated the nation’s strategic intention and major deployment, reflecting a comparatively more systematic and careful deliberation on deployments in the deep sea, deep earth, deep space and deep blue and other high-tech fields that can further the nation’s strategic interests and guarantee the nation’s strategic advantages. The 13th Five-Year Plan for National Science and Technology Innovation explicitly put forward the guiding ideology, overall requirements, strategic tasks and reform measures for national science and technology innovation over the next five years. From the time of the founding of the People’s Republic China, in particular since the reform and opening up, the 18th National Congress of the Communist Party of 4

Please see Xi Jinping: Strive to build a world power in science and technology [EB/OL]. http://cpc. people.com.cn/xuexi/gb/387488/index4.html/n1/2016/0531/c64094-28399667.html, 2016-05-31.

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China, to the formulation of the 14th Five-Year Plan, the development outlook with innovation development as the primary framework proposed by the CPC Central Committee with Comrade Xi Jinping at its core, is by far the most important and significant change in the development of the nation and society. A correct recognition and understanding of the real meaning of innovation is fundamental to China’s development pathway as a world power in science and technology innovation. The innovation development concept put forward collectively by the CPC Central leadership with Comrade Xi Jinping at its core is a systematic concept of development. It is a unified and integrated system composed of innovative ideas in the various realms of science and technology, culture, economy, society and ecology. At the same time, innovation development needs the support of the national innovation system, among which science and technology innovation should be the center of the entire national innovation system. Moreover, the idea of innovation development is not an isolated, detached theory of development, but it is rather a development concept that is mutually complementing and supporting of the new “five-in-one” kind of development concept that embodies innovative, coordinated, green, open and sharing ideas. Elevating “innovation development” to the number one position of the five development concepts matches the basic requirement of the current development situation of China. Ever since the founding of the People’s Republic of China, in particular since the reform and opening up, it has been necessary for China to achieve socioeconomic development in a comparatively shorter period of time, and to progress rapidly from the early stages to the later stages of industrialization. In the process of extensively developing and upgrading China’s overall scientific, technological and economic strength, the original development model, one basically driven by investments in factors of production and high reserves, can no longer fully adapt to the current stage of economic and social development. The transition to a new phase of innovation-driven development is certainly the way to go, both in theory and in practice. There are strategic priorities for innovative development. First is to enhance the capacity for indigenous innovation. In the push to catch up with global standards, especially the process regarding the development of high-tech industry and the level of science and technology, China should not always just set eyes merely on the importing of skills, which would result in excessive reliance on the technology of the other countries, and will ultimately only lead to forever following the footsteps, or even becoming a shackle by the advanced technologies of other countries. Second is to strengthen the capacity for original innovation. In terms of innovation, there are original innovation, integrated innovation and indraught assimilation innovation. At a time when China is progressively edging toward the technological frontier and entering unexplored technological realms, as a follower, China has already caught up with and aligned with the pace of other nations and has even overtaken some to reach leading positions in certain technological and industrial fields, where there is no established technology route to follow. As a matter of fact, developed countries have imposed strict controls on cutting-edge technology, core components and major equipment, rendering it impossible for core technologies to be imported or purchased, which is exactly why there is an exigent need for original innovation. Third is to

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adhere to the asymmetric innovation strategy. It is necessary for asymmetric innovation strategies to focus closely on socio-economic development needs, align with the key objectives of enhancing core competitiveness, tackle major challenges of national security from the standpoint of the urgent needs of social development and strengthen the deployment of tasks in certain key areas and key links.

1.2 China’s Development Pathway as a World Power in Innovation, Science and Technology In modern times, multiple rounds of science and technology revolutions and numerous shifts in the global scientific center have triggered the rise and fall of the great powers and enormous changes in world structure. Some countries have seized rare opportunities in science and technology revolution to quicken the pace in strengthening their economic might, science and technology prowess, and national defense capability, bringing about substantial boost in their overall national strength.5 Waves of major scientific discoveries and technological breakthroughs coming out in succession have fostered the rise and development of emerging industries, spawning a number of science and technology world powers represented by the UK, France, Germany, the USA and Japan. Accompanying this powerful thrust brought about by technological innovation is a profound adjustment in the global landscape of science and technology innovation dominated by the USA, Japan and Europe, and their science and technology capability and national strength are also changing accordingly. Whether the world powers in science and technology innovation, or the latecomer emerging economies, they need to prioritize technological innovation high on their agendas and rely on science and technology innovation to support and promote socio-economic development, to create new vitality and impetus for economic growth and sustainable social development (Chen and Zhang 2010; Chen and Huang 2018). Various countries serve as valuable references for China in terms of designing a pathway of developing into a world power in science and technology innovation. Scientific and technological development of the USA exhibits multi-layered, multidimensional and cross-cutting characteristics, forming a dynamic innovation system–a system in which the government provides strategic support, universities undertake scientific research activities, and start-ups and the private sector focus on R&D investment. There are two aspects in the American science and technology innovation system that sustain the advancement of high-tech development, as detailed here. (1) Synergy between public and private investments. The prospect of sustainable and rapid development of the country’s economy and technology attracts active R&D investment from private companies; profits gained by companies in the process are in return invested heavily in high-tech research and development, leading to a substantial increase of funding in such areas. At the same time, the government’s steady investments in key areas of national strategy and national defense facilitate 5

See Footnote 4.

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continuous progress in domains relevant to national strategy. (2) Promotion of the cultivation and free movement of human resources. In the relevant government funding policies for universities, emphasis is placed on cultivating new generations of young scholars to enter enterprises or engage in academic entrepreneurship, and scientific research personnel are encouraged to work in corporations or start their own businesses. Such an approach enriches the exchange of ideas and benefits human interaction between university research, corporate research and product research and development, thus enhancing the continuous progress of technology (Fan 2018). Concentrating on higher education and research is at the core of Germany’s current innovation advantage. The main objective of the “Excellence Initiative” (exzellenzinitiative in German) launched among German universities in 2007 is to enhance the capacity of the universities with regard to scientific research and academic innovation. Exzellenzinitiative is a joint initiative of the German Federal Ministry of Education and Research and the German Research Foundation, the two institutions that are also responsible for the organizational evaluation and monitoring of the “Excellent Initiative.” Thus far, the Excellent Initiative has commenced in two phases, funded jointly by the federal and state governments. The Excellence Initiative entails three aspects of funding. (1) The establishment of research schools. This aspect aims to foster excellent research conditions for a large number of young scientists and outstanding Ph.D. candidates, thereby promoting the quality of higher education and ensuring their international competitiveness in cutting-edge research fields. At the same time, this initiative also encourages extensive international academic cooperation and communication in order to raise Germany’s academic visibility on the international stage. (2) The creation of “Clusters of Excellence.” This aspect intends to provide funding for research institutes set up by universities, to connect them with other related German research institutes and businesses for promoting interdisciplinary research and development, thereby augmenting their competitiveness in research and training. At the same time, the Clusters of Excellence also provides more employment openings and vocational training opportunities for young scholars and researchers. (3) Establishment of the “Future Concept Institutional Strategy.” This aspect aims at building world-class universities in order to enable German universities to maintain longterm leading positions in international academic competition. It is also conducive to enhancing international appeal and competitiveness of German universities, thereby drawing international academia efforts to the nation (Fang 2018). The UK attaches great importance to the formulation, upgrading and optimization of its national science and technology innovation strategy, which is the core competitiveness and principal driving force of the nation’s sustainable development. Since the start of the twenty-first century, the British government has issued a number of white papers featuring innovation as the main element of their contents, a reflection of national development’s dependence on and strong demand for science, technology and innovation in the context of a knowledge-based economy. In order to promote the development of national knowledge-based economy, the British government has strengthened the formation of its national innovation system. The middle- and longterm science and technology development plan was formulated for the first time in 2004, proposing the goal of establishing a British national science and technology

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innovation system, for the purpose of positioning the UK as the key knowledge center of the world. The British government has revised the 10-Year Planning Policy Framework on National Development and put forth the development direction of building an innovation ecosystem, which includes five key strategies: Promote public investment in the science domain, enhance operational capacity of the Research Councils UK (RCUK), implement the Research Excellence Framework (REF), support world-class health research, and strengthen education in the domains of science, technology, engineering and mathematics (STEM). After the outbreak of the global financial crisis in 2008, UK started to look for new economic growth points and driving force for sustainable social development, and the British government has prioritized the policy on supporting technology and industries founded on technology foresight (Liu and Tao 2018). In 2008, the British government earmarked life sciences, nanotechnology, high value-added industry, digital technology and space technology as priority areas for development. In 2012, eight key technology areas were identified, including big data, satellite and space technology, robotics and automation systems, synthetic biology, regenerative medicine, agricultural science and technology, advanced material and energy storage technology. Subsequently, knowledge-intensive industries and advanced manufacturing industries were made pillar industries of the UK. The overall strategy of British science and technology innovation is to consolidate its world-leading advantages in basic science, accelerate the innovation and entrepreneurship of science and technology achievements, transform this research prowess into economic prowess and position the UK as the world’s apogee with regard to the environment for research, innovation, business and related services, so as to ensure long-term prosperity for the country. In spite of its small territory, Japan has made remarkable achievements in the field of science and technology innovation and development, which are primarily attributed to tremendous and continual emphasis focusing on the accumulation of economic strength, human resources and technological foundation since after World War II. Japan has adopted the strategy of “building a nation by technology” since the 1970s, and has implemented a series of measures including the pivot from the introduction of and imitation in key industries, to prioritizing independent basic research and increasing investment in scientific research. Japan’s technological prowess has been improving consistently, as exemplified in its world-leading position in the semiconductor industry. At the same time, with the development mode of governmentdominated big sciences, corporate R&D capacity has been gradually enhancing, and collegiate research capacity has also climbed to the world’s top echelon (Hu and Wang 2018). The endless emergence of major scientific discoveries and technological breakthroughs, together with the formulation and implementation of national innovation policy and strategy, have fostered the rise and development of emerging industries, spawning a number of science and technology world powers as represented by the USA, Germany, the UK and Japan. At present, the USA is still the frontrunner in overall science and technology innovation, while Germany, Japan, the UK and France occupy the number two spots and leading positions in some key areas. This landscape is changing due to China’s rapid ascent in technological innovation: According to

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Year

Fig. 1.2 Changes in China’s ranking on the global innovation index from 2010 to 2019

the Global Innovation Index 2019 (GII) released by the World Intellectual Property Organization (WIPO) in 2019, China has maintained her upward momentum for the fourth consecutive year, ranking 14th, overtaking Japan and France and climbing three places from the previous year, making it the only middle-income economy in the top 30.6 The changes in the ranking of China’s placement on the Global Innovation Index from 2010 to 2019 are shown in Fig. 1.2. Over the course of development of more than seven decades since the founding of the People’s Republic of China, the role of science and technology innovation in the overall development of the Party and the country has been enhanced substantially. Innovation is an internal demand during national and economic development, and equally important it is also a natural outcome of the collectively endeavor of science and technology workers as well as all sectors of society nationwide. Along the course of building China into a world power in science and technology, during every key stage of national development, from “marching toward science” and “science and technology is the primary productive force,” to “rejuvenating the country through science and education,” and finally “building an innovative country,” major decisions and strategic deployments made at the national level have all centered on science and technology innovation. The report to the 18th National Congress of the Communist Party of China stated that science and technology innovation is a strategic support for improving social productivity and overall national strength, and must be placed at the core of China’s overall development.7 Science and technology innovation is the primary driving force for development and an important strategic pillar that underpins the establishment of a modernized economy. It is crucial to further identify the orientation and development pathway of science and technology innovation prior to building a world power in science and technology 6

Please see Global Innovation Index 2019 on official website: https://www.wipo.int/global_innova tion_index/en/2019/ 7 See Footnote 2.

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innovation. Positioning China as a world power in science and technology innovation means that the country will become one of the world’s major science centers and strategic high grounds. There are three important criteria to determine whether a country can be described as a science and technology innovation powerhouse: Whether it has the science and technology innovation capability to lead the world; whether it has built a high-level innovation-oriented economy; and whether it has become a vibrant innovation society. To fulfill these three important criteria, two pivotal aspects need to be clearly defined. Firstly, to build a world power in science and technology innovation, it is necessary to elevate the role of science and technology innovation during the course of development, making it an integral part of the comprehensive and whole process of material, political, cultural/ideological, social and ecological progress. Secondly, to build a world power in science and technology innovation, it is necessary to unswervingly support indigenous innovation with Chinese characteristics, and comprehensively enhance innovation capacity. China’s development practices have proved that following the path of indigenous innovation with Chinese characteristics is the only way to go, particularly when there is still large discrepancy between China and the highest levels of science and technology innovation around the world, particularly under the backdrop that China lacks key and core technologies, or breakthrough achievements in disruptive technologies and stranglehold technologies. Therefore, it is essential to attach greater importance to the long-term nature and the magnitude of the task of catching up to leaders of innovation, foster innovation with a global perspective and employ indigenous innovation with Chinese characteristics to comprehensively augment China’s potentials in national innovation. Strategic transformation is the key to China’s science and technology innovation development. The science and technology innovation strategy must move from merely following behind others to leading the way, rise from introducing and integrating, to creating originals in an independent manner. The science and technology innovation strategy of China must be anchored in strategic transformation, built upon a complete establishment of core capabilities and full possession of core technologies. From independent research and development to indigenous innovation, from indigenous innovation to independent self-control, to be the spearhead is the central pursuit China’s science and technology innovation. “A centenary dream of building a world power in science and technology innovation” is the directive core strategy for science and technology, economic endeavors and social development in the upcoming period. It is of supreme importance to study the science and technology powerhouses of the world, and set a clear and accurate positioning of the strategy for transforming China into a world power in science and technology innovation. Upon this basis, the pathway for building a world power in science and technology innovation can be consolidated into a “dual pathway,” that is, a “basic research and core technology supply path” and a “demand-driven science and technology innovation path.” With regard to typical national development strategies driven by science and technology innovation, different countries have adopted different pathways in turn themselves into world powers. From the technological supply and demand perspective, the UK concentrated on a basic research supply-oriented pathway; Germany

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Fig. 1.3 Development pathways of some countries

and Japan showed inclinations for the core technology supply-oriented pathway; and the USA has taken both pathways, as in the “basic research and core technology supply path” and “demand-driven science and technology innovation path,” while effectively striking a balance between the two approaches. India adopts the “demanddriven science and technology innovation path” but ignores the “basic research and core technology supply path,” as shown in Fig. 1.3. At present, China stands in the middle of a transformation stage between growing from a great nation in science and technology innovation to becoming a world power in science and technology innovation. In view of the existing science and technology innovation capacity, it is appropriate for China to adopt a midway approach that integrates the “demand-driven science and technology innovation path” and the “basic research and core technology supply path,” by designing a pathway that is tailored to actual circumstances related to China’s goal in building a world power in science and technology innovation. Such a Chinese pathway, in particular, should be one that makes full and effective use of the powerful government organization and management capacities and huge market demand, takes advantage of global economic transformation, digital economy and smart economy, pursues the strategic transformation of “a better life,” and charges through obstacles before the “turning point” by relying on a strategy that combines “basic research and core technology supply path” and “demand-driven science and technology innovation path.” Taking into account the analysis and pathway design of Chinese transformation needs in the science and technology innovation world power system, the strategy bolstering the building of a world power in science and technology innovation should center on the development logic of strong research talents, system, policy and culture. Details are as follows:

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First, strong talents: accelerate the cultivation of high-level innovation talents. The strategy of reinvigorating the country through the cultivation of human resource is the foremost strategy of transforming China into a world power in science and technology innovation. To attain this goal, it is therefore necessary to speed up the fostering of high-level innovative talents, enhance the incentive mechanism for innovative talents, address the worries of innovative talents, reform thoroughly the human resources systems and mechanism with the focus placed on forming an empowering environment for talents to maximize their role, and finally, actively create a social atmosphere conducive to the healthy development of innovation. First of all, it is necessary to give close and thoughtful attention to the mechanisms and measures for discovering, nurturing, attracting and stabilizing talents, investigate and formulate plans and preferential policies for recruiting high-level scientific and technological talents, explore and resolve key problems in the development of science and technology personnel, so as to create an accommodating environment and conditions for the development of science and technology innovative talents. Secondly, considering the current situation of the make-up of human resources, it is necessary to identify ways to speed up the construction of an innovation corps comprising different kinds of talents with particular focus on high-level, high-skilled individuals, carry out national high-level personnel training program and accelerate the cultivation of strategic scientists. Lastly, it is necessary to explore new models and mechanisms for developing innovation and entrepreneurship education, construct a training system for innovative engineering and scientific talents who embody general, specialized and crossing-linking skills, establish sound curriculum structures and teaching platforms that combine science and technology research and teaching, and explore a production-academia cooperative training system for innovative engineering and science and technology talents. Second, strong system: establish and improve the national innovation system. The perfection of the national innovation system is the crux of the matter of building a world power in science and technology innovation. The emergence of new industries, new business forms and new models, and increasingly diversified social governance objects and environment, are forcing social governance system to reform in response, promoting changes in the role of the government, and expediting the modernization the nation’s governance system and capacity. Therefore, first of all, it is necessary to continue with pursuing an enterprise-led mechanism for collaborative innovation between government, industry, university, research institutes and financial institutions, construct a series of major national innovation bases, and maintain linkage between national laboratories, national engineering technology research centers and enterprise technology centers. Second of all, it is necessary to strengthen the effective cooperation between basic research funds, major R&D funds, and technological innovation guidance funds in the national science and technology planning and management system. Last of all, it is necessary to create a China-led innovation system that is in line with the Belt and Road Initiative, establish a number of global innovation centers, foster a pattern of accelerating innovation that is evenly distributed and integrates internal and external developments, establish a full-chain service systems for innovation and entrepreneurship focusing on the “four-chain fusion” that integrates

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innovation chain, industrial chain, capital chain and policy chain, and construct an efficient national innovation system that accommodates diverse innovation entities. Third, strong policies: improve policies on science and technology innovation. With the intensification of global innovation competition, the uncertainty of science and technology innovation has given rise to a myriad of new challenges. For example, artificial intelligence (AI) may result in issues such as reshaping of employment structure, threats to national security and, various impacts to legal and social ethics. While persisting steadfastly to foster more innovative achievements and promote the emphatic integration of emerging technologies with various industrial sectors, there is also the concurrent need to strengthen proactive prevention and restraint guidance on potential negative effects, and draw up sound policies, laws and regulations related to science and technology innovation, so as to ensure safety by way of innovative means. Emphasizing the objectives and requirements on policy design of building a world power in science and technology innovation, it is necessary to further explore the national system and mechanism of government-led world power in science and technology innovation; investigate systems and mechanisms for science and technology innovation that combine the role of government with market mechanisms; analyze the stimulating effect of science and technology policy on technological innovation; explore the impact of the design of science and technology innovation on basic technological innovation, and study the effect of institutional guarantee on the dissemination and application of technological innovation; analyze the influence of the improvement of intellectual property system on the protection and diffusion of technological innovation; promote policy implementation and supervise evaluation studies; and study the working mechanism of interdepartmental promotion and implementation of policies. Fourth, strong culture: foster a culture of science and technology innovation. To nurture a favorable science and technology innovation world power, culture is fundamental for providing a high-quality cultural atmosphere and social environment for the building of a world power in science and technology. At the current stage, global technological innovation has entered an intense and active period, where new emerging technologies are accelerating their integrations with, penetrations into and continuous expansions of traditional domains. The innovative organizational model is becoming increasingly distributed, flat, open, clustered and virtualized, with new innovation organizations emerging incessantly. Simultaneously, innovative modes are progressively leaning toward crowdfunding and crowdsourcing and are growing fast, while new innovation platforms such as makerspaces and innovation labs are consistently emerging. Further, the innovation ecosystem is becoming increasingly diversified, as innovation is not only reflected in science and technology, but also in organizational, institutional and cultural aspects. The establishment of science and technology innovation culture system is indispensable to the creation of a world power in science and technology innovation and the cultivation of national innovation capacity.

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Column 1.1: National Natural Science Funding of China Supporting Efforts in Building China into World Power in Science and Technology Innovation —Perspective of basic research and core technology supply path Ever since the 18th National Congress of the Communist Party of China (CPC), the CPC Central Committee led by Comrade Xi Jinping has placed science and technology innovation at the heart of China’s overall development, implemented an innovation-driven development strategy and vigorously promoted all-round innovation with science and technology innovation at its center. The National Natural Science Foundation of China has earnestly complied with the spirit and the guiding principles of President Xi Jinping’s important instructions, scientifically utilized about RMB 109.406 billion from the national budget and about RMB 1.756 billion from other sources to invest in a total of 159,861 projects, steadily supported basic research and exploration in the frontier of science, fostered the growth of talents and teams, continuously enhanced China’s capacity in original innovation and helped laid a solid foundation for the construction of a world power in science and technology innovation (data listed in this segment are fundings from 2013 to 2016). The National Natural Science Foundation of China (NSFC) is composed of eight departments, including Mathematical and Physical Sciences, Chemical Sciences, Life Sciences, Earth Sciences, Engineering and Materials Sciences, Information Sciences, Management Sciences and Health Sciences. During the 13th Five-Year Plan period, the National Natural Science Foundation of China invested a total of RMB 24.8 billion to aid 3000–3500 key programs over the period of five years and allocated funding for an average of about 20 major programs each year with about RMB 20 million for each, bringing the total to around a hundred major research programs in five years. The NSFC makes comprehensive arrangements for basic research and fosters capacity of innovation at the source. The organization promotes balanced, coordinated and sustained development of disciplines, retains a steady proportion of funding for free exploration projects, encourages researchers to conduct innovative studies on topics of their choice and has funded a total of 64,837 general projects amounting to RMB 44.35 billion. Oriented toward the frontier of science and technology, the NSFC strengthens deployments in priority areas, guides and focuses efforts to conduct in-depth and systematic innovative research studies, gives priority support to important frontier scientific research issues, promotes the development of disciplines, advances breakthroughs in important fields or in the frontiers of science and has funded a total of 2406 key projects amounting to RMB 7.213 billion. Oriented toward the frontier of science and the needs of the country, and guided by scientific objectives, the organization encourages and fosters exploratory scientific instrument research and development with original ideas, strongly supports the research and development of original and major scientific instruments and equipment, provides more novel means and

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tools for scientific research, strengthens conditional support for original innovation research and has funded a total of 295 major national scientific instruments research and development projects amounting to RMB 3.607 billion. Oriented toward meeting major national strategic needs, the NSFC promotes interdisciplinary integration. The organization has increased support for major original innovations and cross-disciplinary areas, launched 16 major research programs including “basic research on the causes and coping mechanisms of atmospheric complex pollution in China,” “basic theory and key technologies of eutectic robot,” “fundamental research on turbulent combustion for engines,” “basic theory and key technology of spatial information network,” “immune characteristics and disease of tissue and organ regions,” etc., with funding totaling RMB 3.160 billion. The NSFC actively coordinates and connects with other national science and technology initiatives, puts emphasis on providing scientific support for the development of important national strategic areas, persists on the promotion of interdisciplinary integration and solving complex and difficult problems as a strategic policy, and guides scientists to carry out cross-disciplinary research that takes into consideration the national needs and frontiers of disciplines, having funded 88 key programs in this regard including “research on gravitational wave physics problems,” “basic research on the biological characteristics and pathogenesis of Ebola virus,” “real-time fault diagnosis and application verification of high-speed train information control system” etc., with funding totaling RMB 1.449 billion. Aiming at the frontier of international science for forward-looking deployment, the NSFC has piloted the implementation of basic science center programs in 2016, approving grants for three basic science center programs, namely “geometry, analysis and calculation on manifolds,” “cutting-edge research in dynamic chemistry” and “craton destruction and terrestrial biological evolution,” with funding totaling RMB 540 million. The NSFC intends to incorporate the advantages of multidisciplinary crossovers and integrations through long-term and steady support, so as to realize leapfrog and leading development in relevant fields, while fostering the formation of an academic hub that exerts important international influences. Source: Yang Wei. In-depth Dedication to Dream of Building a World Power in Science and Technology, the Glories of Steadfast Progress Forward— Five-year Development Review of the National Natural Science Foundation of China [EB/OL]. http://www.nsfc.gov.cn/publish/portal0/tab440/info69919. htm, changes on 2017-07-31.

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Column 1.2: Design of National “13th Five-Year Plan” Science and Technology Planning System —Perspective on Demand-Driven Technology Innovation Pathway Five types of science and technology demand initiatives are involved in the proposed 13th Five-Year Plan for Science and Technology System, guiding the direction of national science and technology innovation. The first type is the National Natural Science Foundation of China. The NSFC finances basic research and exploration in the frontiers of science, supports talent development and team building and enhances the capacity for innovation at the source. The NSFC further improves management, increase funding and furnish key national research areas with innovation knowledge and talent teams. It also strengthens the effective connection between the Foundation and other types of science and technology programs. The second type is major national science and technology special programs. These programs focus on major national strategic products and their industrialization goals, and solutions for “stranglehold” problems. They further reform implementation mechanisms and management models of innovation organizations, emphasize major strategic products and industrialization goals, control the number of special projects, strengthen division of labor and connection with other science and technology programs (special projects, funding, etc.), and eliminate repetitive investments. The third type is a national key research and development initiative. This initiative focuses on major public welfare research concerning national economy, people’s livelihood, major scientific and technological issues related to core competitiveness of industries and overall indigenous innovation capacity and national security, and aims to address technological bottlenecks in major areas of national economic and social development. This endeavor integrates the following into a national key research and development initiative: programs managed by the Ministry of Science and Technology including the National Key Basic Research Development Program, the National High Technology Research and Development Program, the National Science and Technology Support Program, and the International Science and Technology Cooperation and Exchange Program; industrial technology research and development funds jointly managed by the National Development and Reform Commission and the Ministry of Industry and Information Technology; and scientific research projects of public welfare industries managed by 13 different departments including the Ministry of Agriculture, the Health and Family Planning Commission, etc. The fourth type is the special programs (funds) for guiding technological innovation. According to the needs of technological innovation activities of enterprises at different stages, these programs classify and integrate the following special financial resources (funds): Venture capital funds for emerging industries managed by the National Development and Reform

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Commission and the Ministry of Finance; guiding funds for policy guiding programs and transformation of scientific and technological achievements, managed by the Ministry of Science and Technology; the portions of special funds for supporting science and technology innovation in small and mediumsized enterprise, jointly managed by four ministries including the Ministry of Finance, the Ministry of Science and Technology and others, and other special funds for guiding and supporting technological innovation of enterprises. The fifth type is base and talent special programs. These programs consolidate the following: National (key) laboratories, National Engineering Technology Research Center, National Science and Technology Infrastructure Platform Center and Innovative Talents Promotion Program managed by the Ministry of Science and Technology; and National Engineering Laboratory, National Engineering Research Center, National Enterprise Technology Center and others managed by the National Development and Reform Commission. Such programs further optimize the layout, classify and integrate resources according to functional positioning, and strengthen top-level design and interconnection of relevant talent programs. Upon this basis, adjustments have been made in relevant special funds. Base and talent are important foundations conducive to scientific research activities, which is why relevant special projects should support the construction of scientific research bases and scientific research activities of innovative talents and teams, so as to foster open sharing of scientific and technological resources. The five new types of science and technology initiatives (special projects, funds, etc.) are formed from integration, and each has its own focused point of support and distinctive management mode, while at the same time, they complement each other. Cross-program coordination mechanism and evaluation and supervision mechanism are established through a unified national science and technology management platform, ensuring that the five types of science and technology initiatives (special projects, funds, etc.) form a unified entity that can effectively focus on key objectives while avoiding overlaps. Source: Public Service Platform of National Science and Technology Information System. Systematic Explanation of the 13th Five-Year Plan for Science and Technology System [EB/OL]. https://service.most.gov.cn/index/ xwljh.html, changes on 2015-07-29.

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1.3 Necessity and Urgency in Exploration of Science and Technology Innovation in China 1.3.1 The “Grand Strategy” of the Nation Requires “Grand Innovation” The grand strategy of a country is an overall layout for the advancement of its national strength in peacetime, mainly taking into consideration various factors such as economic development, social stability, national security, resource development and international influence (Hu 2016). Many Western countries have experienced slowdown in economy along with acceleration in technological reform after the economic crisis, which on the other hand provides a precious window of opportunity for second-mover countries to catch up and overtake. In order for China to transform from its previous role as a follower to that of a leader, it is imperative to innovate a unique development model with Chinese characteristics, and avoid the pitfall of foreign technology import. For China, most industries and enterprises are second-movers in the process of gradually evolving from catching up to trying to overtake, even speeding toward the forefront of innovation. A number of reasons, such as change in international status quo, replacement of technological paradigm and the drive of technological innovation aggregate into a multi-layered array of situational factors featuring technologies, demands and systems that bring hopes and opportunities to second-mover countries, industries and enterprises to catch up and surpass leaders. At this point, there is a necessity for the provision of an institutional guarantee of the whole national system for the industries and enterprises in such a window of opportunity. China has put forward a myriad of major national development plans, such as the “Belt and Road” Initiative, building a world power in science and technology innovation, developing the Guangdong-Hong Kong-Macau Greater Bay Area and the Xiong’an New Area, etc. All these plans are characterized by the following features: (1) Grand measures—in politics, economy, culture, etc., as well as direct and indirect measures; (2) grand objectives—the scopes of objectives are typically cross-cutting, holistic and long-term, covering all the organizations within a horizontal and vertical category of the nation or region; (3) grand coordination—oftentimes involving multiple stakeholders, interest targets, realization paths, etc., it is necessary to balance and coordinate the various subgroups of target systems, strategic measures systems and relevant participants under these programs, endeavor to protect local and partial interests, and safeguard the absolute guarantee of overall interests. Fulfilling the goals of these plans requires concerted efforts undertaken with grand innovations. Traditional innovation theories and paradigms tend to start from the aspects of specific behaviors, methods, links, entity or problems to understand the innovation process and formulate innovation strategies, or adopt a local (partial) entry point, such as user innovation, design-driven innovation; or focus on the integration of essential

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elements like horizontal knowledge and resources, etc., with collaborative innovation being such an example. These traditional theories and paradigms either ignore the effective coordination of multivariate and heterogeneous entities and the control of core technologies, such as the case of open innovation; or they go to the other extreme by overemphasizing cultural or social factors, such as the case of social innovation and naïve innovation. In other words, most of the existing mainstream innovation theories are limited to partial thinking mode, although they can enhance the capability of enterprises in certain aspects, they lack holistic thinking on innovation from the perspective of national development. Confronted with more uncertain and complicated rivalry under the new competitive environment, it is urgent for the nation, industries and enterprises to adopt new innovation strategies and models, and focus on grand innovations to implement the nation’s great plans. Holistic innovation (HI) with holistic thinking is exactly the innovation theory that attaches importance to strategic goals, tackles complex problems and takes heed of the balance of partial and overall interests. Holistic innovation is an innovation-thinking paradigm of overall innovation and grand innovation. Its essence is a holistic, systematic approach, and it focuses on grand innovations, breaks through the atomistic thinking paradigm of traditional innovation theory and organically integrates all elements of innovation through strategic guidance and strategic design, providing theoretical support for enterprises and countries to achieve breakthroughs and implement innovation in crucial domains and major technologies. Columns 1.3: Embrace a New Era of Convergence Science and Science Data, and Open Sharing The first issue of Bulletin of the Chinese Academy of Sciences (BCAS) 2020 focuses on “convergence science,” which is an application of holistic thinking in the field of basic and applied research. It is the embodiment of strategy, openness, synergy and comprehensiveness in the field of scientific research. The “spring of science” began in the late 1970s with the convening of the National Science Conference. “At sunrise riverside flowers redder than burning flame, in spring radiance paints green waves blue as sapphire,” since the reform and opening up, China’s scientific and technological modernization has developed by leaps and bounds, and its science and technology capabilities and international influences have markedly increased. China ranked second in the world in 2019 in the “Nature Index” (NI) according to data from published papers of top journals. However, increasingly prominent bottlenecks and constraints such as resources, ecological environment have emerged following the rapid Chinese economic development. At the same time, huge impacts on international structure due to China’s rapid ascent increasingly underscores limitations in Chinese reliance on foreign key and core technologies in numerous fields, as exemplified in the China-US trade war. The Chinese science and technology circle is no stranger to resolving these obstacles in order to respond to

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the urgent needs of economic and social development, and safeguarding the long-term strategic interests of the nation. As a new scientific research paradigm taking an interdisciplinary approach to solve major economic and social problems, “convergence science” provides an opportunity for China to tackle the aforementioned outstanding problems. This new paradigm originates from interdisciplinary and objective-oriented research, and has seen adoption since its emergence in the middle of the twentieth century. As humankind is forced to deal with a raft of major challenges such as energy shortage, environmental pollution, high incidence of cancer and other problems that are threatening sustainable development, this new paradigm of scientific research has been highly valued internationally since the beginning of the twenty-first century. Relying solely on existing traditional scientific paradigm chiefly based on a structure of discipline division will definitely pose tremendous difficulties in tackling these colossal challenges. It is therefore of immense urgency to seek solution through a reform of scientific research paradigm and scientific research management model. Set against this backdrop, “convergence science” first appeared in the field of life science research and has gradually seen broad applications in various fields such as energy, environment, information and security. Concurrently, the concept and practice of opened sharing of scientific data have continued to deepen on the international stage, and they are considered one of the three determining factors in the global development of scientific research in the next decade. This orientation toward “open sharing” of scientific data is only not limited to the long-established “big science” data (such as ecological observations and large instrument data), but rather more emphasis is placed on the open sharing of data (so-called “small science” data) that researchers design, collect and process during their personal studies. A number of countries have actively deployed and promoted the open sharing of “small science” data, trying to seize advantageous high grounds in the open sharing of scientific research data. As a matter of fact, at present there is an intrinsic connection between the two major international trends of “convergence science” and open sharing of scientific data. On the one hand, the new paradigm of “convergence science” will effect a fundamental transformation in scientific research ecology, which needs stimulation from various aspects such as planning, organization, evaluation and personnel, among which the most basic aspect is open data sharing. On the other hand, with the government and the public holding scientific research accountable for the influence they exert, policies and initiatives to promote open sharing of scientific data can no longer ignore the concerns regarding the practical utility of data openness. As pointed out by the US National Research Council, the development of “convergence science” will bring a whole new vision for scientific research and the future of humanity. Promotion of the

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open sharing of scientific data and the new paradigm of “convergence science” are complementing each other with respect to new requirement on basic data. This intrinsic connection is fully demonstrated at the frontline of scientific research, among them the typical example is the multidisciplinary crossintegration of life science, medicine, information technology, nanoscience, statistics, sociology and other disciplines, made possible thanks to the emphatic support of open data sharing. This new research paradigm has spawned new research organizations and funding models, new ways of open sharing of scientific data, new cooperation mechanism between industries, universities and research institutes, and new modes of human resource development, together injecting new vitality into the thriving scientific research scene. In recent years, major science and technology authorities and bodies including the Chinese Academy of Sciences, the Ministry of Science and Technology, the National Natural Science Foundation of China and the Ministry of Education have undertaken fruitful explorations in the concepts and practices of scientific research management in accordance with the direction of “convergence science” and open sharing of scientific data, each with their own characteristics. For example, in July 2014, the Chinese Academy of Sciences announced the launch of The Chinese Academy of Science “Pioneer Action Plan” and The Outline of Comprehensive Deepening Reform. Specifically, upon the twolevel management system basis of academy and institute as legal persons, steps will be taken to construct “four types of institutions,” namely centers of excellence for innovation, innovation institutes, big science research centers and distinctive research institutes. Thereafter, as major tasks gain traction, legal entity barriers of the institutes will be broken down, so as to bring together the strengths of multidisciplinary institutes to tackle problems concertedly. Ever since the “13th Five-Year Plan,” the Chinese Academy of Sciences has taken advantages of its multidisciplinary superiority and put forward the “8 + 2” innovation domain strategic deployment, while adopting a convergence perspective to carry out its pilot evaluation program in the two innovation areas of life sciences and energy. From 2018 onward, the National Natural Science Foundation of China (NSFC) has launched a reform on “funding orientation in the new era,” conducted evaluation and allocated funds according to classification based on four types of scientific issue attributes: “encourage exploration, highlight originality; focus on frontier, blaze a unique trail; motivate by demand, break through bottleneck, orient toward commonality, promote interdisciplinary convergence,” so as to explore funding methods for “interdisciplinary convergence” (convergence science). The Fourth Plenary Session of the 19th CPC Central Committee underscored the building of a new whole-nation system for tackling key and core technologies under the backdrop of socialist market economy. What is the “new whole-nation system” in the new era? In fact, “convergence science” and open

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sharing of scientific data can be regarded as crucial explorations of new international scientific research organizations. The construction of “new wholenation system” in China needs to incorporate these beneficial experiences. Generally speaking, these two aspects are still in the initial stage of development in the world today. It is likely that the rise of “convergence science” and data opening constitute another precious, historic development opportunity in Chinese science and technology endeavors since “spring of science” 40 years ago. In this regard, on the basis of making up for the shortcomings of traditional discipline development, it is imperative to give full play to the nation’s superiority, break down barriers between discipline barrier and remove separation of interests among different authorities and bodies, improve mechanism for data sharing, coordination and cooperation across disciplines, bodies and industries, build a database and cooperation network for solving national socio-economic problems and tackling key core technologies, and at the same time actively draws on international experiences to explore a Chinese pathway. Source: Please refer to guest commentator article “Embracing the New Era of Convergence of Science and Science Data, Open and Sharing”, 2020 first issue of Bulletin of the Chinese Academy of Sciences.

1.3.2 The Development of Major National Projects Needs the Guidance of Chinese Wisdom National major projects have become an immense driving force for national development and the core competitiveness of the tug-of-wars between countries. Whether it is the powerful and advanced equipment or major engineering construction projects of the nation, China has already surged to the global forefront in many ways, from national policy spending, and scientific and technological talents, to a bevy of early research results in new fields. National major projects need to mobilize resources of the whole society to organize strategic project implementation. Successful executions of major projects generate massive social, political and economic benefits, and are likely to bring about profound impact on national competitiveness and structure of international relations. China has shown excellent practices in major projects, being at present the world’s leading country in major engineering construction projects in terms of the total number of major projects and scale of individual projects. Yet, much of research achievements in management originate from the West, where the academic systems, discourse systems, and even cultural connotations can neither fully interpret nor guide the development of China’s major projects. In China, development of following major projects including “national powerful equipment” (nuclear bomb, missile and satellite, aircraft carrier, Shenzhou spacecraft, C919 large passenger jetliner, Beidou Satellite Navigation System, “Mosquito

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Dragon” manned deep-sea submersible, etc.), major projects (Three Gorges Project, South–North Water Transfer project, West–East Gas Pipeline project, High-speed Railway, Hong Kong-Zhuhai-Macau Bridge, Qinghai-Tibet Railway, Hualong 1 nuclear reactor, synthetic bovine insulin, Artemisinin, etc.), “big science” installation (electronic positron collider, five-hundred-meter aperture spherical radio telescope FAST, spallation neutron source, “Micius” quantum experiments at space scale, Dayang-1 scientific research ship, etc.), high-tech fields (artificial intelligence, big data, cloud computing, 5G, Internet of Things, chips, new energy, new materials, etc.) have enabled the nation’s infrastructure to expand effectively, forming a secure, efficient and interconnected infrastructure network in China. Such developments have provided an important material basis for the improvement and safe advancement of the whole society, and at the same time also promoting rapid socio-economic progress. These major projects are important vectors of the innovation-driven development strategy. During the construction stage of such major projects, it is of utmost importance to resolutely pursue a coordinated innovation, green, open and shared development vision, and adhere to the people-centered thinking. This is the historical mission bestowed on the major national projects by the historical heritage and social characteristics of China. Correspondingly, first-class innovation theories and academic achievements should be in place to address the major project management issues with Chinese characteristics, and theories with Chinese characteristics and wisdoms are urgently needed to serve as reference and guidance. Column 1.4: Management Issues in “National Powerful Equipment” and Major Projects In April 2019, the Journal of Management World launched the “Management Science and Engineering Project” column and placed specific focus on the “national powerful equipment,” major projects, high-tech fields, etc. Five articles were published in that monthly issue of the periodical as the premiere of the “Management Science and Engineering Project” column. This is an important achievement of the National Natural Science Foundation of China’s key project “Innovation Research on Theory, Methods and Application of Major Infrastructure Construction Project Management of China” spearheaded and accomplished by Professor Sheng Zhaohan of Nanjing University. This study marked the transformation in the basic academic research model and path of project management in China from “following” to “keep going,” from “apprenticeship” to chiefly “indigenous innovation.” It exhibits theoretical thinking and academic innovation of the discipline system, academic system and discourse system with Chinese characteristics and originality, thus enhancing the nation’s international discourse power on major national project management research. These five articles respectively discuss the construction of a basic theoretical system of major project management of socialism with Chinese characteristics, putting forward a series of original knowledge transformation and new discourse systems primarily derived from the management practice of major

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projects in China: Giving full play to the advantages of the system and concentrating strength to do great things are the dynamic mechanism of China’s major projects organization model, and the adaptive evolution rules of China’s major project organization model under the binary role of “government-market”; the coupling principle between the hierarchy of major project technology innovation goals and the complexity of innovation ecosystem; the principle of major project decision management and governance system structure based on legal checks and balances; and major project and factory construction management model and supply chain optimization. The aforesaid theoretical and methodological innovation achievements have been systematically and thoroughly applied in major projects such as the Hong Kong-Zhuhai-Macao Bridge in China, which represents an immaculate combination of China’s major project theory and practice, and it is also a laudable example of the close collaboration between the Chinese academic and engineering spheres of major project in enhancing technological advances in major project management. Source: Sheng et al. (2019). The research on the fundamental theory of major project management has become an original and cutting-edge academic issue recognized by the international project management circle. In recent years, Chinese scholars have actively participated in the independent and original research on this theoretical issue of remarkable academic value, demonstrating the important transition in the academic research of project management in China from “following the example” to “keep going. “The core concepts, basic principles and fundamental scientific issues refined by Chinese scholars and a new methodology constitute a chain of theories of a complete theoretical system. This development is a leading academic innovation of the fundamental theoretical system and discourse system of major project management in the international project management circle. Source: Le et al. (2019). The organization model of major projects is characterized by national circumstances, system and cultural condition. In the past 40 years, the great achievements of major projects in China have benefited from the scientific design of organization model of major projects, with core ideas listed here: Give full play to and fully unleash the institutional advantages of socialism in the nation, integrate comprehensive resources and concentrate power on major tasks. Centering on these core ideas, this paper starts from the institutional context of the binary role of “government–market” and: (1) analyzes the connotation of the organization model of major projects in China, puts forward the corresponding theoretical analysis framework; (2) reviews the long-term institutional change, binary role mechanism and evolution process of organization model of major projects in China; (3) analyzes the formation mechanism,

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organization allocation and life-cycle process evolution of major projects organization model in China; and (4) puts forward four development suggestions on the innovation of organization model of major projects in China. Source: Li et al. (2019). Major engineering construction project decisions are characterized by high uncertainty, scenario complexity and sustained impacts throughout long life cycles. How to form a “good” decision plan requires not only a scientific evaluation system but also effective means of implementation. This paper analyzes the basic connotation of decision management of major projects. Using the Hong Kong-Zhuhai-Macao Bridge as case, this papers studies the following: the complexity and basic principles of decision-making governance under the political background of “one country, two systems,” shaping of the “applicable territorial law” action criterion for decision-making governance of Hong KongZhuhai-Macao Bridge based on the systematic decomposition and reconstruction of decision-making issue, and establishment of a multi-level decisionmaking governance structure and power allocation scheme of “three-level structure and two-level coordination,” which formed a multi-entity “friendly negotiation” governance action process. On this basis, this paper constructs the major project decision-making governance system from the three aspects of action criterion, organization procedure and joint action mechanism, so as to provide reference conducive to improving decision-making governance ability. This paper contains a litany of research achievements, develops the traditional decision-making theory, enhances the modernization level of decisionmaking and management ability of major projects and serves as sound reference for the decision-making process of major project like the “Guangdong-Hong Kong-Macao Greater Bay Area.” Source: Zeng et al. (2019). Unlike general project innovation and enterprise innovation, major project technology innovation is demand-oriented, and is technology innovation activity with “target lock-on.” The complete structure and effective operation of major project innovation ecosystem is instrumental to smooth project implementation and the value co-creation of innovation entity. This paper deconstructs the composition of innovation entity of innovation ecosystem of major projects, reveals the dynamic evolution rules of major projects innovation ecosystem (chiefly manifested as multi-entity symbiotic co-opetition, multistage interactive evolution and cross-project dynamic migration), and explores the influence mechanisms of innovation field on innovation capability. The element composition and dynamic evolution of the innovation ecosystem with reference to the Hong Hong-Zhuhai-Macao Bridge project case is analyzed, and it has been discovered that the effect of innovation ecological network on enhancing competitiveness is more marked for innovation entity with undivided/concentrated innovation niche and low innovation ecological potential. Lastly, this paper discusses contribution and practical enlightenment of the

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research, in the hope of providing a theoretical basis for the improvement of innovation capacity of major (engineering) projects. Source: Qi et al. (2019). This paper analyzes the key issue relevant to factory construction management of major projects, refines the management innovation of major project factory construction–integrated management model and supplier cultivation, and demonstrates validity through the Hong Kong-Zhuhai-Macao Bridge project case, with the aim of offering enlightenment for major national project construction management. The content and conclusion of the research include the following: (1) In view of the difficulty of collaborative factory construction of major projects, this paper proposes the implementation of three-dimension integrated management of organization integration, process integration and information integration, and further deepens the organization integration of factory construction under the general contract mode, integration planning driven by assembly construction, and production construction process control, as well as an information integration of multi-entity-collaboration and multisource orientation. (2) In view of the issue of low participation willingness arising from failures of major project manufacturing suppliers in meeting project requirements in production capacity and quality level, this paper analyzes the characteristics of major project manufacturing supplier cultivation, and proposes corresponding conceptual models and management revelations. (3) Using the island tunnel project and the factory construction of steel box girder in the Hong Kong-Zhuhai-Macao Bridge project as example, this paper summarizes and discusses the implementation approach and effect of major project factory construction, so as to demonstrate the validity of management innovation proposed in this paper. Source: Please refer to Journal of Management World 2019 column setting and focus, and fourth issue of “Management Science and Project” column, 2019.

1.3.3 The Necessity of New Development of Innovation Theory for Disruptive Technology Breakthrough The world has ushered in the embryonic stage of a new round of scientific and technological revolution and industrial transformation, as disruptive technologies continue to emerge, and new forms of industrial organization and business models are taking shape one after the other, providing society with a new driving force for leapfrog development, while also offering second-mover countries with new

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opportunities to speed up technological catch-up and realize innovation-led development. There are two typical combinations of terms representing emerging disruptive technologies—“NBIC convergence technology” and “ABCD Internet emerging technology.” “NBIC convergence technology” refers to the synergy and integration of four rapidly developing domains of science and technology, namely nanotechnology, biotechnology, information technology and cognitive science. This term was put forward in a frontier science research program launched by over 50 leading scientists funded by the National Science Foundation of the USA and the US Department of Commerce. They anticipated that NBIC convergence technology would become the most representative leading-edge technology in the twenty-first century, and each major breakthrough in these four science and technology domains would bring extraordinary changes to society and economic development, while a crossover, convergence, fusion or integration of any two of these technologies will result in a profound and lasting impact. “ABCD Internet emerging technology” refers to major breakthroughs such as those accompanying 5G-communication technology, and emerging Internet technologies that have garnered widespread popularity including artificial intelligence, blockchain, cloud computing and data science. The development of “ABCD Internet emerging technology” is also triggering substantive social changes. Major countries around the world including the USA, Germany, Japan, the UK, France and China have implemented relevant national strategies and science and technology policies. “Intelligent plus” has been officially proposed for the first time in the Government Work Report 2019 subsequent to “Internet plus” and intelligent manufacturing becoming national strategies, which raised AI-driven economy to the level of national development strategy, and highlighted the significance of emerging technologies to the development of the nation, industries and enterprises. Disruptive technologies represented by “NBIC convergence technology” and “ABCD Internet emerging technology” are the main engine for the new round of industrial revolution worldwide. They have led to the rise of the following new features in the domestic and foreign competitive environment, as well as the modes of competition among enterprises: First, ambiguity is manifested as the blurring of the boundaries between enterprise and industry. Traditional enterprise strategy theories, such as enterprise competitive advantage theory, five forces model and so on are all based on the assumption that industry boundary is clear and industry structure is stable. When enterprises enter a well-defined market segment and master the corresponding core technology or resources, they are able to reap the benefits of economies of scale and monopolistic competition. But with the emergence of new disruptive technologies and changes in Internet-based business models, boundaries between business and industry have become blurrier and blurrier due to the continuous appearance of new industries, models and forms of business, while industry structures are being upended and reconstructed by the Internet, and cross-industry efforts and industry disruptions are increasingly common. Enterprises not only have to deal with direct competition with apparent competitors in the same industry, but also need to stay highly alert

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to counter potential challenges from cross-industry competitors. Highly uncertain competitive environment and ambiguous industrial boundary force enterprises to rethink the relationship between their own development and the change of industrial competition structure. Second, nonlinearity embodies the nonlinear development of technology and the nonlinear characteristics of knowledge production and dissemination. Previous discussions and studies directed toward technology development chiefly focused on incremental innovation and the resulting linear growth trend. Both corporate executives and policy makers are inclined to predict technology, market and industry development, then formulate relevant policies on the basis of linear thinking. However, the new generation of disruptive technologies, such as big data and artificial intelligence, features typical nonlinear characteristics, have spawned nonlinear knowledge creation and dissemination models such as crowdsourcing, wikinomics, platform strategy and network effects, and given rise to many “emergent” phenomena in the biological sense, which have effected great impact on the existing cognitive and organization models. The nonlinearity of technology development, and of knowledge production and dissemination results in enterprise technology innovation management and competitive advantage cultivation no longer following the cookie-cutter pattern, but is rather increasingly personal, differentiated and diversified. These changes not only present new challenges to traditional enterprise management, but also furnish emerging enterprises and second-mover economies with opportunities to achieve differentiated breakthroughs and asymmetric catch-up. Third, exponential growth is mainly reflected in the exponential characteristics of technology maturity and diffusion speed, user and industry growth speed. The continuous emergence and accelerated applications of disruptive technologies as represented by big data, 3D printing and artificial intelligence have not only effectively solved the problem of “information silo” faced by internal management of enterprises but have also significantly improved the speed and efficiency of information transmission among enterprises, resulting in marked enhancement in terms of the effectiveness of technology innovation through operation between enterprises, and substantial reduction of the cost of management and communication. One of the consequences is that the rate of technology maturation and diffusion is increasingly exponential, leading to sizable drop in cost of user acquisition of new technologies and new products, and explosive growth rate of user accumulation. For example, the exponential growth and adoption of cloud computing have led to an exponential decline in the cost of using cloud services, followed by an exponential increase in the number of users and sales in the cloud services industry. Thanks to cloud computing, big data and artificial intelligence technologies, considerable number of start-ups, such as Toutiao, IFLYtek Co., Ltd. and Beijing Megvii Technology Co., Ltd. have grew rapidly, and now exert cross-industry impact on incumbent players in automobile, finance, equipment manufacturing and other traditional industries. The convergence of artificial intelligence and communication technology is also spurring the exponential development of intelligent manufacturing, intelligent customer service and smart home industry (Zhou 2019). In the face of exponential trends in technology and industry, both start-ups and mature enterprises need to break from the

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original, steady state competitive mindset, and implement dynamic and exponential innovation and co-opetition strategies. Four, ecology embodies the emergence of ecological organization and competition model. Ecotype organization here is in contrast to traditional bureaucratic organization, as ecotype organizations embrace change and value symbiosis rather than competition, place emphasis on the flatness of organization, democratization of management and the entrepreneurial spirit of employees. Nowadays, organizational and industrial boundaries are increasingly ambiguous, emerging Internet technologies enable online co-creation and efficient linkage of industrial chains and value chains to become a reality, and structural changes have taken place in the innovation process and profit distribution model, while the focus of enterprise has shifted from single technology, product or market to integrated competition based on innovation ecosystem (Chen and Yin 2019b; Chen 2016). Simultaneously, new business models such as open innovation, crowdsourcing and knowledge-based pay are driving the rapid development of gig economy, impacting the existing technology innovation and profit model, transforming as well the traditional closed innovation model and zero-sum competitive thinking. Ecotype organization is not only an effective enterprise organization management model, but also a highly competitive business model. Among the top ten companies by global market capitalization in 2018, eight of them are Internet-based eco-companies. China’s leading companies such as Alibaba, Huawei and Tencent are also typical eco-companies. Traditional enterprises represented by Haier Group also realized the strategic transformation from traditional manufacturing enterprises to ecological enterprises with the help of the Internet, thereby maintaining and consolidating their competitive advantages. In summary, more and more enterprises are becoming ecological enterprises, or collaborating with existing enterprises to accelerate the pace of technology innovation, value co-creation and return sharing. From the perspective of technology innovation management, disruptive innovation refers to the process in which a second-mover country or enterprise penetrates from low-end markets or low-end technologies, gradually move up the value chain, and eventually overtakes its original competitors. Harvard University professor Christensen et al. (2015) put this concept forward. In the report to the 19th CPC National Congress, President Xi Jinping also stressed the following: highlight key generic technology, cutting-edge technology, modern engineering technology, and disruptive technology innovation to provide strong support for building China as a world power in science and technology, quality, aerospace, cyberspace and transportation, a digital China and an intelligent society (Xi 2017). As a second-mover economy, the majority of enterprises in China lack the accumulation of technology in the early stages of development, and the technological disparity between enterprises in China and those in developed countries is evident. Therefore, technology import, digestion and absorption, and imitative innovation are the technological development pathway for most Chinese enterprises as they strive to meet market demand and realize their own development in the early stage. However, this pathway easily leads enterprises to step into the never-ending cycle of “import—falling behind— reimport—falling behind again,” even though there are a number of enterprises that

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have overcome the drawbacks of simple imitation by relying on secondary innovation (Wu and Zhang 2018). But on the whole, Chinese enterprises have not yet effectively solved the problems of insufficiency in key and core technologies still remain in the middle and low end of global value chains (GVC) and in subordinate positions in the international production division of labor structure, while the key and core “stranglehold” technologies have yet to be overcome. The report to the 19th National Congress of the Communist Party of China officially stated “Socialism with Chinese characteristics has stepped into a new era,” “China’s economy has shifted from a stage of high-speed growth to a stage of high-quality development,” and explicitly pointed out “innovation is the primary driving force for development, a strategic support for building a modern economy” (Xi 2017). Enterprises are at the core of building a national innovation system and turning China into a world power in science and technology, and disruptive innovation is the breakthrough that China needs to gain independent control of key and core technologies. Therefore, only by encouraging enterprises to accelerate the realization of disruptive technological breakthroughs can China effectively advance its key and core technology innovation capacity, and position itself as a world power in science and technology innovation. Under the background of a new round of scientific and technological revolution, the industrial revolution driven by the new generation of disruptive technologies as represented by artificial intelligence, Internet of Things and big data have led to the rise of a new development trend of domestic and foreign competitive environment in the corporate sphere, a trend featuring ambiguous, nonlinear, exponential and ecological features, and this trend is challenging traditional innovation theories and paradigms dominated by linear, static and partial thinking (Chen 2016). Enterprises urgently need to unshackle themselves from the traditional linear growth mindset and single development mode, shift from closed and indigenous innovation to open and holistic innovation based on autonomy, and adjust their missions, visions and strategic positions by applying holistic, global and nonlinear thinking, accelerate the realization of disruptive technology breakthroughs, and enhance sustained innovation capacity and global competitiveness. This is not only the primary problem to address when cultivating world-class enterprises but also an important proposition for building a future-oriented world power in science and technology innovation, as well as achieving high-quality development of the Chinese economy.

References Adner, R. 2012. The Wide Lens : A New Strategy for Innovation. New York: Penguin UK. Christensen, C.M., M.E. Raynor, and R. McDonald. 2015. What is disruptive innovation. Harvard Business Review 93 (12): 44–53. Chen, Chunhua. 2016. Arrival of era of sharing requires new management model. Guanli Xuebao 13 (2): 157–164. Chen, Jin. 2017. Enterprise Innovation Ecosystem Theory. Beijing: China Science Press. Chen, Jin, and Haixia Huang. 2018. Exploration of theories and practices of building a world power in science and technology. Forum on Science and Technology in China (1): 7–15.

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Chen, Jin, and Xilang Yin. 2019a. Evolution of national innovation system and China’s exploration. Economic Information Daily. Chen, Jin, and Xilang Yin. 2019b. From indigenous innovation to holistic innovation. Enterprise Management (1): 16–18. Chen, Jin. 2019d. Focus on core technology breakthroughs led by innovation. Tsinghua Business Review (6): 1. Chen, Jin, and Xuewen Zhang. 2010. Building an Innovation-Oriented Country. Beijing: China Science Press. Chen, Jin, and Xuewen Zhang. 2018. China’s innovation-driven development and science and technology system reforms. Studies in Science of Science 36 (12): 2116–2121. Cooke, P., M.G. Uranga, and G. Etxebarria. 1997. Regional innovation systems: Institutional and organizational dimensions. Research Policy 26 (4/5): 475–491. Etzkowitz, H., and L. Leydesdorff. 2000. The dynamics of innovation: From national systems and “mode 2” to a triple helix of university-industry-government relations. Research Policy 29 (2): 109–123. Freeman, C. 1987. Technology Policy and Economic Performance: Lesson from Japan. London: Pinter Publishers. Fan, Chunliang. 2018. Building a world-leading science and technology innovation system— Pathway of the U.S. in becoming a world power in science and technology. Bulletin of Chinese Academy of Sciences 33 (5): 509–519. Fang, Zaiqing. 2018. Sustained and relentless progress in scientific research system innovation— Pathway of Germany in becoming a world power in science and technology. Bulletin of Chinese Academy of Sciences 33 (5): 502–508. Hu, Angang. 2016. CPC central committee’s grand strategy and grand scheme: “Three thorough” and “three Chinas”. In China Study Volume 17—2014, ed. Angang Hu, 232–235. Beijing: Party Building Books Publishing House. Hu, Zhihui, and Wang Su. 2018. ‘Nation built on science’ strategy and ‘Nobel prize plan’—Pathway of Japan in becoming a world power in science and technology. Bulletin of Chinese Academy of Sciences 33 (5): 520–526. Le, Yun, Yongkui Li, Yi Hu, et al. 2019. The organization pattern and basic evolution rule of major projects in China under the binary role of “government-market”. Journal of Management World (Monthly) 35 (4): 17–27. Li, Qian, Yongling Zhu, Huimin Liu, et al. 2019. Decision management system of Hong KongZhuhai-Macao Bridge: Principle and practice. Journal of Management World (Monthly) 35 (4): 52–60, 159. Liu, Yun, and Siyu Tao. 2018. Advantages in basic sciences inject new impetus into innovation development—Pathway of the U.K. in becoming a world power in science and technology. Bulletin of Chinese Academy of Sciences 33 (5): 520–526. Lundvall, B.Å. 1999. National business systems and national systems of innovation. International Studies of Management & Organization 29 (2): 60–77. Malerba, F., and S. Mani. 2009. Sectoral Systems of Innovation and Production in Developing Countries: Actors, Structure and Evolution. London: Edward Elgar Publishing. Nelson, R.R. 1993. National Innovation Systems: A Comparative Analysis. Oxford: Oxford University Press. Qi, Chao, Hui Liu, and Hongwei Wang, et al. 2019. Innovation of major project factory construction management: Integrated management and supplier cultivation. Journal of Management World (Monthly) 35 (4): 29–51. Research on Strategies for Changes Under New Circumstances and Expansion of Central City Science and Technology Function and Role Task Force. 2000. Science commission for development of capacity, improvement of central city science and technology innovation system. Science and Technology Progress and Policy 17 (7): 34–35. Statistical Bulletin on National Economic and Social Development [EB/OL]. http://www.stats.gov. cn/tjsj/zxfb/201902/t20190228_1651265.html.

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Sheng, Zhaohan, Xiaolong Xue, and Shi An. Constructing the theoretical system and discourse system of major project management with Chinese characteristics. Journal of Management World (Monthly), 35 (4): 2–16, 51, 195. Wu, Xiaobo, and Haoyu Zhang. 2018. From secondary innovation to catching-up and overtake. Social Science Front (10): 85–90. Xi, Jinping. 2016. Strive to build a world power in science and technology—Speech at the national science and technology innovation conference, the conference of academicians of the Chinese academy of science and Chinese academy of sciences, and the 9th national congress of China association for science and technology. Science and Technology Association Forum (6): 4–9. Xi, Jinping. 2017. Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects, and Strive for Great Success of Socialism with Chinese Characteristics in New Era 1—Report of the 9th National Congress of the Communist Party of China. Beijing: People’s Publishing House. Xi, Jinping. 2018. Take Aim at Forefront of the World’s Science and Technology to Lead the Direction of Science and Technology Development, Seize Opportunity and Face Challenges in Building a World Power in Science and Technology: Speech at the National Science and Technology Innovation Conference, the Conference of Academicians of the Chinese Academy of Science and Chinese Academy of Sciences, and the 9th National Congress of China Association for Science and Technology [EB/OL]. http://www.xinhuanet.com/politics/leaders/2018-05/28/ c_1122901308.htm. Xu, Guanhua. 2019. Review of science and technology development in China and several suggestions. Bulletin of Chinese Academy of Sciences 34 (10): 1096–1103. Zhou, Ji. 2019. Intelligent manufacturing is key direction for ‘made in China 2025.’ Enterprise Observer (11): 54–55. Zeng, Saixing, Hongquan Chen, Zhizhou Jin, et al. 2019. Major project innovation ecosystem evolution and innovation enhancement. Journal of Management World (Monthly) 35 (4): 28–38.

Part II

Discussion on Theories of New Types of Innovation

Part II focuses on the development of theories, and Chap. 2 starts with the classical innovation paradigms and innovation theories of the East and West, compares Eastern and Western theories, and establishes holistic innovation, a novel innovation paradigm with Chinese characteristics. Thereafter, Chap. 3 puts forward preliminary explanation of holistic innovation theory set against the background of its proposition, forming a concerted performance with other theories, and puts forward “triangular mindset” of holistic innovation based on the binary logic of organization and management. Chapter 4 analyzes the connotation of holistic innovation and its key features, and explores realization pathways. Chapter 5 delves into the methodology of holistic innovation from the perspective of practices in China, and after polishing and refinement, proposes the elements of holistic innovation practice such as complex system scientific method, Eastern wisdom, the whole nation system, peaceful development, and people-centered and sustainable development.

Chapter 2

East Meets West: Dialogue Between Classical and New Innovation Theories

Every form of beauty has its uniqueness, precious is to appreciate other forms of beauty with openness, if beauty represents itself with diversity and integrity, the world would be blessed with harmony and unity. —Fei Xiaotong. (December 1990, keynote speech of Fei Xiaotong at “Human Studies in China—Personal Experiences”).

Innovation is the primary driving force for the sustainable development of human civilization, economy and society (Chen 2015). In recent years, with the continuous progress in globalization, humankind is faced with grave challenges arising from global development (Kuhlmann and Rip 2014). Issues such as transformative technological innovation and social development (Schot and Steinmueller 2018) and United Nations’ 2030 Agenda for Sustainable Development have prompted people to contemplate innovation and development paradigms. The old western science and technology innovation paradigms as represented by industrial revolution and information technology, which focused solely on technology and economy, have exhibited limitations when dealing with the process of global change. Technological innovation paradigms have begun to extend to a broader dialogue between scientific research, technological innovation and social development (Stilgoe et al. 2013), and on top of realizing scientific and technological progress and economic growth, the development goal of moral ethics and social satisfaction are also being fulfilled, thereby achieving sustainable transformation (Mei and Chen 2015). Without a doubt, innovation has become an important theme of global and socioeconomic development in the world today. All developed economies have realized that only innovation can continuously stimulate new economic growth points. Developing countries are also incessantly upgrading their industrial structures and enhancing their national competitiveness through innovation. As the representative of emerging economies, China continues to develop its national capacity, and the central thought on national governance based on oriental civilization is evolving from “orientation and dependence” “steady one end, open one segment,” “rejuvenate the country through science and education” and “national innovation system” (Fang and Liu 2004), to “world power in science and technology innovation” (Chen 2015). Step by step, China is gradually realizing the development goals of “joining the ranks of © Science Press 2023 J. Chen, Holistic Innovation, https://doi.org/10.1007/978-981-19-8625-3_2

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innovation countries (2020) → ranking among the top innovative countries (2030) → building China into a world power in science and technology innovation, a major world science center and innovation high ground (2050).” In order to better understand and analyze Chinese characteristics and establish innovation theories unique and suited to the country, it is necessary to compare the existing classical innovation paradigms and theories advocated both at home and abroad, so as to further comprehend thoroughly the unique innovation factors and corresponding innovation theories in China.

2.1 Evolution of Theoretical Development in Innovation Paradigm Kuhn, a famous American philosopher of science, put forward the concept of “paradigm” (2012). The article The Structure of Scientific Theories (Achinstein 1977) divided paradigms into two types: comprehensive and partial. “Comprehensive paradigm” represents all commitments shared by a particular scientific community, while “partial paradigm” is an important subset of the former and the most crucial and fundamental commitment among them. A paradigm urges members of the scientific community to adopt common ethical vision, assessment criteria, interpretive models and methods for solving problems, form a theoretic system that conforms to its paradigm and coordinate behavioral norms. Paradigms play different roles in different stages of scientific development, and revolutionary characteristics of the scientific development stage are especially outstanding during the paradigm shift. Kuhn proposes that scientific paradigm is characterized by two conspicuous aspects: technological and sociocultural. The technological aspect is mainly manifested as demonstrative techniques and exemplars in the stage of scientific development, while the sociocultural aspect is symbolized by the beliefs and values adapted to a certain stage of scientific development shared by members of the scientific community. In the late Kuhn era, in order to further clarify the paradigm and its concrete form of expression, Kuhn put forward the concept of “disciplinary matrix,” which is the basis that members of the scientific community need to grasp and jointly and continuously promote, including symbolic generalizations (formulary expressions), models (basic assumptions and reasoning) and exemplars (puzzle solvers used as concrete examples and problem solutions). This basis redresses the vagueness of the original paradigm concept and also provides opportunities and means for dialogues and communication among members of the scientific community. Similarly, there are also mainstream paradigms for innovation research guiding the major composition and development direction of innovation research. At the same time, paradigm constitutes the basis for theories. Since Schumpeter put forward the concept of innovation, innovation has become a trending topic in the circle of academia and practitioners. Especially with the rapid advances of information technology, innovation has become the key behind corporate development

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and national competitive advantage obtainment. Hitherto, Schumpeterian and postSchumpeterian innovation paradigms have emerged in leading the way of innovation development.

2.1.1 Innovation Paradigm of Schumpeter (Joseph) Schumpeter defined technological innovation as “the recombination of factors of production,” which consists of five types of classical ways to create innovation achievement: (1) introduce new product, reinvention or improvement, creating new products that are not yet familiar or completely unknown to the customer group; (2) open up new markets, which means to create or discover new markets that may not have existed by tapping into consumer groups and certain geographical areas; (3) acquire new sources of raw materials, including selecting new suppliers, obtaining new raw materials or semi-finished products in order to drive innovation across the entire product chain; (4) invent new manufacturing process, which involves employing a production method or treatment means that is not yet practically known in the original production line so as to effect costs reduction, efficiency enhancement or new product quality creation; and (5) adopt new business organization structure including internal management structure, business takeover structure, value chain organization structure, etc. Schumpeter is hailed as the originator of “innovation theory.” In his book The Theory of Economic Development published in 1912, Schumpeter first proposed the concept of innovation and its important role in national economic development, creating a sensation in the then economics circle of the West. The book Capitalism, Socialism, and Democracy published in 1942 further interpreted the connotations and extensions of innovation. However, with the changes of social context and technology situation, the connotations and extensions of the concept of innovation are constantly expanding and technology penetrates ever deeper into society, take for examples technological innovation and organizational innovation, incremental innovation and fundamental innovation, imitation innovation and original innovation. Among the research of Schumpeter’s theories of innovation, the innovation paradigms he proposed mainly fall into the following three types: entrepreneurship and innovation, technological innovation and creative destruction. 1. Entrepreneurship and innovation Schumpeter attached great importance to entrepreneurs and their entrepreneurial spirit in the development of capitalist economy, giving them much higher merits than external factors such as material resources, technology, or industry. In Schumpeter’s definition of entrepreneurship, he called the realization of new combinations an “enterprise,” and the people whose function is to realize new combinations the “entrepreneurs.“ There are both broad and narrow definitions within Schumpeter’s definition entrepreneur. In a broad sense, entrepreneurs not only include independent businesspersons in an exchange economy, but also the people who actually perform

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such functions, such as the managers employed by the company, the members of the board of directors, etc., or the shareholders who control the majority of the company shares. Given that those realizing certain new combinations can be termed entrepreneurs, then in fact many financiers and promoters to a certain extent can also be called entrepreneurs to varying degrees. In a narrow sense, entrepreneurs do not include all leaders or managers of individual manufacturers and firms, as they are often just those who help start a business, but in fact, only the individual who creates the new combinations can be called an entrepreneur (Schumpeter, 1999). “A person is an entrepreneur only when he/she actually ‘carries out’ new combinations, and loses that label as soon as he/she has built up his/her business, when he/she settles down to running it as other people run their business. This is the rule, of course, and hence, it is just as rare for anyone to always remain an entrepreneur throughout the decades of his/her active life as an entrepreneur” (Schumpeter 1999). In Schumpeter’s view, entrepreneurs are the group of people who are the authors and direct movers of innovation, and entrepreneurship is the prime driving force of innovation activities. Capitalism, Socialism, and Democracy stated that the effective function of the entrepreneur is “to start innovation in venture, by exploiting a new invention, or more generally, an untested technical possibility to produce new goods or to produce old goods in new ways; by opening up central sources of raw material supply or new markets for products, and by reorganizing the industrial structures to modify or making sweeping changes to the model of production” (Schumpeter 1999). 2. Technological innovation Professor Zhang Peigang wrote in his introduction and commentary to Schumpeter’s The Theory of Economic Development: Schumpeter stressed emphatically the supreme role of the innovation of production technology and the reform of production methods in the development of capitalist economy; regarded this “innovation” or “new combination” of factors of production as the most fundamental features of capitalism, and therefore, without “innovation,” there will be no capitalism, neither will there be the birth of capitalism, nor the development of capitalism (Zhang 1991). Schumpeter repeatedly emphasized the distinction between invention and innovation and between inventors and entrepreneurs. Technological innovation is a very important innovation paradigm, but it cannot represent the whole connotation of innovation. Technology combinations can become a new product, or a new production process, and thus trigger innovation. Technology chiefly relies on production methodology and basic material law to explore and discover, so as to find a previously unknown natural law and form technology innovation. However, while exploring technology combination, it is also necessary to take heed of its corresponding economic combination, technology must be subject to economic appropriateness and technological methods must take economic purpose into consideration. 3. Creative Destruction In The Theory of Economic Development (Schumpeter 1999), Schumpeter expounded the relationship between innovation, economic growth and economic

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development, with the purpose of interpreting economic development. According to Schumpeter, economic growth is the increase in value per unit of time, including population increase, wealth increase, etc.; and economic development is the economic result of implementing the new combinations. He opined that the existence of economic development cycles arises from the temporal discontinuity, bee swarming behavior and irregularity of innovation, or even the formation of intermittent in groups or swarms. Similarly, it is this discontinuity in innovation development that has led to the industrial revolution in the history of capitalist economic development, and it is precisely because of this creative destruction that formed the essential facts about capitalism.

Column 2.1 How Does Innovation Drive Development? Commemorating the 70th anniversary of the death of Joseph Schumpeter. From the “Marginal Revolution” of 1870 onward, economics entered an era dominated by neoclassical economics, abandoning classical economics’ concern on long-term development and adopting a balanced approach that concentrated on stationary resource allocation. In the dreary world where neoclassical economics dominated, Schumpeter’s theory of innovation came as a thunderbolt that shattered the tranquility of a balanced world. Schumpeter mainly focused on the relationship between economic behavior, innovation and economic change, and is known as the progenitor of innovation theory because of his outstanding contribution in the field of innovation research. Despite his contemporary social prestige, Schumpeter has long been ignored by the academic community and denied due credits because his views were at odds with mainstream economics theory. It was not until the rise of the NeoSchumpeterian school in the 1980s that his theories gained traction across the world. Schumpeter’s innovation theories began to capture the attentions of the domestic academic circle because of the emphasis placed on “indigenous innovation” in recent years. 1. Brief biography of Schumpeter Joseph Alois Schumpeter was born on February 8, 1883, in Triesch in the Austro-Hungarian province of Habsburg Moravia (now part of the Czech Republic). He studied at the University of Vienna between 1901 and 1906, and earned his PhD at the age of 23. His magnum opus and masterpiece, The Theory of Economic Development (in German), was published in 1911, and soon after that he joined the faculty of the University of Graz, becoming the youngest professor at the institution (28 years of age). He served as Finance Minister of German-Austria in 1919, and president of the private Biedermann Bank in Vienna from 1921 to 1924. Schumpeter held a chair at the University of Bonn, Germany, from 1925 to 1932, and visited and lectured at Harvard

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University on numerous occasions during his professorship. In 1932, he immigrated to the USA of America and became a professor at Harvard University, where he participated in establishment of disciplines at the Department of Economics, and played a crucial role in the creation of the Harvard Department of Economics, which would go on to garner stellar fame. Schumpeter cofounded the American Economic Association in 1942 and became its president in 1948. Schumpeter passed away on January 8, 1950, at Taconic, Connecticut, U.S.A., at the age of 67. Throughout his life, Schumpeter was never short on students and followers, and “opening the door to the students’ mind” was his motto. Some of his notable students include Paul Samuelson (1970 Nobel Prize laureate in Economics), James Tobin (1981 Nobel Prize laureate in Economics), John Galbraith, Paul Sweezy, Peter Drucker, Zhang Peigang and various other accomplished scholars. To celebrate the 100th anniversary of Schumpeter’s birth, the international academic circle commemorated this master of innovation theory in various manners. For examples, the British Economist magazine inaugurated the “Schumpeter Column,” University of Vienna established “Schumpeter Chair Professor,” and University of Graz set up “Schumpeter Scholarship.” In 1986, the International Joseph A. Schumpeter Society was established, and it presents the Schumpeter Prize every two years, which has thus far been bestowed 17 times. 2. Brief summary of innovation theories of Schumpeter Schumpeter has written prolifically throughout his life and published an impressive litany of works. During his stay in the USA alone, he published the English version of The Theory of Economic Development (1934), Business Cycles (1939), Capitalism, Socialism, and Democracy (1942), History of Economic Analysis (1954), etc. Among which, The Theory of Economic Development and Capitalism, Socialism, and Democracy condense Schumpeter’s central ideas, namely that innovation and the dynamics of economic growth are truly important economic phenomena. Schumpeter asserted that innovation occupies an important role in socio-economic changes. Economic development is a process of qualitative change, which would occur as driven by innovation in a certain historical period (Fagerberg et al. 2009). During his lifetime, Schumpeter saw innovation in increasing complex forms as embodied in fields such as railways, automobiles, telephones, airplanes, electricity, radio and television, and witnessed the emergence of many remarkable inventors and entrepreneurs. Schumpeter concluded that innovation is the source of development (Stanley Metcalfe 2007). When a company in a given industry successfully introduces a vital innovation, it will enjoy a high return, which is also a signal that attracts other companies. Consequently, imitators will come out of the woodwork and swarm into the industry or sector in the hope of getting a share of the cake (Fagerberg et al. 2009). Therefore, competition through innovation is the driving force of economic development. Schumpeter also voiced

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an original insight about business cycle. On the basis of Kondratiev’s economic cycle, he demonstrated the existence, persistence and regularity of long wave. Schumpeter’s explanation for the long wave is that different economic periods are marked by a different set of technologies and related industries, the emergence of a new set of technologies and industries stimulates investment and leads to an expansion of economic activities, resulting in long-term upswings. Schumpeter argued that each of such long booms would eventually wear off as a result of slowdown technological progress in key sectors and a dearth of investment opportunities. Therefore, each upsurge would be followed by a long period of relatively slow growth and depression. Different economic periods are marked by the emergence of different groups of strategic technologies and industries. Key technologies must be easily accessible to initiate subsequent waves of applied technology development. This is an insightful view lauded by many economists (Nelson 2001). From the perspective of the origin of economics, Schumpeter’s theory should belong to the mainstream of economic thought development, and eminent economists from Adam Smith and Marx to Marshall were all very concerned about economic development (Nelson 2001). It was only by Schumpeter’s time did neoclassical school begin to dominate and the theory of longterm phenomena studies gradually marginalized. It was precisely owing to this circumstance that Schumpeter, among the major economists in the first half of the twentieth century, was basically the only one who took technological progress as the core of his theoretical system and seriously discussed issues regarding social and institutional changes. Schumpeter always emphasized innovation as the primary driver of economic development, viewed innovation and its diffusion from a historical perspective, and elevated people’s understanding of the connection between organizational innovation, management innovation, social innovation and technological innovation. This mindset enabled him, like other esteemed economists such as Adam Smith and Marx, to establish a general theory of economic development that has become the basis for subsequent research (Dosi et al. 1992). 3. Innovation and Development: The Theory of Economic Development The significance of The Theory of Economic Development cannot be overemphasized with regard to the studies of innovation and development, because it is the basic conceptual building block of such studies. Schumpeter admitted in the preface to the Japanese edition of The Theory of Economic Development that his understanding of economic dynamics is similar to Marx’s, as they both “look for sources of power within the economic system, which itself will disrupt any equilibrium it may have achieved” (Reinert 2007). In the preface, Schumpeter set out his intellectual agenda, which was to understand how economic systems change and the dynamics of such change, and that such change is the outcome of purely endogenous forces. “The economic system itself has an

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endogenous capability to upset any equilibrium that has been achieved. There should be an economic theory that causes economic changes independent of external factors” (Rosenberg 2004). In The Theory of Economic Development, first and foremost, Schumpeter focused on discriminating the difference between “circular flow” and “development” in the process of economic operation. Circular flow is the missing link in the economic causality discovered by physiocrats. Circular flow is not only a static process, but it is also a kind of equilibrium condition. Static condition excludes business cycles but includes economic expansion, which results from capital accumulation of savings and population growth. In Schumpeter’s point of view, general equilibrium theory can only study the new equilibrium state after a change has occurred, but can’t explain the dynamic development phenomenon. Not only does stationary analysis fail to predict the consequences of discontinuous changes in traditional ways of doing things, it is incapable of accounting for the emergence of such productive revolutions, or the phenomenon accompanying them (Nelson 2001). It is because equilibrium theory is mostly concerned with marginal adjustment mechanism, rather than the logic of capitalist organization and incentive mechanism. Thus, theoretical approach that ignores the forces upsetting equilibrium and promoting development touches at best on secondary or superficial phenomenon. Yet, the stationary competitive process model is not completely meaningless, because it can help us understand the process of economic change without endogenous forces (Rosenberg 2004). A theory that focuses on the composition of equilibrium can be a powerful analytical and predictive tool when the forces of innovation are not strong enough or so frequent as to constantly sway the economic system away from equilibrium (Nelson 2001). In contrast to circular flow, Schumpeter defined development as a giant leap in economic systems and their social conditions, a spontaneous change in economic life occurring from within. If this change was not to take place, and the economy just continuously adapts to changes in data, then economic development would be non-existent. For instance, wealth generated by an increase in population size alone is pure economic growth, not development, because such growth does not inherently produce new phenomenon. By “development” Schumpeter meant “changes in economic life that are not imposed on it from outside, but occurs from within.” Although there are always human and natural forces that push the economic system towards equilibrium, Schumpeter believed that the most essential feature of modern capitalism is economic change. “A static feudal economy is still a feudal economy, but a static capitalist economy is itself self-contradictory.” The core of capitalism is not its equilibrium forces, but the inevitable tendency of the system to deviate from equilibrium, that is, the power to disrupt equilibrium. This revolutionary power, as in the driving force behind the continuous development of capitalism, is innovation. Our arguments about why and how economy changes should

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not be confined to the static framework of neoclassical equilibrium analysis, because the capitalistic economic organization structure has an internal logic leading its economic behavior, and its essence is the economic reform fueled by innovation (Rosenberg 2004). From Schumpeter’s angle, innovation is the predominant driving force of economic change. Innovation has led to more efficient allocation of economic resources, new combinations of factors of production, and advances in resource utilization, rather than an increase in the number of factors of production such as capital and labor. The development process includes the following five situations: The introduction of new products or new qualities of products; the adoption of new technologies or new production methods; the opening up of new markets; the conquest of new sources of supply of raw materials or semi-finished products; and the performance of new organizations. It can be observed that innovation and development are closely linked notions. The key to economic development is innovation, and without innovation, there will be no development at all. When constructing the theory of technological innovation, most contemporary economists will start their research from the exposition of Schumpeter as mentioned above. In fact, only a small part of Schumpeter’s discourse talks about technological progress. However, some economists, on reading Schumpeter’s works or learning about his ideas indirectly through the works of other scholars, misinterpret his basic point of view because several other aspects of innovation are also as important as technological innovation (Nelson 2001). 4. Market Structure and Innovation: Capitalism, Socialism, and Democracy Capitalism, Socialism, and Democracy is another masterpiece of Schumpeter and one of the vital foundations of innovation theory. However, its contribution is often overlooked as people have been so absorbed in The Theory of Economic Development. Apart from a few historians focusing on economic thought, many scholars of innovation have not paid particular attention to the work. Although Schumpeter was socially and politically conservative, he advocated the rejection of the most important and cherished principles of neoclassical economic theory. Rosenberg (2004) therefore called Schumpeter a radical, and Capitalism, Socialism, and Democracy is exactly his mature manifesto. According to Nelson (2001), all contemporary studies of the engine of capitalism are based on Schumpeter’s Capitalism, Socialism, and Democracy. As previously mentioned, all along economics has been deeply concerned about economic development. The main orientation of mainstream economic analysis has shifted from development and innovation to issues that can be dealt with by concept of equilibrium, and economic activities and phenomena can be analyzed by the concept of equilibrium (Nelson 2001). For example, the welfare implications that arise from ideal state of competition reflect people’s nagging

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questions about such secondary issues as how to allocate existing resources. The perfect competition hypothesis has long been at the heart of economists’ models and has been advocated in economic management over the past few decades, especially in American antitrust law (Rosenberg 2004). A more important issue that Schumpeter deemed more worthy of this concern was how economic system succeeds in promoting change in the essence, which was precisely the central message of Capitalism, Socialism, and Democracy. In this book, Schumpeter argued that innovation-driven economic development must be interpreted as an evolutionary process: “Capitalism is essentially a form or method of economic change that has never been, but can never be, static. The evolutionary nature of the capitalist process is not only that economic life takes place in a changing social and natural environment, but that change in the environment alters economic behavior itself” (Schumpeter 2013). This quote contains not only recognition of the inherently dynamic nature of capitalism, but also a rejection of the ideal assumption of perfect competition (Rosenberg 2004). Schumpeter stressed the advantages and role of imperfect competition and economies of scale in innovation: “In the reality of capitalism, totally different from that of textbooks, what matters most is not competition through low prices, but competition for new goods and technologies. The difference in efficiency between this kind of competition and other competitions is comparable to the difference between attacking with artillery fire and attacking with your bare hands.” Schumpeter declared that it would be wrong to simply reduce monopoly to straitening and antisocial forces, because monopoly to some extent is a temporary by-product of a process of creative destruction. He pointed to the significance of the growing size of factories in the twentieth century, where large companies with in-house research capabilities became the main drivers of the technological progress. “We must recognize that large enterprises have become the most powerful engines of economic progress, and especially of the long-term expansion of output. Perfect competition is not only impossible, it is second-rate and unworthy of being a model of ideal efficiency” (Schumpeter 2013). Contrary to his previous work The Theory of Economic Development, this point of view became the main theme of Capitalism, Socialism, and Democracy (Rosenberg 2004). However, abandoning the assumption of perfect competition is not the same as proclaiming that monopoly power is itself inherently beneficial to innovation, because monopoly is only a temporary stage in the innovation process. If the temporary monopolistic profits of innovation are not protected, there will be no incentive to continue innovation. Schumpeter argued that the laws and spirit of capitalism, which enable enterprises to possess ownership and own the new technologies they create, define the environmental condition in which enterprises operate on the one hand, and on the other hand, the environmental condition is defined by common scientific knowledge, which enables enterprises to solve problems

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in industrial research and development activities. When research and development activities create promising products, enterprises profit from them. If competitors are tempted by the prospect of profit to likewise conduct R&D, enterprises are hugely motivated to prioritize R&D investments, leading to the emergence of a large number of new products and new production processes. All that remain are for the market to make an afterthought between the innovations of different enterprises, and for the enterprises themselves to make choices after the fact (Nelson 2001). The concept of innovation-based market structures and competition proposed by Schumpeter is often understood as how capitalism manages existing organizations, but the more crucial question is how these organizations are created and destroyed. Innovation, as the chief disequilibrating factor, propels an economy towards higher income, higher output and higher level of welfare. Only the tempest of creative destruction can sweep away old guards that stand against reform, which is why creative destruction is such a vital economic force (Rosenberg 2004). If the innovation function becomes business-as-usual or bureaucratic as large companies grow, the function of the entrepreneur disappears. “Because it is easier than ever to do something outside the routine, innovation itself has been reduced to conventions. Technological progress is increasingly becoming the work of professionally trained specialists who create whatever is needed and make it work in predictable ways” (Nelson 2001). 5. The difference between “the two Schumpeters” From The Theory of Economic Development to Capitalism, Socialism, and Democracy, Schumpeter’s view has changed dramatically as mainly reflected in his exposition of the sources of innovation. In The Theory of Economic Development, Schumpeter focused his concern on entrepreneurship and new enterprises, whereas in Capitalism, Socialism, and Democracy, Schumpeter underscored that innovation occurs in large companies with research laboratories where new products are invented for adoption. He opined that “the first thing a modern enterprise must do, whenever doing the best is within reach, is to establish a research department, the members of which all know that their livelihood depends on the success of their devising improvements” (Schumpeter 2013). The impacts of General Electricity, DuPont and other such enterprises are evident in this passage (Nelson 2001). Hence, the distinction between the two Schumpeters: The “young Schumpeter” who emphasized the role of entrepreneurship, and the “aged Schumpeter” who stressed on the advantages of big business and bureaucratic technology (Dosi et al. 1992). The academic circle has conducted a lot of empirical studies on this issue to unveil the “mystery of the two Schumpeters.” This difference can be explained to a certain extent by the fact that Schumpeter lived in a time of drastic changes in the world economy, namely the tremendous changes that had taken

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place in the real world during the intervening years between the release of these two books. The Theory of Economic Development was written in the Austro-Hungarian Empire at the beginning of the twentieth century, which was experiencing the third long wave of decline, while Capitalism, Socialism, and Democracy was written in the 1930s in the USA during the upswing of the fourth long wave. The change in Schumpeter’s view reflects the change in reality (Rosenberg 2004). Given these factors, it is not surprising that the two books differ in their angles on the sources of innovation (Nelson 2001). However, Schumpeter asserted in Capitalism, Socialism, and Democracy, that “large enterprises with research and development laboratories are the main source of innovation,” and that even if there is only one firm in a certain field, said firm may still be compelled to innovate under strong competitive pressure. This assertion is often interpreted by economists simply as “the bigger it is, the better it innovates,” or “monopoly power is better for innovation.” Over time, many economists have opted to learn about Schumpeter’s hypothesis by reading the work of other scholars rather than reading the original work itself. This behavior has allowed economists to explore hypothesis econometrically and without exerting much effort. However, some economists have discovered through argumentation that Schumpeter had never raised this hypothesis. 6. Relationship between the innovation thoughts of Schumpeter and Marx The ideological rivalry instigated by the Cold War placed Marx and Schumpeter at opposite ends of the political matrix. However, in terms of the classification of economic theory, both of them adhered to the German economic tradition, both of them possessed profound theoretical background of the German historical school, and both of them inherited the quintessential German point of view that prolificacy fuels social change. Marx to a great extent drew lessons from the thought of Franz Liszt, the founder of the German school of history, and likewise, the historical school also laid the foundation for Schumpeterian economics. For example, Werner Sombart first put forward the concept of “creative destruction,” a synonym for Schumpeter’s theory of innovation. In the preface to the Japanese edition of The Theory of Economic Development, Schumpeter clearly expressed that Marx’s thought is the source of his thinking, and traced his early research on innovation back to Marx. He underlined the similarities between his research methods and those of Marx, pointing out that “these ideas and aims are exactly the ones in Marx’s theories.” The emphasis on the importance of technology innovation and learning is a strong theoretical mainline in the German economic tradition, and these characteristics also place Marx in the same pedigree as Schumpeter (Reinert 2007). In his other masterpiece, Capitalism, Socialism, and Democracy, Schumpeter paid homage to Marx, venerating him as a “prophet” and a “teacher.” Schumpeter observed that Marx had praised the achievements of capitalism in the Communist Manifesto in a way not found in other economic

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literature (Rosenberg 2004). Schumpeter, like Marx, embraced the historical interpretations of economics, and most of his own works also conform to this analytical approach (Rosenberg 2004). It can be said that Schumpeter’s thoughts are aligned with those of Marx and the historical German school. There are at least two reasons why present day researchers are unable to fathom these theoretical roots. First of all, the tradition of the historical German school is not well-known outside the German-speaking world because of the small number of works that have been translated. Second of all, for a variety of different reasons, the followers of Schumpeter and Marx, intentionally or inadvertently, have processed the original ideas of the two pioneers, dividing the two men into different camps, leaving behind “broad differences across the board” between them that still exist among their modern adherents, pushing them even further apart in different directions. For instance, while Schumpeterian viewpoints highlight the creative side, while Marxism accent the destructive side; the Schumpeterian devised the theory of development, Marxists on the other hand invented the theory of underdevelopment. However, their central ideas are actually implicit in both systems of theory (Reinert 2007). 7. Schumpeter’s influence and enlightenment on modern innovation development research Schumpeter’s legacy in modern economics lies in his rejection of the equilibrium hypothesis of neoclassical economics and his belief that innovation is the core of economic development. He was convinced that the central problem of economics is the interpretation of economic changes that take place over time, and what matters most in the long run is economic growth, not stationary economic efficiency. Schumpeter believed that innovation is an inherently disequilibrium process, as such the equilibrium theories and models of mainstream economics can’t explain innovation and the economic changes it causes. As Rosenberg (2004) said, Schumpeter’s impact on neoclassical economics is principally reflected in his destruction of the neoclassical camp. His works embody the outstanding characteristics of this disequilibrium economic analysis, so they have become the theoretical sources of many innovation economists who have given rise to the likes of evolution theory, national innovation system theory, technology-economy paradigm theory, and even endogenous growth theory, among others, all of which are deeply influenced by Schumpeter. Although Schumpeter was not as influential as Keynes during his lifetime, in the minds of folks of contemporary society, Schumpeter has emerged from out of Keynes’s shadow and stands in the limelight of realm of economics. Despite Schumpeter’s groundbreaking contributions to economics, there is very little content about innovation in the majority of modern economics textbooks, as if Schumpeter never existed (Nelson 2001). On the one hand, the

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equilibrium paradigm of mainstream economics rejects Schumpeter’s innovation theory, and Schumpeter’s theory, on the other hand, needs further development. First of all, Schumpeter almost never elaborated on government policy towards industry, technology and science, or the relationship between universities, government agencies and industrial research and development. At the same time, Schumpeter paid little attention to the periphery of the third world and did not really extend his analysis to international trade or international technology diffusion (Dosi et al. 1992). Secondly, although Schumpeter’s theory gives us a good point of departure to understand relevant concepts, this notion of innovation is a little sketchy compared with the increasingly complex phenomenon of innovation, to the extent that the strengths and weaknesses of innovation engine cannot be rigorously examined (Nelson 2001). Third of all, although Schumpeter used the term “evolution” and held that technology progress as an evolutionary process is triggered by competition, he did not further develop the idea, rendering it a misstep for further contribution to the real development of evolutionary theory in replacing neoclassical economic theory. Schumpeter also failed to analyze the complex intersections between modern technology and science, and fell short of the comprehension that the development of science and technology involves a rice and diverse series of organizational systems. Of course, given the constraints of his times, Schumpeter couldn’t have anticipated the subsequent changes in the characteristics of technology and the institutional environment (Nelson 2001). In spite of these limitations, Schumpeter was still an extraordinary economist of epoch-making significance, and his theory is still an ideological source of modern innovation development theories and policies. For the Chinese academic circle, innovation-driven development is already a national strategy, which requires a set of scientific innovation-driven development theories to guide policy implementation. However, the current research on innovation and development lacks a complete theoretical framework, and innovation research and development research belong to different disciplines. The absence of effective communication between scholars from different fields, inadequate in-depth research on the relationship between the driving forces of economic system and the mechanism of economic development, are all factors hindering people’s in-depth understanding of innovation development. For example, despite the fact that scholars have long recognized the need for innovation policies to be integrated with science and technology policies, industries policies, fiscal and tax policies, trade policies and financial policies, for years China’s innovation policies are still centered on science and technology policies, and have not been effectively combined with economic policies. It can even be said that the degree of chasm between innovation research and development research in the theoretical circle is no less than the separation between science and technology on the one hand, and economy on the other in actual practice. There are still a throng of scholars who accept the concept of innovation only in form, but ignore Schumpeter’s innovation connotation, and still

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rely on using mainstream economic ideas and equilibrium models to analyze innovation problems. Therefore, research on innovation and development has a long way to go. In future research, in addition to transcending the limitation of Schumpeter’s era, Chinese scholars also need to return to Schumpeter’s ideological tradition, and find ways to bridge the gap between innovation research and development research, so as to thoroughly comprehend the mechanism of innovation development and formulate feasible innovation development policies. This is the law of theoretical development, and also the mission of today’s scholars. Let us continue to learn from Schumpeter’s ideas and push innovation development research to new heights. Source: Sui (2019).

2.1.2 Innovation Paradigm in the New Era Following Schumpeter’s proposition of the innovation theory, new technology revolution led by micro-electronic technology has been booming since the 1950s, and researchers of innovation theory have found that the original theory are no longer valid to explain issues such as the large-scale technological changes in various fields or the development of social system. The subsequent development of Schumpeter’s “innovation theory” has gradually diverged into two branches, namely the economics of technological innovation that deals with technological change and popularization and the other branch of economics of institutional innovation that takes institutional change and institution formation as its object. The two branches have different perceptions of the core driving forces of innovation, but due to the social embeddedness of innovation, essentially the two branches are mutually complementary and restrictive. In addition, under the post-Schumpeter innovation paradigm, the primary driving force of innovation, originally focused on entrepreneurs as chief engine, has gradually expanded to encompass the general public as a whole. In other words, progress in innovation, previously achieved among a few elites, has evolved into innovation driven by the wisdom of the masses, which in turn also leads to the emergence of a variety of innovation models. These innovation models involve a bigger scope of innovation entities, focus on current advanced basic research achievements and begin to integrate into the development goals of the nation and society, realizing beneficial dialogues between innovation and social development. 1. User Innovation User Innovation is an innovation model proposed by von Hippel (1986), which emphasizes the liberty and complementariness of the innovation process, meaning that users of product or service are able to put forward new ideas and suggestions for improving the product or service usage process, or even refining the products

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or services themselves. The entity of the user innovation paradigm is no longer just the manufacturers and suppliers, but rather also users, which have also become important sources of innovation (Gao and Wang 2006; Wu and Xie 1996). Users have first-hand experience and a deeper understanding of what meets their requirements and what is considered valuable, which can in turn supplement enterprises with knowledge, assist them to gain market information, obtain potential refinement schemes, improve products and service quality and innovation efficiency and reduce market risks. Currently, user innovation identifies users of different characteristics, such as professional users, enthusiasts, key users, empowered customers and lead users (von Hippel 1986; von Hippel and Krogh 2003). When motivating users to innovate, emphasis ought to be placed on the design of open source and online user exchange community to communicate with users, improve user stickiness, tap users’ passion for innovation and assist users to accomplish innovation (Su and Wu 2016). 2. Public-driven Innovation Public-driven innovation is an open innovation on a wider scale and an important means and innovation paradigm in open science. Public-driven innovation is closely associated with crowdsourcing, collective innovation and social innovation. It is a bottom-up, democratic and free-style innovation paradigm that entails mass participation through open, collaborative communities. Participation of the public in basic research, engineering or applied research has led to the opening of science and technology at different levels. As pointed out in a 2016 report released by the Science Council of European Union titled Europe’s Future: Open innovation, Open Science and Open to the World: “Scientific excellence is the foundation of future economic and social prosperity, and open science is the key to scientific excellence.“ Ample evidence demonstrates that open science behavior in industry has a long-standing history. Allen (1983) is the first to observe that profit-oriented enterprises often deliberately adopt the behavior of open science. He noticed this phenomenon from the historical records of the British iron industry starting from the nineteenth century and called it collective invention. Hicks (1995) discovered in research that certain enterprises, such as Philips, Hitachi, ICI (British chemical industry company), Siemens, Roche (Swiss pharmaceutical company), Sandoz (watch) and Toshiba frequently publish extensive papers in scientific journals, and their contributions to science are equivalent to those of medium-sized universities. Bar (2006) pointed out that 90% of the world’s leading enterprises include knowledge and information disclosures in their R&D process, but the surprising thing is that through technology forum reports, articles published in academic journals, press conferences and “targeted disclosures” in patent agencies, companies have disclosed a huge amount of R&D information. In recent years, the open science behavior of enterprises almost universally exists in all industrial sectors, especially in the biopharmaceutical industry (Zhang and Chen 2017). 3. Innovation Ecosystem Ever since Moore put forward the concept of “business ecosystem” in 1993, Adner has been at the forefront in leading and developing research on “innovation ecosystem” in 2006. A popular concept, academic circles have reached a consensus about

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the connotations of innovation ecosystem, namely the “alignment structure” established between multilateral and heterogeneous participants with interaction needs for the purpose of realizing common value propositions (Adner 2017; Wang et al. 2019). This conceptualization essentially gears toward interpreting the strategic choice and innovation activities of enterprises from the perspective of complementarity and dependence (Adner and Kapoor 2010; Adner 2017; Kapoor 2018). In the context of innovation-driven development, the advancement of competitive advantages of enterprises becomes increasingly dependent on the innovation ecosystem in which it operates. As the intermediate level between market and organization, ecosystem perspective has become a new direction of innovation theory research paradigm (Mei et al. 2014a). 4. Open Innovation and Blockchain Open innovation and blockchain are new developments of traditional theory in the context of new technology. In 2003, Professor Henry Chesbrough of Hass School of Business at the University of California, Berkeley, proposed “open innovation” through his research on Xerox’s management model, underscoring the influence of external knowledge spillovers in the innovation process gradually forming an innovation paradigm. Open innovation is closely related to such theories as economies of scale, coopetition relationship, knowledge spillovers, transaction costs, government intervention, social networks, government–industry–university triple helix and resource dependence (Gao et al. 2017; Su and Wu 2016). Open innovation focuses on the openness of value brought by knowledge and information through information flow to foster innovation conditions for stakeholders (Xia and Wang 2016). In contrast to closed innovation, open innovation aims at enabling enterprises to incorporate internal and external resources with a broader boundary, thus significantly improving innovation efficiency. However, while opening their own company boundaries to the outside world, enterprises are faced with a series of issues such as information disclosure vulnerability, core technology leakage risk, insufficient incentives, incomplete contracts and loss of property rights and intellectual assets. The emergence of blockchain technology provides new solutions to the above-mentioned problems. With the continuous development of the Internet of Things and digital technology, blockchain has risen as an important digital support for open innovation. The essence of blockchain technology is a distributed and reliable database that uses encryption technology to link all transactions on the blockchain in chronological order, forming a data chain. The typical characteristics of blockchain technology include decentralization, trustlessness, openness and transparency, immutability and traceability. Decentralization means that verification, recording, storage, maintenance and transmission of all data on the blockchain are based on the distributed network system and mainly rely on encryption algorithms to support the establishment of a trusted relationship for sharing information between members. Trustlessness means that blockchain members do not need to establish trust relationships or endorsement by third parties to establish trust and proof mechanisms for transactions. Openness and transparency refer to the practice that both parties to the transaction will be encrypted with public and private keys, and any other information would be

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publicized on the Internet, and any participant can query through the open structure. Such a set-up is immutable because data is stored in chain and distributed mode, and even if all transaction data is altered locally, it is difficult to tamper with local data of all other users, thereby maintaining the fidelity of data stored therein. Traceability means that all data uploaded in the blockchain is “time-stamped,” encrypted and decrypted with private keys unique to each member and can be traced back to any member that has edited the data. As an important new technology, blockchain is known for its important application prospects in open innovation. Blockchain technology can make the sharing, authorization, tracking, protection, traceability and evaluation of information, knowledge and intellectual property openness and transparency. The decentralized, trustless and immutable attributes ensure the security of data and information uploaded, while the technical characteristics of traceability enable the value of open innovations such as intellectual property rights and patents to be acquired by and protected for innovators. 5. Artificial Intelligence-driven Innovation Artificial intelligence is the core driving force of the Fourth Industrial Revolution (Lu et al. 2018). As a general term for a class of “humanoid” computer systems, artificial intelligence is leading a new round of global innovation boom (Pan 2018). Innovation triggered by artificial intelligence tends to fall within basic disciplines. Historically, every significant development of artificial intelligence has been conducive to the emergence or marked progress of related basic disciplines. For examples, disciplines like automation, computer and information gradually appeared and developed in tandem with progress in artificial intelligence research and practice. As a consequence, innovation triggered by artificial intelligence tends to focus on this kind of basic disciplines. In addition, the biggest limitation of artificial intelligence research currently lies in the lack of comprehensive breakthroughs in related basic disciplines, and this bottleneck coincides with the standpoint of Miao Wei, then Minister of Industry and Information Technology, who asserted that China should strengthen breakthroughs in key and core technologies in order to accelerate the research and development and commercial usage1 of artificial intelligence, virtual reality and other technologies. The new wave of innovation stimulated by artificial intelligence will become the key to “trigger the Fourth Industrial Revolution” (Ma et al. 2017). Especially in recent years, breakthroughs have been achieved in artificial intelligence with regard to basic theories, core algorithms and AI combination with big data, and these outcomes have clearly demonstrated the immense innovation potentials embodied in artificial intelligence. In the foreseeable future, it is likely that artificial intelligence will completely change the traditional mode of technological innovation and the ways that technological innovation and industrial practice are connected. Innovation based on artificial intelligence has realized the significant transformation of technological innovation mechanism and contains important basic innovation value. 1

Ministry of Industry and Information Technology: Accelerate the commercial application of technologies such as artificial intelligence [EB/OL]. http://www.gov.cn/xinwen/2017-07/11/content_5 209713.htm, 2017-07-11.

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Innovation led by artificial intelligence could become the main direction of future innovation, with “disruptive” potentials in speed, breadth and depth (Lu et al. 2018). 6. Science-based Innovation The rapid developments of information technology and continuously intensifying global competition have precipitated the era of knowledge economy. For enterprises, the importance of traditional factors of production (including physical factors such as labor, land and capital) is gradually diminishing. Global competition is increasingly reflected in the competition for scientific and technological strength, and innovation is fast becoming the key to augment scientific and technological competitiveness. Nevertheless, science, as the prerequisite foundation of technology, is fundamentally different from technology. “Technology-based innovation” falls short of meeting the innovation needs of high-tech enterprises, and the global trend of innovation is gradually moving toward science-based innovation (Chen et al. 2013). The notion of science-based innovation has been long-standing. As early as the eighteenth century, Adam Smith proposed that the relationship between progress and innovation in the division of labor came from two aspects, the experience-based and the science-based. Science, which refers to the categorization and learning of knowledge, is the assembly of a system of knowledge about the laws of change in nature. Science includes the knowledge system formed by the cumulative understanding of phenomena, essences, characteristics and movement patterns of various things. Science includes basic science and applied science, among others. Basic science mainly studies natural phenomena and the form of material movement (mode of motion of matter), explores the basic laws of their operation and development, and basic science research results are the most fundamental and crucial theoretical basis across science and technology. Applied science refers to science that transforms the aforesaid theoretical basis into practical application, manifests strong instrumentality and purposefulness and directly relates to the actual needs and practices of people. The idea of science-based innovation originated from Pavitt’s (1980) research on industrial classification of innovation. He conducted a questionnaire on more than 4,000 enterprises in the U.K. and found that the characteristics of industrial technological innovation differ based on the type of industry. In this context, industry is mainly divided into supplier-led industry, production-intensive industry and sciencebased industry, from which the concept of “science-based technology” was derived. Meyer-Krahmer and Schmoch (1998) further subdivided science-based innovation. According to Coriat et al. (2003), Cardinal et al. (2001), science-based innovation is defined as follows: Science-based innovation refers to innovation that is directly fostered by and strongly dependent on scientific research. In contrast, technologybased innovation refers to innovation based on process engineering and technology development and is less dependent on scientific research. 7. Design-driven Innovation From the 1980s onward, the significance of design-driven innovation has become increasingly apparent with “design thinking” embraced by entrepreneurs, and design

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is generally recognized as an important innovation process (Chen and Chen 2016). Utterback et al. (2006), Verganti (2003, 2006, 2008, 2009) put forward the designdriven innovation theory under the theoretical framework of technological innovation, and this theory has gained quite some traction. The theory extends the model of innovation impetus and proposes that in addition to “technology” and “market,” the presence of “meaning” is the key knowledge that advances technological innovation. This development successfully integrates the two theories of design research and technological innovation, clearly defines the status and role of design in technological innovation and enhances the explanatory/interpretation ability of technological innovation theory in social and cultural innovation. Dominant meaning is a kind of industrial innovation theory proposition that draws upon dominant design theory, and the focus here is investigating how dominating meaning innovation is formed in the industry. The essence of design-driven innovation is “meaningful innovation” (Verganti 2003, 2008, 2009). The core concept of “meaning” is derived from the semiotic theory popular in Europe and North America. From the perspective of innovative cognitive logic, meaning must be created before corresponding objects (products, services, modes, etc.). That is to say, the first innovator must create the symbol of the object before creating the object, and the innovator must explain this new symbol with known concept symbols, as in what it is and why it is meaningful. “Design-driven innovation” is the creation of meaning in innovation, and is also known as “meaning innovation.” The two are synonymous, with the former emphasizing the key role of design behavior in innovation, while the latter underlines the corresponding relationship among meaning, technology and market. In design-driven innovation research, innovation system, innovation network and open innovation are three interrelated research directions. Verganti (2009) proposed the concept of design discourse, referring to an innovation system in which “multiple rules and ways of expression coexist in a pluralistic society.” In earlier studies, design innovation network was regarded as a linguistic network consisting internal actors (managers, designers, product developers) and external actors (various social and cultural researchers, technical researchers and customers), which are manifested in media such as books, magazines, films and music. It is a complex network formed by enterprises, industrial venues, museums, exhibitions, trade shows, events and theaters (Dell’Era et al. 2008). The above research revealed the first characteristic of design innovation network, namely the diversity, heterogeneity and hierarchy of network structure. In recent years, research efforts have largely concentrated on the second characteristic, namely knowledge transformation founded on criticism in design innovation network. Design innovators often have to deal with a plethora of contradictory symbols, concepts and ideas in a network (this is obviously related to the first feature of the design innovation network), which are called design mess. To solve this mess, knowledge related to meaning needs to be reinterpreted before transformation, and the essence of reinterpretation is criticism (Verganti and Öberg 2013; Jepsen et al. 2014; Öberg and Verganti 2014). Chen and Chen (2010) proposed that the essence of design-driven innovation is innovation in an open social and cultural environment, which can be well combined with the open innovation theory. Lu et al. (2015) discussed the formation mechanism of design-driven innovation

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from the perspective of collaborative network. Verganti (2006) proposed that open innovation is solution-oriented, as focus is placed on obtaining as many external ideas as possible, while design-driven innovation is complementary to open innovation, because it is problem-oriented and concentrates on criticizing creativity with the help of external interpreters. 8. Jugaad Innovation The value of an innovation is measured by its usefulness, while its possible negative impacts should also be systematically weighed. The simplest character of technological innovation is its adherence to positive value orientation and its reverence for objective laws. For technological innovation, which is dominated by western culture, to adapt to social environment of eastern culture, it is necessary to reduce the “alienation” brought about by aggressive instrumental rationality and return to the core values of local culture. It is essential to absorb nutrients from oriental wisdom such as traditional Chinese culture, Japanese Zen culture and Indian folk cultural “frugal” spirit, just to name a few. Many sources of oriental wisdom are somehow related to traditional Chinese philosophy and culture, which are worth reflecting upon and exploring (Yin and Chen 2015; Chen et al. 2014). With the development of emerging markets and changes in the global economic environment, a new innovation spirit and model has swept across the world, namely jugaad innovation (Radjou et al. 2012). How to create more value with limited resources is the core mission of jugaad innovation. The idea of jugaad innovation has its roots in the “appropriate technology” movement of the 1950s. Schumacher (2011), in his book Small is Beautiful, with reference to the concept of “appropriate technology,” criticizes the direct transfer of technology from developed countries to developing countries and mass production, arguing that this method will hinder sustainable economic development. He emphasized that the required technology should be identified according to the needs of local customers, and product development should be in line with local economic and resource conditions (Bhatti and Ventresca 2012). As early as the 1980s, multinational corporations such as Unilever and Procter and Gamble have begun selling simple, appropriate products in developing countries, such as shampoo and body wash in small packages, to cater to local needs and budgets, while Nike has designed totally enclosed hijab sportswear that cater to the practice of Muslim women. Jugaad innovation originates from certain kind of almost unwitting natural perception. It is a combination of traditional naïve wisdom and simple technology to deal with serious resource conflict by providing products or measures with huge cost advantages. It is not just frugal thinking in a simple sense, but an innovative wisdom that grasps the core and the most fundamental mission at a time when objective conditions are at a disadvantage. This wisdom represents profound oriental cultural heritage. The six principles of jugaad innovation include: seek opportunity in adversity, do more with less, think and act flexibly, keep it simple, include the underprivileged and follow your heart. While traditional western structural innovation method is challenged by the market against the backdrop of diversity and meager resources, jugaad innovation provides an ideal means to solve the current innovation dilemma and demonstrates important technical and economic value. “Jugaad” is an Indian

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colloquial word that can be translated as “an original fix or a simple problem-solving born from ingenuity or quick-wit.” It is a unique way of thinking and acting in the face of adversity, a gutsy art of spotting opportunities in the most unfavorable situations and improvising for on-the-spot work-around in a simple and flexible manner. The formation and prevalence of the concept of jugaad innovation took place in India, where there is a long-standing “ jugaad” culture, that is, “overcoming constraints by improvising an effective solutions to problems using limited resources” (Radjou et al. 2012). Relying on this postulation, Indian corporations are reframing product concepts and minimizing unnecessary product designs by catering to local customers’ needs and market characteristics to develop market-relevant products. In doing so, Indian companies have achieved tremendous success by not only reducing production costs but also maintaining the durability and usability of products. Jugaad engineering represents the concept of “Gandhian engineering,” the latter referring to the effort of extreme frugality, and the willingness to challenge conventional wisdom in engineering and technological innovation. The core idea of jugaad engineering, namely better products and services for more people with fewer resources, is built on two statements of Mohandas Karamchand Gandhi, respectively being “Earth provides enough to satisfy every man’s needs, but not every man’s greed,” and “I’m very much in favor of all scientific inventions that benefit everyone” (Hang et al. 2010). Jugaad engineering is a type of disruptive innovation involving the redesign of products and their development process by providing products and services with the essential characteristics to meet the needs of broad consumer groups. Cost principles and customer benefits are inherent components of jugaad engineering, but above all, jugaad innovation seeks to reduce unnecessary costs and unnecessary product designs (Govindasamy 2010). 9. Inclusive Innovation Inclusive innovation is a response to an appeal for innovation beneficial to healthy and sustainable economic development. In 2007, the Asian Development Bank introduced the notion of inclusive growth, stressing the need for realizing equality of opportunity and equitable participation during the process of innovation and in turn enabling innovation achievements and the resulting economic growth to benefit all people (Xing et al. 2013a, b). Hence, the concept of “inclusive innovation” came into being, emphasizing that the popularization of innovation achievements should benefit all, including the once marginalized base of the pyramid (BoP). This approach requires innovation outcomes to possess diversified values, priority given to the real needs of the market at the bottom of the pyramid, ensuring equal participation of market groups and alleviation of poverty, so as to promote inclusive development of society (Xing et al. 2015). 10. Innovation for Peace Generally speaking, peace implies being free from war and violence. In a narrow sense, peace building refers to resolving the fundamental factors that directly cause or intensify conflicts and improving local management capacity for conflict resolution

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(Galtung et al. 1972). Peace building in a broad sense is a concept with wider meaning and deeper levels and includes not only conflict resolution but also the establishment of sustainable relationships and foundations for peaceful development (Kozan 1998) and advancements in various aspects such as social development, humanitarian aid, governance, environmental security and judicial protection. The issue of development is often the underlying cause of many of the conflicts and upheavals in the world today. Only when all countries have developed will, there are more favorable conditions for maintaining world peace and stability (Xi 2012). According to the definition of content of peace and peace building, innovation for peace (IFP) is a series of technological or process innovations aiming at supporting and promoting peace building. Its starting point is people-oriented, and the ultimate goal is to achieve the development of humankind. Innovation for peace can be applied to short-term, operational conflict resolution focus, and it can also serve long-term, structural socio-economic development (Chen and Huang 2017). 11. Social Innovation The concept of social innovation (SI) can be traced back to studies on corporate social responsibility (CSR) (Phillips et al. 2015). From the first time when the notion was presented by Bowen (1953) in his book Social Responsibility of the Businessman, corporate social responsibility has gradually moved from the fringes to the center of economic management research. However, debates on whether corporations should assume social responsibilities have never ceased, take for example Friedman’s (2009) argument that economists who adhere strictly to liberal ethnics will always believe that CSR undermines the foundation of a free society. Nevertheless, increasingly mounting evidence are convincing scholars that CSR is favorable to businesses, while corporations that ignore social responsibility will be “punished” (Mitchell et al. 1997). When the analysis of organizational field and stakeholders (DiMaggio and Powell 1983) has been incorporated into the analytical framework of the external institutional environment of corporations subsequent to the establishment of the theoretical system of neo-institutionalism, the above-mentioned evidence secures a strong theoretical support. Mumford (2002) put forward the concept of social innovation in his essay “social innovation: ten cases from Benjamin Franklin,” which has been criticized and refined subsequently by such scholars as Cajaiba-Santana (2014), MacCallum (2009) and others, eventually forming a relatively complete theoretical framework. Social innovation is an extension of Schumpeter’s definition of innovation output to “non-market sectors,” or in other words, the concept of “creating new products with market value through recombination of key elements” is expanded to produce outputs with “social value” (Osburg 2013). The European Commission defines social innovation as follows: New ideas (products, services or models) that simultaneously meet social needs and create new social partnerships (Tunheim 2013). It is not difficult to observe from the above definition that the essence of social innovation is to realize the optimal solution of social problems through innovation activities. However, while social innovation studies often concentrate on the importance of “value co-creation,” nevertheless, social innovation with corporate social responsibility as the underlying

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logic and origin does not intrinsically demand the economic nature of an action, meaning that the paradigm allows for some innovative outputs intended purely for solving social problems without generating commercial value. Even though such a value orientation is “beneficial” from the perspective of social ethics, economic logic suggests it is more of an initiative than a market-based mechanism. Under this model, the “invisible hand” could lose its power. 12. Common Innovation Common Innovation (CI) emphasizes the response of enterprise innovation behavior in solving social challenges, but fundamentally, it is still a search for answers on how the behavior of the commercial sector can promote the welfare of the noncommercial sector. Furthermore, scholars begin to pay greater attention to the application of innovation process in non-commercial public sector and organizations. In 2014, Swann (2014) proposed for the first time the concept of common innovation in his book Common Innovation: How We Create the Wealth of Nations, defining common innovation as follows: Innovation that takes place outside the business, professional and governmental spheres and is carried out by the general public for their own good. Swann (2014) highlighted that while people’s attention is more likely to be captured by novel innovative products from business innovation (e.g. iPhones, Ferrari racing cars, among others), nonetheless, common innovation devotes more attention to innovation activities accomplished by ordinary individuals, households, clubs and local communities. In English, the word “common” denotes both ordinary and “grassroots,” and common innovation focuses more interests on broad, mundane, non-proprietary and inexpensive innovations (such as finding new uses for old factory buildings, or developing innovative dishes with common ingredients). Compared with traditional innovation paradigm, common innovation has three characteristics: (1) From the perspective of the entity, the implementers of common innovation come from the public sector, namely the individuals, households, clubs and local communities mentioned above and not traditional sectors of the economy; (2) from the perspective of purpose, common innovation aims to solve public problems and challenges and promote social welfare, rather than generating returns for shareholders; (3) from the perspective of domain, the main place of common innovation is not in the market, but in the broad and universal sphere of everyday public life. It should be noted that the focal point of research of common innovation centers on the non-commercial public sector, and innovation activities under discussion are neither enterprise-oriented nor do they primarily occur in the market, let alone undertaken for improving shareholder returns. From the economics angle, common innovation is even more distant from the core issues of economic management research than social innovation. There is no doubt that common innovation can create value, but this kind of value creation is not necessarily or directly related to market and capital. Common innovation also has social implication, but it does not seek to integrate the existing economic management analysis framework to optimize the overall allocation of resources. In conclusion, as an emerging paradigm, common innovation is confronting at least two challenges: First, partial and inadequate solutions to social challenges.

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Facing the gap between the rich and the poor caused by increasing income inequality, common innovation stresses on the adoption of low-cost, ordinary and extensive innovation paradigm, which means social innovation does not actively seek to solve the problem of inequality, but instead looks for optimizing the allocation of resources in a small range. This idea of partial equilibrium may further divide social groups and does not work toward the realization of the overall optimization of society. Second, a contradictory and incompatible analytical framework. Researchers regard the difference between common innovation and traditional business innovation a dichotomy, emphasizing that it is a kind of non-business innovation, which renders it unusable in neither the analysis of the commercial nor public sectors in a unified framework, nor the optimization scheme of overall resource allocation.

2.2 Classic Evolution Theories The thinking of traditional innovation theory originated from Schumpeter’s classification of five types of innovation: manufacture new products, adopt new production processes, open up new markets, acquire new sources of raw material, or establish new organizations (Schumpeter 2009). Different from the importance of capital, land and institution in the traditional driving factors of economic growth, Schumpeter’s innovation theory stresses on the contribution of entrepreneurship to economic growth. His definition of innovation implies that entrepreneurs effectively identify potential opportunities in the external environment to create and gain profits, break the inertia of traditional commercial law and carry out innovation activities until gain commercial profits are obtained. This is a focus fundamentally based on commercial viability and value return of technological inventions (Baumol 2002), punctuating the “creative destruction” caused by the inner driving force of entrepreneurship and the value creation and continued growth it drives (Schumpeter 2009). With the rise of Schumpeterism, innovation is regarded as the core propellant of economic growth (Chen 2015), innovation theories in the context of different countries have begun to emerge and their evolutionary history is shown in Table 2.1.

2.2.1 Major Innovation Theories in the USA Ever since Schumpeter put forward the innovation economics theory, American scholars have been the first to conduct research and exploration from the perspectives of the economics of technological change (Carter 1966) and the relationship between industrial research and technological innovation (Faulkner and Senker 2011). Other key issues have also been addressed, such as the driving effect of technological innovation on economic growth and core competitive advantages (Crossan and Apaydin 2010), as well as the value acquisition in the process of innovation (Teece 1986). Outcomes of these studies include classical innovation theories like user innovation

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Table 2.1 Summary of major innovation theories in different countries

Country/region

Major innovation theories

Representative scholar(s)

USA

User innovation

von Hippel

Disruptive innovation

Christensen

OpenInnovation

Chesbrough

Design-driven innovation

Verganti

Social innovation

Nicholls 和 Murdock Nicholls and Murdock

Common innovation

Swann

Responsible innovation

Owen et al.

Lean innovation

Womack

Europe

Asia

Knowledge innovation Nonaka and Takeuchi Jugaad innovation

Radjou

Imitate innovation/catch up

Kim and Nelson

Comprehensive innovation

Xu Qingrui

(von Hippel 1986), open innovation (Chesbrough 2003) and disruptive innovation. User innovation focuses on the significant role of users in the process of innovation and asserts that the basis of all innovation activities is to meet user demand for value, while users, especially lead users, can be the core source of innovation in aspects such as developing new products. Open innovation concentrates on internal and external knowledge interaction, highlighting that enterprises can improve their technological capabilities and competitive advantages by opening up organizational boundary barriers, acquiring knowledge from outside (inward opening) and exporting knowledge from inside (outward opening) (Christensen 2013). Disruptive innovation accentuates the interaction between incumbents and newcomers and holds that new entrants in the industry can reconstruct the value network of traditional markets by entering emerging markets and innovating technologies, products and business models, thereby unseating industry traditional incumbents and reconstructing the industry traditional value chain. Classical innovation theories emerging in the aforesaid American context are mostly market-oriented and targeted at the demand for economic benefits.

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2.2.2 Major Innovation Theories in Europe Innovation theories that have appeared in the European context in recent years, such as design-driven innovation (Verganti 2009), social innovation (Nicholls and Murdock 2011), common innovation (Swann 2014) and responsible innovation (Owen et al. 2012), are predominantly based on European culture and social value propositions, emphasizing the integration of technological innovation theory with humanistic, social and value attributes. Design-driven innovation refers to innovation in which the novelty of product information and design language exceeds the novelty of technology and product function (Verganti 2003). Design-driven innovation is an integration of technology and culture and focuses on the value-added effect of design elements, other than technological attributes, on product value output and satisfies the needs of users by guiding their demand mindset and purchase intention (Verganti 2003). Social innovation has been deemed the sixth wave of social macro-transformation after the age of the industrial revolution (1771–1829), the age of steam and railways (1829–1875), the age of steel, electricity and heavy industry (1875–1908), the age of petroleum, automobile and mass production (1908–1971) and the age of information and communication (1971–present) (Owen et al. 2012; Mei et al. 2018). Different in nature from innovation at the economic level, social innovation does not concentrate on new products or exploration of new markets, but rather on meeting new demands that the market fails to fulfill and on the social attributes of innovation beyond economic attributes. Common innovation differs from traditional economic and commercial innovation theory in that its content involves non-commercial innovation theory and highlights the value of innovators and innovation communities outside of the non-commercial innovation theory (Swann 2014). Responsible innovation is also known as responsible research and innovation. It refers to the exploration of the future of innovation through collective management of existing science and innovation (Mei et al. 2014b), emphasizing that innovation activities should conform to moral ethics and social expectations while achieving technological advancement and feasibility, economic efficiency and benefit (Mei and Chen 2014). Unlike the emerging innovation theories in the USA, which mainly revolves around the attributes and goals of market and commercialization, innovation theories emerging in Europe have their interest mostly grounded upon innovation goals beyond economic attributes and upon broader macro-value guidance at the societal level.

2.3 Dialogues Between Eastern and Western Innovation Theories In addition to the USA and the European nations, scholars from major Asian countries also put forward indigenous innovation theories founded upon the experience learnt through innovation practices in the context of their own countries. For instances, Japanese scholars proposed knowledge innovation (Nonaka and Takeuchi 1995) and

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lean innovation (Womack et al. 2012). Knowledge innovation mainly emphasizes the key role of knowledge in value creation. In this regard, knowledge can be divided into explicit knowledge and tacit knowledge. The goal of knowledge innovation is attained through the interaction and spiral transformation of socialization, externalization, combination and internalization of knowledge (Nonaka and Takeuchi 1995). Lean innovation essentially represents a production method that chiefly involves the pursuit of eliminating all “wastes,” including inventory, as well as developing a series of specific methods centering on this objective in order to achieve just-in-time production process and other goals of production and operation management system (Womack et al. 2012). Korean scholars put forward an inverse A-U model of pursuit path primarily to deal with companies in second-mover countries having to catch up with leaders, stressing that innovation catch-up of second-mover countries is an evolutionary process that advances from production capacity to engineering capacity and then further to innovation capacity. In essence, it has the paradigm attributes of “imitation innovation” and “catch-up innovation” (Kim and Nelson 2000). Juggad innovation is a representative kind of innovation theory emerging in the context of India, and originates from the far-reaching Indian “Juggad” culture, which means “overcoming constraints by improvising effective solutions to problems using limited resources” (Radjou et al. 2012). Compared with traditional innovation theories, the features of Juggad innovation are primarily manifested in durability, lightweight, flexibility and convenience, user-friendliness, simplicity, new distribution modes, applicability, local resource reliance, green technology and affordability (Weyrauch and Herstatt 2016). Among the emerging economies, China is the most important developing country, and Chinese scholars have also put forth indigenous original innovation theories, take for example indigenous innovation (Chen 1994). Indigenous innovation chiefly includes the three aspects of indraught assimilation innovation, integrated innovation and original innovation. Another example is comprehensive innovation (Xu 2007), comprising the three aspects of “all element innovation” including strategy, market, technology, organization and culture, “all personnel innovation” that targets all staffs in the organization, and the “all time–space innovation” oriented toward changes in organizational space and time. Over the past 40 years of reform and opening-up, Chinese innovation and management scholars have formulated a series of innovation theories with Chinese characteristics based on classic western innovation theories and China’s excellent innovation practices. Some of the more prominent examples include comprehensive innovation theory of Professor Xu Qingrui from the Zhejiang University School of Management, enterprise innovation ecosystem of Professor Chen Jin and secondary innovation theory of Professor Wu Xiaobo, and asymmetric innovation theory of Professor Wei Jiang from Tsinghua University, among others (Chen et al. 2017). Against the backdrop of global innovation and peaceful development being confronted with challenges, and in the context of innovation-driven development and the peaceful rise of China, the development of innovation theory with Chinese characteristics is somehow still lagging behind and there are gaps waiting to be bridged. Through sorting out the evolution process of existing innovation theories, it has been discovered that classic innovation theories from around world can be basically

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divided into three categories. The first category is based on partial/local thinking. Take for examples user innovation and disruptive innovation proposed by American scholars, design-driven innovation and common innovation proposed by European scholars, knowledge innovation proposed by Japanese scholars and imitation innovation proposed by Korean scholars, they all place emphasis on understanding the innovation process from the perspectives of specific innovation behavior, innovation method or innovation procedure and innovation entity, and these theories are characterized by the tendency to adhere to atomistic innovation way of thinking. The second category only focuses on the horizontal integration of knowledge, resources and personnel, such as open innovation proposed by American scholars and comprehensive innovation proposed by Chinese scholars, among others, but these theories lack vision-driven strategic leadership and may possibly orient enterprises toward positions susceptible to such risks as excessive opening and inadequate core competence. The third category includes those going to the other extreme with over-reliance on conceptual, cultural or social factors, like the responsibility innovation and social innovation put forward by European scholars, and Jugaad innovation put forth by Indian scholars. Although these innovation theories succeed in jumpstarting discussions on global science and technology innovation issues such as those related to climate and transformative technology governance, they are prone to becoming mere policy buzzwords, rendering them inapplicable to actual innovation practice. Furthermore, developed countries have refined their own major innovation theories, as evident in examples such as the instrumental contribution of organized innovation to the prosperity and revival of the USA (Currall et al. 2017) or the national innovation systems with strong foundations in Finland and Sweden (Lundvall 2010), but the roles of developing countries and Eastern innovation theories have largely been ignored. Both research and practice require global dialogues that transcend national boundaries and cultural contexts (Vasen 2017), so that the theory of science and technology innovation can be effectively shifted toward paradigm attributes such as divide-and-conquer, openness and inclusiveness in the global context (Hajer and Wagenaar 2003). In turn, innovation theory can realize a broader range of international conventions and global governance, and advance peace and sustainable development around the world (Chen and Huang 2017). Eastern civilizations, as represented by China, are making progressive contribution to global development. For examples, China has contributed to the growth and stability of the international economy after the 2008 global financial crisis and China’s innovation and governance, represented by “a community of common interest, a community of common destiny and a community of common responsibilities” under the Belt and Road initiative, have brought immense value to global development. It is imperative for theoretical researchers to refine and review innovation theories with Chinese characteristics in relation to China’s innovation practices and value contribution to international development, so as to assist in building China into a world power in science and technology innovation, creating world-class innovative enterprises, enhancing and consolidating China’s global innovation leadership and furthering

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the provision of knowledge and wisdom growth for global innovation theory development and innovation practice. The current innovation theories advocated in China chiefly observe the innovation process from specific behavior, methods, procedures and entities of innovation. However, the creation of new products, new elements, new methods, new processes and even new organizational models neither necessarily depend on the improvement or advancement of a single aspect, nor do they arise naturally and spontaneously, but rather they are the results of organized and crafted development of innovation. For the most part, within current innovation theories, there is a general absence of “strategy” in a leading role, while the spearheading and forward-looking functions of strategic design and strategy execution in promoting the implementation of ideas, achieving innovation results and transforming innovation value have also been overlooked. Gary Hamel, a master of modern management thought, in his book The Future of Management, puts forwards a four-level model of innovation, namely technological innovation, operational innovation, strategic and business model innovation and management innovation (Hamel and Breen 2008). It can be seen that strategic design offers important guiding and driving value for innovation. Furthermore, the long-established holistic view of Eastern philosophy (traditional Chinese culture, Buddhist wisdom, etc.) is missing from the existing innovation theories. No innovation theories reflect Eastern thoughts such as overall thinking, unity of opposites, organic integration and dynamic development, the dynamic evolution of Yin and Yang unity, the harmony between nature and humans advocated by Taoist philosophy, the balanced “middle way” philosophy and the peace view of “harmony without uniformity” advocated by Confucian philosophy, the overall strategic view proposed in the Legalist school thought of “Sun Tzu’s Art of War,” or the “middle way/centrism (Madhyamaka)” philosophy in Buddhism. All of these Eastern wisdoms are nowhere to be found in innovation theories. Therefore, “holistic innovation” is proposed.

Column 2.2: West Meets East The Academy of Management Perspectives, a top journal of international management, published a paper in 2010 that explored the differences between Eastern and Western management cultures and steered future management to a bicultural approach. In the wake of the economic crisis, the world was looking for new ideas and new perspectives. Business studies and practices had shifted from “West Leads East” to “West Meets East,” and the flourishing business climate in China not only served as a source of economic partners but also a potential wellspring of management wisdom. Studies have already hinted at the possibility of oriental management research and practice in assisting the recovery of Western economy. Unfortunate as it is, the cultural chasm between the East and the West impart Chinese models with distinct Chinese characteristics, the situational characteristics among which are unfathomable to western management, not to mention that Chinese models at times may not

2.3 Dialogues Between Eastern and Western Innovation Theories

be the perfect match for western companies. Accomplished entrepreneurs like Stan Shih on the one hand has circumvented this shortcoming and drew on the best management lessons from both the East and the West, while on the other hand presenting the ideal “middle” role model. By adopting a “bicultural/ambicultural” management approach, Stan Shih provides a model for cultural communication and organizational guidance between the East and West. Indeed, “Chinese characteristic” as a way of thinking, with its emphasis on balance and “integration” of self-others, is promising in bridging global disputes and facilitating the formation of globally minded executives. Source: Chen and Miller (2010). The Academy of Management Journal, a top journal of international management, published a paper in 2015 that explored the new concepts and theories emerging in management research in the East and the West. The field of management research has made tremendous progress since the 1950s. Most Western research paradigms originate in North America from the 1950s to the 1980s and were inspired by empirical phenomena and cultural, philosophical and research traditions of the time, followed by a subsequent and expanding necessity to gradually attach greater importance to the institutional, philosophical and cultural values and background differences between the East and the West. Source: Barkema et al. (2015).

Column 2.3: Du Weiming: Dialogue between Eastern and Western Civilizations The Institute for Advanced Studies of Humanities at Peking University was founded in 2010 under the initiative of Du Weiming, an academician of the America Academy of Humanities and Social Sciences. Studies conducted in the past decade or so chiefly focused on the issues of dialogues among civilizations, “cultural China” in a broad sense, world civilization and world ethics. 1. Dialogues among civilizations Dialogues among civilizations in the past refer solely to dialogues between the East and the West; we used to compare the shortcomings of our own culture to the brilliance of Western cultures, which is not fair. What I wish to see now is whether it is possible to conduct a dialogue on a level playing field between the Western core values developed through enlightenment and the Chinese core values founded upon Confucian traditions. We have endeavored over the years in this respect, especially attempts made in fostering dialogues between Confucianism and other major civilizations, as well as interchanges between Confucianism and Islamic civilizations. 2. “Cultural China” in a broad sense

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“Culture China” primarily seeks to explore the notion of “cultural identity,” both in China and among overseas Chinese communities, including as well the understanding and interaction of many foreigners who have no blood relationship with China but have long been devoted to understanding about and interacting with China. 3. World civilization and world ethics The Age of Enlightenment in the West represents a very strong Westerncentered ideology, of which we seek to explore from a multiple-civilization angle and to reflect upon the Western Enlightenment from the perspective of Chinese culture. I gather that this is a comparatively broader view, and it is going to be a long-term process because what we have gained over the years is limited. With today’s world enveloped in secular humanism, confronted with difficulties in environmental protection, challenges to social order and conflicts between the rich and the poor, the way to break through the shackles of money and power is a problem shared by world civilizations. Therefore, entrepreneurs should possess the awareness to consciously seek an understanding of the relationship between the entire human race and the Earth, build a community of shared life, remove oneself from one’s own private, personal universe, and on the one hand comprehend the sanctity of the Earth on which we live, while on the other hand also respecting different religious traditions. With regard to differences in values between civilizations of the East and the West, at present we tend to overemphasize such Western values as freedom, equality, reason and human rights, which are beyond the values of our traditional culture such as compassion, justice, fairness, harmony between people, social responsibility, so on and so forth. Therefore, the profound traditional values of China should be brought into full play, and the individual, social, natural ways and the Way of Heaven to be integrated into one framework. We should refrain from limiting the dialogue between China and the USA to economy and politics, but should also encompass exchanges on culture and ideology. Source: Interview with academician Du Weiming on Thepaper.cn in September 2019, and speech by academician Du Weiming at the “New Business Civilization Forum & 2nd CKGSB-HKS Global Symposium” on July 8, 2016.

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Chapter 3

China’s Innovation Theories: Emergence of Holistic Innovation

Integrative thinking bases itself upon the holism, which offers us alternatives in a complex, dynamic and flexible way. —Roger Martin.

“To seek the greatness and rejuvenation, China must make tireless efforts to develop science and technology to build herself into a world science center and a mecca for innovation; it’s a call of the circumstance, the challenge, and the mission.” (Xi 2018) The holistic innovation theory was put forward to answer the call and fulfill the mission of the age. It is one of Chinese characteristics that scientific and technological experts have contrived to keep abreast with the times, seize the initiative among international peers and take lead in technological development, as directed by the innovative gene of the Chinese nation.

3.1 Source of Innovation in Traditional Chinese Culture Apart from the innovation theories newly established by Chinese scholars, innovation factors can also be spotted in the long-standing Chinese culture. As product of great Chinese minds, these innovation factors would do themselves justice when explored deeper and studied more. The struggle between traditional Chinese culture and modern Western counterpart was seen the old versus the new at one time, with the former being obsolete, old-schooled and rotten. When Chinese intellects were overwhelmed by the social Darwinism in closing days of Qing Dynasty, in particular, the traditional Chinese culture was claimed a has-been doomed to drop out of the march of the humanity. However, the deeper studies into cultural study, peaceful rise of China and boosting cultural recognition and confidence of Chinese people in recent years have vetoed the claim. Chinese and Western cultures are now regarded different in type, not in state of art. (Chen 2005) Despite their difference in type, both can achieve innovative transformation and development in the future society and times. © Science Press 2023 J. Chen, Holistic Innovation, https://doi.org/10.1007/978-981-19-8625-3_3

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In other words, there can be plural models of modernization (Chen and Wu 2019). Du Weiming (Tu 2000) pointed out that the modernization process itself is shaped by the cultural form rooted in a specific tradition. The Confucianism completely modernized but incompletely westernized is the best proof that all roads lead to modernization. The China-US trade friction, natural disasters and responses to COVID-19 are all witnesses of the competition and cooperation between Western and oriental civilizations that “make America great again” and “seek great rejuvenation of the Chinese nation”. If the competition or confrontation would not lead to a zero-sum game, the factors in both civilizations that help with innovation in the future will complement and intertwine one another. For either the epoch of conflicts and interaction between civilizations, or the Chinese modernization with “confidence in path, theory, system and culture”, analyzing classic oriental innovation theories is of great significance. Whether there’s an endowment of innovation in traditional Chinese culture, President Xi Jinping made it clear that “Innovation is the core of national progress, the perpetual impetus of national prosperity, and the inherent endowment of the Chinese nation.” (Literature Research Office, CPC Central Committee 2014) Innovation is basically defined as “any behavior that can change the existing resources to create wealth” (Li 2011). By this definition, many inventions, creations and even creative ideas in traditional Chinese culture are not innovation at all. But for today or for a long run, these accumulated through millennia of fortune of the Chinese civilization may be innovation factors that could help turn wisdom of the past into wealth of the future. This is why we shall delve into the innovation factors in traditional Chinese culture. From the perspective of constituent elements, culture generally includes the ways of thinking, ideas and beliefs, organizations and systems, utensils and technologies, etc. The article will discuss innovation factors in traditional Chinese culture from these aspects below.

3.1.1 Traditional Way of Thinking Mr. Lou Yulie, a prestigious sinologist, once remarked, “The humanistic way of thinking in Chinese culture is dynamic, holistic, connected, random, and comprehensive.” (Lou 2015) Compared with the partial, static, analytical and reductive way of thinking advocated in modern Western sciences, traditional Chinese culture prefers a dynamic, balanced, comprehensive and holistic model. In general, Chinese culture is better at holistic thinking and the Chinese way of thinking features being holistic, global and systematic. A household example is that traditional Chinese therapists may ascribe headache to trouble with the heart. As the holistic way of thinking in traditional Chinese culture also features being dynamic, it highlights the dynamic holism. For instance, Book of Changes holds that heaven and earth are filled with qi, which reproduces in endless succession. Another example is the meridians of traditional Chinese medicine, which are the phenomena arising from the continuous

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movement of the human essence, qi (energy) and spirit. Also, the holistic way of thinking in traditional Chinese culture is forward-looking, because dynamism leaves traces. “Treating diseases before its onset” in traditional Chinese medicine is the essence of the forward-looking way of thinking. The holistic way of thinking in traditional Chinese culture is also ethical, since all parts come together to constitute a community of shared destiny. It is narrated in Zhuangzi: On the Equality of Things that “Heaven and earth were born with me, and all things are united with me as a whole”; Book of Rites: Evolutions of Rites advocates that “See the world as a family and China as a person”. Zhang Zai, a Neo-Confucianism advocate of North Song Dynasty, showed a greater outlook on life as demonstrated by the saying that “All people are my siblings; all creatures are my fellows” in Western Inscription; Cheng Hao, a Neo-Confucianism advocate of North Song Dynasty, argued that “The benevolent sees things as a whole”. For governance of a nation or even the world, the Chinese proposal to “build a community of shared future for mankind” and the American counterpart to put “America first” are derived from varying ways of thinking of the two sides. In September 2015, President Xi Jinping pointed out in an important speech at the United Nations Headquarters in New York, “In today’s world, all countries are interdependent and share a common future. We should renew our commitment to the purposes and principles of the UN Charter, build a new type of international relations featuring win–win cooperation and create a community of shared future for mankind.” (Policy Planning Department, Ministry of Foreign Affairs of the People’s Republic of China 2016) It can be said that the concepts of a community of shared destiny, a community of shared interests and a community of shared responsibility advocated by Chinese leaders are derived from the holistic ethical view of Chinese culture, while the “America first” slogan is the result of individualistic and partial way of thinking in the West. The innovation factors brought by the holistic way of thinking not only impacts the innovative governance of China today, but also guides the country to embark on a new modernization path of peaceful rise rather than colonial hegemony and a road of indigenous innovation with Chinese characteristics. The path of indigenous innovation with Chinese characteristics has distinct stages and multiple layers. With respect to the distinct stages, we have gone through the secondary innovation, combinational innovation and comprehensive innovation since the founding of PRC. Today, we are chiefly heading to a stage of open-up comprehensive innovation (Chen and Wu 2018). Professor Xu Qingrui broke through the long-dominating innovation theoretical paradigms of the Europe and America in 2003 and raised a brand-new total innovation management theory (Xu et al. 2003), which is dubbed “the most systematic of its kind to date” in the academia. Total innovation management shall adhere to the cultivation of core competencies and the improvement of sustainable competitiveness, aim at creating/increasing values, combine various innovation factors (technology, organization, market, strategy, management innovation, culture, system, etc.) and innovate the management mechanisms/methods/tools, so as to attain “three all and one synergy” of innovation, namely “all-factor innovation, all-people

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innovation, all-time/space innovation and a comprehensive synergy of all innovation factors upon all-people participation in all time and spaces”. (Chen and Wu 2018) It can be said that directed by the traditional holistic way of thinking, adaptive to requirements of the times of greater science and interconnectivity, the total innovation management theory is imposing heavier impact on the Chinese path of self-innovation.

3.1.2 Traditional Ideas and Beliefs When it comes to innovation factors in the traditional Chinese values, we ought to first shed lights on the innovation spirit in Chinese culture. In his speech at the 17th Meeting of Academicians of Chinese Academy of Sciences and the 12th Meeting of Academicians of Chinese Academy of Engineering on June 9, 2014, Xi Jinping quoted “If you can improve yourself in a day, do so each day, forever building on improvement” from the Book of Rites: The Great Learning to promote the spirit of innovation (People’s Daily Commentary Department 2015). The quotation originally means to polish one’s virtue every day, but it is deduced into constant self-improvement later. There is indeed a source of the innovation spirit. Among the 64 hexagrams specified in the Book of Changes, hexagram Ding highly praises innovation. It is recorded in the Book of Changes: Hexagram Ding that “hexagram Ding means auspicious and prosperous.” It is said in the Book of Changes: Miscellaneous Notes on Hexagrams that “hexagram Ge indicates to discard the obsolete while hexagram Ding suggests to embrace the new.” It is written in the Book of Changes: Xici Commentary I that “making improvement every day is the greatest virtue.” That is to say, it is the secret of luck and success to discard the outdated and embrace the new. Daily improvement is the best of virtues. Hexagram Sun then champions to change with the circumstances, as narrated in the Book of Changes: Hexagram Sun that “a man of virtue shall see profit and loss, emptiness and fullness, equally to change with the circumstance.” It is proposed in the Book of Changes: Xici Commentary II that “any circumstance hitting a limit will begin to change, change will in turn lead to an unimpeded state, and then lead to continuity”. Such flexibility in mind and adaptability to circumstances are an importance connotation of the innovation spirit of Chinese nation. The Chinese spirit of innovation also contains a profound advocacy of tolerance. For one thing, it upholds the idea of refining virtues to shoulder greater responsibilities and seeking harmony in diversity, as penned in Book of Rites: Doctrine of the Mean that “all living things grow together without harming one another, and ways run parallel without interfering with one another”. It makes China a rarity in the world that never launched a massive religious war and endows the ancient civilization with the trait of openness and innovation. For another, it introduces optimism on failure. Old tales, such as Kuafu Chasing the Sun and Decapitated Xingtian Waving His Weapon, are all odes to the loser. Without the ever-changing, adaptive and tolerant innovation spirit, Chinese civilization could barely have registered such scientific and technological achievements which make

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up a monumental seven-volume work of the Science and Civilization in China by Joseph Needham. From the perspective of civilization comparison, many ideas and beliefs of the myriads of ancient Chinese philosophers and authors are of great innovation values even today. For example, the traditional Chinese theories on human nature are richer and more comprehensive than the Western counterparts. Even today they are offering crucial insights into human nature for governance and management in theory and practice. Confucianism advocates the flexible management and “governance with virtue” based on its doctrine of good human nature; legalism champions the rigid management through a combined use of law, technique and circumstance against its theory of human selfishness; Taoism endorses the “governance with non-intentional action” in line with its theory of natural human nature beyond good and evil. Compared with the dominating theory of human evil in the West, different schools of thoughts and perspectives on human nature in traditional Chinese culture make the Chinese more flexible and tolerant in governance and interpersonal relationship. For another example, the traditional Chinese personality theory can be transformed into a positive innovation factor, providing references for promoting the development of Western leadership theory. Confucianism, Buddhism and Taoism all attach great importance to the cultivation of a good personality. Confucianism advocates the “three cardinal virtues” of wisdom, benevolence and courage (Book of Rites: Doctrine of the Mean) or the “five constant virtues” of benevolence, righteousness, propriety, wisdom and faith (Mencius); Taoism suggests to “live in a proper place, keep a peaceful mind, be kind in personal interaction, keep your words, adopt a soft and flexible management, do what you can, and take action at appropriate moments” in its personality theory known for “the highest excellence is like that of water” and “learn from nature” (Tao Te Ching); Buddhism upholds the personality doctrine of “eternity, bliss, true self and purity”, which wishes people to “practice abstaining greed, hatred and ignorance”; the military strategist school highlights the “five virtues for a general”, namely wisdom, integrity, benevolence, bravery and strictness. All these raise higher requirements on the practice and performance of the leaders. A new trend in contemporary leadership theory and practice is to concentrate more on service-oriented leadership, vision-oriented leadership, cross-cultural leadership with extensive knowledge accumulation, reform-oriented leadership, etc. (Chen 2010). Personality ideal in Confucianism, Buddhism and Taoism features inherent advantages in promoting cultivation of such new leadership types. Confucianism, Buddhism and Taoism all attach importance to benevolence and compassion, which is naturally in line with the development of public servant-type and service-type leaders; the pursuit of wisdom in Confucianism, Buddhism and Taoism, including the pursuit of knowledge and truth about the universe, society and life, and the pursuit of wisdom adapting to time and place, is good for the development of visionary, transformational and cross-cultural leadership; in addition, Confucianism, Buddhism and Taoism all respect the ethical leadership, as suggested that “If the leader’s personal conduct is correct, subordinates will follow even without giving orders; if the leader’s personal conduct is not correct, subordinates will not

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follow even if he may give orders” (Analects of Confucius: Zi Lu). It helps corporate leaders pursue moral self-discipline and leads enterprises to actively assume the social responsibilities. The financial crisis in 2008 best proves what a horror it would be if enterprises give up moral self-discipline. There are many more values in traditional Chinese culture that may give reference to innovation in governance and management today. General Secretary Xi Jinping stressed in his speech for the 13th group study of the Political Bureau of the CPC Central Committee (February 24, 2014), “We shall make in-depth exploration and analysis of the precious values in excellent traditional Chinese culture to seek benevolence, value the people, uphold integrity, respect justice, prioritize harmony, and pursue world peace, making them vital sources to nurture the core socialist values.” (Theory Department, People’s Daily 2015) Among them, the “harmonious culture”, a major pursuit of the Chinese nation, has become an important development direction for governance innovation today and pointed out the goals for setting up the moral, social, international and cosmic values of today’s China.

3.1.3 Traditional Organizations and Systems Compared with the ways of thinking, ideas and beliefs, it is the organization and the system that are relatively concrete and operational. Through its long development, the Chinese culture has accumulated a good deal of valuable experience in setting up organizations and systems, leaving huge influence on the national governance and corporate management today. General Secretary Xi Jinping even proposed the four matters of confidence: confidence in the path, theory, system and culture of socialism with Chinese characteristics. In the exploration of paths and systems, China has indeed embarked on a unique journey influenced by its traditional culture. In terms of political governance, it can be said that the idea of “great unification”, rooted in the DNA of traditional Chinese institutions, helps the Chinese to blaze a trail of political modernization. “Great unification marks an important feature of traditional Chinese culture. Empires always broke into independent countries in the west, while China maintains its unification, despite of many divisions in history. Division is never the ultimate goal; instead seeking unification is the ultimate goal. “Great unification” does not mean unitary interest. In contrast, “great unification” keeps sustainable development due to the internal diversification” (Zheng 2016). Under the concept of great unification, “Chinese politics has always had a unified authority, and now this unified authority is the political party” (Zhang 2011). Through opening up, social groups of different interests are absorbed into the political process. Thus, governance of the government can represent the fundamental interests of the great majority of people. One of its initiatives is to promote the mixed economy to become a normal part of the Chinese economy; through electoral and consultative democracy, the government can avoid the Western political dilemma of “vetoing for exercising the veto right” in its governance and eliminate the social division and opposition caused by it.

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For the great unification of diversity, diversified parts are mutually inclusive, making it possible to unify. “In our history, we had the tributary system, vassal system, protectorate general system, system of bureaucratization of native officers and system of prefectures and counties, among others. Such intuitional diversity and inclusiveness are unimaginable under the modern ‘nation-state’ concept in the west. However, in China, a ‘civilized country’, various systems can get along with each other very naturally. China can implement ‘one country, two systems’ and the regional autonomy” (Zhang 2011). From a practical point of view, this unification of diversity has produced tremendous power and even formed sustainable competitive advantages of the Chinese path of innovation. What differs us from the west is the strategic guidance and the national system. Ours is an innovation path with Chinese characteristics that features “CPC leadership, nationwide system, mass line, and openness and inclusiveness” (Chen 2018a). As for the organizational system of enterprises, Confucianism and Taoism have gradually exerted considerable and even unique innovative value in the construction of corporate system in China today. For example, Confucianism advocates “All under heaven are of one family” and “All people are my compatriots and all objects are my kinds”. Therefore, the quasi-family organization governed primarily by rites and secondarily by law can be said a typical institutional feature of Confucianism. This feature also impacts the institutional innovation of many Confucian enterprises. Fotile Group is a model in this regard. The quasi-family operation is to build the enterprise and its business ecology into a family that gives the employees, clients and partners a sense of belonging and achievement and even into a “community of shared destiny” in the end (Li 2017). Influenced by the Japanese corporate culture, such as the “lifetime employment system”, the quasi-family operation of Chinese enterprises gradually forms its own characteristics. The quasi-family operation of Chinese enterprises emphasizes the interest distribution among employees (such as the performance share) and welfare system, the care and attendance of employees and their families, the growth and happiness of employees, the employees’ sense of belonging, accountability, mission and achievement and the happiness of clients. “It puts clients first and sees employees the core”. In building a big happy family, the ritual and music system and rule of law are also indispensable. The construction of ritual and music system in modern Confucian enterprises covers the cultivation of daily etiquette to refine employees’ temperament and develop normative behaviors, the hosting of milestone ceremonies for the employees or the enterprise and the establishment of promotional and incentive norms. It is narrated in Analects of Confucius: Governance that, “If the people are ruled by decrees, and constrained by punishments, they will try to avoid the punishment, but have no sense of shame. If they are guided by virtue, and regularized by etiquette, they will have the sense of shame, and moreover will become good.” The sense of ritual, sanctity, responsibility, mission and cohesion, as well as the pleasure of physical and mental growth, brought by ritual and music system are very popular among employees.

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Apart from the influence of Confucianism, the institutionalized construction influenced by the Taoist “governance with non-intentional action”, the legal construction influenced by the Legalist “governance by law” and the military organizational construction influenced by the military strategist school have gradually impacted the practice of institutional innovation in many enterprises. In fact, institutional types are not clearly divided. There is more or less overlap among different types. Therefore, we may say that as influenced by the traditional culture, there is some uniqueness in the duties of Chinese entrepreneurs and in the institutional construction. “An entrepreneur actually has three identities: A ‘general’, if his enterprise is run like an army; a ‘patriarch’, if his enterprise is operated like a family; a ‘principal’, if his enterprise functions like a school.” (Li 2017) Chinese entrepreneurs are paying increasing attention to the all-round growth and well-being, referring at least to the physical/mental growth and family/career achievement, of their employees; and even seeking multi-dimensional happiness not only for employees, but also for customers, more than just offering products, technologies and services alone. In this sense, we can say that China’s corporate organizations will increasingly become study-oriented, training-oriented and growth community-oriented ones.

3.1.4 Traditional Artifacts and Technologies Technologies, especially artifacts, can be regarded the most figurative facet of traditional culture. The innovation factors and values contained in traditional artifacts have been mined and affirmed in contemporary practices, concerning culture and creativity particularly. The profound Chinese cultural elements, food, medicine, costume, architecture, furniture, utensil, drawing, calligraphy and more, have left the cultural industry endless inspiration and astonishing creative ideas, many commercialized already. In terms of science and technology, traditional Chinese technologies are generally judged outdated. The ancient China is even doubted to own only technologies and engineering, but no science. However, as far as the mindset is concerned, with the rise of new scientific and technological theories, such as relativity, quantum mechanics, information technology and ecological civilization, the system mindset has emerged, and the systems science is under development. Systems science has brought drastic changes to the forms of science, “from entity-centrism to relation-centrism; from studying things in isolation (closed systems) to studying things in interconnection (open systems); from the study of things from a static point of view (the science of being) to the study of things from a dynamic evolutionary perspective (the science of evolution).” (Miao 2007) The era of systems science will surely bestow upon Chinese people who are relatively good at holistic thinking many opportunities to boost the scientific and technological breakthroughs. Ilya Prigogine, founder of the dissipative structures, once remarked: “While traditional Chinese academic thoughts focus on the study of integrity and spontaneity, and the study of coordination and harmony, the development of modern new science and the advance of physics and mathematics in

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recent years, such as Thom’s catastrophe theory, renormalization group, and branch point theory, cater more for the Chinese mindset.” (Wang 2012) Hermann Haken, creator of synergetics, also pointed out, “In fact, the holistic understanding of nature is an essential part of Chinese philosophy. In my opinion, insufficient consideration has been taken in Western culture in this regard.” (Wang 2012) It is foreseeable that in this era of big science, big data, big interconnectivity and big pattern, it is entirely possible for the Chinese to exert greater influence in technological innovation. With respect to science, the prejudice in the “Western science” perspective that ancient China had only technology but no science is likely to discourage Chinese people delving into innovation factors in their traditional culture. Whether there was “science” in ancient China is like whether there were philosophy and religion in ancient China. If assessed by the Western scientific paradigm, there might not be; viewed from our own perspective, there were definitely philosophy, religion and science in ancient China. Both of the two renowned British historians of science, Joseph Needham and J. D. Bernal, mentioned many scientific achievements China had made in the past in their respective works, the monumental 34-book, 7-volume Science and Civilization in China and Science in History. The concepts of yin and yang, five elements, eight hexagrams and sexagenary cycle actually constitute the foundation of traditional Chinese science. Agronomy, traditional Chinese medicine, astronomy and arithmetic mathematics are all representative forms of traditional science. Taking traditional Chinese medicine as an example, a rigorous and effective theoretical system has long been established, and it is an undeniable fact that traditional Chinese medicine has cured countless patients in the past millennia. Practice is the only criterion for testing truth. In this sense, we might as well keep a more open mind about the future development of science. There is more than one paradigm in science. It is possible that traditional Chinese science can bring new ideas and paradigms into the future development of science. Therefore, it is very meaningful to rediscover the innovation factors and values in traditional Chinese technologies, since our predecessors had recorded many achievements in this regard. For example, “Gottfried Wilhelm Leibniz, a German philosopher and mathematician, was surprised to find between the binary algorithm he invented in 1678 and the Chinese eight hexagrams…Darwin, founder of the theory of evolution, cited a large number of records in his famous book On the Origin of Species (1859) about genetic variation in what he called the ‘Encyclopedia of China’, whose citation came from Important Arts for the People’s Welfare by Jia Sixie of the Northern Wei Dynasty, Compendium of Materia Medica by Li Shizhen in the late Ming Dynasty and The Exploitation of the Works of Nature by Song Yingxing. The lost-wax casting in ancient China is now widely used in the precision casting industry nowadays. Today’s computer program based punching control technology is inspired by the jacquard technology in ancient Chinese textile industry. Celestial body evolution, tectonic structure, earthquake prediction, climate change, sea-level rise and fall, environmental succession, biological evolution and other scientific and even social hotspots are related to the history of nature and historical natural sciences. In the seas of ancient Chinese literatures, there is a wealth of accounts on natural phenomenon of abundant types, long series, good continuity, wide field coverage

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and favorable comprehensiveness, especially accounts on supernatural ones. It is a treasury of information on natural history Chinese ancestors has left us and the world. It has played a vital role in establishing the radio astronomy, developing the earthquake epicenter distribution maps and intensity zoning maps, rephrasing the 5000-year climate history, rewriting the 500-year drought and flood history, and discovering their implied cycles” (Wang 2012). We are convinced that wisdom accumulated in traditional Chinese culture in the past millennia will offer more inspiration to the scientific and technological innovation in the imminent AI and gene editing epoch.

3.2 Xi Jinping’s Important Instructions on Innovation Lead the Development of Theories Xi Jinping’s important expositions on scientific and technological innovation are embodied in such important documents and speeches as the Summary of Xi Jinping’s Exposition on Scientific and Technological Innovation, the Outline of the National Strategy of Innovation-Driven Development issued by the CPC Central Committee and the State Council, the report of the 19th National Congress of the Communist Party of China. General Secretary Xi Jinping stressed in the important speech at the 2018 Meeting of Academicians of the Chinese Academy of Sciences and the Chinese Academy of Engineering the need to adhere to the Party’s leadership in science and technology, adhere to the goal of building China a world power of science and technology, adhere to the path of indigenous innovation with Chinese characteristics, adhere to deepening reform to stimulate innovation vitality, adhere to the proposal “innovation-driven is in essence talent-driven” and adhere to integrating into the global scientific and technological innovation network. The six aspects of “adhere” are the “steering wheel” and “key” for us to learn, understand and implement General Secretary Xi Jinping’s important expositions on scientific and technological innovation. The theoretical system of Xi Jinping’s important expositions on scientific and technological innovation can be summarized into four levels (Liu and Liu 2019).

3.2.1 Level I: What is Innovation General Secretary Xi Jinping clearly put forward that “Innovation is the first driving force for development” and expanded the academic definition of innovation, claiming that innovation envelops technological innovation, theoretical innovation, institutional innovation, systematic innovation and cultural innovation, with scientific and technological innovation as the core.

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3.2.2 Level II: Why Innovation General Secretary Xi Jinping proposed the theory of the historical laws of scientific and technological innovation that makes innovation a must to obey historical laws, the theory of “three-orientation” policies on scientific and technological innovation that necessitates innovation to meet the needs of economic and social development, and the theory of goals for scientific and technological innovation that puts innovation an indispensable momentum to build China a world power of science and technology. (I)

Theory of the historical laws of scientific and technological innovation: Innovation has invariably been an important force to promote the development of a country and a nation. General Secretary Xi Jinping made it clear: “All industrial revolutions share something in common: First, they were all based on new scientific theories; second, corresponding new production tools emerged; third, a large number of new investment hotspots and jobs were produced; fourth, major adjustment was made to the economic structure and development model to shape new large-scale economic benefits; fifth, new changes took place in production models and lifestyle in the society.” Through historical investigation, General Secretary Xi Jinping ascribed the backwardness of modern China to the fact that “After entering the modern times, China missed the opportunities of scientific and technological revolution time and time again for internal and external reasons, thus sinking from a former power to a semi-colonial and semi-feudal country at the mercy of others” (Xi 2016). (II) Theory of the policies on scientific and technological innovation: “Three orientations”. In 2014, General Secretary Xi Jinping1 gave instructions to the Chinese Academy of Sciences Outline on “First Action” Plan and Comprehensive Deepening of Reform, emphasizing the orientation to the world’s scientific and technological frontiers, orientation to the country’s major needs and orientation to the main battlefield of the national economy (“three orientations”). Later, the “three orientations” were established as the “basic principles” in the Outline of the National Strategy of Innovation-Driven Development. In 2016, General Secretary Xi Jinping once again emphasized the “three orientations of scientific and technological innovation” in his speech “Strive to Build China a Power of Science and Technology” at the National Science, Technology and Innovation Conference, the Meeting of Academicians of the Chinese Academy of Sciences and the Chinese Academy of Engineering and the Ninth National Congress of the China Association for Science and Technology (Xi 2016). The “three orientations” are the “orientation and dependence” policy (economic construction must depend on science and technology, and scientific and technological work must be oriented towards economic construction) put forward in the Decisions on the Reform of the Science and Technology System issued

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Refer to Xi Jinping’s speech at the seventh meeting of the Leading Group of Financial and Economic Affairs of the CPC Central Committee on August 18, 2014.

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by the CPC Central Committee in 1985 and shall be the guideline for China’s scientific and technological innovation in the new stage. (III) Theory of the goals for scientific and technological innovation: Build China a world power of science and technology. General Secretary Xi Jinping mentioned at the seventh meeting of the Leading Group of Financial and Economic Affairs of the CPC Central Committee, “To build China a modern socialism country by the middle of this century, it’s an obligation to boost our science and technology.” As clearly stated in the Outline of the National Strategy of Innovation-Driven Development issued by the CPC Central Committee and the State Council2 in May 2016, China will be built into a power of scientific and technological innovation, a world center of science and a mecca for innovation by 2050, thereby bolstering fulfilment of the Chinese dream to create a modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and to seek the great rejuvenation of the Chinese nation. At the end of May 2016, General Secretary Xi Jinping issued a general mobilization order to build a power of science and technology at the National Science, Technology and Innovation Conference, the Meeting of Academicians of the Chinese Academy of Sciences and the Chinese Academy of Engineering and the Ninth National Congress of the China Association for Science and Technology and proposed new ideas and specific requirements for building a power of science and technology (Xi 2016).

3.2.3 Level III: How to Innovate General Secretary Xi Jinping proposed a series of theories on scientific and technological innovation, from the top-level design for the reform of the scientific and technological system to the strategic deployment of important work, such as the “asymmetric” catch-up strategy, the transfer and transformation of scientific and technological achievements, the status of science popularization and the international cooperation in scientific and technological innovation. (I)

2

Top-level design for the reform of scientific and technological system: Labor divisions in three aspects are required for scientific and technological innovation. First, functions of the government and market shall be divided. If possible, full play shall be given to the market for a decisive role in resource allocation. The government shall be emancipated from specific labor of capital/material allocation to do better in strategic planning, environmental construction, direction guidance and service provision. Second, functions of various central departments shall be divided. Some shall focus on basic research, some on applied research and some on industrialization promotion. Third, functions of

See Footnote 1.

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the central and local governments shall be divided. The central government shall focus on the basics and the local governments shall pay more attention to the application. In addition, it is necessary to strengthen the Party’s leadership in scientific and technological work. (II) Catch-up in scientific and technological innovation: “Asymmetric” catch-up strategies. General Secretary Xi Jinping has made a correct judgment on the status quo of scientific and technological innovation in China, “We’re now at a crucial moment transferring from quantitative accumulation to qualitative leap, and dot-by-dot breakthrough to system capability improvement” (Xi 2018). We must be soberly aware that compared with developed countries, China has a weak foundation for scientific and technological innovation, with a significant gap in innovation. In some fields, the gap is expanding instead of shrinking. How can China reach an internationally advanced level of scientific and technological innovation? General Secretary Xi Jinping attaches great importance to and vigorously advocates the implementation of “asymmetric” catch-up strategies for scientific and technological innovation, especially the indigenous innovation. The “asymmetric” catch-up strategy is “a guiding principle that advocates using one’s unique advantages to surpass competitors through unconventional strategies, tactics, and ways that are not known to the competitors, based on a full knowledge of oneself and the competitors. It can be said that the core of the ‘asymmetrical’ catch-up strategic thinking is to ‘have what they lack, do well in what they have, do better in what they do well, and change if they do best’” (Liu 2016). In general, asymmetric innovation is to use the asymmetry in information, cognition, pre-investment and decision-making priority that exist between different innovators to lay out in fields unknown, unclear, unwilling and unvalued to the powers of science and technology, while continuously narrowing the gap with powers of science and technology in key areas. By seeking breakthroughs in fields deemed “dispensable”, “non-urgent” and “unnecessary” by powers of science and technology and taking active or presiding part in the formulation of new standards/rules, it aims to achieve the strategic goals of corner overtaking (Chen and Hua 2018). To successfully implement the asymmetric innovation strategy, we shall prioritize the basic science, follow the objective laws of science and technology, fully consider the national conditions and strengths and combine the strategic leaps with economic leaps. (III) Transfer and transformation of scientific and technological achievements: Pave the way for economic transfer/transformation of science and technology. To break down the enduring “disconnection” between scientific research and commercialization in our country, General Secretary Xi Jinping pointed out, “We shall deepen the reform of the science and technology system, resolutely remove the institutional barriers that hinder the improvement of scientific and technological innovation, and pave the way for the economic transfer/transformation of science and technology.” (Literature Research Office, CPC Central Committee 2016) He also pointed out that the Law of the People’s Republic of China on Promoting the Transformation of Scientific

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and Technological Achievements shall be revised. From 2015 to 2016, China intensively issued a “trilogy” of policies and regulations on the transformation of scientific and technological achievements: the Law of the People’s Republic of China on Promoting the Transformation of Scientific and Technological Achievements (revised in 2015), Several Provisions on the Implementation of the Law of the People’s Republic of China on Promoting the Transformation of Scientific and Technological Achievements, and the Action Plan for Promoting the Transfer/Transformation of Scientific and Technological Achievements. Subsequently, the “trilogy” for scientific and technological achievements transformation was further implemented: In August 2016, the Ministry of Education and the Ministry of Science and Technology jointly issued the Several Opinions on Strengthening the Transfer/Transformation of Scientific and Technological Achievements in Colleges and Universities, and the Chinese Academy of Sciences and the Ministry of Science and Technology jointly issued the Guiding Opinions of the Chinese Academy of Sciences on Accelerating the Transfer/Transformation of Scientific and Technological Achievements in the New Era, thus forming a relatively complete policy system for the transfer/transformation of scientific and technological achievements in China. (IV) Status of science popularization: Scientific and technological innovation and scientific popularization are the two wings to realize innovation and development. In his speech at the National Science, Technology and Innovation Conference, the Meeting of Academicians of the Chinese Academy of Sciences and the Chinese Academy of Engineering and the Ninth National Congress of the China Association for Science and Technology, General Secretary Xi Jinping proposed that “Scientific and technological innovation and scientific popularization are the two wings to realize innovation and development. Equal importance shall be attached to the two.” “Let the innovative wisdom hidden in hundreds of millions of people be fully released, and the innovative power burst out to the fullest.” (Xi 2016) This marks a major development of the Party’s ideology on science popularization. (V) International cooperation in scientific and technological innovation. General Secretary Xi Jinping spotlights the foreign cooperation concerning indigenous innovation of science and technology. In fact, promoting indigenous innovation in science and technology through opening up and cooperation is also a common practice in developed countries such as European countries, the USA and Japan. China’s practice of the reform and opening up over the past 40 years has fully proved that without opening up to the outside world, we could not have so quickly built up an increasingly complete and powerful economic system and science and technology system, nor could we have such a strong national defense and growing people’s living standards. On October 18, 2017, General Secretary Xi Jinping made a solemn promise to the whole Party, the whole people, and the whole world in the Report to the 19th National Congress of the Communist Party of China, “China will never cease its opening up, but will open wider to the outside world.” (Xi 2017a) Carrying out exchanges

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and cooperation in the process of opening up and strengthening close ties with countries/regions around the world are the basic requirements raised by General Secretary Xi Jinping to promote indigenous innovation and science and technology development in China, the basic laws revealed by materialist dialectics, and the proper understanding of the Marxist topic of connection and development (Tan 2018).

3.2.4 Level IV: Who is Responsible for the Innovation At this level, Xi Jinping put forward the people-centered theory for scientific and technological innovation and the theory of innovative talents that lists talents as the first resource. First, the people-centered theory for scientific and technological innovation. There are three basic points of this theory: (1) Scientific and technological innovation shall be made for the people; (2) scientific and technological innovation shall rely on the people; (3) scientific and technological innovation achievements shall be shared by the people. General Secretary Xi Jinping pointed out, “The people-centered development idea shall not be seen only as an abstract and esoteric concept. More than mentioned and recited, it shall be practiced in all links of the economic and social development.” (Xi 2017b) As far as scientific and technological innovation is concerned, Xi Jinping pointed out during his visit to Shanghai in 2014 that “We shall benefit people’s livelihood through science and technology, and promote the close integration of scientific and technological innovation with people’s livelihood” (Party Literature Research Office, CPC Central Committee 2016). It makes clear that improving people’s livelihood is the ultimate mission of scientific and technological innovation. In terms of relying on the people, General Secretary Xi Jinping further emphasized at the National Science, Technology and Innovation Conference, the Meeting of Academicians of the Chinese Academy of Sciences and the Chinese Academy of Engineering and the Ninth National Congress of the China Association for Science and Technology held in 2016, “Without general improvement of the scientific quality of the whole people, it will be difficult to establish a massive army of high-quality innovation talents.” (Xi 2016) As to sharing the results, in the report of the 19th National Congress of the Communist Party of China, General Secretary Xi Jinping specified in the section of “Work and Historic Changes in the Past Five Years”, “We shall thoroughly implement the people-centered development thought, and implement numerous people-oriented measures, to significantly enhance people’s sense of gain.” (Xi 2017a) This shows that the scientific and technological innovation shall be based on the fundamental principle of benefiting the people and being shared by the people. The people-centered theory for scientific and technological innovation emphasizes the people-centeredness being adhered to in the scientific and technological innovation activities, so that the development is for the people, development depends on the people, and development results are shared by the people. In this way, it enhances the well-being of the people, and better develops

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the socialism with Chinese characteristics. These important expositions demonstrate that the Communist Party of China has always adhered to the people-centered value and the responsibility of governing for the people. Second, the theory of innovative talents. General Secretary Xi Jinping pointed out that “Talent is the first resource of innovation”. Talents shall be prioritized. “We shall focus on reforming and innovating the use and management of scientific research funds, so that funds serve people’s creative activities, not the opposite. As a result, scientific researchers may yield both fame and fortune” (Xi 2016). General Secretary Xi Jinping’s important exposition on scientific and technological talents shifts the focus from making full use of “things” to mobilizing the enthusiasm, initiative and creativity of “talents”, and from cultivating talents to using talents, thus renewing the understanding of talents for scientific and technological innovation, and specifying the new direction for implementing the “empowering the country with talents” strategy.

3.3 Proposal of Holistic Innovation Since the reform and opening up policy was put into practice in 1978, China has maintained the longest time of economic growth, registered the biggest growth in population base and eliminated the largest number of poverty-stricken population. To adapt to the transition from high-speed to high-quality economic growth, avoid falling into the “middle-income trap” and maintain a sustainable and stable development, the government of China, a latecomer economy, has implemented an “innovation-driven development strategy” to gradually shift from the traditional “factor-driven” and “investment-driven” pattern to the “innovation-driven” model (Liu et al. 2017). Such milestones in scientific and technological innovations as supercomputers, manned spaceflight and lunar exploration projects, manned deep diving, deep exploration and domestic aircraft carriers mark the effective advancement in building China into an innovative country (Mu 2017) and in the global contribution by Chinese scientific and technological innovation (Chen 2018b). “Development is the eternal theme of human society”.3 Whether and how innovation can drive development has always been a topic of the Western economic management. The Austrian school represented by Schumpeter proposed “entrepreneurship” as an exogenous driving force for economic development and made theoretical analysis on the impact of innovation on economic growth. It believed that entrepreneurs can implement the novel combination of new enterprises, new technologies, new supplies and new organizational models to form creative destruction (Schumpeter 1982) and adventurous and innovative entrepreneurs (Aghion and Howitt 1992) are the backbone of market economic growth. Swan (1956), Solow (1956) established the 3

Refer to Xi Jinping’s congratulation letter to the opening of the “International Seminar to Commemorate the 30th Anniversary of the Declaration on the Right to Development” on December 4, 2016.

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neoclassical economic growth model (Solow-Swan model), arguing that long-term, sustainable economic growth must rely on exogenous technological advancement. Arrow (1962) sees technological advancement as a by-product of capital accumulation. However, the improvement of capital quality requires huge capital investment. Romer (1986) reckons that only manufacturers under the market structure of monopoly competition have sufficient capital capacity to upgrade capital quality. A typical capital investment method in this regard is R&D—development of new product or improvement of product quality. It can be found that the research on technological innovation and development is based on the economic growth model in traditional economics, and “innovation” is encapsulated as the variables of “technical advancement” or “all factor growth rate”. More studies are conducted on the causality between innovation and economic development, and few on national contexts outside the economics community and outside developed countries. With the rise of China’s economic strength and its international status, some management phenomena and theoretical topics have appeared in the Western management society. Such topics set China as an example to articulate on the oriental thoughts and cultural contexts, including the competition and cooperation, duality (Li and Tsui 2002; Tsui et al. 2004), relations (Xin and Pearce 1996), network capitalization (Boisot and Child 1996) and market transition theory (Nee 1992). However, the above-mentioned research and the emerging phenomena with Chinese characteristics are concentrated in the general management, with no explanation made on the selfinnovation theories in scientific research, technological development and engineering application, under the influence of the economic foundation, market structure, social system, cultural tradition and government governance (Uz 2015) with Chinese characteristics. Taking the major scientific and technological innovation projects of China (such as manned spaceflight, domestic aircraft carrier and domestic large aircraft) as an example, mainstream paradigms adopted in Western general/innovation management theories mainly cope with specific parts of the innovation activities through an atomistic manner (Wittgenstein 1929; Russell 2009), such as the knowledge transfer in major innovation projects (Lifshitz-Assaf 2018) and open innovation issues, the support of national innovation system (Lundvall et al. 2002) to the scientific and technological innovation activities, the role of government in major innovation projects and the influence of policy upon major innovation projects (Mazzucato 2015), which are short of systematic thinking on why and how major scientific and technological innovation projects can be successful. Simply introducing or transplanting innovation theories in the Western context cannot effectively explain the typical characteristics of China’s innovation activities, or guide the innovation practice in the Chinese context. Therefore, it is of theoretical and practical significance to construct a theoretical paradigm for innovation, against the local context and based on the induction and refinement of China’s local innovation practice (Bai 2017; Yang 2018). The holistic innovation theory is proposed simply against this background. The innovation management paradigm based on holistic innovation is named as the holistic innovation management (HIM). HIM features four core elements, i.e. “strategy”, “comprehensiveness”, “openness” and “synergy”, which are interrelated

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Fig. 3.1 Framework of holistic innovation: strategy-guided emerging innovation paradigms

and organically unified in the holistic innovation theoretic framework (Chen et al., 2017). All the four are indispensable. Holistic innovation framework: The emerging innovation paradigms under the strategic leadership are shown in Fig. 3.1. Holistic innovation is the result of continuous evolution of innovation management theories. It turns out a paradigm that puts “strategy guidance” at the overarching position and highlights mindset upgrade and holistic view, based upon independent, open, collaborative and comprehensive innovation. The theoretical source and evolution of holistic innovation are shown in Fig. 3.2. In an era of open innovation ecosystem, holistic innovation is one spawned by the overall management reform, and the “trinity” of integration of natural and social sciences as guided by the Eastern and Western philosophical thoughts. Containing the global outlook, overall planning view and peace concept, the holistic innovation thoughts conform to the core values of the Eastern and Western philosophies. It contributes to the competition and interaction between engineering, technology and science and humanity, art and market and breaks down the traditional corporate boundaries to help enterprises build a holistic innovation ecosystem with stakeholders, such as the external demand side, supply side and policy side at home and abroad. By tapping into marketing opportunities and scientific and technological potentials in dynamic collaboration, innovating products and technologies for the enterprises and promoting industrial reform and regional co-development through

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Fig. 3.2 Theoretical source and evolution of holistic innovation

cross-boundary innovation and cooperation-competition, it resolves to fulfill the ultimate goal of “world peace, global sustainable development and happiness and value realization of people”. The holistic innovation theory holds that in the building of new-type countries and corporate innovation ecosystem, it is necessary to avoid the absence of core capabilities caused by excessive opening and to prevent the failure of maximum utilization of global innovation resources and opportunities due to excessive emphasis on independence. This idea echoes with the “Happy Mean” and “Keep to the Neutral” proposals in Chinese philosophy and goes consistent with the modern institutional logic of state governance in China. As a new management idea with Chinese characteristics and global significance, it is of great theoretical and practical values for establishing new national innovation ecosystem, accelerating enterprise development and cultivating world-class innovation leaders. For the country, the holistic innovation contains the peace concept with Chinese characteristics, the advantages of strategic execution nationwide and the experience and wisdom of Chinese system-driven innovation. Also, it caters for China’s demands of innovation strategies to achieve innovative development of society and economy no longer through the “quartet” of industrialization, informationization, urbanization and agricultural modernization, but through a global eyesight. Through contribution to poverty eradication, environmental protection, health promotion, national defense fortification and international affairs promotion and organic integration of these aspects, it will help to enrich the people, strengthen the army and promote global peace and development. When it comes to major scientific and technological innovation fields, such as aerospace systems, high-speed rail technology, quantum communication, artificial intelligence and industrial Internet, attention shall be paid not only to technological innovation, but also to the medium- and long-term development strategy of the country. Through organic integration of strategies concerning science and technology, education, industry, finance, talent and diplomacy and horizontal integration and vertical improvement of various strategy-guided elements, efforts are made to

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provide an inexhaustible impetus for building China a power of scientific and technological innovation and make leading contribution to the sustainable development of the global economic and social development. The accumulation and application of basic technologies determine the survivability at present, the mastery of key core technologies and the exertion of their advantages decide the current core competitiveness, and the abilities to judge, develop and exploit the industry-leading technologies endorse the future competitiveness. Mastering the current key core technologies and future-oriented advanced technologies through holistic innovation is the key for Chinese enterprises to catch up and surpass the leaders and achieve innovation-led development. For enterprises longing for continuous leapfrog development, it is more important to stay ahead in discontinuous technological innovation and in strategic frontier technological innovation. In this way, they can fully grasp and formulate new development rules and gain a leading edge in the global competition. Enterprises shall think big and aim high, lead the development of themselves and their ecosystems through forward-looking strategic design, act bold in strategic implementation, pave the way of horizontal resource integration and vertical capability integration, realize technological integration and product innovation under the overall thinking relying on the collaborative thinking and achieve a win–win situation of competition and cooperation (Chen and Miller 2010; Chen 2013). According to the holistic innovation theory, innovation is not only the responsibility of the R&D Department, but part of the overall development strategy of the enterprise. Strategic innovation is leveraged to lead the technological innovation and management innovation, thereby realizing the dynamic integration of the entire value chain and truly implementing the concept that “everyone is an innovator”. During holistic innovation, enterprises shall focus on not only strengthening technical elements through all-people, all-factor, all-time and all-space innovation, but also exploiting nontechnical elements, so as to build their own “duet” of core technology capacity and core management capacity, surpass the traditional model of indraught assimilation innovation adopted by other Chinese enterprises and realize subversive technological breakthrough in a quicker pace. The biggest difference between holistic innovation and traditional innovation theories lies in the fact that the former advocates the strategic leadership, emphasizes building the technological innovation system and the management of innovation process through a system perspective and a holistic view, underscores the research and judgment of domestic and foreign environment, industrial competition trends and technological development trends and leads the integration of technological elements and non-technical elements with strategic innovation. Looking into the future, while applying the holistic innovation, building their own dynamic core capabilities and accelerating disruptive technological breakthroughs, enterprises shall further strengthen the integrated thinking on scientific and technological innovation and lead continuous innovation transitions with future missions and a strategic vision. In addition to increasing economic benefits, enterprises shall also continuously empower individuals inside and outside the organization to improve their capabilities, help them realize personal values and enhance their sense of happiness, create more and more sustainable social value on this basis and promote sustainable development of the industry, the nation and even the world.

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3.4 Co-deduction of Innovation Theories 3.4.1 Holistic Innovation and Qian Xuesen’s Thoughts Typical research objects of holistic innovation are large-scale, complex systematic innovation engineering and technological projects, which feature an apparent system complexity as containing many a subsystem. How to coordinate the relationship between subsystems, so that each subsystem can help and cooperate with each other without conflict, is a problem that needs to be solved in holistic innovation. Qian Xuesen’s thoughts on systems engineering, systems science and systems perspective would offer meaningful reference for holistic innovation. Strategic leadership is important, because the analysis of strategies can help companies identify the opportunities and challenges they are currently facing and analyze the historical missions and important tasks they are undertaking in today’s social environment. With the deepening of China’s economic system reform, the country’s economic growth model has shifted from an unsustainable model to the sustainable, intensive and environmentally friendly one, which gradually relies on management and technology to enhance performance. Under the background of the new normal of macroeconomic development, the analysis of corporate strategies is conducive to making in-depth planning and layout, designing a path based upon their own transformation and upgrading demands and gradually forming their core competitiveness. Holistic innovation is a paradigm under guidance of strategies. It can innovate policy design from a holistic, overall-planning and whole perspective, combine science and technology, education, economy, culture, people’s livelihood and ecology to form a systemic force and guide the comprehensive innovation, open innovation and collaborative innovation under guidance of strategies.4 1. Systems Engineering Qian Xuesen is somehow the pathfinder for domestic research on systems engineering. In 1978, he put forward the concepts of “systems engineering” and “systems engineering science”. In his point of view, systems engineering shall delve into three aspects, the integration of process research, the comprehensiveness of technology and the scientization of management. Besides, he believes that the leadership of the Party committee, the organs and the overall design department are the key executive departments of systems engineering. Later, at the study meeting of the Chengdu Military Region on June 5, 1978, Qian Xuesen systematically explained the theoretical connotation and realization path of systems engineering, including the modern science and technology system, the organization and management of modern science and technology, the computer revolution and the training of systems engineering talents. On September 27 the same year, Qian Xuesen, Xu Guozhi and Wang Shouyun coauthored the Technology of Organizational Management–Systems Engineering to 4

Refer to Professor Chen Jin’s speech “The Rise of Oriental Innovation” at the 2018 Innovation Frontier Theory and Practice Sharing Theme Forum held by the Research Center for Technological Innovation, Tsinghua University on July 6, 2018.

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publish on Wenhui Daily. Since then, the “Chinese school of systems engineering” has been established. Systems engineering is the analytical research on components, structure, information flow and control mechanism of the system in an aim to better fulfill the overall objectives of the system. In this way, the system as a whole well coordinates with its components to eventually realize optimum performance of the system. Analysis on systems engineering chiefly covers three characteristics. First, systems engineering analyzes the research object as a whole, on the interconnection and mutual restriction of the components, so as to coordinate all components and achieve the overall optimization. Furthermore, for analysis of the locality problem, the overall goals and overall coordination shall also be considered to select the optimal scheme and evaluate the overall effect of the scheme. Second, the methods for qualitative analysis and quantitative analysis shall be selected according to characteristics of the subject and technology. The qualitative-quantitative mixed method is selected in general. Third, attention shall be paid to the external environment and changing laws of the system, so that it can continuously adapt to changes in the external environment through dynamic adaptability. 2. Systems Science Systems science is predominantly derived from the systems science theory of “open, complex giant systems” proposed by Qian Xuesen. In Qian’s opinions, an open complex giant system is one that exchanges matter, energy and information with the external environment, which harbors an array of subsystems in an obvious hierarchy with layers impacting and containing each other. What’s more, each subsystem participates in the activities of the whole system and falls subject to both the internal system and external environment, thus shaping a complex interaction and a highly non-linear relationship. An open complex giant system surely contains multiple subsystems instead of a single one to attain the system complexity. Arranged from low to high, from simple to complex, the subsystems show a spiral ascending order. For research on open complex giant systems, it is often impossible to rely on a certain discipline or technology in the traditional sense. Instead, they shall be analyzed from a higher level. A single paradigm or principle is not enough. How subsystems share resources shall be analyzed from more complex angles, commonsense studies shall be reduced and cross-over studies shall be conducted. Now science can be divided into three levels: Basic science, technical science and applied technology, which are of holistic, structural and systematic features. Instead of an object or a phenomenon, modern science deals with the development and evolution process and correlation between things. It can thus be seen that modern science is a very rigorous comprehensive system. The reason why systems engineering can gradually develop into systems science is that it embraces disciplines one by one (natural science, architectural science, social science, mathematical science, thinking science, human body science, military science, behavioral science, geography, etc.). In Qian Xuesen’s mind, engineering is a comprehensive integration of technologies, covering technical factors, management factors, economic factors and cultural factors. The comprehensive integration is more an innovation process than a simple

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superposition of technologies. For one thing, it pushes the entire innovation activities relying on engineering demands; for another, it puts people first and studies the whole technological integration process with integrated methods from quantitative ones to qualitative ones. Subsequently, Qian Xuesen proposed the comprehensive integration method that puts people first, combines people with machine and shifts from a qualitative model to a quantitative one. The comprehensive integration method is a comprehensive integration technology shifting from qualitative to quantitative nature, which can also be called the “comprehensive integration engineering”. Involving high-tech issues such as computer, network and communication technology, artificial intelligence technology and knowledge engineering, it is an applied technology of the thinking discipline, which uses the results of the thinking discipline on one hand and promotes the development of the thinking discipline on the other. The essence of the comprehensive integration methodology is to organically combine the expert data and information through system design and computer system design, to form a highly intelligent human–machine, human-network combined system, which is open and complex itself. When applied, it can give full play to the comprehensive advantages, overall advantages and intelligent advantages of the system and integrate people’s thinking results, thinking process, experience knowledge, wisdom, external intelligence, data and information, thus coming to a quantitative understanding from a qualitative understanding of multifaceted results. On this basis, Gu Jifa, former chairman of the Systems Engineering Society of China and other scholars proposed the “regularities in the objective world (the wuli), the ways of seeing and doing (the shili) and the patterns in human relations (the renli)” systematic methodology (wuli, shili, renli, WSR) based on the oriental characteristics of the Chinese culture. Systems science and comprehensive integration method have major social significance for China, because the establishment and improvement of the socialist market economic system is a complex system engineering, so are the implementation of the scientific outlook on development and the construction of a harmonious socialist society, which involve all aspects of social and economic development such as economic activities, social activities and natural activities. To complete such tasks, the comprehensive integration method of systems science shall be used to analyze and solve the problems and analyze the development of economy, society and social/natural forms starting with complex factors, complex levels and complex aspects. The comprehensive integration method features unification and combination. By unification, it means to unify the qualitative and quantitative analysis methods. Different from either the traditional oriental holism or the Western reductionism, it unifies the two in a balanced way. When analyzing specific problems, it combines empirical knowledge with scientific theories, macro-level thinking with micro-level one, quantitative thinking with qualitative thinking, image thinking with abstract thinking and singular disciplines with inter-disciplines. It turns out an analytical method of dialectical unity. By combination, it refers to the comprehensive integration of qualitative analysis and quantitative analysis. Humans and machines are combined to present an integral state. “Humans” refer more to expert systems with comprehensive quality instead of individuals, and expert systems are main bodies to

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implement the comprehensive integration method. “Machines” are high-performance computers here, which can quickly process the knowledge, information, experience, wisdom and external intelligent data possessed by the expert systems and help them unify information and opinions of all aspects to form simulation models and conduct simulation experiments. The comprehensive integration method provides inspiration for the research route and technical route of holistic innovation. For holistic innovation, a method combining quantitative and qualitative techniques is also required. As to analysis of problems, it is necessary to unify the macro- and micro-levels, from the whole to the part, and from the part to the whole, to finally shift from solving some problems to solving all problems and realize holistic innovation. Therefore, the comprehensive integration method in systems engineering turns out one of the major methodological bases for holistic innovation.

3.4.2 Holistic Innovation and Comprehensive Innovation Holistic innovation is in essence a sort of inheritance and development of comprehensive innovation. It features four elements of strategy, openness, collaboration and comprehensiveness. Comprehensive innovation is included in holistic innovation. Comprehensive innovation relates to the all-factor, all-people, all-time and all-space innovation, which primarily promotes the transformation of innovation results by enhancing the enterprise’s competitiveness as a whole through all-factor integration, all-people participation and all-time/space promotion. In view of all factors, all people, all time and space, comprehensive innovation coincide with holistic innovation in many theoretical achievements and methodologies. However, the holistic innovation adopts a higher-dimensional view and analysis of problems to raise the strategy to the height of leading the entire innovation development. In other words, strategy is regarded as an important element during the innovation development, with an equal relationship with other innovation factors, in comprehensive innovation, but put at a leading position in holistic innovation, as shown in Fig. 3.3. In the corporate management of technological innovation, leaders of strategic vision shall see technological innovation more of a pure activity and embed it in the ultimate goals of corporate development and management. Keeping abreast with the global trend of economic, social and technological development, they will determine the development orientation of the enterprise and ecosystem with a trans-cultural strategic vision, thus “looking into the future under strategic leadership”. The industry and the country also need to formulate an overall strategy according to the domestic and foreign environment and the status quo of the innovation system, so as to connect various elements to form a competitive advantage. In the comprehensive innovation management theory, strategic innovation is expressed as one based on the development view. It mainly embeds innovation

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Fig. 3.3 Relationship between holistic innovation and comprehensive innovation

management into the enterprise strategic management from the perspective of enterprise development, so as to effectively enhance the core competitiveness and innovation ability of the enterprise and create values. In the complex and changeable market environment, if there is no strategic guidance, other innovation activities would normally fall victim of the competition that consumes considerable resources. After the innovation management is embedded in the strategic management of the enterprise, the strategic activities of the enterprise will serve the implementation of the operation strategy, thereby effectively improving the innovation effect of the enterprise. Xu Qingrui pointed out that in the research of innovation management theory, special attention shall be paid to the leading role of strategy, and innovation activities must take the corporate operation strategy as an important basis and starting point, so as to serve the core capacity building of the enterprise. Comprehensive innovation management is a strategy-led innovation management model, which can form a systematic arrangement of all-factor, all-people and all time and space innovation activities within the overall internal framework of the enterprise, so as to meet the needs of strategy implementation and accomplish business goals more efficiently. Strategic leadership in the comprehensive innovation is embodied in the following three aspects. First, strategy determines the all-factor innovation. Depending on the company’s technological development direction, technical level, product R&D, organizational structure, business unit design, operation process design and specification and corporate culture, the strategy mainly determines the company’s formulation of goals and allocation of limited resources. Therefore, strategy and organizational structure design support and coordinate with each other. Likewise, the interaction between innovation and strategy is consistent. For the comprehensive innovation, the strategy is further understood as a strategic activity of the enterprise. Whether it is technological innovation or non-technical innovation, it must serve and satisfy the enterprise strategy and be incorporated into the strategic framework, so as to better meet the strategy formulation and implementation of the company.

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Second, strategy guides the all-people innovation. Every employee in the enterprise is the main body of innovation and the maker and implementer of the corporate strategy. Formulation of the strategy will guide the innovation activities of all employees to adapt to the requirements of the strategy. Besides, strategic management activities will decompose the overall goal of the enterprise to each employee and allocate corresponding resources and privileges, so that employees become the main body of the strategy implementation. Likewise, all-people innovation can be achieved only when goals, resources and authorities are delegated to each employee. Third, strategy stipulates the all-time/space innovation. To a certain extent, the formulation and implementation of strategies reflect and standardize the enterprise’s boundaries and value propositions within a specific time and space. In a competition environment with increasing tumult and uncertainty, corporate strategies shall be more flexible and dynamic and constantly adjusted. The dynamic adjustment of strategy in a specific time–space range requires all employees to effectively integrate, coordinate and allocate resources inside and outside the enterprise anytime anywhere, that is, to conduct the all-time/space innovation, so as to adapt to the new needs of development and dynamic adjustment of strategies. In the holistic innovation strategy, strategic leadership is one of the key fulfillment paths. Based upon corporate strategy, strategic leadership needs to expand the boundaries and value propositions of the enterprise to macro-levels such as society, politics, economy, environment and policy, so as to identify the macro-development trend for the enterprise and put forward more targeted corporate vision and strategic positioning.

3.5 “Triangular Thinking” of Holistic Innovation and Its Transcendence of Binary Logic Organizational ambidexterity is an important research theory in management science. Duncan (1976) first proposed “ambidexterity” for the organizational operation and management, claiming that enterprises face many choices and dilemmas in the management process (Lewis 2000), such as flexibility and stability in the process of organizational development (Duncan 1976), strong and weak ties in interorganizational relationships (Ring and van de Ven 1994), incremental and subversive choices for technological innovation (Christensen et al. 2018), open and closed choice of knowledge flow (West et al. 2014) and economic and social value of corporate development goals (Jo and Harjoto 2011). What binary logic inspires organizational management is that competition means, inter-organizational relationships and interest demands shall be constantly adjusted in a dynamic environment to adapt to and balance the complex social situations (Zhou and Xue 2009). To solve the duality problem, the organization may seek a comprehensive balance under specific time, space, system and technology conditions of the two distinct methods, so as to get rid

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Fig. 3.4 Triangular thinking model of holistic innovation

of the capacity constraint and innovation traps (March 1996) and achieve the multiobjective/multi-condition compatibility and dynamic balance of the organization in the context of differentiation, among diversified subjects and under fixed resources and structure (Gibson and Birkinshaw 2004). Under the binary logic of organizational management, the holistic innovation theory proposes the “triangular thinking”, which breaks through the trade-off between choices of the binary logic, and sets the enterprise organizational management, especially innovation management decision-making, as consideration in three aspects, as detailed in Fig. 3.4. Its specific meaning is as follows: (1) The length of enterprise means the duration an enterprise operates and survives. An organization must have sustainable goals and motivation so as to survive long. Therefore, it shall pay full attention to its internal capabilities, including internal and external resources of the enterprise, resource allocation ability, learning ability and dynamics. However, an excessive pursuit of length will produce the negative effect of maximizing short-term benefits and overlooking long-term benefits and corporate activities. (2) The breadth of stakeholders stands for the outward concern for the welfare of other subjects, the balance of social responsibility and goals of stakeholders and the emphasis on handling of external issues. This has great social significance in the context of globalization where major global challenges continue to emerge. Whether it is an individual, an organization or a country, when paying too much attention to length and too little to breadth, it will be isolated. As the globalization continues to accelerate, every individual and organization are involved in a common development process and an interconnected social network. Thus, paying attention to stakeholders is paying attention to the development of the enterprise itself.

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(3) The height of the strategy is a goal with a leading role and social significance, and the leading role marks the most important feature of the height of the strategy. Meaning is a collective term for symbols, history and situations, complex phenomena and fuzzy thinking. Meaning-oriented strategy emphasizes the exploration, application and expression of strategic meaning. Relatively clear logical thinking and relatively vague innovative thinking shall be formed by solving complex phenomenon in a specific historical context. In traditional strategic research, the discussion of meaning is often themed on corporate social responsibility, which sees the corporate behavior that conforms to the system, convention, culture, morality and popular meaning as its reaction under the pressure of the system. It is a passive sort of research. Talking about meaning at the strategic height emphasizes an active perspective of innovation and strategic management and turns the passive results into important preconditions for enterprises to gain competitive advantage. With the higher-level integrated thinking, it goes far beyond simply considering the dual choice and balance. In resolving the duality, as oriented to goals, it jumps out of the binary decision-making space and determines the dual balance with strategy and seeks the priority and auxiliary degree of dual measures by introducing strategy implementation and realization. With the triangular thinking, many operational management, technical management and innovation management issues within the organizational boundaries can thus be abstracted. An example of the application of triangular thinking in an organization is shown in Fig. 3.5.

Fig. 3.5 Promotion of the triangular thinking model of holistic innovation

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Chapter 4

Innovation Paradigm in the New Era: Theoretical Framework of Holistic Innovation

Only theories can inspire and carry forward the spirit of invention and creativity. —[French] Pasteur. (Quoted from the Art of Scientific Investigation by W. I. B. Beveridge).

4.1 Analysis of the Connotations of Holistic Innovation Holistic innovation, namely the “strategy-driven open innovation, collaborative innovation and comprehensive innovation”, emphasizes the effective allocation and utilization of resources required for innovation activities through open, collaborative and comprehensive innovation under the guidance of strategy, so as to yield innovation results. For the Chinese practice of innovation in development, holistic innovation provides a theoretical basis for innovation upon the holistic/system view and major innovation projects (Chen et al. 2017, 2018a, b).

4.1.1 “Strategic Orientation” in Holistic Innovation The existing strategic management research on corporate growth and development has formed a systematic evolution of theory and methodological basis (Tan and Ding 2014). As a major construct of research, “strategic orientation” focuses on how companies define their market areas (entrepreneurship issues), how they establish systems and processes (management and technical issues) and how they capture value (Miles et al. 1978; Porter 1980). Regarding the research on “strategic orientation”, Miles et al. and Porter provide two main frameworks. Miles et al. (1978) divide corporate strategic orientation into the offensive, defensive and analytical types. Offensive enterprises typically make active efforts to seek and develop new products and market opportunities, and product development and marketing within the enterprise have an

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important impact on the positioning and selection of strategies (Chaganti and Sambharya 1987); defensive enterprises usually occupy a safe and stable niche market, which tend to embrace the “intensive development” (Cusumano et al. 1998; Cooper 2017). Instead of expanding outward, they would optimize existing financial and production processes to improve efficiency; analytical enterprises are somewhere between the offensive and defensive types, which treat new product areas and new markets in a more prudent manner, and maintain and protect existing products and customer bases. Hambrick (1983) argues that this classification method primarily explains the business phenomenon at the enterprise level, without enough light shed on the strategies. Subsequently, Hambrick and Mason (1984) extended this classification by adding outsider orientation and functional orientation to the strategic orientation, and explained the formation process of corporate strategy in more detail. Porter (1980) expounded on the core of corporate strategic orientation as “competitive strategy” and divided it into three types of cost leadership strategy, differentiation strategy and concentration strategy. However, the strategic orientation in the innovation system, featuring more asymmetry, uncertainty and structural diversity, is different from that of general enterprises. Thus, many phenomena in innovation activities are hard to explain with traditional theories such as equilibrium, path dependence, reversibility and linearity, which require involvement of more non-binary and complex systems views (Fischer and Frohlich 2001). In addition, in the Western strategic management theory, the key is to establish competitive advantage with valuable, scarce, inimitable and irreplaceable resources (Barney 1991). Such competitive strategies and logic thinking are inapplicable to developing countries whose resource advantages and competitiveness are not prominent. Under the constraints of limited innovation ability and basic resources, it is possible to attain full synergy of internal and external resources and win competitive advantages by leveraging external resources and creatively integrating resources (Slater et al. 2006). As a strategic choice for this resource integration, the strategic orientation emphasized in the holistic innovation theory may include two options: offensive strategic orientation and defensive strategic orientation. For corporate cases, let us take a Chinese high-speed rail practitioner as an example. Driven by the state’s high-speed rail development strategy of “introducing advanced technologies overseas and conducting joint design and production to build a Chinese brand”, CSR1 has objectively analyzed the internal and external opportunities and challenges it faces, and formulated and implemented the development path of “focusing on core → strengthening core → building core → expanding core”. By integrating internal and external resources and conducting strategic coordination at the macro-level, the group has uplifted its competition advantage in the global competition. Another corporate case is Huawei Technologies Co., Ltd. Since its establishment in 1987, it has gradually developed from a private communication technology company to the world’s largest telecom network solution provider and the world’s second largest telecom base station equipment supplier, through more than 30 years of technological accumulation and development. Ren Zhengfei, a previous soldier

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and then president of Huawei, marks a typical example of successfully applying military strategic thinking to corporate innovation management. He iterated that Huawei “cannot consume the company’s strategic competitiveness at non-strategic opportunity points” in the innovation process. Centering on technological research and development, Huawei has formulated product development strategies, talent strategies and organizational management incentive strategies to adapt to the globalization and help the company maintain its global leadership in the telecom field (Chen et al. 2018c). For example, Huawei’s integrated product development strategy consists of three major modules for market management, process reorganization, and product reorganization. As an important source of global leadership, this strategy shortens the product development cycle by 50% and reduces instability by 2/3.1

4.1.2 “Openness” in Holistic Innovation Due to more complex and interdisciplinary changes in technological innovation, certain corporate internal resources alone such as assets, organizational management, structure, technology, process, personnel, information and knowledge (Wernefelt 1984) can no longer meet the demands of complex or major technological innovation. In addition, the uncertainty and cost of technological innovation are gradually increasing, thus sharply raising the risk and difficulty of innovation. In 2003, Chesbrough (2003) compared companies, such as Lucent and Cisco, to find that those with weak internal R&D capabilities could use external resources to improve the innovation speed and rate of return. Based on this, he proposed the concept of “open innovation”, emphasizing that external technologies and resources could be acquired to make up for the insufficient internal resources so as to jointly undertake the innovation risks. Usually, open innovation regards the enterprise as the subject, and studies the open behavior of enterprises (single open) or the interaction between organizations (bilateral open). The open behavior stands for the enterprise’s active search of knowledge from exterior, external cooperation and sharing. The open innovation between enterprises makes available the integration of internal and external technologies and realizes value acquisition of participants through the integration of corporate resources and complementary assets (Teece 2006). Moreover, open innovation advocates sharing risks and costs in innovation cooperation, making full use of the resources and capabilities of innovation entities, realizing complementation of advantages, shortening innovation cycles and enhancing innovation efficiency (Chesbrough et al. 2014). In addition to the subject of the enterprise, component suppliers with advanced technical capabilities and users with market knowledge are important sources of innovation, who can provide enterprises with valuable product design ideas and improve innovation efficiency (von Hippel 1986; Clark 1989). In essence, open innovation emphasizes a knowledge flow across enterprise boundaries 1

Relevant information and data come from the internal research and project reports of the author’s research team.

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(Chesbrough et al. 2018), with open cooperation within enterprises and bilateral cooperation across enterprise boundaries as the main carrier (Bogers et al. 2012). With the continuous deepening of progress, breadth and depth of openness, the complexity and networking degree of open innovation are also increasing, expressed as the emergence of value networks and value galaxies (Normann and Ramirez 1993) and so on. This necessitates the “multilateral” trend in knowledge flow and transaction processes. Vanhaverbeke and Cloodt (2006) summed up and proposed three types of knowledge flow and transaction relationships for open innovation within an organization, bilateral open innovation between organizations and multilateral open innovation in heterogeneous organization groups. Therefore, based on the classification of open innovation, the “openness” in holistic innovation can be divided into three categories: single open, bilateral open, and multilateral open. Take Haier Group as another corporate case. In the new competitive environment for open innovation, the Haier open partnership ecosystem (HOPE) platform was officially launched in October 2013. Through the “people-order integration” model and years of practice in constructing and developing an innovation ecosystem, Haier has built an innovation ecosystem for interaction between enterprises and users based on the HOPE platform. Also, based on the organizational management model for self-managed entities and microsmall innovation, the ecological member interaction model featuring user participation and all involvement innovation has been developed to further optimize Haier’s corporate innovation ecosystem (Lv et al. 2019; Zhang and Zhao 2015; Zhao 2014).

4.1.3 “Synergy” in Holistic Innovation The rapid development and iteration of cutting-edge technologies such as biotechnology, energy technology and information technology require parallelization of many technological innovation links, aggregation of resources and synergy of subjects (Chen 2012), making systems embedded with specific technologies more complex, and synergy the core for managing the complexity of organizational systems (Chen et al. 2018c). The mutual coordination, cooperation, union and collective behavior of various subsystems and elements in the system show collaborative effects as a whole, through a large number of nonlinear effects, so that the entire system can have specific functions and form self-organization in a specific time and space (Haken 2013). The current research on “collaborative innovation” is mainly based on the relationship between collaborative subjects and subjects. In different scenarios, different linking methods are used to promote the interaction and combination of knowledge and resources to achieve value creation. During the collaborative innovation, enterprises, universities, scientific research institutions, governments, intermediary organizations and other innovative subjects would jointly build innovation platforms, establish R&D communities, and collaborate innovative organizations and interest communities (Ye et al. 2014). It is necessary to focus on the ownership of intellectual property rights, the distribution proportion of economic benefits, the management

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of innovation goals, the way of cooperation (Fontana et al. 2005), the time limit of cooperation agreements, the degree of formalization of the cooperation relationship, the information asymmetry, and the structure of transaction costs (Jensen et al. 2003). All innovation subjects need to reach mutual recognition and matching in terms of values, culture, code of conduct, strategy and interest goals, so as to achieve “strategic synergy” (Haken and Mikhailov 2012); now that different innovation subjects have different interests and goals, and the goals are not completely consistent with each other, a win–win interest compatibility mechanism shall be established to achieve “risk-interest synergy” (Harland et al. 2003); “vision synergy” is attained through trust, communication and exchange (Campbell and Yeung 1991); During knowledge transfer, assimilation, sharing, integration, utilization and recreation (Koschatzky 2002) among subjects, efforts shall be made to protect the intellectual property rights, highlight the input and output of explicit and implicit knowledge (Nonaka 1994), and reach “knowledge synergy” (Gold et al. 2001). Whether it is a self-managing system distinguishes it from the typical cooperation models such as strategic alliance. “Collaborative innovation” emphasizes constructing the collaborative relationship and cooperation model, such as the industry-university-research collaborative innovation that centers on transformation of specific scientific research objectives and achievements (Etzkowitz and Leydesdorff 2000; Etzkowitz 2008) and efficient synergy of national innovation systems that focus on major technological innovation projects and national innovation capacity building (Lundvall 2010). All these are important subjects of innovation research. In essence, all these collaborative innovation issues emphasize the systematic thinking and advocate the coordination and matching of collaborative subjects, collaborative scenarios and collaborative means. To deal with technological innovation activities with different goals, based on different organizations, industries and other scenarios, appropriate means shall be adopted to effectively combine innovation subjects to achieve rational allocation of resources and fair distribution of value (Hong and An 2015). Therefore, the “synergy” in holistic innovation can be deconstructed from three dimensions: collaborative agent, collaborative context, and collaborative approach. Collaborative innovation has two characteristics. First, the integrity of scientific and technological innovation refers to that the innovation ecosystem is an organic collection rather than a simple addition of various elements, with its existence, goals and functions all showing a unified integrity. Second, dynamism refers to the constant-changing innovation ecosystem. Given the backdrop of technological and economic globalization, the collaborative innovation that features openness, cooperation and sharing is proven to be a major path to potently improve the innovation efficiency. Giving full play to the activeness of various innovative entities, such as enterprises, universities and scientific research institutions, and organizing in-depth cooperation and open innovation across subjects/departments/industries are exceptionally important for accelerating the technical integration and dissipation across fields, industries and chain links of innovation. Holistic innovation is a new paradigm for strategy driving, vertical integration, top-down interaction and dynamic development. In the context of open innovation, technological innovation management

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is no longer the combination, management and coordination of singular technical elements. Enterprises, universities, scientific research institutions and individuals in the open innovation ecosystem need to see innovation from a strategic, holistic and overall perspective, realize the integration and interaction of strategy, technology, humanities and the market, and maximize the vitality of innovation and entrepreneurship of the whole people. To tackle key problems and innovate collaboratively, it is first of all necessary to make better use of the institutional advantages of concentrating efforts on major tasks. Since the founding of the People’s Republic of China more than 70 years ago, we have successfully coped with difficulties in research on “Two Bombs, One Satellite” and aerospace through national efforts, and made world-shocking breakthroughs in science and technology. The enormous achievements of China’s high-speed rail in recent years are the latest proof of competence of the all-people involvement system. China’s high-speed rail features the richest product offerings in the world, with its overall performances reaching the international standard and some leading the world. It has created several world records in this regard. Why the Chinese highspeed rail ranks among tops in the world? Because a self-innovation alliance of close industry-university-research-application collaboration has been established by involving nearly 30 first-tier universities and research institutes in China, such as the Chinese Academy of Sciences, Tsinghua University, and Peking University, and roughly 50 backbone enterprises, which forms a strong momentum for collaborative innovation to realize high-level innovation in many technologies, during the R&D and trial production processes. In the future, for major scientific and technological projects that reflect the country’s strategic intentions, better use shall be made of the new all-people involvement system to form integral innovation momentum through collaboration of all parties. Also, it is imperative to better handle the governmentmarket relationship, and stimulate the innovation vitality of market players. Now that enterprises are most sensitive to market demands as the most dynamic innovation unit, it is more important to stimulate the microscopic vitality of corporate innovation in seeking breakthroughs in core technologies. At the intersection between the innovative development of the Internet and the new industrial revolution today, the new round of technological revolution and industrial transformation will rewrite the global economic patterns, offering golden development opportunities for Chinese high-tech companies. With Alibaba’s cloud computing, Baidu’s artificial intelligence and DJI’s drones as examples, as long as making the most of their innovation vitality, enterprises can secure a spot in a field or even enter the first echelon. Besides, innovation vitality is further stimulated in Chinese companies of traditional industries. For instances, the home appliance giants, Haier and Midea, have established their high-standard open platforms for scientific and technological innovation in an aim to catch up with and even overtake industrial peers. Thus, when increasingly more enterprises attach importance to innovation, there will be countless innovation engines scattered around to form force for “collaborative innovation” objectively (Chen 2019). As to corporate cases, CSR promotes the coordination of internal and external resources by building an innovation platform. Through years of accumulation of

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innovation resources and capacity building, CSR has established the “collaborative simulation platform”, “test verification system” and “technical standardization information platform” to enable a trilateral synergy. It is also worth mentioning as the core part of the self-developed CRH380A, CSR has realized the independent synergy of four theories and ten core technologies. CIMC is a multinational group that serves the global market. To cope with the changing environment through continuous organizational and technological reform, it issued the “CIMC Upgrade Outline (2010 Version)” in 2010 to comprehensively launch the strategy-driven innovative upgrade, integrating submodules at all levels, external information and cooperative resources transversely and building a support system that mixes finance, human resources, culture and information platform for operation and technology innovation vertically. Under guidance of the strategic concept of holistic innovation, CIMC has optimized its management services for more than 300 member companies and customers and sales networks in more than 100 countries around the world, thus comprehensively improving its global competitiveness, and consolidating its position being a world leader in logistics and energy equipment supply.

4.1.4 “Comprehensiveness” in Holistic Innovation Centered on technological innovation, taking combined innovation, technical ability, and innovation ability as basic points, oriented to enhancing sustainable competitiveness, and aiming at value creation (Xu et al. 2004), total innovation management combines and collaborates various elements required for innovation (technology, organization, market, strategy, management, culture, system, etc.) through effective innovation management mechanisms, methods and tools, so as to spur innovation results (Xu et al. 2006). Total innovation management emphasizes that the innovation process mobilizes all elements and all employees, which is conducted in a full time and space context. Total factor innovation, a concept based on the resource view and system view, coordinates resource factors directly associated with the innovation process and performance such as the internal technical resources, market resources, organizational management resources, strategic resources, and cultural resources (Xu 2007). All involvement innovation is a conduct that involves participants from traditional R&D personnel and technical personnel to all staff, and further to stakeholders outside the organization (users, suppliers, channel providers, shareholders, etc.) (Xu et al. 2004). Full time and space innovation includes full-time innovation and fullspace innovation. It requires enterprises to implement improvisational innovation, immediate innovation and 24/7 innovation (innovation in 24 h a day, 7 days a week). Besides, in the context of globalization and networking, it totally integrates resources inside and outside the enterprise to do innovation anytime anywhere throughout the total value chain and total process (Xu 2007). Total innovation management marks a milestone China-made paradigm of innovation management. Total refers to “all elements, all involvement, all time and space”. Guided by developing core organizational capacity and enhancing competitiveness,

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and aiming at value creation, it continuously uplifts the competitiveness of firms through integration of all innovation factors, participation of all innovation staff and promotion of innovation in full time and space. Furthermore, when extended to research at the industry and country levels, innovation activities with major scientific and technological innovation projects as the carrier rely on the integration of innovation factors in larger systems at the macro-level, the participation of innovation subjects and the coordination of innovation time and space to truly realize the development goal of “total innovation cored by scientific and technological innovation” (Literature Research Office, CPC Central Committee 2016). Therefore, the holistic innovation “totally” focuses on three aspects: all elements innovation, all involvement innovation and all time and space innovation. In the corporate case: domestic high-speed rail enterprises represented by CSR have effectively integrated internal and external resources to create a corporate innovation ecosystem based on core competencies, and achieve comprehensive innovation in group factors, personnel, and time and space. CSR has built a core technology system based on five pillars: shock absorption technology, noise reduction technology, lightweight technology, insulation technology and water treatment technology, and further extended its business development to cultivation of scientific and technological personnel, simulation capabilities, testing capacities and R&D of core innovation products (He 2019).

4.2 Key Features of Holistic Innovation On February 20, 2019, Xi Jinping pointed out in his meeting with the research and test personnel of the Chang’e 4 mission of the lunar exploration project, “Practice tells us that all great undertakings are based on innovation and that innovation determines the future. It’s no plain sailing to build China into a power of science and technology. Innovation is the only way for us to take the initiative”, and further stressed “we ought to have a firm hold of the world trend in science and technology development, carry forward the scientific spirit, target at strategic/basic/frontier fields, stick to simultaneously making up for shortcomings, following the development and laying out in advance, and strive to seek major breakthroughs in key and core technologies, thus enhancing the overall efficacy of the country’s innovation system, unremittingly strengthening our scientific and technological strength and innovation capacity, and endeavoring to secure a spot in the world high-tech arena”.2 Since the reform and opening up, China and its enterprises have jumped from a stage characterized by simulation and chasing to one featured by “running behind, abreast and ahead of the echelon”, and the initiative to “empower the country via science and technology” has witnessed a key turning point from the demand-triggered innovation path to one 2

Refer to Xi Jinping’s meeting with research and test personnel representatives of the Chang’e 4 mission of the lunar exploration project [EB/OL]. http://www.gov.cn/xinwen/2019-02/20/content_5 367237.htm, 2019-02-20.

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underpinned by basic research and major technological breakthrough. The secret of successful shift lies in accelerating the innovation of disruptive technologies and breakthrough in core technologies, the integrated thinking on innovation and the cultivation of first-class enterprises. As a brand new innovation theory under the strategic guidance, the holistic innovation features three key characteristics. (1) Holistic innovation is a blend of strategic leadership, collaborative innovation, total innovation and open innovation. The innovation paths taken by worldclass enterprises share such in common: in an environment of open innovation; these enterprises make overall coordination of the strategic design and involve all elements in to realize the collaborative innovation of all departments and stakeholders. Given the theory of holistic innovation, the innovation path taken by an enterprise covers four aspects: strategic leadership, organizational design, resource allocation and cultural creation, which can be specifically defined as to “look into the future through strategic leadership”, “underline knowledge in organizational design”, “optimize the resource allocation” and “take a loose cultural atmosphere as the basis”. Only by organically integrating strategies, organization, resources and culture, focusing on the long-term objectives and sustaining dynamic innovation can enterprises build stable, flexible and sustainable core competitiveness. In the logic of holistic innovation (Fig. 4.1): while the open innovation, collaborative innovation and total innovation are important creative activities (e.g. innovative thinking and creative design), indigenous innovation marks a supplement, tool and method of the holistic innovation thinking as a major research-oriented activity; “strategy” is put at a leading position, and innovative achievements shall serve the innovation of the enterprise, industry and nation under the strategic guidance. In corporate cases, Midea sets a typical example. The Guangdong-headquartered Midea, founded in 1968, is a globe-leading group specialized in consumer home

Fig. 4.1 Logic of holistic innovation

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appliances, HAVC, robot and automatic system, and intelligent logistic (supply chain). Based upon its core technologies and R&D system, Midea has further enhanced its innovation capacity by strengthening the innovation management and strategic innovation. First of all, Midea promotes the strategic transformation and innovation in the group at the strategic level. While strategically following suit of Haier and Gree, two Chinese home appliance giants, Midea proposed “333 Strategy Transition” in 2012 to shift focus on building the consumer-driven core capacities, and clarify the group’s strategic positioning—produce good products, lay a solid foundation and uplift operation quality in three years; rank up from top three to an industry-leader in the home appliance sector in three years; secure a spot in the global home appliance industry to realize international business in three years. Driven by the strategic vision, Midea further creates a global innovation ecosystem for R&D and production, build and develop an innovation ecosystem based on industry-universityresearch synergy, and establishes an innovation ecosystem based on “Midea Innovation Platform” (Fig. 4.2), thereby attaining a comprehensive gathering of innovation ecosystem partners and resources, value interaction and innovation overflow, creating an inclusive innovation culture and hugely improving the group’s manufacture efficiency, resource utilization, automation level, and stock operation and optimization capacity. Holistic innovation lays a solid foundation for Midea to participate in global competition, polishes competition advantages in global home appliance market and obviously raises its brand value. (2) Under the strategy-guided overall philosophical perspective, holistic innovation makes organic mixture of the convergent thinking of natural sciences and the divergent thinking of social sciences to not only embody the values of oriental culture, but pair with the innovation practices of Chinese characteristics to cater for the Chinese strategic demands for innovation. Specifically, holistic

Fig. 4.2 Midea group: framework of holistic innovation driven by strategic transformation

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innovation is based on the systematic view and global insight of systems science. Through top-level goal setting and strategic design, it transcends knowledge management, breaks through the organizational boundaries of traditional enterprises and focuses on the supply side of external resources (such as universities, research institutions, suppliers, and technological and financial service institutions) that are closely connected with the enterprises’ innovative development, the support side of innovation policies and systems (government, and domestic and foreign public organizations and industrial associations) and the demand side of innovation results (consumers, leading users, competitors and niche market users). Thanks to the comprehensive integration, global planning and multi-headquarters synergy wisdom born in the oriental culture, it helps enterprises mobilize technical elements (R&D, manufacturing, human resources and capital) and non-technical elements (organization, process, system and culture) needed for innovation, build and strengthen their core technology and R&D capabilities, and create for the enterprises dynamic and sustainable core competitiveness in an open innovation ecosystem. The holistic innovation theory spotlights the importance of strategic driving, top-level design, and medium-/long-term development orientation in the innovation process; the significance of the global view, overall view and peaceful view to innovation theory; the role of the oriental culture and Chinese context. The proposal of this innovation theory has considerable practical value for understanding the innovation practices in China’s major scientific and technological fields and typical enterprises, helping enterprise managers to implement strategies for improving their technological innovation capabilities based on strategic innovation, and maximizing enterprises’ innovation performance. Counting upon the oriental holistic philosophy and the Alibaba Damo Academy, Alibaba Group has gradually established an “interlaced” innovation ecosystem with Alibaba Cloud Computing’s big data technology as the infrastructure, and the commercial ecosystem (Taobao, Tmall, Juhuasuan, Ali Publishing and Ali Global Shopping, etc.) and scientific and technological ecosystem (smart logistics backbone network cored by Alipay and Cainiao) as the subject. With them, the Alibaba Group has set up the “urban brains” based on digital economy nationwide step by step, as shown in Fig. 4.3. The innovation based on the “urban brain” strategy intends to reach the balance between the enterprise’s innovation value and its social value and promote the overall improvement of production efficiency and economic efficiency, with the help of the overall vision advocated by holistic innovation during innovation activities. (3) Holistic innovation acts as an innovative thinking paradigm of overall innovation and major innovation, with the overall view, system view and focus on major innovation as its essence. Abandoning the traditional atomic paradigm where R&D management, manufacture management, marketing management and strategic management perform independently, the holistic innovation makes organic integration of all aspects of corporate management through strategic leadership and design, as it strives to back up the enterprise and the nation

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’’

’’

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Fig. 4.3 Alibaba’s holistic innovation based on the “urban brain” strategy

in seeking breakthrough and innovation in major fields and technologies. It is an innovation concept of quantum management characteristics in the era of quantum theory. In China’s aerospace industry, the state takes advantage of the national system to focus on the strategic goals of national development. Under the guidance of toplevel design and top-down large system thinking, the central government deploys the industrial resources nationwide and carries out innovative practices with major national projects as the research and operation platform. For instance, in the selection of the third-stage engine for the Long March 3 rocket, to innovate the low-temperature high-energy LOX/LH2 engine with higher thrust, the state exploited the institutional advantage to coordinate systematically, gathering advantageous R&D and innovation resources nationwide, effectively collaborating the China Academy of Launch Vehicle Technology (703 Institute), Lanzhou Institute of Physics (CAST), Central Iron and Steel Research Institute, and General Research Institute for Nonferrous Metals, and integrating relevant material welding experts in Shanghai to form a state-supported technological innovation and research organization to improve the process. Eventually, the solution for welding technology was attained to realize R&D innovation of the engines (Liu 2013). In the context of catch-up and upgrade of the global industry, China, as a developing country, utilizes its institutional advantage to integrate resources nationwide under the guidance of overall innovation and major innovation. This helps to make up for shortcomings in core technologies and basic industrial R&D capacities, and realize uplift and development of industrial competition. Despite of its relatively backward industrial base, China cannot become the third country after the former Soviet Union and the USA to send astronauts into the space independently and registering noteworthy breakthrough in aerospace field without the superior socialist system with Chinese characteristics under leadership of CPC. This superiority is fully

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reflected in the efficiency and ability of resource allocation demonstrated by the allpeople involvement system in the Chinese economic and social environment, as well as the full mobilization of people’s enthusiasm for innovation and entrepreneurship. What kind of industrial development system a country shall establish and what kind of development path it shall take must be based on its own social reality and industrial development foundation. To sum up, whether it was in the early stage of the development of China’s aerospace industry or in the twenty-first century today, handling the technical shortcomings in China’s basic industries has always been one of the keys to sustaining success in aerospace sector.

4.3 Realization Pathways of Holistic Innovation Starting from the holistic innovation theory, combined with the corporate exploration of innovation practice, the following paths, as shown in Fig. 4.4, can be taken to accelerate the realization of innovative development: strategic leadership, innovation foundation and institutional empowerment, from top to down. The three paths are the process of upgrading from technical elements to non-technical elements, and from the tactical level to the strategic level. They are also the breakthroughs from singular technological innovation to the integration of technological innovation, institutional innovation, cultural innovation and strategic innovation (Yin et al. 2019).

4.3.1 Strategic Leadership The key of strategic leadership is to analyze the factors persistently affecting the society, politics, economy, environment, customers and policies, identify the major trends affecting the development of enterprises and clarify their own vision and strategic positioning.

Strategic leadership

Holistic view

System view and balance view

Innovation foundation

Innovation theory and practice

Indigenous innovation

Fig. 4.4 Realization path of holistic innovation

Institutional empowerm ent

Open innovation

Collaborativ e innovation

Total innovation

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The management needs to build a synergy platform based on a common vision upon this basis, make overall planning for future trends, form a roadmap for corporate development, and formulate short- and medium-term strategies in conjunction with its own resource endowments. Through the dynamic adjustment and optimization of the innovation strategy, they lead and accelerate the breakthrough in disruptive technology and core capacity construction. Take Siemens, a big-name corporation founded in 1847, as an example. It has maintained an edge in the electrification and automation fields owing to its prominent R&D and technological innovation management system that is underpinned by the central research institute, and is leading the reform in digitalization, healthcare sector and green energy-saving technologies by dynamically adapting its strategies with the Pictures of the Future magazine. Adhering to the principle “not to consume strategic resources at non-strategic points” and counting upon the strategic leadership based on indigenous innovation, Huawei is shifting from a globe-leading communication technology and device provider to an enabler and promoter of “smart society” that centers on scaled application of 5G and Internet of Things technologies. Core capacities cultivated upon institutional empowerment and innovation foundation are potent guarantee for the enterprise to ramp up its overall productivity and gain a competition edge in the short run, and key for startups to successfully leap over the “Startup Death Valley” and head to a scaled development. Nevertheless, looking back on the history of corporate advance and industrial revolution, we can see that many celebrated companies, Kodak, Nokia, Xerox and more, once made brilliant achievements in technological innovation and market competition but finally lost the edge as they missed the opportunities brought by revolutionary technologies. This phenomenon of achieving remarkable results in the short term but missing the golden opportunities for transformation in the long term to finally withdraw from history or be overtaken by latecomers is known as the “innovator’s dilemma” (Chnstensen 2013). The root cause is that although such enterprises possess a leading edge in certain core technologies, products or markets, their management lack advance judgment of and layout for social, economic and industrial development trends. The strategic short-sightedness of the corporate management often leads to ignorance of the discontinuity, nonlinearity and asymmetry of technological changes, making them hard to abandon the existing technological and industrial position for a new one. Those companies that are not “blinded” by short-term advantages in technology and business model and can conduct organizational update and cultural reconstruction in time to seize the opportunities brought by technological and industrial revolution to leapfrog the more retarded mostly attach great importance to strategic leadership. Strategic leadership chiefly demonstrates in the advanced layout in R&D of cutting-edge disruptive technologies, precise positioning of the future technological development direction of the enterprise, better balance between short-term strategy and medium- and long-term strategy, and realizing the dynamic matching of organizational strategy, institutional culture and technological innovation on this basis (Chen et al. 2017; O’Reilly and Tushma 2008). Strategic vision is the key to distinguish ordinary managers from outstanding leaders, and the secret for enterprises and

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countries to identify and seize major strategic opportunities and achieve exponential growth in a complex, volatile and uncertain development environment.

4.3.2 Innovation Foundation Innovation plays a fundamental, critical and leading role in technological breakthroughs of enterprises and high-quality development of countries. Building a firstclass enterprise with global competitiveness, and adapting to and leading the highquality economic development depends fundamentally on innovation. Enterprises may accelerate their technological innovation by three means: indigenous R&D, indraught and assimilation, and openness and co-creation. Which means to choose depends on the enterprise’s comprehensive consideration of its own resource endowments, technical routes and the competitiveness of the industry in which it operates. Besides, timely adjustment shall be made according to the demands of specific development stages and changes of competitive environment. Compared with technological introduction and imitative innovation, indigenous R&D features a longer cycle, higher uncertainty and bigger potential returns. Indigenous R&D has long-term strategic significance for companies to seek breakthroughs in disruptive technologies and master core technologies, and irreplaceable value in developing new products and even opening up new markets. Gree sets a good example in this regard. After rejected in its introduction of central air-conditioning compressor technology overseas in 2001, the home appliance giant kicked start of indigenous R&D as the first in Chinese industrial peers. Giving full financial and decision-making freedom to its R&D team, it proposed the slogan “no upper limit for R&D budget” and set up 14 corporate research academies and 74 research institutes. Thanks to the enduring indigenous R&D, the independent talent training mechanism and the perfect quality management model with zero defects, Gree has put 98% of core technologies under control and possessed 24 internationally leading technologies, making it a leader to promote the upgrade of Chinese brands through indigenous innovation. It turns out another feasible model of technological breakthrough to actively seek indraught and assimilation based on indigenous R&D. Technological innovation typically requires long-term accumulation of knowledge, and the lack of technology and experience is often the disadvantage of latecomers. The technological accumulation of outstanding enterprises in Western developed countries provides Chinese enterprises with a potential knowledge base and an effective channel to speed up technological breakthroughs. For Chinese enterprises with capital operation strength, M&A and assimilation become effective ways to achieve “overtaking on the curve”. Take Geely as another instance. As a private auto-making latecomer, Geely acquired Volvo in 2010. Afterward, it speeded up the localized production on one hand, and the assimilation and integration of Volvo’s car-making technologies on the other. Geely and Volvo jointly invested in the construction of a basic module platform for automotive technologies in 2012, and set up a R&D center in Europe in 2013 to integrate

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their respective advantageous resources and promote the collaborative development of a new generation of vehicle architecture and related components. The partnership makes Volvo the first luxurious automobile brand to export to European countries and the USA, and co-established a brand, Lynk & Co., in 2016, thus becoming a win–win exemplar resulted from M&A, assimilation and integrated breakthrough. Nonetheless, for many enterprises, indigenous R&D faces a succession of challenges, such as long cycles, high risks, difficult application of results, low production efficiency due to enclosed production, and inaccurate grasp of exterior resources and market demands. Based on indigenous R&D and learning from the concept of open innovation, open co-creation introduces external partners and takes suppliers, users and even competitors as external sources of technological innovation for enterprises to achieve interior-exterior collaboration, multi-party co-creation and value sharing. It is an effective way to reduce the risk of technological innovation and improve the R&D efficiency of new technologies and new products. What is more, open cocreation can give effective play to the comparative advantages of multi-faceted and heterogeneous entities, and achieve joint technological breakthrough and win–win outcome by “making the market bigger”.

4.3.3 Institutional Empowerment In the era of open innovation, improving the company’s technological innovation capability has no longer been the responsibility of the internal R&D team alone. Instead, all the staff and external stakeholders such as the users, suppliers and competitors are held accountable. When it comes to the complex issue of stakeholder synergy, the institutional empowerment capacity determines whether an enterprise can truly ignite the organization, the internal members and the external partners, and whether it can fulfill the goal of promoting technological innovation via efficient synergy. Institutional empowerment means that the enterprise realizes efficient synergy inside and outside and organic integration upside and downside and establishes an open, collaborative and comprehensive innovation paradigm by updating the organization, building a tolerant and innovative interior system, and empowering innovation individuals inside and outside the organization with macro- and meso-industries offered by the government. (Chen et al. 2017). Scientific and technological innovation is intended to establish core technical capabilities of the enterprise and lay the foundation for its long-term development. Still, some enterprises with outstanding technologies and products fail to sustain their technological innovation and benefit from it. A major reason is that they have overlooked the creation of core management capacity. Whether it is indigenous R&D, open co-creation, or merger and acquisition, the accelerated breakthrough in scientific and technological innovation shall be empowered by system and culture that encourage adventure, tolerate failure and award study. Only in this way can the all involvement, all elements, and all time

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and space innovation persist (Xu et al. 2018). Enterprises need to adjust their organizational management models in a timely manner, in order to actively respond to external market and environmental changes and meet development goals at different stages. The existing system of an enterprise is often the model that best meets the short-term development goals, which is easily solidified to numb the enterprise to new opportunities, new challenges and new market demands, thereby doing harm to the long-term development of the enterprise. The revolution in business models evoked by the Internet and digital technology and the in-depth development of new economic models such as the sharing economy and gig economy have posed enormous challenges to the speed and efficiency of organizational renewal of bureaucratic enterprises and brought pressure and opportunities to the reform of corporate management (Chen 2016; Chen and Liu 2017). To cultivate and encourage an innovative culture that tolerates failure through organizational and institutional update can effectively stimulate individuals and teams inside/outside the organization to continue conducting creative activities and maintain the enthusiasm for innovative cooperation. World-class companies, such as Google, 3M, Microsoft and Oracle, all require the employees to spend 10–20% of their time on part-time projects, giving them space for independent exploration and free cooperation. Instead of imposing negative impact on the company’s innovation performance, it has stimulated the employees’ enthusiasm in innovation and learning from failure in the long run, and thus contributed to the realization of a series of technological and product innovation. Let us see into the case of Haier. Entering the age of Internet, Haier Group, starting with home appliance manufacturing, has to cope with not only the individualized, segmented and customized users’ demands, but also the challenges of shrinking profit, lack of new growth points and simplex knowledge source for technological innovation. To keep in real zero contact with users, mobilize the users’ enthusiasm in participating in technological customization and product innovation as much as possible, and stimulate the innovation vitality of internal employees, Haier has launched the exploration of a borderless organizational management model, introduced the concept of decentralization, and established the HOPE platform for open innovation in its move to promote the application of distributed management model. Haier has been devoted to the building of two supporting platforms, the investmentdriving platform and the user-payment platform, since 2015, in an attempt to transform from an open innovation platform to an open, parallel ecosystem governance model based on the HOPE platform (Xu et al. 2018). Such groundbreaking system and management model not only subvert the traditional bureaucratic management model but also greatly activate the enthusiasm of innovation entities inside and outside the Haier Group, thus effectively implementing the technological innovation orientation that “takes users as the guide and core”. Today, Haier’s HOPE platform has become a world-renowned open innovation platform par excellence to form a network system that links to over 3.8 mln top-notch resource nodes. Owing to this, the corporation has hugely enhanced its capacity to obtain external resources, output over 6000 creative ideas each year, solved technical issues and incubated innovation projects (over 200 in total) and shortened the new

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product development cycle by over 50%. Haier’s institutional empowerment model has been replicated in a good many industries such as energy, daily chemicals and electric power, to successfully fulfill the cross-field applications.

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Chapter 5

Leading Implementation in Innovation: Methodology of Holistic Innovation

Action is the beginning of knowledge, and knowledge is the completion of action. —Tao Xingzhi.

Holistic innovation is the product of theoretical innovation formed against the backdrop that China’s innovation-driven development and reform and opening-up have entered a deep-water zone and its fast-growing hi-tech sector is gradually entering the “no man’s land”. Holistic innovation stems from and guides China’s innovation practice. The innovation theory purveys theoretical support and scientific guidance for many practices of the innovation-driven development in China. In turn, specific new problems arising from the practices induce constant improvement of the theory to enable a better interpretation of realistic phenomenon. An innovation paradigm makes sense only when embedded in the specific political environment, cultural background, economic conditions, social context, ecological requirements, strategic positioning, and technological level, and evolving with them together (Mei 2018; Mei and Chen 2015). The Party and the state make coordinated efforts to promote balanced economic, political, cultural, social, and ecological progress and the Four-pronged Comprehensive Strategy, thereby realizing the total integration of the persistence in the new era and the political, cultural, strategic, economic, social, ecological, and security significance in developing the socialism with Chinese characteristics. Since the 18th National Congress of the Communist Party of China, General Secretary Xi Jinping has delivered a series of important speeches on scientific and technological innovation. Of high aims, enriched connotations, and deep insight, they offer essential guidance for conducting research on theories and practices of Chinese scientific and technological innovation management in the new era. In this chapter, the author analyzes the principles to be adhered to in holistic innovation from the perspective of ways, rules, means and will, four of the six Taoist principles, to shape the guiding methodology for implementation of holistic innovation. Ways refer to the core ideas, concepts and essential laws; rules stand for laws, regulations, systems and methods, which are inviolable principles for practices formulated on the basis of “natural law”; means are the conducts and skills; will means the goals to be achieved. © Science Press 2023 J. Chen, Holistic Innovation, https://doi.org/10.1007/978-981-19-8625-3_5

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5.1 The “Way” Based on Oriental Wisdom Wisdom is the ability to recognize, analyze, judge, process and invent things. In traditional Chinese culture, the oriental wisdom requires people to maintain subjectivity, independence and initiative, learn from the universe and respect and conform to nature. After the two world wars, many Western statesmen and philosophers reflected on the instrumentality and one-sidedness of Western culture, and called for a new humanistic spirit, agreeing that this new humanistic spirit exists in the East, in China in particular.

5.1.1 Holistic Thoughts The holistic thoughts in oriental wisdom mainly refer to the system view and the holistic view. The holistic thought is a basic method and point of view to look at things. Everything is a system that covers its ingredients, or subsystems under a complex system. From the Marxism point of view, Qian Xuesen summed up the “science—technology—industry—society” integrated development trend in scientific, technological and social advance. He argues that there are interactions and mutual influences between the scientific revolution, technological revolution, industrial revolution and social development. If we take a holistic and dynamic view of the modern science and technology system, the relationship between the contemporary science and technology revolution and social development must be analyzed with a more holistic and macroscopic perspective. The holistic thought is more of a way of thinking. It’s specified in the report of the 19th National Congress of the Communist Party of China that innovation is the first driving force for development and the strategic support for building a modern economic system (Xi 2017). To advance from a follower to a leader in innovation, China has a tremendous lot to learn from the “holistic thought”. The modern science and technology are established upon the Western reductionist thought originating from ancient Greek philosophy, which divides complex issues into simpler subjects and solves them bit by bit. Reductionism is the main method and theoretical basis for major breakthroughs attained in the development of modern natural sciences. In the seventeenth century, the leading exponent of reductionism, Descartes1 (2011), proposed the way to use reductionism and its basic principles: to break each problem observed into parts as small as possible, until they can be solved. However, as natural sciences become increasingly more complex today, reductionism has encountered its unbreakable bottleneck. After the nineteenth century, due to the discovery of fields between particles, reductionism turns inapplicable in part. Holism takes it stead to become the primary research thought. Especially during the determination and development of quantum mechanics, the holism demonstrates a clearer interpretation and garners wider popularity. For highly complex systems, things ought to be viewed from 1

The standard translation should be “Descartes”—Editor’s note.

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a holistic perspective. The holistic view is based on functionalism, which simplifies the problem by understanding the overall function of the system. The system view has been continuously explored and expanded in various fields and practices. The holistic view is a mainstream school in modern sciences. Under the influence of system dynamics, Peter Senge put forward the theory of learning organization in the 1990s (Senge 1995) and emphasized using the system thinking of the organization to guide the management and reform of the whole organization (Senge 1997); later, impacted by the Eastern Zen thought, he proposed the Theory U, advocating thorough, holistic and systematic thinking of the enterprise (Senge et al. 2004). The Santa Fe Institute (SFI), a Mecca for research on complexity sciences, has invariably taken systems engineering, systems science and systems view as major breakthroughs for sciences and theories. The more complex the problems and severer the situations, the greater demand of systems thinking to handle them. In the thinking under the systems view, there is a universal connection and an eternal movement in all things. To solve the problem comprehensively and systematically, it is necessary to explore the relationship between all elements and non-elements, and grasp the interaction and change laws between the system and the environment. Fan Daiming, academician and former vice president of the Chinese Academy of Engineering, put forward the holistic thinking and emphasized the fit between the systems theory and the integration view (Fan 2016). However, analyzing problems with the holistic innovation and systems view is different from the previous models, which requires the formation of a new knowledge system instead of discussing problems in fragmented knowledge sub-disciplines. Integration is different from mixing. Mixing is a disordered fusion, but integration is intended to achieve system design and ultimately complete the overall goal under guidance of the strategies.

5.1.2 Transcendental Knowledge The transcendental knowledge in oriental wisdom mainly refers to an individual’s perception and knowledge of the external world from the bottom of his heart, which have been improved and transcended to form wisdom. “Transcendental knowledge” is essentially an education model for innovative talents. The education of innovative talents depends on not only their accumulation of knowledge, but also their understanding and transcendence of knowledge. What matters are knowledge, curiosity and imagination and value orientation. First, in terms of knowledge, the accumulation of knowledge does not necessarily bring about innovation. Deep machine learning in artificial intelligence is a typical case. For artificial intelligence, the learning process is the accumulation of a great deal of knowledge, and the behaviors and decisions do not mean innovation, but imitations based on existing behaviors and traces. Second, curiosity and imagination. Qian Yingyi mentioned the educational formula of “creative thinking = knowledge × curiosity and imagination” in the “Counsellor’s Lecture” co-sponsored by the Public Policy Research Center of

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the Counsellor’s Office of the State Council and Xinhuanet/sikepro. Existing knowledge has its fixed frame and basic setting, which often imprison the individual’s thinking, and curiosity and imagination will prompt the individual to challenge the existing knowledge frame, thus breaking through the traditional thinking and logic, to make innovation available. Third, value orientation. Nowadays, the value orientation of short-term utilitarianism prevails in the society. Innovation achievements are measured by the number of papers published, the number of patent applications and the listing on stock exchanges. Intrinsic non-utilitarian value orientation, such as the pursuit of truth, changing the world and making the society happier, are often undervalued.

5.1.3 Insight and Foresight Insight and foresight in oriental wisdom generally refers to insight into the inner content and essence of things and shape foresight accordingly. An enterprise with insight and foresight is driven by opportunities, and opportunities come from changes in the environment. Insight and foresight could help capture these subtle changes. In a society where digitization and informationization are deepening, high-speed information flow makes new technologies and processes quickly imitated. Therefore, it is the key to form unique competitiveness amid the global competition by quickly seizing opportunities and utilizing resources, talents and institutions to form the innovation atmosphere. It is mentioned in the book Then We Set His Hair on Fire that insight marks the “last mile” of innovation. If insight is the “way”, creativity is the “rule” (Dusenberry 2014). In a society of digital transformation, insight and foresight would cover the consumers, big data, and emerging technologies. First, regarding the consumers’ insight and foresight, contemporary China is ushering in a new wave of consumption upgrade, and social consumption is gradually transforming into a process of life management and enjoyment. Many companies have come to the realization that a correct analysis of consumer’s demands and values is a must for successful market development. When trying to understand the consumers, we often observe and delve into their consumption behaviors through their life and consumption scenarios, establish the consumption framework through projection and finally verify the business assumptions via simulated shopping. A large amount of first-hand research data could be obtained during the research process, thus enabling a more comprehensive and systematic understanding of consumer behaviors. For consumer insight and foresight, it is necessary to analyze consumers’ preferences and motivations at different levels and depths on product attributes, functional interests, instrumental interests and values in such research data. Besides, insight is just the beginning. From insight to innovation, foresight on consumers’ demands is needed. There are diversified ways of innovation, and insight is an important link. Viewed from a long-term perspective, foresight makes clear the development direction of innovation. Scene consumption, social consumption, short video

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consumption, cultural industry consumption, knowledge consumption and intelligent consumption are a few to list. Second, as to the insight and foresight of big data, big data can help managers to quantify the business of the enterprise, thereby improving the decision-making quality and enterprise performance. In recent years, technologies for high-speed processing of massive and diverse big data have emerged. These are typically based on open-source and general-purpose platforms that integrate physical hardware and open-source software. Besides, visualization tools and big data statistics have also been available. They cannot only process massive data sets, but also bridge the gap between the complexity and causality presented by the data through the skills to design data experiments, thus helping business managers turn major challenges confronting their companies into forms that can be solved by big data. Big data shall be more understood than analyzed. In the era of big data today, the truly successful enterprises have not only more or better data resources, but also a management that can set goals and find out problems more clearly through big data. The powerful big data would not obviate the need for humanized insight and foresight. On the contrary, insight and foresight can help corporate leaders seize the opportunities endowed by the times, figure out the way to expand the market and offer more valuable products and services through their own innovation and creativity, thus successfully winning customers (McAfee and Brynjolfsson 2016). Third, for the insight and foresight of emerging technologies, the reason why emerging companies can rise so rapidly is that they can see the future development trend of technologies earlier and more accurately. Such insight and foresight are directly related to the operation and transformation direction of enterprises. Especially for the chief innovation officer, he/she must make clear how the frequently emerging technologies affect their behaviors and businesses. Gartner, the world’s leading IT research and consulting company, released 29 emerging technologies you cannot miss in 2019 and specified the development trend of emerging technologies. At present, technological innovation has become the key of differentiated competition for enterprises. As the scientific and technological innovation continues accelerating, and more disruptive technologies are emerging, enterprises shall keep alert on tracking and understanding the scientific and technological innovation and follow the development of cutting-edge technologies. Gartner released five emerging technological trends, including sensing and mobility, augmented human, postclassical computing and communications, digital ecosystems and advanced AI and analytics (Panetta 2019). In gaining insight into such emerging technologies and making predictions about their future development, special attention shall be cast to the following issues: Can the technology bring sufficient benefits to the society and the economy? Can it bring any changes to the social life? Can it interest investors inside and outside the company? Can it make significant progress in the next few years?

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5.1.4 Contemplation and Strategy Contemplation and strategy in oriental wisdom predominantly means that one proposes the development strategy based on his/her insight into and concern of the history. Shao Yong mentioned in his poem, The Song of A Hundred Diseases, that “when it comes to the career, it truly has little to do with manpower” (Shao 2015). It implies that the career success is closely linked to the exterior environment and development rules/cycles of things. When coping with problems, we shall discover the nature and laws of things with the “contemplative eyes”. “Contemplation” is often identified as a form of religious prayer, but essentially a state of solitude and quiet thinking in a bid to comprehend the source of things. It works better to formulate development strategies upon insight into the essence of things. “All great careers are based on innovation.”2 For innovation contemplation, it is imperative to clarify the meaning of innovation activities. It is the pursuit not only of short-term and local interests, but also of the Pareto improvement of the overall welfare of society under the guidance of philosophical thinking and humanistic spirit. It is also necessitated to clarify the social, humanistic and even philosophical significance innovation itself shall have and underscore the “return” of social culture, humanistic care and philosophical thinking in the process of innovation. The contemplation and strategy of innovation uplift the thinking on corporate innovation practices from the “technological level” and “market level” to the “humanistic level” and even “philosophical level”. With the disruptive development of science and technology and the revolutionary evolution of economic culture, the human society is shifting from an era of industrial economy to one of knowledge economy amid a climbing uncertainty of the market. On one hand, the diversity, complexity and urgency of social development and human progress embrace no effective response under the traditional framework of economic management and corporate strategic decision-making; on the other hand, in face of the increasingly intensified international competition and the rapidly changing environment, the elements in the resource field of the traditional innovation paradigm are no longer sufficient to support the corporate innovation strategy of constantly pursuing excellence, and the a brand new perspective of resource synergy and innovation paradigm is emerging (Chen and Qu 2018). The constant recurrence of “black swan” events shows that it has become increasingly difficult for decision makers to predict the future environment, and the previous risk-based decision-making framework has been continuously impacted by uncertainty. For innovation, the long-term, high-investment business activity with uncertain returns, a highly uncertain environment will lead to immeasurable risks. Corporate decision makers have to “proactively” shift their attention to longer-term and deeper social significance and human development megatrends. When the development of science and technology relies on its own logic to run wildly on the existing

2

Refer to Xi Jinping’s meeting with the research and test personnel representatives of the Chang’e 4 mission of the lunar exploration project [EB/OL]. HYPERLINK “http://www.gov.cn/xinwen/201902/20/”, http://www.gov.cn/xinwen/2019-02/20/content_5367237.htm, 2019-02-20.

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path and goes beyond constraints, enterprises need to conduct philosophical thinking and lead humanistic thinking with contemplation and strategy.

5.2 The “Rule” Based on Socialism with Chinese Characteristics The “rule” based on socialism with Chinese characteristics primarily refers to the experience, practices and guidance accumulated and summarized during the development of socialism with Chinese characteristics, which gives an effective direction for scientific and technological innovation to play its scientific, economic and social effectiveness in the context of socialism with Chinese characteristics. Holistic innovation makes an organic integration of the convergent thinking of natural sciences and the divergent thinking of social sciences, highlighting the innovation in technology and business, embodying the value of the oriental culture and pairing with the innovation practices with Chinese characteristics to cater for the strategic demands of innovation in China. It contains the experience China has accumulated in its historical development in the past 5000 years and its socialist construction, including peaceful development, new national system and people-centered orientation.

5.2.1 Peaceful Development Peaceful development has long been embedded in the Chinese cultural tradition. The peaceful development advocated by the holistic innovation will provoke a variety of research topics and opportunities. From advocating the consciousness to build the “community with a shared future for mankind” to proposing the “world dream of perpetual peace and common prosperity”, from committing to building a new type of relationship between world powers, to promoting the connectivity of neighboring countries and economic integration in Asia (Central News Interview Center, Xinhua News Agency 2013). Under the guidance of the “innovation, coordination, green, openness and sharing” development concept, China is continuously practicing the concept of peaceful development of the Chinese nation. China’s national innovation capability has been rapidly strengthened, and its scores in innovation environment, innovation resources, innovation achievements and innovation benefits have been continuously raised since 2000. By 2050, its innovation capability will be considerably improved (Chen 2017a). We are sure that the research on peaceful development adhered to in the holistic innovation will promote the balanced economic and social development of more countries or regions and make far-reaching contributions to the world peace and the development of a community with a shared future for mankind. We are living in the midst of an unprecedented technological advancement. The global R&D expenditure exceeded USD1 trillion in 2015, as least twice

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the amount spent in 2000 (Clauser 1979). Nonetheless, the global development still faces severe challenges: many parts of the world are still suffering from frequent local violent conflicts, more than 700 million people worldwide still live below the poverty line, and vulnerable groups continue to face social exclusion, social unrest, racial or sectarian conflicts and human trafficking problems, especially in those areas where poverty, discrimination and frequent epidemics or armed conflicts exist. How to achieve peaceful and sustainable social and economic development is an urgent challenge to be concerned about and faced in this era (Chen Jin and Huang Jiang 2017). Peace and development are the two major themes today. The number of studies on peace and conflict has grown substantially since the end of the Cold War in 1991, focusing chiefly on what causes the conflict and how to prevent it. At the same time, a swarm of global technology startups, angel investors and social entrepreneurs are attempting to build a society of wider peace and positive development with innovation, under the assistance of the government and charitable institutions. But so far, there is little interaction between scholars in innovation and peace fields (Miklian and Hoelscher 2016). Scientific and technological innovation can play a very important role in peaceful development, but it requires a radical shift in our understanding of and actions toward innovation. Only in this way can we promote the realization of the holistic innovation and truly achieve the innovation-driven peace and development. 1. Meaning and Establishment of Peace (1) Interpretation of peace Generally speaking, peace means the freedom from wars and violence. Johan Galtung, a Norwegian scholar touted as the “Father of Peace Studies” in the international academia, classifies violence into three types: (a) direct violence refers to the violence that does harm to the victim’s body, soul and mentality via words and physical conflicts; (b) structural violence means political and economic suppression and exploitation attained via penetration, splitting, division, and marginalization in the social structure; (c) cultural violence indicates cultural erosion hidden in religion, law, ideology, language, art, and scientific research, which is typically transmitted through public channels such as the media and teaching institutions (Galtung 1996). Galtung first made the division of “passive” peace and “positive” peace in his classic Violence, Peace and Peace Studies in 1969. While “passive” peace refers to the absence of direct or physical violence, such as war, gang assault, sexual assault and random killings; “positive” peace involves the establishment of social and cultural structures that are conducive to the well-being of all citizens. The United Nations has also pointed to the far-reaching impact of peace as a cultural and educational concept. (2) Establishment of peace “To save future generations from the tragic scourge of war this generation of mankind has experienced twice” is the main motivation for the founder to establish the United

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Nations after the two world wars. Especially after the end of the Cold War, the United Nations’ peacemaking actions started to play a more active role. For the United Nations, peacebuilding means to lay the foundation for sustainable peace and development by strengthening international conflict management capabilities, helping all countries and regions transition from war to peace, and reducing their risk of slipping into or re-slipping into conflict. Actions it has taken include monitoring ceasefires, demobilizing and reintegrating combatants, facilitating the home return of refugees and the displaced, helping organize and oversee the elections for new governments, supporting reform of the justice and security departments, strengthening human rights protections, promoting post-atrocity reconciliation, and addressing “the deepest causes of conflict” such as economic collapse, social injustice and political oppression. The United Nations defines peacebuilding more from an outsider’s position, through a “top-down” approach. Also, many studies discuss from the authority’s perspective, offering a “bottom-up” development framework. Specifically, the peacebuilding engages five aspects (van Tongeren 2013): a safeguarded environment, where people’s living is free from the threat of the system or massive violence; a just rule of law, where people are offered equal access to legal protection, and a trustworthy judicial system is in place to contain everyone and guarantee the human rights and security; a stable government governance, where people can obtain or distribute rights through non-violent means, and enjoy the collective welfare and services offered by the state; a sustainable economy, where people can earn a living in an economic system upon the rule of law; and social well-being, where people no longer need to struggle for the basic living conditions and can coexist peacefully and progress together with other groups in the community. 2. Peaceful Development in Holistic Innovation Peaceful development is a task with very rich connotations, with its subjects distributed in various organizations and groups of the society (Diamond and McDonald 1991). The peaceful development adhered to in holistic innovation mainly incorporates the following subjects: enterprises and industrial associations, which provide people with the goods and services they need and pay more attention to social needs, such as the health and quality of people’s life, the sustainable use of natural resources and the living needs of minorities; universities and educational institutions, which delve into the causes of conflict and ways to build peace and educate students and society about peace; the government, which can standardize the judicial system and provide equal opportunities for education and employment to ensure fair market operations and protect local health and environment; media workers and journalists, including those engaged in literature, art, music, sports, etc., who can present the public the causes and consequences of conflicts, and information and approaches of peacebuilding, and develop the values of tolerance and mutual love; all individuals or teams, including women and youths of all ages and living standards, and even all minorities, who can start locally and promote peacebuilding through innovation; NGOs, which promote the long-term advance of peacebuilding by providing humanitarian assistance in times of crisis; international organizations, such as the United Nations, which formulate legal norms, and create conditions for

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lasting peace through diplomatic means and assistance to local post-conflict recovery activities. The subjects in peaceful development adhered to in holistic innovation can also be divided into ten categories the way adopted by Harvard University’s the The Third Side Program for handling conflicts: providers, who help to cater for people’s living (e.g. food, safety or freedom) and emotional (e.g. love and respect) demands; educators, who help people develop the inclusive and peaceful values, and the ability to resolve conflicts and better understand and deal with diverse differences; relationship builders, who can improve relationships and understanding between groups by building networking platforms, projects or activities, against the belief that good relationships are the key to preventing conflicts; healers, who help people deal with the negative emotions of anger, fear, humiliation, hatred, insecurity and sadness in conflicts, and achieve spiritual relief; witnesses, who can spot warning signs through careful observation and call for action in time to prevent conflict from escalating or even save lives; equalizers, who impose greater influence on vulnerable groups and help them get fair treatment in conjunction with other volunteers; mediators, who help to clarify and coordinate the interests of all parties and resolve disputes; arbiters, who decide how conflicts and disputes are to be handled; referees, who limit the way of struggle to less destructive weapons and methods; conflict stoppers, who take necessary actions to stop a harmful conflict that is taking place when a conflict exceeds certain limits. Or, by the working level, subjects of peaceful development adhered to in holistic innovation are grouped into three levels: community level, including local residents, women, youths, ethnic minorities, health workers, small and microenterprises or organizations and local community organizations, which undertake basic tasks such as building of community life, peace-themed education and activities or boosting of local economic growth; middle level, including local governments, scholars, media workers, and non-governmental organizations such as sports associations, chambers of commerce, and trade unions, which promote the economic and social development, establish values, and improve the region’s response to conflicts; high level, including political, economic, military and religious leaders with decision-making power, who can provide strategic guidance and support for high-level negotiations, ceasefire agreements, etc. (Lederach 1997). According to the content of peacebuilding, we hold that the peaceful development in holistic innovation chiefly contributes to two aspects: economic growth and social development. First, innovation and economic growth. Economic growth, especially the longterm sustainable economic growth, has long been the focus of discussions among scholars and policymakers. Much of the early literature has attempted to suggest longterm factors that may have an impact on economic growth. For example, the seminal work of Romer (1986), Lucas (1988) on the theory of endogenous economic growth emphasized the important role of knowledge as a productive input. In their model, it is the technological progress and industrial innovation that drive the long-term economic growth. Besides, Schumpeter is another important theorist who delved into innovation earlier. When he discussed the concept of “innovation”, he laid his

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focus not only on “disruption”, but also on “innovation”. From his times on, the industrial innovation process has been regarded an important driving force for economic growth. By the end of the twentieth century, there had been a wealth of economic literature shedding light on the relationship between technological innovation and economic growth, and proving that R&D and innovation can significantly increase a country’s economic productivity. Among them, total factor productivity (TFP) marks a major measure of the contribution made by innovation. China and many other countries still use it to measure the contribution of national innovation. Decades later, modern innovation scholars have gone beyond Schumpeter’s understanding of innovation to establish a sound concept of innovation system, thereby erecting an important theoretical framework for innovation-driven economic development. However, less attention has been paid to how innovation impacts different people and development goals. As a result, innovation targets too much on business profit, seeks merely short-term returns and benefits brought by innovation are unevenly distributed. Some people come to the assumption that science and technology are oriented to the rich, instead of the poor, around the globe. Therefore, some parts of the research on innovation shall aim at developing countries and their needs. For example, a study commissioned by the United Nations in 1969 (later known as the “Sussex Declaration”) called for a substantial increase in investment and funding to establish institutions and infrastructure to support the scientific and technological development. Second, innovation and social development: The word “development” was understood differently in different historical periods. After World War II, Western scholars often used it to express the economic growth and technological change achievements of the nation. This usage was deeply rooted in the European understanding of the elements required for social progress at that time. When referring to the term “social development”, world organizations such as the United Nations, the World Bank, and governments generally separate it from economic growth. This perception has separated social development from economic growth all along. Many countries take economic growth as the primary goal. Only when their economic development reaches a certain level would they begin to discuss issues concerning social development and ensure that primary focus is laid on economic growth. Blindly pursuing economic development has exposed many countries to obvious problems in the later stages of development. The UN Report 1996 summed up five types of economic growth failures: jobless growth that fails to drive the employment, ruthless growth that benefits only a small population, voiceless growth that takes little consideration of democracy and especially equality of females, rootless growth that lacks cultural recognition and futureless growth that makes non-sustainable development of environment and resources. Looking back on the past decades of development, some scholars have noticed that although economic growth is important, it is simply a part of the social development system, interacting and co-evolving with other parts. This change in concept has hugely influenced the world’s understanding of social development. Afterward, the word “development” has become a comprehensive term that describes the social development. The UN Human Development Index, for example, gives a comprehensive measure of people’s income,

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average life expectancy and educational attainment of a country. Likewise, the value bases of the Millennium Development Goals (MDGs) are dignity, freedom, equality, solidarity, tolerance, respect for nature and shared responsibility. The sustainable development goals (SDGs) not only base themselves on such values, but also clearly set human rights as the basis. For instance, human rights and dignity, equality, tolerance, happiness, peace, justice and sustainability will be goals to be achieved in the coming years. The Inclusive Growth and Development Report 2017 published by the World Economic Forum pointed out that without a timely adjustment of their economic growth models and measurement methods, many countries would be missing important opportunities to boost economic growth and reduce social inequality. Instead of the previous sole focus on GDP, it shall be the “minimum goal” of policymakers in measuring the country’s economic development to ensure a continuous and comprehensive improvement of people’s living standards (income, employment opportunities, etc.) and life security. Today, research on innovation has gradually shifted its influence subject to social development. The World Summit on the Information Society Declaration of Principles 2003 acknowledged that new technologies would impose material and conducive impact on the socioeconomic conditions, health care, employment opportunities, educational development, agricultural production, business growth, environmental management, poverty alleviation and transport and infrastructure improvement. Some macro-studies have also demonstrated the contribution of technological innovation to human development. What is more, a number of new innovation concepts have emerged in the academia, such as social innovation (Young Foundation 2006), frugal innovation (Radjou et al. 2012), inclusive innovation (George et al. 2012), responsible innovation (Mei and Chen 2015), and green innovation (Driessen and Hillebrand 2002). A series of new views and solutions (products, services, business models, production processes, etc.) have been developed upon different social structures in an attempt to refine people’s living quality and protection of natural resources. 3. Characteristics of Peaceful Development in Holistic Innovation Peaceful development in holistic innovation features the important characteristics of general innovation, which is realized through innovation in science and technology or operation model. Compared with other innovations, peaceful development in holistic innovation has prominent features in the following aspects. The ultimate goal of peaceful development in holistic innovation is to contribute to peacebuilding, and as to the content, holistic innovation attaches greater importance to social development, not just the realization of commercial value. This coincides with the purpose emphasized by social innovation. In other words, apart from mitigating the occurrence and consequence of the war and violent conflict, innovation typically creates values for the whole society, especially vulnerable groups, and cares about the harmony between humanity and nature. Related inclusive innovation, green innovation and other purposes are also part of it. Extending the purpose of innovation from business to society will help achieve a wider contribution that caters more for the social well-being. In Common Innovation: How We Create the Wealth of Nations, Swann distinguishes the two values realized by innovation into material

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wealth in economy and health and happiness in life, and bisects it into commercial innovation and public innovation according to the different values created. He pointed out that a major feature of business innovation in the past was the “disruptive innovation” proposed by Schumpeter. However, when evaluating the contribution of innovation, they neglected the blows and losses suffered by individuals who had been “disrupted”, “eliminated” or “kicked out of the market”. Public innovation aims to meet people’s living demands. As a non-profit behavior, it involves no competition or mutual exclusion and helps more people, regions or industries embrace the benefits of innovation. This is similar to the feature of the “user innovation” theory that users are often willing to share their inventions with friends around them and even people online they have never met free of charge. (1) Subject of Peaceful Development in Holistic Innovation The subjects of peaceful development in holistic innovation are more diversified. In the past, companies were typically considered the main force of innovation. In the holistic innovation, due to the rich and hierarchical content of peacebuilding, the subjects have shifted from enterprises to comprehensive systems that cover individuals, NGOs, troops, media, educational institutions and governments. In the previous study on the role of enterprises in social development and peacebuilding, main focus was laid on the improvement and realization of corporate social responsibilities as confined by the management framework. Enterprises are not the sole source of innovation. Users (von HipPel 2016), “grassroots” and more, can bring loads of ideas and applications. In particular, women’s empowerment and action also play a major role in peacebuilding (Usta et al. 2019). More importantly, apart from enterprises and individuals, organizations and industries of other forms and backgrounds, studied more in sociology, public administration, journalism, education and military sciences and seldom in innovation, are also subjects of peaceful development in holistic innovation. (2) Generation Mechanism of Peaceful Development in Holistic Innovation The peaceful development in holistic innovation features much more sources. The industry-university-research triple helix framework was previously the main basis for accelerating and improving the corporate innovation. However, in the peaceful development of holistic innovation, since the innovation realization process involves more subjects distributed in different industries and levels, and is subject to the impact of social systems such as culture, it requires closer and more coordinated cooperation of all subjects to enhance peacebuilding via innovation. Similar to the idea of systems engineering, the generation of innovation requires not only sorting out the division and cooperation of various links inside the complex system, and coordinating the comprehensive research on the intersection, combination and integration of different disciplines and fields, but also paying attention to the relationship between the internal mechanism of innovation and the external environment (Wang 2006). Besides, the peaceful development in holistic innovation also proposes higher requirements for exchanges and coordination among regions and even countries.

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(3) Value Realization of Peaceful Development in Holistic Innovation Peaceful development in holistic innovation places more emphasis on transformation and action. Creating and realizing values are the most fundamental characteristic of innovation. Peaceful development in holistic innovation pays considerable attention to the latter half of the innovation process, that is, the transformation and application of innovation. To a certain extent, peaceful development in holistic innovation emphasizes action more. If innovative technologies and theories are simply paperwork, it will be hard to resolve practical problems in conflict and peacebuilding. The transformation and practice of peaceful development in holistic innovation can be understood from two perspectives. For one perspective, it can satisfy the demands faster or allow more people to enjoy the results. With frugal innovation as an example, it lowers the complexity and cost of the products and the value chain through innovation in business model, value chain, production process and product design, and provides qualified, durable products/services that can meet the demands (Chen et al. 2014) to allow people limited by finance or resources to enjoy the basic privileges. However, this transformation could be done in the same way in other non-profit industries like in the business sector, so as to make the most of the innovative technologies or processes. For another, it relates to the transformation of peaceful thoughts, concepts, and culture. Behind the social development lies the change of moral norms. Some intrinsic values contained in social development, such as the respect for people, diversity, respect for nature, equality and a sense of social justice, are often ignored in the discussions of social development (Abramovitz 1986). Peacebuilding is not only a guarantee of material and physical security, but also a spiritual pursuit of peace, tolerance, and non-violence. The spread of the peaceful development spirit in holistic innovation counts upon not only common means such as enterprises, individuals and governments in previous innovation fields, but also the media and education channels. Prior to this, innovation in the creative or entertainment industries (such as video games, art design, advertising, and broadcasting) were often overlooked in innovation-themed research, and even referred to as “hidden innovation” (Cunningham 2016). (4) Measurement of Peaceful Development in Holistic Innovation The peaceful development in holistic innovation is measured not merely by economic indicators. This feature is also consistent with its purpose and content. For example, the achievement of innovation development of a nation was previously measured by economic indicators such as the number of patents and contribution to scientific and technological progress. In the future, the national development goals will be more comprehensive and complete, as Sen (1999) points out “Development goals must be the targeted attack on the worst forms of poverty. Development goals must be set to gradually reduce and eventually eliminate malnutrition, diseases, illiteracy, squalor, unemployment and inequality. When formulating the development models, we shall focus more on how to achieve more production and better distribution.” In the future, a nation’s innovation capability shall be measured with more indexes concerning social development, such as income and poverty levels, employment, healthcare, education,

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housing, gender, sanitation, drinking water safety, carbon footprint, and government governance. Innovation is intended to change the world, instead of being measured (Walker and Unterhalter 2007). The interaction between the innovation and the economics and social institutions is critical to understanding the growth and development (Friman and Perez 1988). We cannot continue to solve social problems with innovation like “searching for the lost keys under the street light”. The innovation research shall extend its coverage and adopt interdisciplinary approaches to explore in depth. Specifically speaking, according to the dimensions of research on peacebuilding, the research directions of peaceful development in holistic innovation can be explored in the following aspects. First, in terms of sustainable economic development, such topics could be discussed in the research on peaceful development in holistic innovation as how to realize balanced economic growth among regions, shorten the gap between the rich and the poor, entitle more people to have a job and enjoy social welfare, protect the natural resources or reduce dependence on a specific natural resource, meet the demands of the vulnerable groups, and balance the distribution of educational resources. Second, as to improving the social welfare and cultural construction, the research on peaceful development in holistic innovation can help figure out how to use innovative means to improve the living and health standards, address the problem of aging, strengthen communication between different groups, encourage more neutral media, improve the historical education of the country and the world, and establish values for peaceful development. Third, regarding the security governance, the research on peaceful development in holistic innovation can enhance the advancement and effectiveness of public security means, and strengthen the circulation management of weapons, conflict prevention and supervision, etc., through scientific and technological innovation. Fourth, with respect to the political and legal environment, the research on peaceful development in holistic innovation can figure out how to use innovation to improve the public participation in government and judicial work, encourage inclusive governance, and improve the sense of happiness and satisfaction.

5.2.2 New National System 1. Implementation of the New National System On June 9, 2014, Xi Jinping, general secretary of the CPC Central Committee, president of the State, and chairman of the Central Military Commission, pointed out at the 17th Academician Conference of the Chinese Academy of Sciences and the 12th Academician Conference of the Chinese Academy of Engineering: “Concentrating nationwide efforts and resources on key national undertakings is our secret to make noteworthy achievements under the socialism system. Since many major scientific and technological achievements in our country shall be ascribed to this magic weapon, we must hold it firm in hand and not lose it! We must give the market

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a decisive role in resource allocation, give a fuller play to the government, strengthen the overall coordination, strive to conduct coordinated innovation, concentrate efforts on major undertakings, and pay attention to major, forefront and basic items, thus forming a powerful strength to promote the indigenous innovation.” (Xi 2014) His remarks have clarified the historical traditions, adaptation environment, academic foundations and institutional paths for the new national system. In January 2015, the State Council issued the “Plan on Deepening the Management Reform of the Central Financial Science and Technology Plans (Special Projects, Funds, etc.)”, which focuses on major strategic products and industrial goals of the nation, and calls on doing justice to the national system to form collaboration within limited time.3 This reform scheme optimizes the layout of the science and technology plan. In November 2015, Xi Jinping specified in an explanation on the “Recommendations for the 13th Five-year Plan for Economic and Social Development” that it is imperative to give full play to the advantages of the new national system under the conditions of the market economy, and concentrate and coordinate efforts to offer support for climbing the strategic commanding heights, enhancing China’s comprehensive competitiveness, and safeguarding the national security.4 It’s specified in the Outline of the 13th Five-Year Plan for National Economic and Social Development of the People’s Republic of China approved on the 4th session of the 12th National People’s Congress on March 16, 2016 that full play shall be given to the new national system under the market economic conditions for key projects. In May 2016, the CPC Central Committee and the State Council issued the Outline of the National Strategy of Innovation-Driven Development, which requires to give full play to the new national system under the conditions of the socialist market economy, continuously concentrate strengths on tackling challenges, accelerate breaking through major core technologies, and develop major strategic products, thereby making leaps in strategically leading fields of the nation. Jia Genliang, Professor of Economics at Renmin University of China and a distinguished professor of Yangtze River Scholars, made a speech titled “The Entrepreneurial Nation of the USA and China’s New National System” at the Academic Commission Seminar of the Research Center of Technological Innovation, Tsinghua University in 2016. He pointed out that the leading position the US takes in high technology shall be attributed to its relatively scattered network-like national system under the market economic system, and that China shall give play to its socialist system, do justice to the state-owned enterprises’ role of the pioneers of innovation-driven development and the tools of national innovation policies, and establish a network-like national system that is more centralized than the American counterpart. On October 23, 2017, the Ministry of Science and Technology held a symposium on “Progress and Working Methods of Major Special National Science 3

Refer to the Notice of the State Council on Printing and Distributing the “Proposal for Deepening the Management Reform of the Central Financial Science and Technology Programs (Special Projects, Funds, etc.)” [EB/OL]. http://www.gov.cn/zhengce/content/2015-01/12/content_9383. htm, 2015-01-12. 4 See Xi Jinping: Notes on The CPC Central Committee’s Proposal on Formulating the National Economic and Social Development during the Thirteenth Five-year Plan [EB/OL]. http://www.xin huanet.eom//politics/2015-ll/03/c_1117029621.htm, 2015-11-03.

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and Technology Projects” to specify that the Ministry of Science and Technology, the National Development and Reform Commission, and the Ministry of Finance will cooperate with departments concerned, local authorities and enterprises to give full play to the new national system under the market economic conditions, and promote the shift from implementation to comprehensive follow-up of major special projects, and the shift from development to the new pattern of “running ahead, side by side, and behind”, thus making world-shocking achievements and occupying the commanding heights of key, disruptive and cutthroat technologies. When talking about how to boost the indigenous innovation capacity and seize the commanding height in the new round of scientific and technological competition on December 9, 2018, Yin Zhongqing, member of the Standing Committee of the 13th NPC and vice chairman of the National People’s Congress Financial and Economic Committee, mentioned at the 2018 Sanya Forum that we ought to explore and establish a new national system, delve deeper in terms of the use and administration of scientific research funds, scientific and technological evaluation system, and incentive system, concentrate strengths on core technologies/projects and on iteration application of independently innovated products, accelerate addressing the “cutthroat” issues, and seek comprehensive breakthroughs in core technologies. “Chang’e 4” took the lead in leaving Chinese footprints on the moon, which not only marks the continuous improvement of China’s scientific and technological strength, but also offers lessons for further seeking technological breakthroughs. Both the collective efforts of the nation and the individual efforts of the aerospace enterprises and scientific research personnel make the march to the moon a success. Concentrating efforts on major undertakings is the advantage of the national system and the basis for advanced layout in scientific and technological fields. Not only in space exploration, but also in more basic and cutting-edge science and technology fields, the national capabilities are the guarantee of advanced deployment. For example, keenly sensing the huge kinetic energy brewed by artificial intelligence in changing the global competition pattern, China has made intensive deployment in AI development. The report of the 19th National Congress of the Communist Party of China clearly calls for “promoting the deep integration of the Internet, big data, artificial intelligence and real economy” (Xi 2017). Currently, China ranks top in the world for the number of AI-themed papers published and cited, laying a favorable foundation for further application. Moreover, enterprises are the subject of innovation. To achieve advanced layout, it is also necessary to exert the power of enterprises and the market. The key to China’s continuous rise in innovation is the integral rise of a group of hi-tech companies that master core technologies. From lagging behind in 1G era, following in 2G era, breaking through in 3G era, running in parallel in 4G era and leading in 5G era, China’s overtaking in the track of mobile communication is resulted from its advanced layout in standard formulation, spectrum planning, technical testing and infrastructure preparation. As the new round of global scientific and technological revolution and industrial transformation encounters China’s economic optimization and upgrading, the Chinese science and technology enterprises, standing at the same starting line with their global counterparts, are possible of seeking more breakthroughs in the wave.

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2. Experience from the Construction of National Innovation System British scholar Freeman (1987) formally proposed the concept of “national innovation system” upon his study on the experience of Japanese industrial development, emphasizing the government’s effective intervention in technological innovation. The Danish scholar Lundvall (1999) focused on the theoretical research on the national innovation system, with particular emphasis laid on the importance of “learning” in innovation. He proposed a national innovation system framework that combines technology and education, calls for attention to vocational and technical education, and actively develops the national innovation system oriented to learning-type economy. In around 2003, the Chinese academia began to conduct in-depth research on the national innovation system. The national science and technology decision-making and management departments attached great importance to relevant research results, and made three important deployments for the construction of the national innovation system. It’s specified in the Outline of the National Medium and Long Term Science and Technology Development Program 2006–2020 issued in 2006 that, “To comprehensively promote the construction of a national innovation system with Chinese characteristics”, and “National innovation system is a social system led by the government, giving full play to the market’s basic role of resource allocation, and closely putting various scientific and technological innovation subjects together for effective interaction.” In response to the strategic requirements of empowering the country with science and technology, the following aspects shall be concerned in the building of a national innovation system. (1) Build a New Type of Corporate Innovation System When it comes to the new type of corporate innovation system, it is necessary to give full play to the strategic complementarity between state-owned enterprises and private enterprises, and the capacity complementarity between large enterprises and small-/medium-sized enterprises to build a corporate innovation system where stateowned and private enterprises are linked, and large and medium-/small-sized enterprises are coordinated. First, we shall actively give play to the role of large enterprises in technological innovation. For large state-owned enterprises, their role in strategic, basic and public technological innovation shall be given full play, and their edge in high-end talent reserve, common technology platform construction, holistic innovation and original major innovation shall be thoroughly exploited. For example, the enthusiasm and creativity of scientific researchers in state-owned enterprises shall be further stimulated through institutional innovation. As far as large private enterprises are concerned, their leading role in innovation in the competitive field shall be given full play. Second, further support shall be given to SMEs to actively conduct the disruptive innovation. It is imperative to pay more attention to the acquisition and absorption of innovation wisdom from the folks, actively use the Internet platform to absorb the innovation wisdom of users and the masses, and further give play to the role of industrial technical workers in innovation, thus realizing the sharing and co-creation of wisdom (Chen 2018).

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(2) Build a Comprehensive Industrial Innovation System Covering Agriculture, Manufacturing and Service Industries Efforts shall be made to strengthen the building of public scientific and technological capabilities, actively set up industry-specified high-end R&D institutions and national applied research platforms, and reinforce the development of industrial engineering technologies, key technologies, disruptive technologies and cutting-edge leading technologies. We shall strive to actively explore the construction of new R&D institutions, and achieve marked breakthroughs in R&D and trial production of common industrial technologies. (3) Build an Efficient and Coordinated Regional Innovation System We ought to further develop a regional innovation system with an integrated effect, and highlight its strategic synergy effect. For example, it is advisable to actively build innovation systems for regions such as Beijing and Shanghai, to make them scientific and technological innovation centers with world influence. Active efforts are made to strengthen the construction of scientific and technological innovation platforms in various regions. We need also to strengthen the construction of the intermediary service system in the regional innovation system, especially the construction of the scientific and technological achievements transfer/transformation system, the intellectual property rights transaction system, the venture capital system and the legal service system, so as to provide a solid guarantee for the scientific and technological innovation work. (4) Improve the National Innovation System First, we shall strengthen the integration of science and education to cultivate more top-notch innovative talents. The initiative to empower China with scientific and technological innovation cannot be possible without talents developed with the call to empower with education. Talents are the root to empower the country with scientific and technological innovation. Casting great importance to the strategic significance of educational innovation to the building of a power of science and technology, we must actively cultivate strategic scientists, innovative engineering/scientific/technological talents and entrepreneurs with patriotism, scientific and technological capabilities, innovative quality and humanistic aptitude. To this end, it is necessitated to vigorously strengthen the education on socialism and patriotism, the development of creativity and engineering practice ability, and the cultivation of entrepreneurial spirit (Chen 2018). Second, we shall further strengthen military-civilian integration. It is of great significance to promote the integrated development of science and technology and the military affairs through military-civilian holistic innovation, improve the national innovation system, and give play to the role of military science and technology in guaranteeing and supporting the national industrial innovation. Finally, we shall realize the integrated development of science and technology, finance, trade, etc. The global value chain, currently characterized by being driven by large-scale crossborder investment and by a high growth in intermediate goods trade, has entered a period of in-depth structural adjustment. A conspicuous feature is that the global

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value chain has undergone a structural change and restructuring, which will leave a far-reaching impact on the international trade, international investment, global economic/trade governance and even world economic prosperity and stability. In the era of open innovation, it is imperative to strengthen competition and cooperation with multinationals, and accelerate the construction of a new type of China-led open global innovation system. Counting on technological innovation, we shall actively implement the branding strategy in the adjustment of industrial structure and product structure, build independent brands, promote Chinese enterprises to deeply participate in and integrate into the global value chain through innovation, and enhance China’s position in the global value chain. 3. Exploration of Development of the New National System in Holistic Innovation The new national system in holistic innovation in fact embodies the superiority of the socialist system with Chinese characteristics in concentrating its efforts on major affairs. In other words, it concentrates the state’s manpower, materials and wealth on working systems and operation mechanisms of strategic significance to the nation, with national interests as the top consideration. It gives full play to the CPC’s role in overall planning, coordination and resource integration, as well as the central government’s role in policy standardization and social guidance. With respect to China’s scientific and technological management, full play must be given to the new national system in holistic innovation and the collaborative innovation paradigm be used as the support for scientific and technological innovation management. Establishing a new national innovation system is the key to building China into a power of science and technology. At the Academician Conference of the Chinese Academy of Sciences and the Chinese Academy of Engineering in 2018, Xi Jinping further stressed, “We must strengthen the capacity integration of the innovation-driven system, open up the channels for technological/economic/social development, continuously release the innovation potential, accelerate the accumulation of innovation elements, and improve the overall efficiency of the national innovation system” (Xi 2018a). In fact, only by leveraging the institutional advantage to concentrate efforts on major undertakings and giving play to the corporate subject and market regulation can the joint force of collaborative innovation be formed. This is in essence the key to “give full play to the advantages of the new national system under the market economic conditions”. When the state concentrates its strengths on basic research and tackles key issues, and enterprises make decisions separately to realize multiple attempts and increase microscopic vitality, a strong synergy can be formed to break through core technologies (Chen 2019a). To this end, we must further improve the new national innovation system from the perspective of collaborative innovation, so that the corporate innovation system, industrial innovation system, regional innovation system, national innovation system, and global innovation system can collaborate and interact with each other to produce innovation results of higher values added (Chen 2012). In May 2018, Xi Jinping stressed at the Academician Conference of the Chinese Academy of Sciences and the Chinese Academy of Engineering, “We must insist

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on integrating into the global scientific and technological innovation network, establishing a sense of community with a shared future for mankind, deeply participating in global scientific and technological innovation governance, and actively raising global innovation issues, so as to comprehensively improve the globalization degree and international influence of scientific and technological innovation, enhance China’s contribution to the world scientific and technological innovation, and make China an increasingly important corner in the global innovation map.” (Xi 2018a) To this end, we must speed up implementing the international development strategy of scientific and technological innovation, and establish an open, inclusive new pattern of innovation governance that conforms to the rules and characteristics of innovation, so as to deal with the common challenges. First, we shall firmly establish the international concept of scientific and technological innovation. An international concept is the important basis for promoting the cooperation and innovation concerning science and technology. Our aim is to comprehensively advocate the concept of international development of China’s science and technology, strengthen the top-level design, expand the global vision of the leadership, and promote the international development of China’s science and technology management system and mechanism. Second, we shall strengthen the construction of an international talent team. We endeavor to formulate policies against an international concept to attract outstanding scientific and technological talents across the globe, and gather global innovation resources to continuously improve our scientific and technological innovation capabilities, and grow bigger in the international competition (Bai 2013). Finally, we shall strengthen the international cooperation. Tapping into the “Belt and Road” initiative that features a broad space for cooperation and development and promotes the shift from the previous “excessive capacity” of traditional industry to “new capacity” of scientific and technological industry and “new momentum” of scientific and technological cooperation, the international cooperation in science and technology will play a greater role. Column 5.1: Xi Jinping: Exploring the Establishment of a New National System On February 20, 2019, the Party and state leaders Xi Jinping, Li Keqiang, Li Zhanshu, Wang Yang, Wang Huning, Zhao Leji, Han Zheng and others met with the research and test personnel representatives of Chang’e 4 mission of the lunar exploration project at the Great Hall of the People in Beijing. On the spot, Xi Jinping pointed out that insisting on indigenous innovation, collaborative innovation, and open innovation in the Chang’e 4 mission is a vivid practice of exploring the establishment of a new national system. This is the affirmation and requirement of the new national system. The national system conforms to China’s conditions and boasts comparative advantages. The national system is a working system and operational mechanism that mobilizes and deploys all forces concerned nationwide, including mental will and material resources, with the national interest as the supreme

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goal, to delve into a cutting-edge field or a particularly important project at the national level. Giving full play to the advantages of the national system in promoting the scientific and technological innovation marks an important experience in the organization and implementation of major scientific and technological activities since the founding of the People’s Republic of China. All noteworthy projects including the “Two bombs and one satellite”, manned spaceflight, and lunar exploration are done with the national system. The development of the first atomic bomb was the first major scientific project organized at the national level throughout the Chinese history. From June 1959 when the central government decided to independently develop the atomic bomb to October 16, 1964 when the atomic bomb explosion test succeeded, it cost merely 5 years for China, a bad performer in technology and economy then, to become one of the five nuclear powers. It was a great feat that shocked the world, laying the strategic cornerstone for China’s defense and security, and leaving far-reaching impact of the country’s scientific and technological development. It was the first time in Chinese history that a scientific and technological practice was raised to the national level. Driving the discipline with missions, it promotes the establishment of the national scientific and technological system. We shall explore the establishment of a new national system. Now that major science and technology projects that demonstrate the will of the country feature heavy workloads, large investment, long cycle and wide coverage, scientific and effective organization and management for them are particularly important. To this end, it is necessary to actively promote the mechanism innovation and explore the establishment of a new national system under the market economic conditions. The National Outline for Medium and Long Term Science and Technology Development Planning (2006–2020) issued by the State Council in February 2006 proposes that “We must adhere to the socialism system, and combine the political advantage to concentrate efforts on national undertakings with the fundamental role of giving full play to the market mechanism in resource allocation, to offer an important institutional guarantee of the prosperous development of the science and technology cause”, and describes the basic features of the new national system. The 12th Five-Year Plan for National Science and Technology Development proposes to “accelerate the establishment and improvement of a new national system upon governmentindustry-university-research collaboration under the conditions of a socialist market economy”. The Opinions on Deepening the Reform of the Science and Technology System and Accelerating the Construction of the National Innovation System issued in 2012 called for “exploring the establishment of a national system under the conditions of a socialist market economy” and “giving play to the role of the new national system in the implementation of major national science and technology projects”. The 13th Five-Year Plan for National Science and Technology Innovation requires to “explore a new

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national system for scientific and technological innovation under the conditions of a socialist market economy”. The Outline of the 13th Five-Year Plan for the National Economic and Social Development of the People’s Republic of China specifies “To give full play to the advantages of the new national system under the conditions of the market economy in completing major and key projects.” Compared with the traditional national system, the new one features three major changes. One is the change from the administrative allocation of resources to the market allocation of resources. The traditional national system feeds on the government financial input, with the resource allocation generally controlled by the government. On the other side, the new national system is based on the decisive role of the market in resource allocation. The state uses science and technology industrial policies and other means to guide the market, and enterprises act as the subject of science and technology innovation. It uses market methods and economic means to solve the problems of establishment, decision-making, budget investment and benefit distribution of national science and technology innovation projects. As early as on March 13, 2015, the State Administration of Science, Technology and Industry for National Defense made it clear that the Chang’e 4 project would be open to social capital, and social capital and enterprises were welcome to take a part in. Hu Hao, chief designer of Phase III of the lunar exploration project, said that taking Chang’e 4 as a pilot project to explore the new model of introducing social capital is of active function and far-reaching impact in breaking down barriers in the aerospace industry, accelerating innovation in aerospace technology, effectively reducing engineering costs, and improving investment benefits. Second is the change from product-oriented to commodity-oriented. The traditional national system pays more attention to the technology chain and less to the value chain; It cares more about the output of scientific and technological achievements and projects, and less about the market, price, and interest distribution among stakeholders. However, the new national system considers both the technology chain and the value chain, both products and market performance, and the interest distribution. Third is the change from concentration on target realization to concentration on both target realization and efficacy. While the traditional national system has a relatively single goal, pays more attention to the realization of scientific and technological goals, and considers less of economic benefits, the new national system needs to take into account both the goals and the input–output efficacy. It marks a convincing practice of the new national system for the Beidou-3 basic system to be completed and offer services worldwide. Beidou’s high-precision features have spawned new breakthroughs in the applications. As of December 2018, over 70 mln pieces of Beidou chips and modules had been sold, Beidou’s high-precision products were exported to more than 90 countries and regions, and Beidou’s groundbased augmentation technologies and products were systematically exported

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overseas. Beidou brings in large-scale market benefits. In 2017 alone, the output of the domestic satellite navigation industry reached RMB255 billion. The national system concentrates efforts on major undertakings to benefit the whole country. In the new era, we must give play to the nation as the leader and the market as the subject, explore the establishment of a new national system, and make government-industry-university-research integration, so as to offer strong support for conducting major scientific and technological projects under the conditions of the socialist market economy. Source: Xi Jinping: Exploring the establishment of a new national system [EB/OL]. https://www.sohu.eom/a/296608586_120057868, 2019-02-22.

5.2.3 Put People First Xi Jinping stressed that “As the strategic bolster to improve the social productivity and comprehensive national strength, scientific and technological innovation must be put at the heart of the national development”, and “we must base the fulfillment of people’s dream of a good life on scientific and technological innovation, and take it as the major direction for scientific and technological innovation to benefit, facilitate and enrich people and improve their life” (Literature Research Office, CPC Central Committee 2016). To conscientiously study and implement the spirit of General Secretary Xi Jinping’s series of important speeches, we must never forget to always put people first and adhere to scientific and technological innovation for the people. Innovation is the primary driving force for development. In the new era, the innovation shall focus on the main social contradictions, take care of people’s needs, promote comprehensive innovation with scientific and technological innovation as the core and boost the realization of a more balanced and sufficient economic and social development. 1. Necessity of People-centricity in Holistic Innovation Scientific and technological innovation is ultimately aimed for the people. Science and technology is a “double-edged sword” to a certain extent, which can benefit mankind by promoting the economic and social development on one hand and bring negative consequences to the survival and development of mankind under certain conditions. If the scientific and technological development chronically focuses only on promoting the economic growth, upgrading the industrial structure and creating personal wealth, technological changes driven by the market and efficiency may impose an increasingly strong impact on the value system of human society, and even go beyond the constraints of ethics and morality to result in a dangerous situation where people’s values are constantly distorted and the basic rights and interests of vulnerable groups are continuously eroded. Therefore, establishing the

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goal “science and technology shall serve the people”, insisting on benefiting people with scientific and technological development, always safeguarding the fundamental interests of the broadest people and benefitting all people with scientific and technological achievements are the premise to ensure that the scientific and technological career invariably serves the comprehensive development of humanity and sustainable development of human society. As a new innovation paradigm and practical exploration of the socialist construction with Chinese characteristics and innovation-driven development, the important concept of people-centricity shall be adhered to. The fundamental driving force of scientific and technological innovation is the people. In the millennia-long history, the Chinese people have worked hard and insisted on invention and creativity all along. China made superb technological inventions that had profound impact on human civilization, including the papermaking techniques, gunpowder, printing techniques and compass. Today, Chinese people are demonstrating unprecedented enthusiasm on innovation to push the country to progress with each passing day. If little use is made of people’s innovative wisdom, ability and potential, the scientific and technological innovation will become rootless. Relying heavily on the people, giving full play to the leading role of the people in scientific and technological undertakings, respecting people’s pioneering spirit, doing business for the people and counting on the people to do business are chief manifestations of the people-centered scientific and technological innovation. Scientific and technological innovation benefits the people by promoting a more balanced and fuller economic and social development. Boosting a more balanced and fuller economic and social development is a major goal to be achieved in the scientific and technological development in the new era. The scientific and technological development intends to seek happiness for the Chinese people, contribute to the cause of human progress and work with other countries to cope with common challenges confronting the mankind. Xi Jinping pointed out, “We must make deep participation in the global science and technology governance and contribute the Chinese wisdom, as we strive to promote the building of a community with a shared future for mankind” (Xi 2018a). It is urgent to deepen the international exchanges and cooperation on science and technology, promote indigenous innovation from a higher starting point, benefit more countries and people while sustaining our own development and promote a balanced development on a global scale. Only by adhering to the people-centered development philosophy can the scientific and technological innovation continue advancing in the right direction and path, to satisfy the people’s yearning for a better life and benefit people all over the world and generations to come. 2. Basic Requirements of People-centricity in Holistic Innovation In recent years, China’s national innovation system has been continuously refined, with great progress made in the upgrading of innovation strategies, the cultivation of innovation capabilities, the development of innovation talents and the integration of innovation resources. At the current stage, the proposal of holistic innovation conforms to the new paradigm and trend of innovation. For example, promoting the “mass entrepreneurship and innovation” emblems an important measure to

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break down barriers, converge wisdom, synergize resources and stimulate innovation vitality and capability, which has hugely promoted the integration of various innovation resources and completed the matching of scientific and technological innovation with non-technical factors including the society, economy and culture. It should be noted that China’s innovation system still has certain limitations, especially in promoting a more balanced and fuller economic and social development and considerable room to improve in calling for a larger involvement of the people. In holistic innovation, the followings shall be completed to keep people at the center. First, we shall care about a wider range of people’s needs. At the current stage, China’s technological innovation system takes enterprises as the subject and market as the orientation and seeks development via deep industry–university–research integration. While business is profit-oriented, the great majority of innovation talents gather in sectors and fields of large added values, high scientific and technological content and deep innovation that serve the hi-end market. In such cases, innovation shall take into account the actual needs of relatively underdeveloped regions and low-end markets, especially the problem of unbalanced and insufficient economic development. Second, we shall facilitate the communication between the general public and the innovation subjects. Alongside the development trend of holistic innovation that underscores openness, collaboration and comprehensiveness, various crowdsourcing service platforms, academic exchange platforms and technological intermediaries have provided assistance for innovation in various fields. However, it should also be noted that these platforms and institutions feature high professional and technical thresholds and clearly specified objectives. In addition, for platforms with a commercial and profitable nature, complex issues such as security, credit and privacy protection shall be considered. As China’s grassroots foundation for innovation is relatively weak at present, ordinary people may find it hard to integrate into these open innovation platforms and directly reflect the real demands in the innovation field due to lack of communication channels with the innovation subjects. Third, we shall set a fixed line of thinking. We ought to have the bottom-line thinking for preventing and resolving major risks. Ensuring the safety of scientific and technological development is the very premise for realizing, maintaining and extending the fundamental interests of the vast majority of the people. Since the 18th National Congress of the Communist Party of China, General Secretary Xi Jinping has repeatedly emphasized the need to enhance the awareness of urgency and prevent risks and challenges. We must strengthen the overall planning and organization of major scientific and technological tasks related to the overall situation of national security and economic/social development and should reinforce the construction of strategic scientific and technological forces of the nation. It is wise to speed up the construction of a scientific and technological security pre-warning and monitoring system and the legislation for artificial intelligence, gene editing, medical diagnosis, autonomous driving, drones and service robots. Some key issues shall be taken into account when promoting the construction of the scientific and technological risk management system. We must widen the public participation and fully reflect the will of the people; promote the modernized governance of science and technology and

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the scientific/refined monitoring management of major scientific and technological projects and ensure an open, orderly conduction of scientific and technological innovation activities with transformation of scientific and technological achievements as the starting point; effectively reinforce the review and supervision on scientific ethics and achieve accurate analysis, assessment and overall management of scientific and technological risks by establishing disciplines for scientific and technological innovation risk assessment and management and relevant talent teams; use bottom-line thinking to build a comprehensive and refined management system for scientific and technological innovation resources, ensure the control of core innovation resources and establish a solid moat from the source.

5.3 The “Means” Based on Complex Systems Science The “means” based on complex systems science is the methodology and technical basis of holistic innovation. Starting from the basic methods of complex systems science, it draws on the thoughts of system of systems (SoS) to complete the integration between systems, within systems and between elements, achieve the strategic goals and meet the open, collaborative and comprehensive innovation requirements.

5.3.1 Basic Characteristics of Complex Systems Science In the research related to complex systems science, the objects cover a variety of differentiated constituent elements and involve physical systems, ecological systems and social systems. In these systems, different research objects have different characteristics. The complex systems science offers them an integrated and unified framework for scientific analysis, makes available the generalization of research ideas and promotes new applications and connections, thereby enabling innovative research results. Therefore, fundamental principles of the complex systems science can guide the methodology of integrative innovation. During the research related to the complex systems science, it is a must to find a description method and analysis perspective that are universally applicable and can describe the entire system. Based on the analysis requirements, the complex systems science comes to the important physical concept of entropy, i.e. the degree of complexity, to describe the development status of things. Generally, in the empirical research on complex systems, the main reasons for the failure include: (1) It is easy to collect data within a system, but difficult to collect data from multiple systems, especially the interaction data between systems. If no interaction information between data is captured, the empirical research will normally turn out a failure. Especially when the system is highly complex and there are too many interaction interfaces between systems, this large-scale complex behavior will be hard to measure. (2) Inappropriate data analysis methods will lead to underestimation of long-tail risks. (3) The existing empirical analysis methods are typically

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based on the assumption of linear research, that is, the total impact of a set of independent variables is assumed equal to the sum of the impact of a single synthetic factor. However, nonlinear effects are one of the major characteristics of the complex systems science. Therefore, this basic linear research assumption does not apply to the research of the complex systems science. When analyzing data of the complex systems science or creating structures of the complex systems science, the traditional, standard empirical research methods are not totally applicable.

5.3.2 Basic Concept of SoS As things and systems are constantly interconnecting and interacting with each other alongside the continuous development of the human society and the rapid progress of science and technology, the human society presents the intensive, efficient and emergent features. Under the action of such features, a social union with its elements intersecting, containing and penetrating each other is thus formed. A union like this is dubbed a system, such as the urban transportation system, power grid system, water conservancy system and international shipping system. In the Modern Chinese Dictionary, “system” is defined as a whole composed of several related things or some inter-connected consciousness. In academic research, the study of systems has a long history. There is a difference between SoS and systems, with the former discussing the mutual impact between systems (Ackoff 1971). Eisner et al. (1991) formally proposed the concept of SoS, or system of systems. Afterward, more and more scholars were engaged in the study of SoS and a new discipline gradually took shape, i.e. system of systems engineering (SoSE) (Jackson and Keys 1984; Keating et al. 2003). SoS chiefly comes from Jamshidi’s thinking on past innovations (Jamshidi 2009). Other Chinese translations envelop the individual system, system set system, comprehensive system and complex system. In the times of Industry 4.0, the concept of SoS has been widely used in solving complicated industrial problems. Now that complex systems in many engineering fields have the distributed and scattered characteristics, SoS thinking could be adopted to see the close cross-relationships and interrelationships between elements. SoS is such an important concept to understand the complex systems. SoS advocates first to specify the analytical methodology for complex industrial systems and determine the world view, before completing the top-level design of the system, the integration of complex systems and the largescale engineering practices. In specific large-scale projects, the interaction between elements/systems, dependencies between elements, and their causalities are spotlighted. In different fields of application, SoS is defined distinctively: Maier (1998) proposed five key characteristics of SoS—the operational independence of component systems, management independence of component systems, geographic distribution, emergent behavior and evolutionary development processes. The emergent nature in the characterization of the five key features is called the common feature of

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Table 5.1 Application of traditional system engineering steps in SoS System engineering steps

Application in SoS

Agreement process

There is no top-level SoS authorization in the system, and there is an independent and equal synergy relationship between systems. The synergy between systems needs to be done through effective agreement

Activation process

The system-system operation model shall be controlled and set through the process constraints at the system level. No single system is free from the process constraints at the system level

Technical management process The system follows the technical management process of planning, analysis and organization and supports the new integration and mixture between the original and new systems Technical process

The technical process follows the sequence of development, integration, verification and transformation and supports the monitoring and review of the entire SoS engineering; the SoS-level technical process requires to design a unified structure and framework for planning, organization and integration

SoS. ISO5 /IEC6 /IEEE7 21839-2019 contains the definition of SoS and composition system: SoS is composed of a group of systems or system elements, and none of the constituent system alone has the functions of the SoS. Among them, a single system plays an interactive role in promoting the realization of the SoS functions. It should be pointed out that SoS is a collaboration formed temporarily to achieve specific goals such as robustness, affordability and efficiency between systems. See Table 5.1 for the characteristics of traditional systems engineering after being applied in the SoS field.

5.3.3 Methods and Techniques of SoS Hawking’s claim that “The twenty-first century will be one for complex sciences”, which has been commonly recognized by the scientific field. In this complex world, the complex systems science has sparked a revolution in methodology and way of thinking of the science and technology. Unlike previous disruptive scientific research achievements in relativity and quantum mechanics that occurred in the field of physics, the complex systems science takes place in various disciplines, even in interdisciplinary fields. Although domestic and foreign researchers have confirmed that the complex systems science has vital research significance, the complexity and difficulty of related research are still beyond imagination and have not been 5

International Organization for Standardization (ISO). International Electrotechnical Commission (IEC). 7 Institute of Electrical and Electronics Engineers (IEEE). 6

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overcome yet so far. For now, the Santa Fe Institute in the USA is a world-class research mecca for complex sciences and domestic counterparts committed to this field include the Complex Systems Research Center of the Academy of Mathematics and Systems Science, CAS and the National Key Lab of Management and Control of Complex Systems of the Institute of Automation, CAS. Key universities, such as Peking University, Tsinghua University, University of Chinese Academy of Sciences and Beijing Institute of Technology, have set up relevant research institutes and labs. SoS is an integration method for multi-task systems. It seeks to solve problems by integrating subsystems based upon analysis on how a subsystem operates, how it interacts with others, and how it could be used, through the systems thinking and holistic methods and acquiring maximum values from the system of a higher level. During the software implementation, constituent elements in a large system are synergized through interconnection of middleware, and their competition or conflict in the large system shall be avoided. The decentralized system of SoS has 5 distinguishing features, i.e. five decentralized features, decentralized operation, decentralized management, decentralized time, decentralized structure and decentralized deployment. The specific connotations of each distinguishing feature are shown in Table 5.2. On this basis, the SoS engineering came into existence stepwise, which was first applied in national security and defense. Later, the concept and principles of SoS engineering were gradually extended to a wider range of government, civil and commercial fields, including transportation (air traffic management, railway network planning, integrated ground transportation planning, freight transportation planning, highway design and planning and space system design), energy (smart grid design, smart housing design and integrated production and consumption design), natural resource management and commerce. SoS methods and techniques can be applied in the following aspects of holistic innovation: First, the relationship design of participating subjects in the holistic innovation. SoS usually exhibits complex behaviors, with interactions and fixed relationships Table 5.2 Specific connotations of distinguishing features Distinguishing features

Specific connotations

Decentralized operation

Each constituent subsystem and element can operate autonomously without interference from other systems

Decentralized management Each constituent subsystem and element can be managed autonomously Decentralized time

It covers the whole evolution and development process of SoS, and the entire initial state, intermediate state and process will together affect the final state

Decentralized structure

SoS features multiple levels, and the elements demonstrate emergent behaviors during hierarchical crossing

Decentralized deployment

Each subsystem and element have a geographical distribution attribute and often a distributed feature

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between components. These are made possible through reasonable, reliable technical planning, cost planning and time planning. For constituent subjects of the system, their quantity or types are changing, but their general characteristics and purposes of participating in the system stay unchanged. In holistic innovation, it is necessary to distinguish the characteristics, purposes and types of participating subjects, make a generalized type division of various subjects and clarify the relationship between subject types, thus quickly figuring out the relationship of the increasing number of participating subjects when the system quickly grows increasingly complex. Second, the data relationship design in holistic innovation. The subjective relationship design essentially determines the data relationship design, because the complex behaviors of the subjects can generate a large quantity of traces and data. The subjective relationship determines the behaviors relationship, and the behaviors relationship determines the data relationship. Data relationship is a lower-level design, which incorporates how to collect/transmit data, how to encrypt/decrypt, and what permissions a subject has in data use. In holistic innovation, particularly in the R&D process where a huge quantity of information, knowledge, data and patented technologies need sharing and transferring, all subjects serve the ultimate innovation goals. To ensure sufficient information sharing, prevent information leakage and protect intellectual property rights, it is necessary to give the data use rights and protection a more rigorous design. Third, design of subject communication rules in holistic innovation. Now that data and information are exchanged among subsystems in the SoS, a higher complexity of subsystems would spur an increase in diversity of the systematic and communication architecture of the overall SoS design. The communication architecture chiefly functions to support the system architecture by ensuring data exchange between business units and system units. Such data exchanges are mostly carried out through the connection and transmission of communication units. In the connection and transmission, formats and efficacies of the data shall be kept unified. Different disciplines and different R&D departments require different information and knowledge sharing structures and contents in holistic innovation, but a good deal of information and knowledge is non-structured and even implicit. Therefore, the communication rules ought to be properly designed to ensure information and knowledge are exchanged between disciplines, departments and systems.

5.4 The “Will” Based on Diverse Meanings of Socialism As an attempt to interpret the values and goals of human development from the angle of scientific and technological innovation, holistic innovation advocates to think about innovation issues through an integrated thinking and embody the unity of scientific and technological thinking, humanistic thinking and philosophical thinking. It cares most about the comprehensive development of humanity and the sustainable development of human society and intends primarily to help innovation subjects to

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gradually emancipate from constraints of the short-term interests and internal efficiency requirements, thereby achieving the transformation oriented to the medium/long-term interests and overall well-being of the external society (Chen and Qu 2018). The Party and the state have coordinated the promotion of the “Economic, Political, Cultural, Social and Ecological Progress” overall layout and the “Fourpronged Comprehensive Strategy” to realize the comprehensive integration of the political, cultural, strategic, economic, social, ecological and security significance in sticking to developing the socialism with Chinese characteristics in the new era. The holistic innovation offers a theoretical interpretation of the integration of diversified values, to blend them with the scientific and technological innovation cause in building socialism with Chinese characteristics, discuss the significance and basic framework of holistic innovation in the institutional context of socialism with Chinese characteristics and guide the holistic innovation practices. It’s worth noticing that although existing studies have shed lights on the theoretical concept and framework of holistic innovation, this innovation paradigm still has a great deal of hardship to overcome in implementing the management model and management system, and addressing actual problems in China’s development, and a lot of fields to further extend to, which include: (1) Systematically sort out the intrinsic attributes of holistic innovation in China’s context, propose the holistic innovation management with multiple meanings and provide theoretical basis and support for the subsequent practice of design and development of management system for the scientific and technological innovation, based on China’s actual situation. (2) Build a “goal-demand-system” holistic innovation management framework with multiple meanings and form a related methodology, with the management goals as the fundamental starting point, through the analysis of the goals and methods. (3) Align with the management needs, carry out modular design, build a multi-meaning holistic innovation management system and provide reference for the management and application of science and technology authorities.

5.4.1 Late Perception of Innovation Prophet of Innovation: Joseph Schumpeter and Creative Destruction (McCraw 2007) is a new biography of Schumpeter. In this book, Schumpeter treats economics as a science and demonstrates ideas from various disciplines such as political science, sociology and history. The wide influence of Schumpeter’s works shall be ascribed to a large-scale correlation between his research findings, especially those concerning the innovative entrepreneurship, corporate strategy and innovative destruction during the capitalism economic development and the capitalism thoughts. More or less influenced by the Austrian School of Economics, Schumpeter sees economics a more ideal type, rather than a measure to influence the public policy. The term revolutionary economics was raised in the capitalism societies and Western economics circles in 1980s. But its source could be traced back to Schumpeter, who had earlier proposed an innovation theory to interpret the capitalist revolution and development and delved

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into the “innovation” phenomenon that strongly matters for the capitalist economic development and revolution. Innovation was also used to explain the unsteady development cycle and unbalanced growth path of capitalism economy. Between 1908 and 1912, Schumpeter published in succession his economic trilogy to expound on the capitalist economic development—The Nature and Essence of Economic Theory (1908), Uber das wesen der wirtschaftskrisen (1910) and The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle (1912). In The Nature and Essence of Economic Theory, a static economic model was proposed to lay the theoretical and methodological foundation for the classical economic theory, while Uber das wesen der wirtschaftskrisen raised a viewpoint of dynamic economic theory. Subsequently, Schumpeter systematically discusses the model of this dynamic theory in The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. The trilogy constitutes an organic whole to explain the capitalist economics and a theoretical analysis framework for the development of capitalist economics. It may thus come to the conclusion that Schumpeter’s theory of innovation takes the development of capitalist economy as its research object. The impact of innovation on the socialist economic development shall be explained in a unique, society-embedded way. The social backdrop of capitalist depression earlier spawned the theory of technological innovation. However, given the backdrop of the all-round development of socialism, holistic innovation theory could explain and guide the economic development to some extent. The capitalist system emblems a huge step forward in human history, which has helped human society to accumulate a tremendous plenty of wealth, opened up a broad market worldwide and emancipated the isolated groups of people around the world from the insularity to form an integrated development pattern step by step. It has sparked a splendid capitalist culture to promote the vigorous development of science and technology in the society and change the values, culture and quality of human society. If it is an “early perception” to explain the laws of capitalist economic development with innovation, it will be a “late perception” to involve the innovation theory in the socialist economic development.

5.4.2 Connotation of Multiple Meanings Grouped with the political, cultural, strategic, economic, social, ecological and security meanings to the socialism with Chinese characteristics, a four-dimensional framework that covers “people orientation”, “comprehensiveness”, “responsibility” and “bottom line” is proposed for the holistic innovation, as shown in Table 5.3. 1. People orientation: Follow the value that the scientific and technological cause serve the political and cultural meanings As the global economic development is going through hardship and the trade protectionism is rising today, some Western countries criticize China’s construction of a

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Table 5.3 Four-dimensional framework of the multiple meanings of holistic innovation Dimension of meaning

Dimension of attribute

Main connotation

Political meaning

People orientation

Embody the will of the people and protect the rights and interests of the people; adhere to and strengthen the Party’s leadership over science and technology; promote the construction of the innovative culture and give play to the leading role of the people; deepen the rule of law in the field of science and technology, and improve the innovation qualification certification system

Comprehensiveness

Construct a scientific and technological innovation policy system with multiple meanings under strategic guidance; improve the new national system that features overall planning, independence, coordination and openness; build a modern technology service system to integrate the roles of government, industry, university, research institute, enterprise and financial institute; form an innovation ecosystem that gathers the state, industry and enterprise

Responsibility

Promote the scientific and technological innovation planning and the construction of risk management disciplines; effectively assess and control the scientific and technological innovation risks; strengthen the ethical review and judicial supervision of scientific and technological innovation; enhance the ability to predict, select, control and correct the innovation vitality

Bottom line

Ensure the subjectivity of the human and people in the field of science and technology; ensure the ability to respond to in advance and terminate at any time the out-of-control scientific and technological events; ensure the ability to dynamically and precisely control the innovation elements; ensure the absolute control over the entire process of energy supply

Cultural meaning

Strategic meaning Economic meaning

Social meaning Ecological meaning

Security meaning

socialist market economy with Chinese characteristics and related industrial policies, and even provoke trade wars (Ren 2018). Although it takes time for China to attain a proportionate voice on the international arena, in the long run, to unswervingly care about politics and firmly adhere to the Marxism and Xi Jinping’s thoughts on socialism with Chinese characteristics in the new era in the scientific and technological cause will be an essential guarantee and primary advantage for China to build herself into a power of science and technology, fulfill the dream of the re-rise of

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the great China nation and establish a community with a shared future for mankind (Xi 2018a, b). Therefore, “people orientation” is made the first attribute of holistic innovation, since it is the outline and soul of all innovation. Adhere to the people-centered scientific and technological development path. Path is the No.1 concern of the Party that contributes in large measure to the success of the Party’s cause.8 Adhering to the people-centricity is the basic strategy for upholding and developing the socialism with Chinese characteristics in the new era, established at the 19th National Congress of the Communist Party of China. While the science and technology is at the core of the whole picture of the national development, we must adhere to the people-centered development path. Under the influence of the Western concept of development, economic growth, industrial structure and personal wealth have always been the concerns in the development of science and technology since modern times. We must turn the table quickly, otherwise the market/efficiencydriven technological reform will hit the values of human society a heavier blow and free the society from the constraints of human nature, ethics and morality, bringing in a world dominated by data, algorithms and machines, twisting human values and encroaching basic rights and interests of the vulnerable groups. What does worth extra attention is that under the prolonged influence of uneven distribution of educational resources and innovation elements, scientific and technological innovation may turn into an “elite career” in a “gentrification” trend, and even become a tool serving only a minority of population. Besides, the “Matthew Effect” may further enlarge the gap between the scientific and technological undertakings and the masses. Turning a deaf ear to people’s voice and giving no play to people’s wisdom, capacity and potential of innovation will make the scientific and technological innovation rootless and people’s interests unattainable. To adhere to the correct political direction and development path, let scientific and technological development always reflect the will of the Party and the people, safeguard the fundamental interests of the vast majority of the people, insist on promoting the education fairness, give full play to the leading role of the people in the scientific and technological cause, make the innovation culture the chase of the whole society, benefit the people with scientific and technological achievements in a better and fairer manner and promote the creation of a community with a shared future for mankind via scientific and technological innovation are the essential premises for ensuring that the scientific and technological undertakings always serve the comprehensive development of humanity and the sustainable development of the human society (Chen 2019a; Zhu et al. 2017a). Adhere to and strengthen the Party’s leadership over the scientific and technological undertakings; the spirit of the Communist Party of China goes consistent with the requirement of people orientation. The Party has no special interests of its own except those of the working class and the broadest masses of the people. The CPC leadership is the most essential feature and the greatest institutional advantage of 8

On April 1, 2019, the magazine Qiushi (Seeking Truth) published an important article by General Secretary Xi Jinping, “Several Issues on Upholding and Developing the Socialism with Chinese Characteristics”, followed by a highlighted interpretation article authored as the editorial department of the magazine, “Unswervingly Uphold and Develop the Socialism with Chinese Characteristics”.

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the socialism with Chinese characteristics, and the fundamental guarantee that the scientific and technological cause always follows the correct development path and strategic goals. To effectively and quickly implement the decisions and deployment of the CPC Central Committee on science and technology, we have to build a Party leadership system for science and technology that considers the overall situation and coordinates all parties so that the CPC leadership is exhibited in all aspects of the scientific and technological governance and in the design, arrangement and operation of the institution, system and organization of the state power. Specifically, the first is to adhere to the highest principle of the authority and centralized/unified leadership of the CPC Central Committee, strengthen the centralized and unified leadership of the Party over the major scientific and technological undertakings and establish sound scientific and technological decision-making and arbitration organs at the central, local and departmental levels, thus ensuring the unimpeded and efficient implementation of the CPC policies. The second is to improve the system and mechanism of the Party’s leadership in science and technology, coordinate the establishment of Party and government institutions and strengthen the leadership of Party organization among counterparts at the same level, thereby giving fuller play to functional departments of the Party and realizing the full coverage of the Party’s leadership over the scientific and technological undertakings. The third is to comprehensively promote the rule of law in the science and technology field. Comprehensively promoting the rule of law is the essential requirement and important guarantee for upholding and developing the socialism with Chinese characteristics (Xi 2017). We must adhere to the use of the rule of law thinking and method to promote the deep integration of the comprehensive rule of law and the development of scientific and technological cause, thereby offering a solid legal guarantee for modernizing the national science and technology governance system and governance capacity. 2. Comprehensiveness: The core method to achieve strategic and economic meanings in scientific and technological innovation Comprehensiveness highlights the efficient and organic unification (Chen et al. 2017) of indigenous innovation (Chen 1994), open innovation and collaborative innovation (Chen 2011) in holistic innovation under the policy leadership and strategic driving, the core attribute of holistic innovation and its basic requirements for shaping the innovation mechanism. It functions as the essential tool to realize the strategic and economic meanings in scientific and technological innovation by promoting the in-depth “government–industry–university–institute–enterprise–finance” integration and constructing the “state–industry–enterprise” trio innovation ecosystem, with the new national system under the market economic conditions as the core and the modern scientific and technological service system as the bolster. We must unswervingly follow the path of indigenous innovation with Chinese characteristics. A series of hallmark scientific and technological achievements in recent years, such as the manned spaceflight, lunar exploration, Beidou navigation, quantum communication, deep-sea exploration, high-speed railway and large passenger aircraft, have proved the continuous rise of China’s scientific and technological strength and implied the secret to further seek breakthroughs in core technologies: the socialist

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system with Chinese characteristics is a great magic weapon for success as it can concentrate efforts on prioritized undertakings. To implement the innovation-driven development strategy, scientific and technological innovation in important fields must be marked and an array of major scientific and technological projects related to the overall situation and long-term interests of the country must be completed. We ought to give full play to the advantages of the new national system under the market economy, concentrate efforts to tackle problems and lay foundation for climbing onto a strategic commanding height, enhancing China’s comprehensive strength and safeguarding the national security. (Literature Research Office, CPC Central Committee 2016). The ZTE and Huawei lessons have alerted us to abandon all unrealistic illusions about key and core technologies, stick to the strategic transformation, the full establishment of core capabilities, and the total possession of core technologies and unswervingly follow the development path from independent R&D to indigenous innovation, from indigenous innovation to independent control. The key lies in promoting the indigenous innovation, policy guidance and strategic transformation. The technological innovation strategy shall shift from following to leading, from introduction and integration to independent originality, from technology-based innovation to science-based innovation (Cardinal et al. 2001), and from incremental innovation to subversion-oriented innovation (Christensen et al. 2008). Stimulate the strong momentum to make use of the open, collaborative innovation. The rise of a succession of hi-tech enterprises that master core technologies is another secret of the rise of Chinese innovation. From lagging behind in the 1G era, following up in the 2G era, breaking through in the 3G era, running side by side in 4G era, to taking the lead in the 5G era, China’s mobile communication sector owes gratitude to the all-cover, active industrial policies. With such efforts, the nation has built a complete industrial environment for 5G application, promoted the collaboration and development of the operators and vertical industries and made early layout in standard formulation, spectrum planning, technical testing and infrastructure preparation for communication enterprises (Chen 2019a, b). Full play is given either to the institutional advantage of concentrating efforts on main undertakings, with which the state makes concerted efforts to focus on basic research and tackle major subjects, or to the regulation function of the corporate entity and the market, with which enterprises make decentralized decisions and multi-facet attempts to boost the micro vitality and form strong cohesion for collaborative innovation and core technology breakthroughs. Specifically, we must establish an organic collaboration between the scientific and technological innovation and the real economy, modern finance and human resources; form an online innovation model where diversified subjects interact and cooperate with each other, with universities, enterprises and research institutes as the core elements and government organs, financial institutions, intermediary agencies, innovation platforms and NGOs as the supporting elements; yield the nonlinear effect of system overlapping through in-depth cooperation and resource integration between knowledge creators and technological innovators; realize an in-depth integration of technology and economy, form an innovation-led, collaboratively developing industrial system, set up the “state–industry–enterprise” trio innovation ecosystem and constantly improve the supporting and leading role of scientific and technological

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innovation in the high-quality economic development (Chen 2017b). Furthermore, we must follow the historical trend and grasp the opportunity of open cooperation, plan and promote innovation through a global vision and stick to scientific and technological innovation, open cooperation and pursuit of win–win situation. The world is undergoing drastic changes unseen in a century today. China must first do its own things well, give full play to the advantages of the new national system and the huge domestic market, establish a complete, stable, high-quality and strongly cohesive indigenous innovation system and economic cycle and firmly seize the initiative of innovation and development. Under the cooperation framework such as the “Belt and Road”, we will actively promote the worldwide open and collaborative innovation, integrate and utilize the global innovation resources with talents as the core, build a global innovation ecosystem with strong kernel and unlimited potential (Chen 2019a), and enable holistic innovation and promote economic globalization to head toward a more open, tolerant, inclusive, balanced and multi-win direction. 3. Responsibility: Basic principles for examining the social and ecological meanings of scientific and technological innovation Responsibility in holistic innovation derives from the philosophical, humanistic and social thinking and the in-depth thinking on the social meaning of technological innovation. In recent years, the issue of the responsibility of scientific and technological innovation has become a hot topic in academics and policies (Stahl 2013; Mei 2018; Mei and Chen 2015). China, the European Union and other countries and international organizations have issued relevant standards and guidelines in a row (Fang 2019; China Electronics Standardization Institute 2018; Gu 2019), to specify the multifaceted risks faced by future technological innovation. One is ethical risk. Applications, such as the emotional robots, virtual crimes and human augmented technologies, spawned by artificial intelligence, virtual reality, gene editing and other technologies are gradually shocking and reconstructing the value system of traditional human society, which may bring irreversible ethical, moral and humanitarian crisis (Kissinger 2018). Two is social risk. While promoting the development of emerging industries and the reconstruction of social relations, scientific and technological innovation will lead to negative social impacts on ecology, population, family, employment and people’s livelihood, including the environmental degradation, unemployment crisis, emotional loss and privacy invasion (Mei et al. 2018). Three is security risk. With the continuous improvement of the scientific and technological development level, it is an inevitable trend to increase the difficulty in forecasting and supervising the innovation activities, putting the governance into a severe “Collingridge’s dilemma” (Collingridge 1980). The development and application of destructive technologies, e.g. biological and chemical weapons, genetic weapons, quantum weapons and robotic weapons, will cause immeasurable security problems. Precisely because of the duality and uncertainty of the impact of scientific and technological innovation activities, responsibility must be assumed in holistic innovation to regulate the scientific research and technology, respect social needs and wishes, reflect social values and responsibilities, abide by ethics and laws, meet the

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requirements of safe, green and sustainable development (Owen et al. 2013), guide the management subjects to shift from crisis management to predictive governance (Sutcliffe 2011) and responsive governance (Owen et al. 2013) of the technological innovation process and results on the basis of extensive participation of stakeholders (Stilgoe et al. 2013), and shoulder social and ecological responsibilities of scientific research and technological innovation through public audit, disciplinary construction, risk evaluation, ethical review, technological upgrade and judicial supervision, as well as institutional construction of an innovation society (Barley and Tolbert 1997; Pandza and Ellwood 2013). 4. Bottom line: It has an indispensable security meaning to prevent the science and technology going out of control In the responsibility part, there is a very important issue that has rarely been discussed before but needs to be solved urgently: once a technological out-of-control event or even a technological disaster has occurred, even irreversibly, how shall we delineate and technically maintain the bottom line of the scientific and technological development and security (Wallach 2015). In this regard, the “bottom-line” dimension that takes it the core mission to prevent technologies going out of control is a must-have security attribute of the holistic innovation. From the perspective of limitation, there is an important difference between the scientific and technological innovation management and the agricultural management/industrial management/economic management/financial management/service sector management: the development of science and technology has no boundaries and its frontier is expanding rapidly. This brings in three problems. First of all, with the continuous emancipation and development of the productive forces, the rapid improvement of per capita education level, the accelerated enhancement of knowledge integration and dissemination capabilities, the accelerated development of brain-computer integration and intelligent technology, and the continuous increase in innovation incentive policies, innovation subjects and innovation practitioners, the flexible combination and mutual promotion of technologies will apparently shorten the process and time from theoretical proposal to actual application and even go far beyond the response capacity of the evaluation and supervision institutions. Secondly, the environmental adaptation and survivability of human beings have retreated, instead of advanced, throughout the millennia. Nowadays, any of the human augmented technologies, the nuclear technology, nanotechnology, quantum technology, biochemical technology, genetic technology, intelligent technology and so on, contains a destructive power that goes far beyond the resisting and standing scope of the fragile humanity. Finally, in a future where private enterprises and capital are deeply involved in or even dominate the development of cutting-edge technologies, and technologies exemplified by distributed and blockchain technologies continue to strengthen the “decentralization”, “autonomous intelligence” and “adaptive management”, we humans are likely to unconsciously fall into a passive situation where we’re losing control of the scientific and technological innovation (Zhu et al. 2017b, 2018a; Chen 2019b).

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Under the combined influence of the above three factors, the technological outof-control event in any form is likely to impose unprepared catastrophic effects on human society. The military and technological “vicious competition” in human history aimed at achieving hegemony and destruction, and the ensuing terrorism and anti-human crimes have all confirmed that worries of the sages are not unfounded (Liu 2015). Against the continuing vigilance of wise sayings and historical lessons, we should fully realize that self-supervision, industrial discipline, policy guidance, judicial supervision and responsibility-oriented governance are not enough to prevent scientific and technological disasters, and the bottom line must be kept to prevent and remove serious risks. While vigorously uplifting the openness and service level, the competent departments should also assume the heavy task of keeping to the bottom line (Li 2016), use bottom-line thinking to ensure that scientific and technological innovation activities are always carried out under the CPC leadership through innovative elements management and energy management and make sure that the right to choose, control, correct and terminate scientific and technological development is in the hands of human beings, especially the people, so as to keep to the security bottom line of scientific and technological development.

5.4.3 Systematic Framework of Holistic Innovation Management Viewed from the perspective of management information system (Xue 2013), only when holistic innovation is performed as a holistic innovation management model and the development and application of management system are completed, can the managers effectively implement the policies, implement the strategies, exercise the management power and achieve the management goals. Therefore, a holistic innovation management model with multiple meanings is proposed, that is, a holistic innovation management model targeting at realizing multiple socialist meanings. As mentioned above, the holistic innovation management model with multiple meanings targets at satisfying the inner attributes of holistic innovation, that is, keeping the “people orientation”, achieve the “comprehensiveness”, shoulder the “responsibility” and ensuring the “bottom line”. See Table 5.4 for their specific connotations. How to put into practice the holistic innovation management model with multiple meanings, transform the management objectives into management needs and design and develop the management system accordingly are the key problems to be solved in implementing the holistic innovation management model with multiple meanings and pivotal links to be mounted in balancing the social governance needs and the technical plan supply. To this end, the “demand analysis to system development” cognitive methodology in the management information systems discipline is used to form the analysis logic for holistic innovation management with multiple meanings, as shown in Fig. 5.1.

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Table 5.4 Objectives and connotations of the Holistic innovation management model with multiple meanings Management objectives

Specific connotations

Keep the “people orientation”

Embody the will of the people, protect the rights and interests of the people, adhere to and strengthen the Party’s leadership in science and technology, promote the construction of innovation culture, give full play to the leading role of the people, deepen the rule of law in the field of science and technology and improve the innovation qualification certification system

Achieve the “comprehensiveness”

Establish a meaning-led and strategy-driven policy system for scientific and technological innovation, improve a new national system of overall planning/autonomy/coordination/openness, build a modern system for scientific and technological services, and make “government–industry–university–institute–enterprise–finance” integration, thus forming a “state–industry–enterprise” trio innovation ecosystem

Shoulder the “responsibility”

Promote the discipline construction for scientific and technological innovation planning and risk management, effectively assess and control scientific and technological innovation risks, strengthen the ethical review and judicial supervision of scientific and technological innovation and improve the ability to predict, select, control and correct innovation activities

Keep to the “bottom line” Ensure the subjectivity of human beings and the people in the field of science and technology, ensure the ability to respond to in advance and terminate at any time the scientific and technological out-of-control events, ensure the dynamic and precise regulation of innovation elements and ensure the absolute control of the whole process of energy supply

The first layer of the research analysis framework is the target layer, which is the starting point for the design and development management system. The second layer is the demand layer, which disassembles the management requirements from the management objectives and provides the basis for corresponding design and development management system. Let’s see into specific examples: (1) “People orientation” objective—while public participation shall be encouraged and corresponding management shall be conducted to promote the building of an innovation culture and give play to the leading role of the people, the innovation qualification shall be managed to improve the innovation qualification certification system; (2) “Bottom line” objective—while innovative elements shall be managed to ensure the dynamic and precise control of innovative elements, energy management is required to ensure the absolute control over the entire process of energy supply. The third layer is the system layer, which is a management system planned and controlled by means of information, chemical industry, logistics, and manufacturing, based on the management objectives and corresponding management needs. Also, the software and hardware layers need to be embedded into the system layer to provide the software/hardware foundation and support for building the system and realizing its functions. Specific instances include: (1) “People orientation” objective—to meet

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Fig. 5.1 Analysis logic of holistic innovation management with multiple meanings

the needs of public participation management, we need to design and develop a public participation system, as well as key supporting software/hardware such as a polling platform and a statistical analysis platform; to meet the needs of innovative qualification management, we need to design and develop a qualification management system, as well as key supporting software/hardware such as a qualification certification platform; (2) “bottom line” objective—to meet the needs of innovative element management, we need to design and develop an element management system, as well as key supporting software/hardware such as a logistics and warehousing platform; to meet the needs of energy management, we need to design and develop an energy management system, as well as key supporting software/hardware such as an energy supply platform and an energy supervision platform. On this basis, we also need to conduct in-depth interviews and research on relevant managers and scientific and technological experts in innovation entities, such as the national science and technology authorities, enterprises, universities and scientific research institutes, by means of object/demand survey and target method analysis and expand, supplement and improve the management objectives, management demands, management system, core software/hardware and key technologies/methods in each dimension, thus forming the system framework for holistic innovation management with multiple meanings as shown in Table 5.5.

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Table 5.5 System framework for holistic innovation management with multiple meanings Management objectives

Management needs

Management system (example)

Core software and hardware (example)

Key technology or method (example)

People orientation

Public participation management

Public participation system

Polling platform

Intelligent voice technology; information integration technology

Statistical analysis platform

Directional grabbing technology; data mining technology

Comprehensiveness

Responsibility

Innovation qualification management

Qualification management system

Qualification certification platform

Qualification assessment method; unified identification technology

Scientific and technological service management

Scientific and technological service system

Open innovation platform

Automatic labeling technology; Intelligent push technology

Distributed service platform

Knowledge graph technology; open-source system technology

Strategic planning management

Strategic Strategic planning system planning platform

Intelligent deduction technology; decision-making assistance technology

Scientific and technological risk management

Risk management system

Risk assessment platform

Knowledge fusion technology; risk assessment method

Ethical review platform

Ethical assessment method; data warehouse technology

Information and intelligence management

Information and Information intelligence management system platform

Collection and identification technology; real-time feedback technology (continued)

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Table 5.5 (continued) Management objectives

Management needs

Management system (example)

Core software and hardware (example)

Key technology or method (example)

Bottom line

Energy management

Energy management system

Energy supply platform

Coordinated distribution technology; modular energy supply technology

Energy supervision platform

Energy flow measurement and control technology; log audit technology

Logistics warehousing platform

Hierarchical logistics technology; blockchain traceability technology

Innovation element management

Element management system

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Part III

Implementations and Applications of Holistic Innovation

In the starter chapter of the application part, the logic for analyzing holistic innovation’s application in enterprises and industries is specified to underpin the theoretical application on consistent logic and framework, facilitate the within-case analysis and inter-case comparison, and obtain a deeper insight. In upcoming chapters, holistic innovation’s application in specific cases concerning the global value chain upgrade, China’s high value-added manufacturing, pillars of a great power, urban Internet and rural revitalization, in regional development and in national strategies is discussed in separate to propose the Globe 6.0 Plan based on holistic innovation, and draw a blueprint for the future development of mankind.

Chapter 6

Upgrade of Global Value Chain: Establishing Holistic Innovation in World-Class Enterprises

The new generation of private entrepreneurs should inherit and carry forward the spirit of their predecessors, working work, daring to venture, focusing on tangible industries, and refining the main business, to make their enterprises stronger and better. Private enterprises should lay their eyes on the international arena, striving to enhance their innovation capacity and core competitiveness with an aim to build more world-class enterprises of global competitiveness. —Xi Jinping. (November 1, 2018, a speech at the forum on private enterprises).

The 19th National Congress of the Communist Party of China pointed out that the building of a socialism with Chinese characteristics had entered a new era, that a comprehensive and systematic deployment had been made for scientific and technological innovation, and that “we should build world-class enterprises of global competitiveness” (Xi 2017). Clarifying the innovation development goal toward world-class enterprises is of great significance for Chinese enterprises to seize the opportunities of the new round of technological and industrial revolution, cultivate sustainable global competitive advantages, accelerate the construction of a power of science and technology and achieve high-quality development. Thanks to the joint efforts of the domestic scientific and technological community and all walks of life, China has gained nonstop momentum to catch up and overtake. With historic, holistic achievements recorded, innovation capacity has been admirably improved for enterprises, industries and the country, making China an innovation power of global influence. A world-class enterprise needs to gain a foothold locally while aiming globally with a clear vision, a lofty mission and an entrepreneurial spirit, effectively grasp and apply the basic laws of corporate operation and management, and continue to lead the technological transition of enterprises and industries through hard work and continuous innovation. Through such efforts, it can effectively and sustainably create economic values and undertake the mission of industrial and national development. Conforming to the global trend of value chain upgrade, the holistic innovation will do great favors to the building of world-class enterprises for its emphasis on the holistic, systematic and overall thinking in Chinese philosophy and culture, the institutional © Science Press 2023 J. Chen, Holistic Innovation, https://doi.org/10.1007/978-981-19-8625-3_6

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advantage to concentrate efforts on prioritized undertakings, and the open mindset to utilize global resources for win–win situation.

6.1 Status Quo of Innovation Development in China’s World-Class Enterprises While enterprises are the core subjects of the national innovation system, worldclass enterprises are the “bellwether” to empower the country with scientific and technological innovation. However, since China’s innovation-driven strategy has not been fully implemented, and the overall efficiency of the national innovation system requires immediate uplift, there is still a long way to go to promote the position of Chinese enterprises in the global value chain.

6.1.1 Connotation of a World-Class Enterprise A general observation of the corporate development history, the Fortune 500 enterprises, and model companies that have given thrust to the advance of society and industry may get to the conclusion that world-class enterprises are not ones unmatched merely in size, output, market occupancy, technology or product, which see profit as the sole goal, but ones that make effective use of the rules of corporate management and operation, create values continuously, assume the development mission of the society and nation, promote the inclusive and sustainable development of the globe, and help individuals fulfill their dreams and live a happier life. Schumpeter, touted as the “prophet of innovation”, admitted in his masterpiece Theory of Economic Development that, great enterprises and entrepreneurs are the products of the times, and the propeller to help with the transformation of the times and social progress. World-class enterprises in developed countries, such as Google, Microsoft, Apple, IBM, General Electric, Toyota, Siemens, Fujifilm, DuPont, Johnson and Johnson and Amazon, and counterparts in emerging economies like Tata Group, Reliance Jio, Huawei, CRRC, CGN, CIMC, Alibaba and Tencent share some traits in common: They outperform peers in the same industry, field and times not only in hard power—sales volume, market value and market occupancy, but in soft power— innovation, social accountability and influence, and public trust and respect. Innovation is the core driving force of the national progress, and the source of vitality for world-class enterprises. It helps them secure a leading position in the efficiency, performance and quality, allocate resource at home and abroad, keep technological innovation in the industry and contribute to the global industrial development and social progress. In a nutshell, world-class enterprises are role models of the times, which act as not only a propeller of the progress of the times, but also a key to achieve global value chain upgrade of the country.

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6.1.2 Development Characteristics of World-Class Enterprises At present, the building of a socialism with Chinese characteristics has entered a new era and the opening to the outside world has headed to a new stage, a new round of technological and industrial revolution represented by digitalization, networking and intelligence is booming globally, and the industrial economy is accelerating its transformation to a knowledge-based economy; China’s development is shifting from a demand-driven model to an innovation-driven one, from one characterized by introduction, imitation and catch-up to one featuring overtaking and innovation leading. It has taken a deep part in restructuring the global value chain and is advocating a new regional/global trade and innovation system. Against the backdrop of the epoch, we must re-understand and grasp the basic laws of corporate operation and management and summarize the typical models adopted by world-class enterprises, in a move to build our own world-class enterprises with global competitiveness and complete the global value chain upgrade more quickly. The basic principle followed by corporate operation and management shall shift from the operation-oriented one in the past to the innovation-oriented one at present and for a long period of time in the future. The key is to head toward the goal of building world-class enterprises through differential positioning strategy and continuing innovation reform. The basic laws and characteristics of operation and management of world-class enterprises in the new era are shown in six aspects: vision-driven, strategic planning, ability highlighted, people-oriented, continuous innovation and pursuit of excellence. 1. Vision-driven Great organizations are built to last, more for their beliefs beyond profit than for their organizational structures or management skills. Vision collectively exhibits the business philosophy of the leadership, and core values and development mission of the company. As the spiritual impetus for the operation and sustainable development of the organization, it contributes to the corporate operation and helps enhance the corporate performance. Drucker raises three questions for great entrepreneurs in The Practice of Management, what is an enterprise, what should an enterprise be, and what will an enterprise be? These are the three starting points for thinking about the corporate culture. When you work out the reasons of existence, core values and development direction of the enterprise, you work out its corporate vision. A typical world-class enterprise would combine its survival and development goals with the development trends of the nation and the globe and formulate exclusive and clear-cut mission and vision that go beyond the profit. 2. Strategic planning Strategic planning is one of the most important forms of planning, an overall action plan for the organization, and a key deployment and arrangement for realizing the

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vision and mission. A clear-cut strategy plays an important prerequisite for an organization to win in the competition and maintain its vitality. Corporate strategy has become one of the key and core issues that determine the success of corporate competition. Strategic planning features three main characteristics: holism, continuity and hypotheticality. As holistic, dynamic and predictive judgment and response to the features, evolution and trends of the competition environment and opponents, it is conducive to figuring out the direction, properly allocating resources and securing competitive edge for the company. It should be noted that in the era of knowledge economy and artificial intelligence, the technological innovation, ethical governance and environmental protection, as well as the dynamic balance between medium/long-term strategic planning and short-term strategic execution, shall be considered more in the corporate strategic planning. In the meantime, the digital economy model is impacting the traditional theories of corporate competitive advantages, including Porter’s strategy that focuses on a single advantage, and the blue ocean strategy that copes with two competitive advantages, contributing to the waning of the competitive concept, and giving rise to the strategic operation system facing the synergetic coexistence. Practices of Google, Amazon, Haier and more have shown that differential, low-cost and centralized strategies can be achieved at the same time, to create win–win situation for business partners. 3. Ability highlighted Corporate management theories based on the resource view generally deem that the combination of tangible and intangible resources will lead to accumulation and improvement of capabilities, the source of competitive edge of an enterprise. Theories based on the resource view take an enterprise as the organic blend of tangible resources, such as personnel, finance, facilities, technologies and management, and intangible resources, including culture, brand and relationship. Apart from resources, the enterprise needs also to improve its internal learning ability so as to tap into heterogeneous resources, and proactively create, purchase and transfer resources outside the organization. The learning of an organization is divided into the exploitative type and exploratory type. Exploitative learning champions the full use of existing technologies and resources, which helps enterprises to continuously improve technical capabilities and product quality upon the existing basis; exploratory learning acts the opposite, which highlights the exploratory development of technologies and products required for future development of the organization. Asking for a bigger investment and leaving a higher risk, the exploratory learning is of great strategic significance in developing technologies and capacities required to cater for future demands for the organization. For example, Google and 3M alike allow their employees to spend 15– 20% of work hours conducting self-exploration that has something directly to do with the company or not. Without an apparent time control, the culture and concept that encourage exploration and innovation have formed an important “field” for individuals and groups in the organization to conduct exploratory learning and innovation. It is a vital means for world-class enterprises to fulfill continuous leapfrog. How to transform employees’ personal capabilities into the company’s capabilities is increasingly becoming an important topic to enhance the company’s core

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capacities in the era of digitalization and gig economy. In this regard, 3M makes clear in its code of leadership conduct to “adhere to an honest quality and transparent management, seek self-development and help employees to grow”, which boosts the self-development of employees through the corporate vision and culture, and rewards innovators with excellent technologies and futuristic innovation; establishes a double-ladder career development and advancement system; and provides enough career advancement incentives for those employees with strong core personal competencies. Additionally, 3M, an American multinational conglomerate corporation, has established an internal incubator and angel investment to ensure that the company can timely absorb and transform employees’ personal capabilities and innovations into core capabilities for future development of the organization. Haier Group has gone a step further, creating a co-creation and symbiosis ecosystem through the construction of an open partnership ecosystem platform. By absorbing external innovation resources and ideas as an important channel for the corporate capability improvement, it has realized the efficient integration of internal and external innovation resources. 4. People-oriented The “people-oriented” humanistic spirit is the mainstream value orientation of modern Western sciences. Highly consistent with the rationale of Chinese philosophy, it is a value connotation shared by both Eastern and Western management thoughts and an in-depth development of the “people-enterprise integrated” corporate operation and management law. The people-oriented management concept is the essential guarantee of the common growth of employees and the enterprise, and realization of continuous renewal and enduring profitability of the enterprise. The primary task of an outstanding entrepreneur is to organically integrate the company’s vision and personal vision by establishing a greater vision and a feasible strategic and organizational model, encourage diversity and complementarity within the organization by improving the management model and the cultivation of corporate culture, and activate the initiative and creativity of employees. Many world-class enterprises regard employees as one of the most valuable resources. On one hand, they attract highly creative talents with excellent corporate culture and remuneration packages; on the other hand, they give them full trust and empowerment, establishing a highly transparent and democratized communication/decision-making/feedback mechanism within the company, in particular, to guarantee the efficient conveyance and execution of the company’s strategic intention, and stimulate the creativity and innovation initiative from bottom to top. 5. Continuous innovation A world-class enterprise must keep abreast and advance together with the times. Embracing an ever-changing corporate culture and a dynamically collaborative network for organizational learning and innovation, it realizes an inclusive empowerment. It is the essence for enduring profitability to break the path dependence and the core rigidity. At the moment, innovation is not only related to the research and development of products and technologies, but also integrated into the reshaping

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of business processes and the opening of new markets. Management innovation is even more important than technological innovation, process innovation and business model innovation. Gary Hamel underscores in his book The Future of Management the four layers of innovation—operation innovation, technology innovation, strategy and business model innovation, and management innovation. The main models of continuous innovation cover the comprehensive innovation centering on technological innovation, of which examples include Siemens, 3M, Huawei and Gree; the open innovation that breaks through organizational boundaries, orients to users, and involve both the internal and external in collaborative innovation, of which examples include P&G and Haier; the disruptive innovation that conducts exploratory R&D and exploits new markets on the basis of existing technologies to realize discontinuous technological innovation or disrupt the market, of which examples include Amazon the online bookstore, Geely the low-end auto brand that launches into the high-end market, Fujifilm that loses its core business but keeps its core technologies; the frugal innovation that offers people better products and services with less resources, of which examples include cost-effective cars produced by Tata, and products of P&G, GM and Johnson and Johnson customized for developing countries and poverty-stricken regions; the collaborative innovation that features industry-university-research-use integration, of which examples include Google X labs jointly founded by Google and university scholars, and R&D centers co-built by companies like Huawei and CRRC and top universities to aim at core technologies. 6. Pursuit of excellence The pursuit of excellence means to build the first-class brand and management model through top-flight quality, technology and service that are made available by A-rated strategies and talents. In the pursuit of excellence, operation management methodologies and systematic tools such as total quality management, lean management and complex systems scientific management are used to make the corporate innovation culture, innovation experience and innovation objective explicit, institutional and dynamically optimized. The Japanese lean management sets an example of the pursuit of excellence. A derivative of lean production, it is billed as the production organization and management model fittest to modern manufacturers. Lean management has gradually extended its application to various links of corporate management from the initial success in production system, and upgraded from the initial focus on specific businesses to the current care about management and innovation strategies. Lean management and lean business operation can maximize the shareholder value and societal value by improving customer satisfaction, reducing costs, enhancing quality, speeding up processes and refining capital investment. Gree acts a good example in using the lean management and total quality management thoughts to explore and establish the “5-step quality prevention” and “Quality-technology innovative cycle” that mix innovation management with quality management. The former takes strict process control of the quality management system in five steps: Demand research, plan formulation, implementation, inspection, improvement and optimization, so as to eliminate quality problems from the source and ensure “zero defect” of the products. The latter uses appropriate quality tools and methods from the four

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aspects (customer demand guidance, detection technology driving, failure mechanism research and process system optimization) to conduct in-depth investigation of quality hazards, effectively ensure the efficiency and success rate of quality and technology innovation, and help Gree maintain its top position in the global airconditioning industry for quality and business performance. CRRC Qingdao Sifang Company has formed a management matrix that covers production, public welfare, quality and logistics through the exploration of lean site, lean manufacturing and lean management, and integrated lean thinking with professional management to implement on the manufacturing site. By successfully developing and testing the C919 large-sized commercial passenger aircraft through scientific management designed for ultra-complex product systems, COMAC has set up a milestone for a Chinese airline to secure a spot on the international aviation arena.

6.2 Future Challenges in Innovation in China’s World-Class Enterprises 6.2.1 Transformation of Management Paradigm The new round of scientific and technological revolution on a global scale, the tension between Western management theories and practices, and the Chinese-style management practices are together promoting the transformation of management science to the fourth generation guided by the Chinese philosophy—the integrated management. The rise of the fourth generation of management science symbolizes the thriving of the management concept that blends science and technology with philosophy, Eastern theories and practices with Western counterparts, under guidance of the Chinese philosophy. Abandoning the simplex economic thinking and atomized partial thinking, and rethinking the essence and ultimate goal of business from the perspective of comprehensive development of human/society and improvement of sense of happiness are the basis of the management theories in the new era and the starting points of operation and management of world-class enterprises. Thus, the holistic innovation theory, underscoring the blend of philosophical insight, technologies of natural sciences, and humanistic spirit of social sciences, and the vision/strategy-driven management and technology innovation, is not only a full upgrade of the traditional corporate operation and management models (e.g. total innovation and indigenous innovation), but also an important theoretical support to accelerate cultivating world-class enterprises with global competitiveness. Besides, underpinning of the management paradigm has returned to its origin, from the mechanical view to the life view. A new trend is stirred up in the new era. Essence of business and corporate operation and management shall be refocused on the cultivation of world-class enterprises. For a long time, almost all theories and methods of management, organizational change and human behavior, represented by bureaucracy-related theories and scientific management ideas, are based on the

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mechanistic view, claiming that employees are “machines” that merely run as per regulations for lack of creativity. This has seriously hindered the employees’ initiative in working and the realization of the organization’s vision. However, the world of the twenty-first century appears a complex life system, which is barely apprehensible to the methodologies guided by the mechanical view. The life system offers a brand new perspective to see the ever-changing and ever-creating world. The new worldview that sees organizations as life systems provides leaders with new principles for cultivating great organizations, for example, meaningful work inspires creativity, creativity depends on diversity, diversity offers paths to consistency, and employees offer nonstop momentum for realizing the common vision and reform via activated creativity and self-motivation. In the upcoming era of artificial intelligence and global innovation, technological and industrial revolutions have spurred two social transitions from agricultural society to industrial economy, and from industrial economy to knowledge economy, respectively. Today, the new technological revolution symbolized by quantum theory and artificial intelligence is pushing us into a “new Homo sapiens” era that is characterized by human–computer interaction, augmented intelligence and organic renewal. The emergence of supertechnologies and “AI+” economic model have incubated new opportunities for world-class enterprises and raised higher requirements on ethics and morality. Henry Kissinger puts in How the Enlightenment Ends, “The Enlightenment started with essentially philosophical insights spread by a new technology. Our period is moving in the opposite direction. It has generated a potentially dominating technology in search of a guiding philosophy”, because “…whose consequences we have failed to fully reckon with, and whose culmination may be a world relying on machines powered by data and algorithms and ungoverned by ethical or philosophical norms.” Philosophical thinking shall be underlined in the operation and management of world-class enterprises, with humanistic spirit respected in scientific and technological revolution to benefit the vast majority of people instead of the profit-centered minority. Amidst the global innovation and the building of a socialism with Chinese characteristics in the new era, it is a mission for both building world-class enterprises and advocating the Chinese management to strengthen the integration of theories and practices, the integration of the East and the West, and “build a better world” while satisfying “the people’s yearning for a better life”. Seeking sustainable development based on locality and aiming for global market, and taking into account the creation and publicity of economic/social/humanistic values are major parts of the operation and management of world-class enterprises in the future.

6.2.2 Upgrade of Global Value Chain Now that the competition environment for enterprises is highly uncertain, complex and dynamic due to the globalization and personalized customization of customer demands, innovation has become the focus of global competition and the soul of

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the times. Only continuous innovation can help enterprises stand out of the competition. The holistic innovation requires enterprises to wholly innovate the internal elements and conduct open innovation on internal and external innovation elements, and unremittingly exchange materials, energy and information flow. Over the past 30 years, China’s export has grown by around 130 times with inflation deducted. To date, it has caught up with the G7 countries one by one in terms of the total exports. Table 6.1 shows the changes in the export trade volume of China and G7 countries to the world. It can be seen that China has always maintained its position as an important exporter in the world. What’s more, China’s part in the global vertical division of labor is also rapidly expanding. China plays an extremely important role in the global trade division, both in terms of total trade volume and part in vertical division of labor. The role China plays in the global value chain behind the scene lays a foundation for Chinese enterprises to properly cope with international competition and gain advantages in international trade. To embed into the global value chain and participate in the competition on the international market is the main means for multinationals in developed countries to integrate global resources and establish international competitiveness, and an important strategy for Chinese enterprises to take a part in international labor division and realize globalization. In recent years, export-oriented enterprises in many industries in China have successfully developed the international market and gone international by embedding in the global value chain. However, in face of the new international economic situation, these enterprises are being stressed by the international transformation. As the global economy goes down, competition at low end of the value chain becomes fiercer, and trade friction and dispute worsen, it has become harder for Chinese foreign-trade companies that are long positioned low to embed into the global value chain and climb to a higher level. How to identify the value-added links of the global value chain more clearly or discover new value chains, change the embedded links and embedding models of the global value chain, and get rid of the “low-end fixation” and “immiserizing growth” (Zhuo and Zhang 2008) dilemma have become major issues for Chinese enterprises to solve now. In the upgrade of the global value chain, any link in the value chain, such as R&D, design, production, assembly, sales and after-sales service, can be targeted to improve the added values, as shown in Fig. 6.1. This requires a systematic, comprehensive and holistic innovation. As a role model, CIMC has climbed up in the global value chain through systematic implementation of the total innovation management. It has been argued that the operation of the global value chain is driven by two main patterns. One is the producer-driven pattern, with which the operation of each link of the global value chain is driven by the investment of producers. Typical adopters of this pattern include multinational manufacturing enterprises in technology-intensive and capital-intensive industries such as the computer, aircraft, automobile, semiconductor, and equipment manufacturing, or government organs that seek economic development through investment on production activities. The other is the buyerdriven pattern, chiefly used in restructuring and separation links of the global value chain driven by the huge market demands that are formed by the multinational commodity circulation network, through global purchase by local enterprises (or

World

Japan

Source General Administration of Customs P.R. China

76,305,739.56

134,021,311.1

49,057,783.29

World

World

–

Germany

World

France

43,926,639.54

43,979,271.96

140,890,813.2

204,736,658.2

2012

Italy

World

World

Canada

UK

World

World

China

USA

Trade partner

Subject country

67,930,584.73

–

138,632,794.3

55,301,536.94

51,666,023.68

44,178,410.3

142,862,710.1

220,727 908.6

2013

65,437,311.02

–

142,605,070.4

55,249,554.34

49,757,691.88

45,754,035.07

146,343,459.3

234,007,652.1

2014

62,487,350.81

45,698,872.04

132,854,913.4

49,394,121.42

–

40,880,420.57

150,184,586.4

228,185,592.2

2015

Table 6.1 Changes in the export trade volume of China and G7 countries to the world (unit: USD10,000)

64,493,243.95

–

134,075,204.6

48,888,507.24

41,585,649.74

38,896,294.01

145,316,714.8

209,763,717.2

2016

69,809,718.66

50,305,392.58

145,021,483.6

52,338,513.07

44,373,388.7

42,050,178.85

154,606,907.8

226,337,050.4

2017

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195

Fig. 6.1 Global value chain

leading enterprises) in labor-intensive industries. This pattern is more seen in exportoriented industries that developing countries rely on, such as clothing, shoes and hats, agricultural products, food and furniture. Such industries normally need to undergo the industrialization reform (Weng and Han 2015). Industries driven by different models would adopt different strategies for ascending in the global value chain. The transformation and upgrading strategies are supposed to help the company figure out the driving force in the global value chain according to the industrial features, develop core capacities needed for the upgrade on this basis, and gain competitive advantages accordingly, thus ascending on the global value chain (Hao and Zhang 2016). However, previous studies on the power model of the global value chain typically focused on a single model. With the subdivision of the global economy and the development of business operations, more and more global value chains are driven by both producers and buyers (Zhang 2006). There is also a trend of shifting from the producer-driven pattern to the buyer-driven one (Jiao et al. 2009) and even are hybrid-driven cases (Yu et al. 2006). Moreover, for industries or enterprises in developing countries that participate in the global division of labor, it’s another key in studies on global value chain how to achieve progressive transformation and upgrading by themselves under a given model driven by global value chain. Relevant studies indicate that economic upgrading in global value chains (GVCs) is the path producers in developing countries take to ascend on the GVCs. To complete the upgrading, knowledge and information in the GVCs shall flow from “leading enterprises” to other suppliers (purchasers). Specifically, industries or enterprises in developing countries achieve the upgrading in GVCs through the following four paths (Gereffi 1999): (1) (Process upgrading): to improve technical capacities through recombination of production activities and achieve a more effective input–output conversion via innovation. (2) Product upgrading: to produce more complex products with higher unit value. (3) Functional upgrading: to improve the technical level of production activities by adopting new functions (or abandoning old functions). (4) Chain/intersectoral upgrading: to apply the competitiveness required by a value chain (or a link) to a new value chain (or another link), as shown in Fig. 6.2.

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Fig. 6.2 Path of global value chain upgrade

The said four upgrade paths can be linear or non-linear, depending on whether the enterprise or country is qualified to upgrade to the next level. In addition to the four traditional upgrade paths, subsequent researchers have added another three as supplements (Kaplinsky and Morris 2008): (1) Entry in the new value chain: the enterprise participates in the competition on the chain for the first time. For new enterprises in the industry, this is the first upgrade model that is attainable, and also the most difficult to attain. (2) Backward linkages upgrading: It generally refers to the upgrading model in which local enterprises in the industry begin to provide inputs and/or services to enterprises (mostly multinationals) ranking top in the global value chain. (3) End-market upgrading: Enterprises turn to market segments with stricter and updated standards, or gain pricing power through mass production to enter larger markets.

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6.2.3 Intelligent Manufacturing Judged from the impact of the external environment, with the advance of AI and IT in recent years, intelligent manufacturing with digitization, networking and intelligence as the key features has become the main direction of future development of the manufacturing industry, and applying the Internet technology to develop advanced manufacturing is also the core of China’s manufacturing development in the future. Intelligent manufacturing is conducive to improving China’s position in the global manufacturing arena and realizing the transformation and upgrading of the manufacturing industry. Most of the existing studies on GVC upgrading are merely summary of experience of industries or enterprises that have successfully achieved upgrading, without specific discussions on the strategies adopted. As a signature of the Fourth Industrial Revolution, intelligent manufacturing is expected to help Chinese manufacturing enterprises face the external impact, and upgrade to both ends of high added value on the GVC through intelligentization and informationization of the whole process from product design, production to corporate management services; it may become the key for China to develop advanced manufacturing in the future, and the main path of transformation and upgrade of Chinese manufacturing (Zhou 2015). As an advanced technology that integrates artificial intelligence, automation technology, advanced manufacturing technology, modern sensing technology, information technology and networking technology (Sudweeks 1989), intelligent manufacturing marks a new type of production that produces intelligent products and offers intelligent services via intelligent production systems. The concept of “Intelligent Product” was proposed a long time ago. The development of the Internet of Things has boosted the interconnection among intelligent products and production facilities (Porter and Heppelmann 2014; Jin and Zhang 2016). Intelligent production is the main component of smart manufacturing, its predecessor being smart factories. Consisting of smart production systems (divided into physical production systems and virtual information systems) and smart production technologies (such as new sensing technology, human–computer interaction technology and real-time highprecision network communication technology), it makes available the collaborative interaction between the mobile Internet and the Internet of Things on the cyberphysics production system (CPPS) (Li et al. 2017). Specifically, the coordinated manufacturing based on Internet and the personalized customizations are the basic models of intelligent production (Li et al. 2016; Ren and Zhao 2014). Intelligent services refer to personalized and intelligent services offered to the users based on their demands through smart analysis of their information, preference, behavior, demand and habit, on the basis of servitization of the manufacturing sector widely promoted in previous research (Luo and Lai 2013). The Industrial Internet is a new business format shaped by the integration of the Internet of Things concept and the industry (Wollschlaeger et al. 2017). On the platform of Industrial Internet, the daily networking equipment functions not only a terminal device that receives production data of the industry, but also an intelligent

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device that can interact with users in real time, so as to realize the comprehensive interconnection of people, machines and things. Intelligent manufacturing turns out the core of the Industrial Internet and the focus of the development of advanced manufacturing. Intelligent manufacturing is a signature of the Fourth Industrial Revolution. However, the concept of intelligent manufacturing was proposed in the field of production design as early as in the 1990s. As a cutting-edge technology that integrates artificial intelligence, automation technology, advanced manufacturing technology, modern sensing technology, information technology and networking technology (Sudweeks 1989), intelligent manufacturing specifically refers to the intellectualization and informationization of the whole manufacturing process, from product design, production to corporate management service, attained through informationized manufacturing under perceptible conditions, and an in-depth integration of information and manufacturing technologies (Zhang 2014). When the “German Industry 4.0” and “Made in China 2025” proposals took intelligentization and informationization as the future development core of the manufacturing industry in recent years, intelligent manufacturing again evoked widespread concerns and discussions. It has been claimed the key of future development of the Chinese manufacturing industry, and the main path for Chinese manufacturing to seek transformation and upgrade (Zhou 2015, 2019). No conclusion has yet been drawn on the specific connotation and model of intelligent manufacturing. However, as one of the six major areas of the China development plan for the new generation of artificial intelligence, intelligent manufacturing takes digitization, networking and intelligentization as its key features. Specifically, digital manufacturing, digital and networked manufacturing, and digital, networked and intelligent manufacturing are regarded as the three basic paradigms of intelligent manufacturing, which are conducted in order and upgraded one by one. Among them, the digital manufacturing can be understood as the first-generation paradigm of intelligent manufacturing, which is the most commonly applied in enterprises currently. Under guidance of the “Made in China 2025” proposal, China has initially formed a digital manufacturing promotion model by establishing an array of digital workshops in response to the national intelligent manufacturing standard system. The penetration rate of digital R&D tools in Chinese enterprises reached 61.8% by 2016, an increase of 18% over 2013. It can thus be seen that digital manufacturing has basically laid a solid foundation for the further development of intelligent manufacturing in China. Moving a step further than digital manufacturing, the digital and networked manufacturing enables further integration of manufacturing and Internet via “Internet+” and builds Internet-based manufacturing platforms through networking of digital production equipment, thus realizing new business formats in the Internet economy era within the Industrial Internet architecture such as collaborative R&D, shared economy and personalized customization (Leading Party Group of the Ministry of Industry and Information Technology 2017). At present, networked manufacturing is also the focus to promote intelligent manufacturing in China, and a primary task for the “informationization-industrialization integration”. Based on the digital and networked manufacturing, the intelligent manufacturing is deeply integrated with the new generation of AI technology to realize a

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true intelligent manufacturing through the in-depth learning, perception, analysis and computing control, self-update and knowledge production (Wang 2016). Since China seeks to advance digitalization, network-orientation and intelligentization “in parallel”, enterprises that haven’t completed the digital transformation need to conduct digital manufacturing to lay a foundation for intelligent manufacturing first and take the late-mover’s advantage to realize paralleled development of different paradigms of intelligent manufacturing using big data, AI and other state-of-the-art technologies. In the specific implementation of intelligent manufacturing, the current studies hold that intelligent manufacturing mainly covers three aspects—intelligent products, intelligent production and intelligent services. Among the three, intelligent products refer to ones that participate in complex human operations with human thinking and “intelligence”, through reception, cognitive processing and classified processing of external information using the intelligent chips (Jin and Zhang 2016; Porter and Heppelmann 2014). The biggest difference between intelligent products and previous simplex physical products is that the former can be interconnected with the Internet and Internet of Things via software. Intelligent production, also known as smart factories, engages physical systems and virtual information systems against the Industry 4.0 idea to realize collaboration and interaction of physical information production systems on the Internet and Internet of Things. It is a model that attains lean production and resource integration by technical means. Among all, the networked collaborative manufacturing is a model adopted in intelligent production. Through the open manufacturing structures, resources are quickly assembled to organize production in a projectbased manner and flexibly respond to the market demands (Zhang et al. 2003). Networked collaborative manufacturing contains specific contents of: decomposing goals, synthesizing and integrating sub-tasks decomposed, assigning tasks, selecting partners within the network, monitoring production progress, and reporting the implementation and progress of sub-tasks (Dong et al. 2004). Besides, enterprises often employ customized production methods in intelligent production. Customization makes available the customized production through real-time interconnection with the factories so as to meet personalized customer demands. Unlike the “push” type production model in the past, the “pull” type customization model starts with user’s demands learned from sales communication, involves users in the module design and produces personalized products, based on the overall modular design (Ren and Zhao 2014; Li et al. 2016). Intelligent services are further developed upon the servitization of manufacturing that was widely adopted in previous studies. Servitization of manufacturing, or producer services, refers to the transformation of manufacturing companies into service providers with their core assets appreciated by offering extra product and service packages, in addition to the products and additional services in the traditional model (Vandermerwe and Rada 1988; Lv et al. 2017). The servitization of manufacturing targets at all links of the global value chain and improves the industrial added value of enterprises, thereby helping traditional manufacturing enterprises to upgrade in the global value chain. For example, manufacturing companies may participate in the upstream operation of the global value chain by providing external

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R&D services and design services; they take a part in the downstream operation of the global value chain by providing financial services, advertising services, aftersales services, financial leasing services, etc. Moreover, the servitization of manufacturing can ramp up the productivity of enterprises through specialized division of labor and overall outsourcing of services. Therefore, servitization of manufacturing turns out an important means for manufacturing enterprises to achieve transformation and upgrading. Some studies have suggested that in the future, manufacturing enterprises need to transform from a product-centered paradigm to a service-centered paradigm through service innovation (Lusch and Vargo 2014). The intelligent service then makes available the intelligent servitization of manufacturing. Through intelligent analysis of the user’s information, preference and habit, it proactively offers personalized services to users on demand (Luo and Lai 2013).

6.3 Realization Pathways for Development of World-Class Enterprises Based on Holistic Innovation in China Manufacturing acts as the mainstay sector of China’s economy. Despite its remarkable progress made in recent years, China’s manufacturing sector still faces a variety of issues, large in size but weak in performance, of low added value, unreasonable industrial structure, weak indigenous innovation, low degree of informationization and low resource utilization. Judged from the perspective of GVC, the most used indicator to measure a country’s manufacturing, China’s manufacturing enterprises mostly stay at lower parts of the chain. Although they’ve taken a larger part in global division of labor recently (Yin 2016) and become increasingly more global (Ge and Xie 2017), there’s still an urgent need to ascend to higher positions on the chain. Also, with the advent of the Fourth Industrial Revolution, global industries further integrate with one another, salaries and investment returns are more polarized, more and more added values of the manufacturing sector flow to the two ends of technical R&D and marketing service, and the global value chains show more smiling curves. While China’s economic growth is slowing down at the “new economic normal” period, China needs to take measures to avoid falling into the middle-income trap like Latin American countries. All these require China’s manufacturing sector to continuously move to both ends of high-added values of the global value chain when facing external shocks, so as to realize the transformation and upgrading. However, existing studies on the transformation and upgrading of manufacturing sector typically spotlight the environmental factors and resource constraints (Wu et al. 2016; Li et al. 2019; Ouyang and Zhang 2016), which shed insufficient lights on the initiative of enterprises, while those on global value chains lay more emphasis on the autonomy of enterprises, countries or regions during the transformation. By ascending to links with higher added values in the global value chain (Liu et al. 2016), enterprises, countries or regions can obtain higher values and benefits (such as profit, added value, capacity and more stable market position) in order to achieve

6.3 Realization Pathways for Development of World-Class Enterprises …

201

upgrading in the global value chain (Gereffi 1999). But most of the existing studies on global value chain upgrading are summaries of the experience obtained by specific countries and industries, which have made no further discussion on the upgrading process and mechanism of specific enterprises or industries. Based on holistic innovation, this section will start with the realization path of strategic guidance, innovation foundation, and institutional empowerment, and delve into the innovative management methods of Chinese enterprises to upgrade at the global value chain and build themselves into world-class enterprises.

6.3.1 Strategic Leadership “Strategic leadership” intends to determine the path for upgrading in GVC of the enterprise, upon identification of GVC governance model of the industry. The upgrading path in GVC of the enterprise is impacted by the governance model of the industry (Gereffi 1999). Specifically, in the technology-intensive/capitalintensive producer-driven industries, the global value chain is primarily driven by the investment of leading manufacturing enterprises in production activities. Leading enterprises in the industry shall invest in technical R&D and design links in hopes of ascending on the global value chain. In labor-intensive buyer-driven industries, enterprises shall upgrade at lower parts of the global value chain by offering producer services. In fact, upgrading at both upstream and downstream links of the global value chain requires enterprises to have the capabilities needed for the links (Pipkin and Fuentes 2017), which cost a long time to accumulate experience and cultivate capacities. Thus, for most enterprises, striving to increase the added value of their own links seems a rather feasible upgrading path. In industries driven by both producers and buyers, the global value chain presents a modular governance structure between the market-dominating type and hierarchical type (Gereffi and Femandez-Stark 2011). Leading manufacturers in the industry have certain freedom in R&D. Also, differential demands of the users shall be satisfied. With all these factors considered, the path to upgrade at both ends of the global value chain may be adopted. What’s more, it’s optional to take the path to enter new global value chains.

6.3.2 Innovation Foundation “Innovation foundation” chiefly means that enterprises choose the proper model of intelligent manufacturing to enhance their innovation capacity. After determining the path for upgrading at the global value chain, Chinese manufacturing enterprises need to further select specific intelligent manufacturing models to fulfill the goal of transformation and upgrading. To be specific, enterprises seeking upgrade at upstream of the global value chain could increase added values of their products through making of intelligent products, and apply the competitiveness in producing existing

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products into the creation of intelligent products, to realize the product and interchain upgrade. On the other hand, the online collaborative manufacturing model is taken to transfer the knowledge and skills of the production of intelligent products to realize the interlink upgrade. Enterprises seeking upgrade at downstream links of the global value chain can transform tangible assets into service-oriented assets by providing intelligent services, to enter the service solution market and realize upgrade of the end market. For most enterprises that upgrade by uplifting the value of their own links, a feasible model of intelligent manufacturing is to enhance the technical capabilities of production activities through lean production and large-scale, personalized intelligent production models, so as to upgrade the processes and functions. The Internet era has put forward different requirements for the transformation and upgrading of leading enterprises. Due to the attention scarcity of consumers in the Internet economy era, the market will be monopolized by oligopoly platform companies (Fu et al. 2014). Therefore, leading enterprises may upgrade in the global value chain by shifting their focus on intelligent products, intelligent production and intelligent services to that on intelligent manufacturing platform, shifting their connection with the suppliers, clients, partners and competitors from through a value chain to through a value network, thereby becoming platform leaders and lead the industry to create values as a whole (Chen et al. 2013). The intelligent manufacturing models of enterprises are detailed in Table 6.2.

6.3.3 Institutional Empowerment “Institutional empowerment” mainly refers to adapting to changes in corporate strategies and improvement in innovation capabilities through a series of reforms and upgrades in internal corporate management, including process upgrade, product upgrade, function upgrade, interlink upgrade, interchain upgrade, end market upgrade and entry into new global value chains. In addition, institutional empowerment ought to be paired with relevant advanced technologies for innovation foundation, to form a proper path for institutional empowerment and upgrade. Intelligent manufacturing marks an effective way for Chinese manufacturing enterprises to upgrade at the global value chain. Specifically, Chinese manufacturing industry’s transformation into intelligent manufacturing shall start with a turn to intelligent production, enhance the informationization/intelligentization level of the production process, drive the networked collaborative manufacturing via digitalization and upgrade to a production link of higher added values. Besides, on the basis of intelligent production, Chinese manufacturing enterprises shall actively develop the IoT attributes of their products, and transform from traditional industrial products to intelligent products based on big data and cloud computing, thereby achieving the product upgrade and interchain upgrade on the global value chain. In the end, the transformation and upgrade of China’s manufacturing industry shall count upon the transformation to intelligent services and to the user-/service-centered paradigm, through unremitting upgrade.

Intelligent production

Intelligent products

Networked collaborative manufacturing is realized on an open cloud platform via a distributed architecture, and the collaborative manufacturing model is copied by offering modular microservices on the platform. Through the human–machine-things interconnection, the user’s information is directly connected to the production equipment, so as to respond to the user’s demands in a millionth of a second

Networked collaborative manufacturing

(continued)

Welding parameters are adjusted via deep learning of the machine to reduce the costs

More than ten world-leading IoT technologies are adopted to realize the interconnection of all intelligent things, so that users can interact with all products. Interconnection of all smart things is realized on the U+ intelligent manufacturing platform

IoT device

Lean production

User’s data, such as user behavior, is collected via cloud computing to enhance the interaction between products and users

Based on cloud computing

Features The big data covers the entire lifecycle of the product, from market investigation, product planning, to product production, to help users interconnect with all elements

Based on big data

Specific model of intelligent manufacturing

Table 6.2 Intelligent manufacturing models of enterprises

6.3 Realization Pathways for Development of World-Class Enterprises … 203

Technical solutions and intelligent manufacturing solutions are provided to cooperative enterprises through modular components, to achieve interfactory collaboration; resource sharing and production digestion are completed among factory groups through informationization of the four aspects of software, equipment, logistics and components. Besides, an open cloud platform architecture is set up to realize data collaboration, knowledge exchange and capability collaboration between Haier and all cloud partners Personalized, large-scale customization services are offered to users, to realize whole-process virtual interaction with users and full-cycle maintenance through the interconnected platforms

Smart life overall solution service

The “two-dimensional strategy” of high-precision user’s experience and high-efficiency corporate value. High-efficiency production is attained through flexibility, digitization and intelligentization

Large-scale customization

Intelligent manufacturing overall solution service

It allows users to accurately participate in the interaction and customization of the entire production process, achieve a seamless, transparent and visualized interaction among users in all links of production and have a batch processing capacity for a minimum quantity of 1 piece. The networked factories will double the product purchase conversion rate, through modular customization, crowd-innovation customization, fully personalized customization and overall smart life solutions

Customization

Intelligent production

Intelligent service

Features

Specific model of intelligent manufacturing

Table 6.2 (continued)

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Fig. 6.3 Holistic innovation strategies for China to build world-class enterprises in the context of upgrading of global value chain

6.4 Holistic Innovation Strategies for Development of World-Class Enterprises in China Under the “dual pressure” of re-industrialization of developed countries and the low cost of production in developing countries, Chinese manufacturing enterprises shall seize the opportunity amid the innovative development of the Internet and the new round of industrial revolution to cultivate capacities required to ascend to higher links at the global value chain (Gereffi and Femandez-Stark 2011) and improve the competitiveness in the international arena, by completing intermediate tasks at the global value chain via “packaged solution”. In the upgrading to higher links of the global value chain, Chinese enterprises need to choose the path and model that meet their own conditions according to the characteristics of industries they operate in, such as the global value chain governance model. Based on the above analysis, the holistic innovation strategies for China to build world-class enterprises in the context of upgrading of global value chain are put forward, as shown in Fig. 6.3.

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Chapter 7

High Value-Added Manufacturing: Holistic Innovation in Chinese Manufacturing

Manufacturing plays as the mainstay of the national economy, and the basis for building, developing and empowering a nation. The fortune of the world powers and the Chinese nation has gone through has proved time and time again that the thriving of a country cannot be achieved without a thriving manufacturing sector. —“Made in China 2025”.

Innovation has been made a major theme of the sustainable economic/social development in today’s world (Chen et al. 2018a, b, c, d). It’s clearly put forward at the 18th National Congress of the Communist Party of China that “as a strategic bolster for enhancing the social productivity and comprehensive national strength, scientific and technological innovation must be prioritized in the overall national development.“ The 19th National Congress of the CPC further clarified that innovation is the No. 1 driving force for development and the strategic bolster for building a modern economic system (Xi 2017). Manufacturing is the foundation of economic development. To fulfill China’s goals of economic transformation/upgrading and innovation-driven development, we must devote more to the “Made in China” initiative. Currently, the world’s largest manufacturing country, though China is still criticized as large in size but weak in performance (Guo and Wang 2015). There is still an apparent gap between China’s manufacturing industry and that in developed countries in terms of industrial innovation system, core technical capabilities, quality and efficiency, and industrial structure, showing no hint of a transition from a “middleand low-end” performer to a “middle- and high-end” one (Zhu and Wang 2017). General Secretary Xi Jinping underlined in the report of the 19th National Congress of the CPC that “We must accelerate the construction of a power of manufacturing, speed up the development of advanced manufacturing and promote the deep integration of the Internet, big data, artificial intelligence and real economy”, thus “raising China’s industry to a medium level to high level at the global value chain” (Xi 2017). The holistic innovation theory is a new paradigm proposed upon the crossboundary integration of natural sciences and social sciences under the guidance of management philosophy and strategic vision in the era of open innovation. In other words, it is a comprehensive, open and collaborative innovation under the

© Science Press 2023 J. Chen, Holistic Innovation, https://doi.org/10.1007/978-981-19-8625-3_7

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strategic leadership, with its four core elements—strategy, comprehensiveness, openness and collaboration, which are interconnected and organically unified in the dynamic process of corporate innovation. The holistic innovation theory argues that to understand and promote the corporate innovation, it is necessitated to get rid of the traditional atomic innovation thoughts that are known to be static, linear and independent and lead the innovation of technical/non-technical elements from the height of strategic vision and strategic design, thereby offering support to seek breakthroughs in major fields and technologies of the enterprise and the country. Enterprises are supposed to mobilize the all-element participation through multiple means such as strategic leadership, organizational design, resource allocation and cultural creation, so as to achieve internal–external coordination and integration of subjects and stakeholders of all departments, and finally build stable, flexible and sustainable core competitiveness. Countries are required to strengthen the strategic thinking and top-level design and combine science and technology, economy, culture, ecological development and even foreign policies, through overall layout and planning, to form the systematic cohesion to promote the total collaborative innovation under the national strategic vision. The strategic leadership, innovation foundation and institutional empowerment based on holistic innovation can ramp up the overall efficiency of the enterprise’s technological innovation ecosystem, accelerate the ascendance and realization of knowledge management to value creation, build world-class manufacturing enterprises and promote the building of a power of scientific and technological innovation. These are also advisable paths for China to achieve high-added value manufacturing.

7.1 Status Quo of Innovation Development in Chinese Manufacturing Up to now, the main problems facing the innovative development of China’s manufacturing include: First, China’s innovation-driven development urgently needs to break through the “low-end locking” at the global value chain. Now that the current international competition is highlighted by the global value chain competition, breaking through the “low-end locking” at the global value chain is of great significance in enhancing China’s position in the global value chain competition (Hong 2017). With the implementation of the innovation-driven development strategy, continuous breakthroughs have been attained in major scientific and technological innovation in China’s highend manufacturing sector. As a succession of projects have been successfully implemented, including the “Tiangong” series manned spacecraft, the “Jiaolong” series manned submersibles, the Five-hundred-meter Aperture Spherical radio Telescope, the world’s largest radiotelescope, the Dark Matter Particle Explorer, the Micius Quantum Experiment Science Satellite, and the C919 large passenger aircraft, the gap between China’s scientific and technological strength and that of developed

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countries is shrinking (Chen and Zhao 2017). The cover article of The Economist, Issue February 15, 2018, The Battle for Digital Supremacy, pointed out that although China’s technology still lags behind the USA as a whole, it boasts a fast and fierce upward momentum. Both sides have their own advantages. China has come to about 42% of technological height of the USA. However, China’s manufacturing industry is too obviously large in size but weak in performance, with a considerable number of enterprises staying at low end of the GVC, dominated by other links and yielding low added values. As a result, the Chinese manufacturing “works hard but earns little” (Hong 2017). When China’s economic development enters a new normal period, giving play to innovation’s role in driving the manufacturing upgrade and structural reform, leading the indigenous innovation (Chen 1994) and open innovation (Mou et al. 2013; Chen and Chen 2009), promoting the transformation and upgrading of the manufacturing industry, changing the subordinate position of China’s manufacturing industry in the global value chain, and continuing to ascend to medium end/high end of the global value chain are important ways to realize industrial modernization in the new era, and to build a new GVC represented by the “Belt and Road” and dominated by China (Zhang 2017). Second, it is urgent to reshape the competitive advantage of China’s manufacturing industry in the new stage of opening to the outside world. Over the past 40 years of reform and opening up, China has seized the strategic opportunity of the 4th large-scale worldwide transfer of manufacturing and tapped into the “cost structure” comparative advantage established upon demographic dividends and resource endowment dividends. By picking up the labor-intensive industries and low-technology/high-consumption industries abandoned by developed countries, such as the USA, European countries and Japan, and emerging industrialized countries/regions represented by the “Four Asian Tigers”, it has become the largest overtaker and beneficiary of the 4th world industry transfer and gradually shaped an industrial system of unique global competitiveness and an efficient production supply chain system, thereby making historic, holistic and structural changes (Chen 2018). As revealed in the China and the Global Competitiveness of Manufacturing Industry report released by Yicai Research Institute in April 2018, China has led the changes of and reshaped the global manufacturing industry since entry into the twenty-first century; China’s total manufacturing output surpassed Germany, Japan and the USA in 2005, 2008 and 2010, respectively; The actual increase in China’s manufacturing in 2016 was 7 times that in 2000, and its global share climbed from 8.5% in 2000 to 30.9% in 2016. China’s manufacturing ranked top 16 for labor productivity. Nevertheless, although China ascended from the 8th position in 2000 to the 4th in 2016 for unit labor cost, it descended for absolute competition advantages, as demonstrated by the decreasing labor cost competition in “high-tech” manufacturing sectors like the machinery, electronic communication equipment, automobile manufacturing and other means of transport (excluding cars) (Yang and Lin 2018). From 2014 to 2016, although China’s global market share in the fields of electronics and communications has increased rapidly, its share in highly technology-intensive manufacturing industries is relatively low, which is 16% in automobile manufacturing, 14% in semiconductors, 11% in consumer electronics, 7% in aerospace, 6%

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in computer hardware, 5% in medical equipment and 3% in semiconductor equipment (Song 2018). In the new stage of opening to the outside world, while adhering to the open innovation, we must implement new manufacturing development strategies and policies to accelerate the cultivation of world-class manufacturing enterprises and rebuild the competitive advantages of China’s manufacturing industry. Third, against the backdrop of the new technology revolution, it acclimates to the trend for China to shift from a country of manufacturing to a power of manufacturing. Zhou Ji, an academician of the Chinese Academy of Engineering, pointed out that the transformation from a country of manufacturing to a power of manufacturing has become a major goal of China’s economic development in the new era. In particular, core technologies of the new round of industrial revolution, such as the digitalization, networking and intelligentization, shall be seen as the commanding heights, sally ports and main attack direction of the “Made in China 2025” initiative (Zhou 2019). With the implementation of the industrialization, informationization integration and “Internet+” strategies, China has made noteworthy progress in promoting the new industrialization and “informationization-industrialization integration”. A string of enterprises, including XCMG, Haier, Huawei, Midea and Xiaomi, have done well in the informationization-industrialization integration (China Enterprise Confederation 2016). The cluster development of common manufacturing technologies, represented by nanotechnology, auto-driving vehicles, industrial robots, artificial intelligence, blockchain and 5G communications, will offer robust power for China’s manufacturing sector to transform into intelligent manufacturing, and for China to turn from a country of manufacturing to a power of manufacturing. Taking artificial intelligence as an example, driven by new theories and technologies such as mobile Internet, big data, cloud computing, human–computer interaction, deep learning and blockchain, the artificial intelligence will reconstruct such links of economic activities as production, distribution, exchange and consumption, as well as the whole chain of manufacturing industry of R&D, design, processing, sales and after-sales. Furthermore, it will become the core driving force for a new round of industrial transformation, give birth to new technologies, new products, new industries and new models, solve the problems of surge in cost and unbalanced structure of the manufacturing industry brought by declining demographic dividends and resource endowment dividends, give full play to the technological dividends of China’s scientific and technological innovation and inject new momentum to China’s manufacturing upgrade and sustainable economic development at the new normal period (Qin 2018). Learning about the milestone value of AI to the economic development and international competitiveness, the USA took the lead in publishing the Preparing for the Future of Artificial Intelligence in October 2016 to list AI as a national strategy; Japan followed closely to announce AI as its national strategy in the “Artificial Intelligence Technology Strategy” in March 2017; Germany took the application and governance of AI technologies, represented by automatic, networked driving, as its national strategy in June 2017; The UK and the United Arab Emirates immediately released the Growing the Artificial Intelligence Industry in the UK and the UAE Artificial Intelligence Strategy in 2017, and Canada, Singapore, EU, South Korea and India also joined the international competition on AI strategies, seeking to

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fix a spot in the trend. In China, the State Council Notice on Printing and Distributing the New Generation Artificial Intelligence Development Plan released in July 2017 indicated that the state raised the development of artificial intelligence, a symbolic strategic technology, to a national strategy. For the upcoming fierce competition of digitalization, networking and intelligentization of the global manufacturing industry, although China’s intelligent manufacturing has made incredible progress, there are still obstacles on its development path such as lack of control over key parts and technologies, monopoly of high-end market by foreign capital and low efficiency of innovation system of manufacturing industry (Lv and Han 2015). New technological revolutions, e.g. artificial intelligence, are also facing challenges of structural contradictions in the supply of engineering and technological talents, and the lack of new technology application talents in advanced manufacturing (Chen and Lv 2017). What’s more, the wide-range application of blockchain, artificial intelligence and cloud computing technologies has many uncertainties and faces a series of risks concerning innovation governance and ethics (Mei et al. 2018). How to strengthen the global innovation governance in the era of new technology revolution, and speed up the transfer and transformation of scientific and technological achievements and the safe application of new technologies (Yin et al. 2017)? How to promote the organic integration of emerging technologies and other innovative elements, such as education, management, finance and social intermediary, through top-level design (Chen 2018), accelerate the traction of scientific and technological innovation to the overall leap of China’s manufacturing industry, promote the in-depth integration of emerging technologies and manufacturing industry and increase the unit increment of the manufacturing industry? These are important and urgent issues for the construction of a power of manufacturing. As the world launches into an era of AI from one of knowledge economy, and China enters a stage of opening wider to the outside world, the rapid advance of the new technological revolution makes it hard to “promote development” via technological innovation alone. Only by strengthening the strategic planning based on an overall, worldwide vision can we solve the “stranglehold” problem in key technologies, reverse the situation that China’s manufacturing is catching up with the industrial leaders and “run side by side” with or “overtake” world powers of innovation in the emerging innovation fields (Chen et al. 2018a, b, c, d). Based upon holistic innovation, high value manufacturing (HVM), an innovation policy of strategic significance to the manufacturing industry, and practical cases of innovation in manufacturing in the said context, the article hereby sheds lights on the key focus and implementation path of the “HVM” strategy for building China into a power of manufacturing. Starting from the overall situation, it proposes to accelerate the shift from the demand-driven model to the R&D and design-driven model of empowering the country via scientific and technological innovation, by mixing the “HVM” strategy with the “high value industry” strategy. With such efforts, it aims to realize the industries-integrated and rural–urban integrated development, speed up solving structural problems such as unbalanced development between industries, regions and urban–rural areas, generally improve the overall efficacy of the national innovation system, cultivate worldclass innovation enterprises in the manufacturing industry, build a power of scientific

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and technological innovation oriented to the future, realize sustainable development of economy and society and constantly enhance people’s sense of happiness, gain and security.

7.2 Strategies for High Value-Added Manufacturing in China 7.2.1 Conceptual Connotation of High Value Manufacturing The “High Value Manufacturing” concept was first proposed by Professor Uvesey of the International Manufacturing Research Center of Cambridge University in his report Defining High Value Manufacturing in 2006. He’s convinced that “manufacturing is the future of the UK, which is based on high value acquisition. It is the case for the enterprise, stakeholders and the nation”. In his opinions, HVM enterprises refer to those “seeking unique values and innovation through highly skilled personnel and knowledge-intensive manufacturing processes”. They pride themselves on prominent economic performance, great strategic value, and active social influence (Livesey 2006). He gave no precise definition of HVM, but stressed that “no simple definition well describes HVM” because it creates values through diversified methods. Recognizing that HVM plays a vital role in reshaping UK’s global manufacturing competitiveness, the British government issued the High Value Manufacturing Strategy 2012–2015 in 2012, announcing HVM as a national strategy. The report clarifies that the strategy “intends to make sure HVM is the key driver for UK’s economic transformation” and specifies a series of policies to support the HVM development of the UK, accelerate the innovation in HVM technologies and enterprises and offer strategic bolster for the UK to secure and maintain a spot at mid-to-high position on the global value chain in the coming 15–20 years, including “doubling the government expenditure on HVM per annum, focusing investment on core technologies that may give the UK a say on the global market, fully supporting the development of 22 HVM fields, helping to build HVM research centers and establishing open-source platforms for transfer and sharing of HVM-related knowledge”. In the report, the British government defines HVM as “the application of leading technical knowledge and expertise to product design, production and related services, which has great potential to drive sustainable development and create great economic values of the UK. The HVM activities cover the entire circular manufacturing process, from R&D to services. The core feature of this huge engine for economic growth and sustainable development is an organic combination of intensive R&D and high growth.” To pair with the High Value Manufacturing Strategy 2012–2015, the British government joined hands with the International Manufacturing Research Center of Cambridge University to release also the Future Prospects on HVM in the UK. The report provides an in-depth analysis of the industries, academia and research institutions, and identifies national competitiveness-boosting organizations that have the

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potential to successfully apply the HVM strategies to promote the cross-sector innovation and manufacturing upgrading in the UK, in an aim to reach an extensive consensus among British enterprises, public departments and other core stakeholders to allow the UK to obtain and enhance competitiveness in the global manufacturing competition via the HVM strategy in the coming 15–20 years. The national competency refers to a key feature for reshaping the future of the national manufacturing industry, which can quickly respond to the global trends and adopt corresponding strategies to create values. The report identifies the five key HVM fields, i.e. the “technology to enhance resource utilization, manufacturing system to boost global competitiveness, material integration technology to refine product design, new manufacturing process model that features stable performance and low cost, and business model to release and improve the manufacturing system’s value”, and the 22 core fields, i.e. new energy, design and manufacturing, intelligent manufacturing, agile additive manufacturing, new business model and new manufacturing talents, as the pillars of the country’s core competitiveness; picks such fields as the key concern as 3D printing, robot automation, integration technology, information technology, nanotechnology, industrial robot and low-carbon technology; claims to continuously support major innovation and HVM innovation in such fields. Echoing the High Value Manufacturing Strategy 2012–2015 released by the UK, other countries took moves one after another: Germany released the 2020 High Technology Strategy in 2010, Industry 4.0 Strategy in 2011, Intelligent Networking Strategy in 2015, and Digital Strategy 2025 in 2016; the US government released the new Strategy for American Innovation in 2015; Japan launched the Basic Plan for Science and Technology in the 5th Period (2016–2020) in 2016; India promulgated the India Ten-year Innovation Roadmap (2010–2020) in 2010. The innovation strategies of all such powers have highlighted the governments’ strategic leadership in the cluster development of the manufacturing industry and the application of new technologies. During China’s theoretical and practical exploration of scientific and technological innovation, either the impressive achievements made by the reform and opening up, or the realization of scientific and technological innovation in aerospace, high-speed rail, nanotechnology, and giant aircraft are the product of the national system, and the holistic and global thinking of the oriental philosophy. Therefore, in the strategic context of the innovation-driven development, facing the increasingly fierce competition in the international manufacturing industry and the disruptive impact of the new technology revolution, Chinese manufacturing enterprises must race against time (Stalk and Hout 2017) to accelerate the innovation of key technologies and application of results. In response to the strategies and actions the Europe and US have taken to reshape their advantages in the global manufacturing industry, we must accelerate promoting the “Made in China 2025” initiative, break through the “low-end locking” of the manufacturing industry and promote China’s manufacturing to ascend to midto-high end at the global value chain. The “HVM” Strategy meeting China’s specific conditions must be proposed and implemented, to enhance the overall efficacy of the national innovation system and the corporate innovation system through the holistic

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innovation strategic planning designed for the whole value chain of the manufacturing industry, combine the R&D and design driving with the cross-boundary application of new technologies, promote the breakthroughs of key technologies and the conversion/application of results through comprehensive utilization of the technological innovation, business model innovation and knowledge management, create core competitiveness for manufacturing enterprises, increase added value of the manufacturing industry, accelerate the building of world-class enterprises and speed up the construction of a power of manufacturing, thus realizing the sustainable development.

7.2.2 Value and Significance of High Value Manufacturing According to the Science and Engineering Indicators 2018 released by the US National Science Board in January 2018, although China’s R&D expenditure surpassed the EU’s and came near to the US’s in 2014, the number of Chinese science and technology-themed papers issued first exceeded that of the USA in 2016, the number of scientific and technological talents is skyrocketing, and China’s technology- and knowledge-intensive industries have ranked second (24%) following only the USA (31%) in the globe, China is still confronted with problems like the low reference rate of Chinese science and technology-themed papers, low proportion the output of technology-intensive industries takes in GDP, lower density of R&D personnel than the developed countries, and deficiency of talents skilled for emerging technologies such as AI. These have seriously hindered the realization of the “Made in China 2025” objective. Studies made by Nie (2017) also show that although China has successfully completed the first transformation from a planned economy to a market economy, it still faces the huge challenge of transformation of its manufacturing industry when it strives to turn from a chaser of the light industrial countries to an indigenous innovator. To cope with challenges and brave difficulties, China urgently needs to use the advantages of the institutional/mechanism and the innovation-driven development strategy to accelerate China’s innovation in strategic science and technology field, and its construction and improvement of the national innovation system (Nelson 1993), national technological transfer system (Fu and Zhang 2011) and corporate innovation system (Chen 2017) with enterprises as the subjects and “government–industry–university–researcher–intermediary–finance–service” collaborative innovation as the theme, through top-level design and strategic leadership. In the end, it seeks to enhance the R&D innovation capacity of the manufacturing industry, realize breakthroughs in key technologies, speed up the transfer and conversion of scientific and technological achievements, form high-value potential and cultivate world-class enterprises. According to the Global Manufacturing Competitiveness Index 2016 released by Deloitte, although China is still the most competitive country of manufacturing, it will be replaced by the US in 2020. Especially in the ranking of manufacturing competitiveness index joined by all countries and regions in the world, China’s hightech-intensive manufacturing exports accounted for only 42%, far below developed

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countries such as the USA (58%), the UK (58%), Japan (55%) and Germany (53%), and even India (43%). China’s low-tech-intensive manufacturing exports still took a large share (Deloitte Touche Tohmatsu Limited and Council on Competitiveness 2016). This further proves that in the new stage of opening up, China shall actively adopt national strategies and holistic innovation policies that can effectively promote the upgrading of the manufacturing industry, accelerate the innovative development of manufacturing enterprises, increase the added value of the manufacturing industry and propel the manufacturing industry to move toward the mid-to-high level at the global value chain (Chen et al. 2017a), so as to accelerate the application of emerging technologies, business models and manufacturing models, speed up the innovation of manufacturing enterprises, boost the building of a power of manufacturing and lead in the handling of the imminent global HVM competition. In 2018, President Xi Jinping remarked at the opening ceremony of the Boao Forum for Asia that “Without a halt, China will open wider to the outside world”.1 However, China relies heavily on developed countries, such as the US, for core technologies of its high-end manufacturing industry. After it enters the new stage of opening to the outside world, the “stranglehold” core technologies will become a huge constraint of the sustainable development of manufacturing industry and security of the nation. Practitioners in high-end equipment manufacturing industries, such as chips, automobiles, airplanes and heavy machines, will definitely engage themselves in fierce global competition due to easier market access requirements. Building the comprehensive competitiveness for Chinese manufacturing enterprises based on dynamic, core technical capabilities is the top priority for Chinese manufacturing enterprises to enhance their global competitiveness and reshape the competitive advantage of the manufacturing industry. Also, while continuing to promote the open innovation, and learn from the experience of manufacturing innovation in developed countries, China shall adopt a new manufacturing innovation strategy based on the development status quo of Chinese enterprises. Under the guidance of the innovation paradigm, it shall make the most of technological innovation economically and socially, through innovation in system and management model and organically promote innovation and its application (Curral et al. 2017), thus promoting Chinese manufacturing enterprises to shift from chasers to leaders.

7.3 Realization Pathways for High Value-Added Manufacturing Based on Holistic Innovation The realization path of “strategic leadership—innovation foundation—institutional empowerment” in holistic innovation offers practical guidance for the high value manufacturing in China.

1

Refer to Xi Jinping’s keynote speech at the Boao Forum for Asia Annual Conference 2018 [EB/OL]. http://www.gov.cn/xinwen/20l8-04/10/content_5281303.htm, 2018-04-10.

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7.3.1 Strategic Leadership Bai Chunli, former president of the Chinese Academy of Sciences, pointed out in the article Scientific Planning and Accelerating the Construction of a Power of Science and Technology, “Insist on concentrating efforts on major undertakings. It’s a unique institutional advantage of China, which has been proved by the ‘Two Bombs and One Satellite’, manned spaceflight and lunar exploration projects.” (Bai 2017) In major innovation fields concerning the overall and long-term development of the country, such as the new generation information technology, high-end equipment manufacturing technology, new energy and new material technology, biomedical technology and artificial intelligence technology, apart from technological innovation, the state needs also to concentrate its advantageous scientific and technological advantages and follow the medium-/long-term strategic leadership to realize the organic integration of scientific and technological strategy, educational strategy, industrial strategy, financial strategy, talent strategy and even diplomatic strategy (Chen et al. 2018a, b, c, d). Only by establishing a robust industrial innovation system (Chen 2018) through strategic design, institutional innovation and business model innovation can enterprises, universities, research institutes and social institutions be spurred to carry out technological innovation for HVM and accelerate the innovative application of leading technology in manufacturing. Take China’s high-speed rail industry and related enterprises as an example. To support China’s development of new industrialization and urbanization, the state formulated and released the Medium- and Long-term Railway Network Planning in 2004, and made according to adjustment in 2008 and 2016. Through the top-level strategic design and medium-/long-term planning, it has pushed China’s high-speed rail construction a great deal forward and boosted the development of rail transit manufacturing industry and the global competitiveness (Sun 2015), as shown in Fig. 7.1. Guided by the state’s high-speed rail development strategy of “introducing advanced technologies from abroad, conducting designing and producing jointly, and building up Chinese brands”, CRRC adheres to the strategic principle to “Put national needs and industrial development first”, adopts a combination of indigenous innovation, integrated innovation and collaborative innovation, and advances in three steps of “Technological introduction and joint design”, “assimilation and integrated innovation”, and “systematic upgrade and holistic innovation”, to build a three-level product and technology platform of advanced transit rail equipment, important system and core parts, and establish a heavy-load railway and fast freight technology platform at an internationally advanced standard (Chen 2017). CRRC has maintained an annual growth of 8% in R&D investment and 70% in patent applications since 2014, setting up an example for promoting China’s rail transit equipment manufacturing industry to ascend to medium end/high end at the industrial and value chain, and for building of a major common technologies platform in the manufacturing industry. The Renaissance EMU (350 km/h), put into maiden service by CRRC in September 2017 on Beijing-Shanghai High-speed Railway Line, sets an example.

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Fig. 7.1 Innovation history and strategy of China’s high-speed rail

Of full independent intellectual property rights, it is a “milestone product during China’s development into a power of manufacturing and its ascendance to medium end/high end at the global value chain”. Over 80% of countries and regions around the globe are using products and services offered by CRRC. When CRRC won the champion of the “Talent Challenge” initiated by the Metropolitan Transportation Authority in March 2018 in an aim to improve the metro status quo in New York with its “20 + 20 > 40 Equal Life Modular Design Concept”, it demonstrated to the world again the design and manufacturing innovation capacity of China’s rail transit blessed by the strategic leadership and scientific planning.

7.3.2 Innovation Foundation Innovation Foundation mainly intends to build a corporate innovation system based on core capabilities through R&D and design and accelerate the development of intelligent manufacturing through the application of new technologies such as “Internet+”. 1. R&D and design-driven: Build a corporate innovation system based on core competencies HVM is designed to drive high growth via high-strength R&D, especially in strategic emerging industries and key technological fields. Technological imports and open innovation alone cannot bring us core technologies and leading advantages; indigenous innovation-driven by R&D must be relied on (Chen 1994). China took lead of the world after 2010 in the increment of R&D investment, close to 20% per

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annum. In 2016, China’s input in R&D outnumbered the EU members combined, its increment in R&D accounting for 31.4% of the global sum. Calculated with the current average annual increment in R&D investment of 7%, China’s total R&D input will surpass the USA in 2026. China spent 2.07% of its GDP on R&D in 2015, higher than the average of EU members (2.01%), but lower than powers of manufacturing—South Korea (4.23%), Japan (3.29%) and the USA (2.74%), leaving a long way to go to meet the goal of “2.5% of R&D investment by 2020” specified in The Thirteenth Five-year Plan. Besides, China’s R&D investment structure still needs to be optimized, with only 5.3% spent on basics, far lower than Japan’s 12.6%, the UK’s 15.5% and the USA’s 16.5%. Prolonged insufficient investment in basic research and development will make China’s manufacturing industry and enterprises incapable of bringing out disruptive innovation, and seriously hinder the indigenous innovation capacity of Chinese enterprises and the global competitiveness of China’s high-end manufacturing industry. Thus, we must give full play to the leading role of large enterprises in scientific and technological innovation, allow state-owned enterprises to strategically supplement private ones, and large enterprises to supplement SMEs regarding capacities, and consolidate the holistic corporate innovation system that features R&D/design driving, state-owned enterprises and private ones cooperation, and collaboration of large, medium and small enterprises. Obtaining independent intellectual property rights and seeking breakthroughs in key technologies/parts through R&D input, combining R&D strategy with product strategy and user strategy through a design thinking, and consolidating the holistic innovation based on core technologies are the only methods to speed up the manufacturing industry’s ascending from the “smiling curve” bottom end to medium end/high end at the global value chain, and bring revolutionary products and services to users, stakeholders and even the entire industry. Let’s take Huawei as an example. Since its inception in 1998, Huawei has become the world’s largest telecom network solution provider and the world’s second-largest telecom base station equipment supplier. The achievements are impossible without its innovation based on R&D and design, and its innovation on core technologies developed upon the R&D management system of clear labor division and efficient collaboration. To cope with the contradiction between customer needs and development efficiency resulted from the company’s rapid expansion, Huawei has introduced and applied the integrated product development framework since 1999 against the “customer-centered” core management concept, as shown in Fig. 7.2. It has restructured the R&D management system, through customer demands collection, analysis and verification—R&D and investment portfolio supported by financial reform—asynchronous development model—crossdepartmental R&D and design team—structural R&D process—R&D project and pipeline management—evaluation system based on strategy and market performance. Before implementing the integrated product development reform, although Huawei spent more than 10% of its sales revenue on product development every year, the expenditure waste and product development cycle were more than double of the best practice in the industry, which lowered the gross profit rate on the contrary. The integrated product development reform effectively guarantees the efficient output

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Evaluation system based on strategy and market performance

Customer demands collection, analysis and verification

R&D and investment portfolio supported by financial reform

Customercentered integrated product development framework

R&D project and pipeline management

Structural R&D process

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Asynchronous development model

Crossdepartmental R&D and design team

Fig. 7.2 Customer-centered integrated product development framework of Huawei

of Huawei’s continuous R&D investment. The structural R&D process identifies key technologies in advance to shorten the new product R&D cycle by 50%, reduce R&D costs by 40%, and lower product failure rate from 17% before to 1.3% now (Wu 2017). Moreover, Huawei has further strengthened the performance of integrated product development reform through integrated financial reform and integrated supply chain reform. The integrated product development reform marks a starter of policies Huawei adopt in a move to build itself into a world-class company. According to the 2017 EU Industrial R&D Investment Scoreboard released by the European Commission, Huawei ranked 6th in the world and 1st in China for its R&D investment of EUR10.4bln, equivalent to 19.2% of its sales revenue, a growth of 28.5%. Outperforming Apple both in the R&D investment and its growth rate, Huawei became the only Chinese enterprise among the top 50 in the scoreboard (Hemdndez et al. 2014). To promote breakthroughs in disruptive and key technologies, Huawei established the “2012 Laboratory” in 2011, spent 15% of its R&D budget on basic research and undertook to continuously uplift the proportion to 30%. It is the core capability obtained through R&D and design that allows Huawei to develop the first 5G prototype below 6 Hz frequency band in the world, making

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it a rival of international telecom giants such as Qualcomm and Intel. The 5G technology innovation led by Huawei has greatly promoted China’s advance in generic technology in fields such as mobile Internet, Industrial Internet and artificial intelligence and brought revolutionary changes to the upgrading of the manufacturing industry. Let’s take Xuzhou Construction Machinery Group Co., Ltd. (hereinafter referred to as “XCMG”) as an example. Formerly an arsenal built in 1943, XCMG ranks seventh in the global construction machinery industry. It is the only Chinese enterprise among the top 10, and first enterprise General Secretary Xi Jinping visited after the 19th National Congress of the CPC. XCMG has formed a holistic corporate innovation system in its move to mix indigenous innovation with introductory innovation, which incorporates “one line” (innovation led by corporate mission under the national innovation-driven development strategy and upgrading of manufacturing), “two cores” (core technical competency and core management competency) and “three supports” (international, informationized and open innovation platform). This corporate innovation system driven by “two cores” has helped XCMG to form a quality, profitable, scalable and sustainable (QPSS) corporate innovation effect (Chen et al. 2018a). As a result, XCMG’s product design cycle has been shortened by more than 20%, its product data accuracy has increased by more than 30%, its production plan coordination has been lessened from two days to 40 min, its production cycle of typical loader products has been cut from 18 to 7 days, its market response has been improved by 30%, and its purchase and delivery cycle has been shrunk by 25% from 4 to 3 months (China Enterprise Confederation 2016). Thanks to the core competitiveness shaped against the holistic innovation strategy, XCMG successfully opened the international market in 2010, currently with its products exported to 178 countries and regions. XCMG has become the first choice for heavy-load construction equipment of 57 out of the 65 countries along the “Belt and Road”. With the continuous efficiency improvement of its innovation system, XCMG’s operating income has increased from RMB386 million upon its establishment to RMB100 billion now. In possession of 5,669 patents, it maintains a comparatively high compound growth rate. It has scored major technological breakthroughs in seven high-end construction machinery fields, represented by all-terrain cranes and crawler cranes, developed the world’s largest all-terrain crane and crawler crane and reached topflight standards of innovation. XCMG’s operating income and export volume increased by 23.4% and 109%, respectively, in 2017, making a staged achievement that surprises the world “from the brink of bankruptcy to the seventh in the world”. 2. “Internet+” new technology application: Accelerate the development of intelligent manufacturing At present, digitalization and servitization are increasingly becoming the trend, as well as new focuses, of the global manufacturing industry (Tong 2015). Realizing an in-depth integration of Internet plus advanced manufacturing and modern service industries through the “Internet+” strategy, and digitalization, networking and intelligentization of the manufacturing industry is the core tasks of the new round of industrial revolution, and the commanding height, breakthrough port and main orientation

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of the “Made in China 2025” proposal (Zhou 2019). The development experience of Industry 4.0 in Germany and the Industrial Internet in the USA shows that the new industrial model induced by the Internet has significant value in improving the overall competitiveness of enterprises, industries and even countries (Ji and Chen 2016). At the new economic normal state, emerging technologies such as artificial intelligence (Qin 2018), Industrial Internet (Tong 2015) and blockchain (Hai 2017), and business models like user innovation, open innovation and mass customization have enhanced the depth and breadth of the integration of the Internet with emerging technologies and the manufacturing industry. Vigorously developing the intelligent manufacturing is not only a breakthrough for China’s industrial transformation and upgrading, but also a new engine for implementing the HVM strategy, enhancing the added value of manufacturing and reshaping the competitive advantages of manufacturing (Lv and Han 2015). Let’s see into the case of Haier Group (hereinafter referred to as Haier). Founded in 1984, Haier is the world’s No. 1 brand of large home appliances. It has transformed from a manufacturing enterprise to an open innovation and entrepreneurship platform with advanced manufacturing as its core. In the Internet era, Haier officially launched the HOPE platform in 2013. Through the “People-order integrated for win–win situation” and “self-operating body” models, it combines strategic and organizational reforms to create a co-building and win–win ecosystem in the poste-commerce era, with community economy as the center, user’s value exchange as the basis and integrity as the core competitiveness. In this way, it has become a leader of the epoch of Internet of Things and intelligent manufacturing. In June 2014, the HOPE platform was revised and upgraded. Following the concepts of openness, cooperation, innovation and sharing, it utilizes various excellent solutions and ideas to realize the crowdsourcing and integration, makes extensive participation in cooperation among individuals or research institutions worldwide and offers platform users forefront information and innovative solutions. In May 2015, the HOPE platform further cooperated with customers. Faurecia, one of the world’s largest automotive engineering solutions and parts suppliers, reached a strategic cooperation with Haier on the integration and sharing of regional innovation resources, in a bid to promote cross-field technological innovation cooperation. Haier launched and upgraded the “Innovative Partner Program” in 2015 and 2016, respectively, leading the exploration of the innovative partner community model. The HOPE platform has gradually become Haier’s main channel for creative development and acquisition of external technology, which helps Haier to obtain user and market demands and connect with excellent external innovation resources more easily. Enhanced by 20% to 30% per annum, it increases the new product development rate by 50%. These have boosted the profit growth and the innovation capacity to practically benefit the group. The product innovation based on the HOPE platform brings Haier at least RMB50 billion of operating income a year. The HOPE platform puts more than 60 new products to the market each year, with over RMB2 billion of innovationadded value created annually. The case of Haier’s manufacturing transformation has been widely concerned and discussed among practical and academic circles at home and abroad, and selected into the teaching case library of Harvard Business

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School and Wharton Business School. For instance, in Future Legends: Business in Hyper-dynamic Markets, a digital best-seller book published in Germany in 2017, Haier is the only Chinese enterprise discussed that was born in a traditional age but has successfully transformed to follow the digital times. In the latest case study for Harvard Business School about Haier’s transformation, Kanter and Dai (2018) spoke highly of the group that applies new technologies via Internet and morphs into an entrepreneurial enterprise, and regarded it a model conglomerate that transforms continuously and empowers SMEs in their innovation and business operation via platform/organization innovation.

7.3.3 Institutional Empowerment The institutional empowerment is primarily intended to formulate an innovative management model conforming to technical features of the HVM of an enterprise, through innovation of management norms and systems inside the enterprise. Both theoretical research and development practice show that core competency is the key for an enterprise to maintain sustainable competitive advantages. In high value manufacturing, manufacturing of complex products is the most important part. The core competency shall be enhanced with design of interior corporate system through knowledge management and management of complex product systems. This is also a key issue that needs to be addressed in institutional empowerment. How to develop the core competency for complex product system management is a tough problem for enterprises in practice. Galloway and Hobday (2012) first took complex product systems as a product type that is significantly different from traditional mass-manufactured products for separate studies, initiating a new research field for innovation of complex product systems. Complex product systems refer to large-scale products, systems or infrastructures with massive R&D investment, high technical content and single-piece or small-batch customized production, including large-scale telecommunication and communication systems, large-scale computers, aerospace systems, power grid control systems, high-speed trains, semiconductor production lines and information systems, which are closely related to the modern industry. Although their production volume is small, the massive production and high unit price make them a major part in the GDP, which plays a vital role in modern economic development. By investigating various data of British products, Galloway and Hobday (2012) concluded that complex product systems shall provide 1.4 million to 4.3 million jobs, with its output accounting for at least 11% of the GDP. They further pointed out that innovation in complex product systems had contributed a lot to keeping UK’s position in the world economy. Because complex product systems are highly integrated, which consist of many subsystems and components, their successful development can promote the development of other industries, and drive in turn the development of other ordinary mass-manufactured products, such as the development and application of more advanced, mass-manufactured product production lines. The innovation of complex product systems is usually participated

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and organized by different units, which often involves multiple modules or subsystems to be jointly developed and propelled by integrators and suppliers participating in the development. Also, the innovation of complex product systems requires a high degree of user participation (Hobday 2000). For the management of complex product systems, the idea of complex scientific management (Xu and Chen 2019) shall be followed, using the systematic thinking and holistic view and starting from organizational design and knowledge management of complex product systems, to achieve the systematic integration of informationization, industrialization and intelligentization. Through management innovation, the creation, assimilation, conversion and application of explicit/implicit knowledge inside and outside the enterprise are accelerated (Chen et al. 2017a) to develop core capacities and realize breakthroughs in core products, core parts and core system modules (Chen et al. 2018a). Let’s delve into the case of Commercial Aircraft Corporation of China, Ltd. (hereinafter referred to as “COMAC”). COMAC, the implementation subject of the Midto-large Passenger Aircraft Project of the National Major Special Project for Large Aircrafts, is devoted to the scientific research, production and test of civil aircrafts and relevant products, as well as the sales, services, rental and operation of civil aircrafts. As a core practitioner and a backbone state-owned enterprise in China’s civil aircraft industry, COMAC shoulders the important mission of independently developing the Chinese civil aviation industry, participating in the global market competition and uplifting the overall performance of China’s science and technology. Large airliners are typical examples of the complex product systems. The innovation of complex product systems is a huge, complex and technology-intensive systems engineering. For instance, the development of a new aircraft model involves millions of parts. The development mostly deals with the positional and assembly relationship between parts and components, and the connection between finished airborne products and the airframe. COMAC’s knowledge management model, embodied in the “dualscreen innovation” construction based on the construction of the “second screen”, provides a new perspective and idea for the development of core capabilities. The “Second Screen” is a knowledge management project comprehensively promoted by COMAC in its technology centers, management departments and production workshops, aiming at developing professional capabilities in employees, which covers three steps of “establishing an electronic library, building a scene-based knowledge application platform and promoting knowledge intelligentization services”. The “Second Screen” requires employees to prepare another computer screen in addition to the one for daily work, to offer information reference, data support and knowledge reference. It does great favor to improving the employees’ working performance, refining the company’s knowledge system and creating a knowledge-based organization, thereby laying a solid foundation for developing core competency and continuous competitiveness of the company. “Dual-screen Innovation” is a comprehensive implementation of the “Second Screen”. It is not only a screen added to enrich the work forms, but also a mechanism innovation conducted to underscore the knowledge management and optimize the learning ability in the company. Viewed from a microscopic perspective, every employee benefits from the “Second Screen” to solve practical problems by a more scientific, efficient means, and obtains a sense

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of participation in building the knowledge system and further a sense of acquisition in enhancing the innovation performance (Zhao et al. 2017). The technological innovation in a company is in essence a transformation from knowledge values to social values, and the innovation capacity of a company is the ability to effectively combine the scientific and technological knowledge with the business knowledge and convert it into values. Based on the sharing and innovation participated by all staff, “Dual-screen Innovation” optimizes the learning atmosphere and organizational learning mechanism of the enterprise on a macro-level, creates an innovative cultural atmosphere and improves the core ability of the enterprise as an innovation subject (Chen et al. 2017b). Ascribed to the indigenous innovation, systems integration innovation and holistic innovation management represented by its “Dual-screen Innovation”, COMAC has successfully developed and piloted the first marketized large trunk airliner C919 with independent intellectual property rights, in less than a decade since the opening to the outside world, marking a trademark breakthrough in China’s indigenous innovation in manufacturing of high-end commercial airliners. CIMC sets another example of achieving major technological breakthroughs and value innovation with the help of knowledge management for complex product systems. Through 40 years of rapid development since its establishment in Shekou, Shenzhen in 1980, CIMC has become the world’s only logistics company that can provide series products such as dry cargo containers, refrigerated containers, tank containers and special containers of the largest scale and fullest varieties. High-end logistics equipment, represented by large composite containers, is a typical ultracomplex product system that sets extremely high requirements on the management of technical/non-technical knowledge in the company and brings huge challenge to the knowledge innovation capacity and process knowledge application of the employees. To improve the knowledge management, and design and application of complex product systems in the company, CIMC started to actively promote the implementation of the “3 + 1 Technical Innovation Project” in 2005; required the management and all technical personnel to propose three innovation proposals, make one valuable innovation achievement, and set up the “Excellence Center” based on the group’s business development goals; drove the improvement of the entire group through common continuous excellent performance of all departments and subsidiaries in technical and management knowledge; combined knowledge management with corporate strategies to turn a coarse R&D management into a refined process/operation management; hugely improved the innovation and economic performance in knowledge management inside and outside the group through a collaborative management model that blends learning of scientific knowledge with learning of empirical knowledge (Guo and Chen 2012). Over the years, CIMC has integrated global resources through the business idea of “global operation, local wisdom”, and refined its technological and service innovation capabilities via knowledge management targeting at complex systems. It has basically realized the industrial upgrade from the single product manufacturing to high-end manufacturing with system integration, from the simplex container business to the eight business patterns of containers, vehicles, energy and chemicals, ocean engineering, finance, airport equipment, modern logistics and industrial city, and topped the world

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in 20 subdivided fields such as road transportation vehicles and boarding bridges. In 2017, CIMC yielded an operating income of RMB76.3 billion, up 50% year on year, creating a record high, with its net profit growing 365% than previous year. In addition, with the help of knowledge management that targets at the complex product systems, CIMC successfully applied the HVM strategy to the deep-sea engineering business, and built the “Bluewhale I” ocean engineering platform to help with the trial mining of combustible ice in the South China Sea, thus making itself a “Pillar of the Great Power”. PR Newswire published a special article to praise the breakthrough: “This ‘Marine Giant’ with the deepest drilling depth has fully demonstrated the courage and strength of CIMC to challenge the state-of-the-art manufacturing technique.”

7.4 Holistic Innovation Strategies for High Value-Added Manufacturing in China The holistic innovation strategy adopted by China’s high value manufacturing is contrived to drive and help world-class manufacturing enterprises with dual “cores” (core technical competency and core management competency). See Fig. 7.3 for the holistic innovation strategy in China’s high value manufacturing.

Fig. 7.3 Holistic innovation strategy in China’s high value manufacturing

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First, for the core technical competency, it is necessary to integrate indigenous innovation, M&A digestion and collaborative innovation, so as to establish a knowledge and technology system joined by all the staff and develop core technical competencies for the enterprise. To remove the obstacle of core technologies and develop high-end manufacturing through indigenous innovation, it is a must to vigorously and continuously invest in scientific and technological R&D, give high requirements and control on the products, and strive to realize the joint development of technological innovation and quality control. M&A digestion can build a double helix of indigenous innovation and market resource acquisition. Apart from the core strategy of indigenous innovation, enterprises need to have a deep insight into the industry and take the initiative to conduct global technological acquisition. Through assimilation, it’s coupled with indigenous innovation technologies to accelerate seeking breakthroughs and working out key technologies. Collaborative innovation means not only to establish an efficient R&D system for collaborative production together with suppliers, partners and research institutions at upstream/downstream of the domestic industrial chain, but also to realize all time/space collaboration of indigenous innovation technologies and cutting-edge technologies at home and abroad with the localized trans-regional cooperation model. It offers powerful momentum for the enterprise to rank among top players in the world, and win international reputation and competitiveness. Second, the core management competency functions as the accelerant and institutional guarantee of technological innovation. Counting upon the holistic innovation paradigm, the enterprise shall actively promote the management innovation, implement the excellent performance management represented by integrated business models, business system design and budget management, and form a management knowledge system that backs the development of core competencies in the enterprise. The excellent performance model contains seven elements: leadership, strategy, market, resource, process, monitoring and result. Various management theories related to performance will be sorted out, and various management tools and means used by enterprises will be integrated to give proper play to each of them, put them together to apply performance management to all aspects of operation management, and turn strategies into practice to guarantee the implementation of various strategies. The design of the integrated management system embodies a systematic, dynamic and multi-dimensional integration concept. With corporate full-value integration as the guide, integration of relevant disciplines as the basis, integration of various management tools as the support, and integration of core business processes as the key, it promotes the orderly operation, enhances overall value of the enterprise and eventually fulfills strategic objectives of the enterprise. Budget management solves the problems of too many management levels, too long a business chain, and too hard the implementation of corporate strategies. Consequently, it links strategies with performance, connects organization with collaboration, highlights the comprehensive budget management system that covers all staff, whole process, all businesses and entire value chain, shapes the “strategic planning—budget plan—execution monitoring—analysis and improvement— examination and appraisal” closed management loop, propels the “group—business

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department—branch/subsidiary—department—staff” collaboration of goals and actions and promotes the implementation of the corporate strategies. Third, internationalization, informationization, and open innovation act as the three powerful supports for the holistic innovation of the enterprise and the completion of high value manufacturing. The internationalization strategy targets at the Chinese market and aspires to take the medium-to-high position at the global value chain. To better reach into overseas markets and improve the company’s innovation performance, it is demanded to pay attention to the implementation of the internationalization strategy, and the operation management of related R&D and manufacturing bases overseas. In particular, it ought to formulate different internationalization directions, i.e. market occupancy and technology acquisition, according to specific overseas markets. The key of informationization construction is to speed up the international network layout and provide a full range of services through agents and outlets overseas. Open innovation is a new cooperation model that seeks supplementation of advantages with Chinese enterprises that have gone global, so as to realize a multi-win situation and boost the industrial transformation and upgrading. Importance shall also be attached to the industry-university-research open innovation. National and provincial R&D systems could be established to carry out new product development, and research on product adaptability, generic technologies and experimental technologies. A major subject in building a future-oriented power of scientific and technological innovation is to better the performance of the national innovation system, improve the corporate innovation system and cultivate world-class innovation leaders (Chen 2018). The transformation and upgrading of the manufacturing industry under the HVM strategy rely upon not only the interdisciplinary application of strategic design, indigenous innovation, and emerging Internet technologies, but also the blend of strategic leadership, innovation foundation and institutional empowerment for reform of the manufacturing management model (Chen et al. 2017a), thus giving play to the exponential thrust of scientific planning, release of organizational efficacy, resource optimization and humanistic dividend to the innovation efficiency and performance of manufacturing enterprises. By implementing the holistic innovation strategy, manufacturing enterprises can combine the national innovation-driven development strategy with the trend of industrial transformation and upgrading, and go beyond the traditional management model and organizational boundaries of traditional enterprises to create an efficient, open and collaborative corporate technological innovation ecosystem (Chen et al. 2018a, b, c, d). Inspired by the holistic innovation theory, the enterprises seek to integrate the subjects and elements of the external resource supply end that is closely related to the corporate innovation development, the policy supporting end, and the innovation results application end, mobilize technical knowledge required for innovation (R&D, manufacturing, human resources and capital) and non-technical knowledge (organization, process, system and culture), and develop core technical competencies and core management competencies of the enterprises. Implementing the holistic innovation strategy and improving the overall efficiency of the enterprise’s technological innovation ecosystem can accelerate the advance and realization from knowledge management to value creation (Chen et al.

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2017b), cultivate world-class manufacturing enterprises, and boost the building of a power of scientific and technological innovation. “Innovation-driven development” is a core of China’s development in the new era, and the innovation-driven building of a power of manufacturing is a major pillar for the building of a power of scientific and technological innovation. As the building of a socialism with Chinese characteristics has entered a new era, the innovation-driven development strategy is implemented, the international manufacturing industry falls into fiercer competition, the new technological revolution is bringing disruptive impact, and the Europe and USA are reshaping their global manufacturing advantages, we must accelerate the promotion of the “Made in China 2025” proposal, maintain and improve the global competitiveness of China’s manufacturing industry, break through the “low-end locking”, ascend to medium end/high end at the GVC and implement the HVM strategy that is based on the holistic innovation theory, that fits into China’s situation and that leads the future development. Namely, through the holistic innovation policy system oriented to the whole value chain of the manufacturing industry, China must combine the independent R&D and design driving with the cross-boundary application of new technologies, comprehensively promote the technological innovation, mechanism innovation, business model innovation, and knowledge management, develop core competitiveness and dynamic ensemble competency of the manufacturing enterprises and improve the added values of the manufacturing enterprises. The effective implementation of this strategy has important strategic significance for accelerating building China into a power of manufacturing, speeding up China’s shift from a country of manufacturing to a power of manufacturing and its transformation from a catcher’s innovation type to a leader’s innovation type, and ascending to medium end/high end at the global industrial chain and global value chain (Chen 2018). What’s more, implementing the HVM strategy will hugely enhance the overall efficiency of the national innovation system and offer significant industrial support to China’s further implementing the high value-added industry strategy, accelerating the integral development of three industries and seeking urban–rural development and regional coordinated development, so as to assist in the precise poverty alleviation (Chen et al. 2018b), rural revitalization (Chen 2018) and economic/social sustainable development.

References Bai, Chunli. 2017. Scientific planning and accelerating the construction of a power of science and technology. Bulletin of Chinese Academy of Sciences 32 (5): 446–452. Chen, Jin. 1994. From learning model of technology introduction to that of indigenous innovation. Science Research Management 2 (31): 32–34. Chen, Jin. 2017. Theory of Enterprise Innovation Ecosystem. Beijing: Science Press. Chen, Jin. 2018. Reflections on building a new national innovation system. Bulletin of Chinese Academy of Sciences 33 (5): 31–35. Chen, Jin, and Wenjing Lv. 2017. Artificial intelligence and cultivation of new engineering talents: A major turn. Research in Higher Education of Engineering 6: 18–23.

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Chapter 8

Pillar of a Great Power: Holistic Innovation in the Development of the Chinese High-Speed Railway Industry While we are striving to uplift the domestic industry to the mid-to-high level at the global industrial chain, Fuxing high-speed trains mark our first step to change from a follower to a leader. —Xi Jinping. (Speech at the 19th Meeting of Academicians of Chinese Academy of Sciences and the 14th Meeting of Academicians of Chinese Academy of Engineering on May 28, 2018)

As an attempt to construct a local innovation paradigm, Chen et al. (2017) put forward the theoretical framework for “holistic innovation” based on the research results of the innovation strategy orientation, open innovation, collaborative innovation and total innovation, paired with the context of China’s local innovation practice. However, the existing research framework for holistic innovation fails to discuss the contextual concept. Relevant concepts and scopes shall be defined in the theoretical construction and the hierarchical structure and correlation of main concepts in the research paradigm shall be sorted out, to effectively reveal the implicit mechanism to apply the innovation management practice in the theoretical framework while enhancing the conceptualization of the theoretical framework (Mao and Li 2010). Based on the “holistic innovation” paradigm and the innovation practices of China’s high-speed railway industry, a national key scientific and technological innovation project, this book articulates on the applicability and framework completeness of the holistic innovation theory in an attempt to establish the theoretical paradigm for innovation activities under China’s national institution, such as the scientific and technological innovation project, and offer reference to China’s innovation management practices.

8.1 Development of the Chinese High-Speed Railway Industry China’s high-speed railway industry has gone through four stages of development— technological accumulation stage, introduction and learning stage, top-down design stage and collaborative development stage (Xu 2017) (Table 8.1; Fig. 8.1). © Science Press 2023 J. Chen, Holistic Innovation, https://doi.org/10.1007/978-981-19-8625-3_8

233

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Table 8.1 China’s high-speed railway innovation at each development stage Stage

Technological accumulation stage

Introduction and learning stage

Top-down design stage 2009–2015

Collaborative development stage

Time

2003 and before

2004–2008

Strategy

Independent research and development

Open indigenous innovation

Strategy

Imitate foreign advanced Mass purchase whole-vehicle concepts whole vehicles and bogies and sign technical transfer contracts; reverse manufacturing

Grasp of core technologies

Promote high-speed railway technologies with the implementation of the “Belt and Road” and deepen the autonomy

Representative model

DDJ1, DJF2, M+5T+M and DJJ2

CRH1, CRH2, CRH3 and CRH5

CRH380A, CRH380B and China Standardized EMUs

“Fuxing” China Standardized EMU

High-speed railway construction

Construct the Qinhuangdao-Shenyang High-speed Railway

Plan and construct “Four Verticals and Four Horizontals” high-speed railway lines

Operation of “Four Verticals and Four Horizontals” high-speed railway lines

Construct “Eight Verticals and Eight Horizontals” high-speed railway lines

After 2015 Going out and carrying out comprehensive indigenous innovation

Note 1. Beijing-Shanghai high-speed railway line added to the “Four Verticals”; Hangzhou-NanchangChangsha high-speed railway line added to the “Four Horizontals” 2. “Eight Verticals” include the Coastal passage, the Beijing-Shanghai passage, the Beijing-Hong Kong (Taipei) corridor, the Beijing-Harbin, Beijing-Hong Kong (Macau) corridor, the HohhotNanning passage, the Beijing-Kunming passage, the Baotou (Yinchuan)-Hainan corridor and the Lanzhou (Xining)-Guangzhou corridor; “Eight Horizontals” include the Suifen-Manchuria corridor, the Beijing-Lanzhou passage, the Qingdao-Yinchuan passage, the Land Bridge passage, the Riverside passage, the Shanghai-Kunming passage, the Xiamen-Chongqing passage and the Guangzhou-Kunming passage

The author selects China’s high-speed railway industry as the subject of research, explores the process and mechanism of the industry’s development and evolution, and extracts evidences concerning the “holistic innovation” and related elements during the evolution. The reasons for selecting China’s high-speed railway industry include: First, the geographical conditions. As a developing country and the world’s

8.2 Sources and Collection of Data of High-Speed Railway Industry

235

Fig. 8.1 Development stages of China’s high-speed railway industry

second-largest economy, China is undergoing a rapid transformation and reform with its focus laid on the improvement of core competitiveness (Li et al. 2008). To realize industrial transformation and upgrading, the top-level design in the macro sense and the industrial innovation practice in the microsense are combined (Ma 2019) to provide reference for China’s high-speed railway industry to catch up and rerise. Second, the characteristics of the industry. China’s high-speed railway industry has the properties of a revelatory case (Eisenhardt and Graebner 2007). Since China implemented the policy of reform and opening up, a large number of supportive policies aimed at industrial competitiveness have been promulgated, such as the “market for technology”, “Top Ten Industrial Revitalization Plans”, and “Going out of Highend Equipment Manufacturing Industry”. As the most successful case of industrial innovation, China’s high-speed railway provides rich experience and reference for research and practice. Tracing the evolution and development experience of China’s high-speed railway industry conforms to the principle of selection of typical cases (Siggelkow 2007).

8.2 Sources and Collection of Data of High-Speed Railway Industry To make the fundamental materials more general and grounded (Yin 2017), the original materials are collected from multiple sources to ensure the underlying concepts, cognitions and theories can show up as thoroughly as possible (Ferlie et al. 2005). The main data types include public data of the State Key Laboratory, interviews, news and speeches, policy texts and industrial reports, literature, and data, as detailed in Table 8.2.

Database of Xi Jinping’s series of important speeches

National Railway Administration

Cnki.net

E-libraries of universities

News and speeches

Policy texts and industrial reports

Literature

Data

8000 words

Research on China’s Railway Reform and Restructuring and Issues Concerning Its High-speed Railway Industry, and Go across the “Belt and Road”: Global Strategy for China’s High-speed Railway Industry

35 papers on the development of the high-speed railway industry

229,000 words

140,000 words

18 policy documents and industrial reports, 193,000 words including the national strategies, industrial policies, scientific and technological innovation policies, foreign policies, action plans, industrial standards and regulations

8 speeches by Xi Jinping from 2014 to 2017

10,000 words

Chinese language video site

Interviews

Video files of 8 interviews with leading Party and government cadres and university professors from 2008 to 2015, with a duration of 20–45 minutes

Experimental text’s basic data of basic research and 20,000 words experiment platform, service performance research platform and digital simulation platform of the high-speed railway industry

Universities and scientific research institutions

Public data of State Key Laboratory

Data scale

Basic contents

Data sources

Data type

Table 8.2 Data sources

236 8 Pillar of a Great Power: Holistic Innovation in the Development …

8.2 Sources and Collection of Data of High-Speed Railway Industry

237

Case texts are chiefly obtained through public channels. For the specific characteristics of the strategic, open, collaborative and total innovation, different text collection channels are selected: (1) Collect Xi Jinping’s series of important speeches, and search for all speeches that contain the keywords “High-speed Railway”; (2) collect all relevant journal papers, and master’s and doctoral theses with keywords “China” and “High-speed Railway” through the journal papers websites; (3) collect all relevant news with keywords “China” and “High-speed Railway” on news websites (caijing.com.cn, caixin.com, www.guancha.cn and www.zaobao.com); (4) in the “Reading Show” book database, collect all related books with keywords “China” and “High-speed Railway”; (5) collect video and audio data, and transcode into text data sentence by sentence. The said data was collected and transcribed by two postgraduates in engineering management majors to initially form data of 600,000 words. To ensure the reliability and validity of the data, apart from increasing the diversity of text data sources, the text cleanup and screening below have also been conducted: (1) Conduct comprehensive comparison of text contents to exclude biographies, purely technical data and descriptions irrelevant to China’s high-speed railway technology innovation, to eventually form text data of nearly 400,000 words; (2) send the text data collected to the researchers of the National Rail Transit Electrification and Automation Engineering Technique Research Center of Southwest Jiaotong University (local relatives and friends of the researchers) to evaluate the quality of the text content and provide supplementary comments; (3) the author continuously compares and iterates between the concepts/dimensions from cases and existing theoretical frameworks of holistic innovation, so that key concepts, dimensions and logical relationships can be worked out to finally complete the theory upon the existing data. The data is specifically analyzed with the software NVivo, and the text information is processed with the coding procedure: (1) Establish the theoretical framework of “holistic innovation” through issue definition and literature review, and select typical cases. (2) Construct preliminary tree nodes, according to the theoretical framework of “holistic innovation”. (3) Establish free nodes for all initial data through open coding, and classify them into preset tree nodes; free nodes that cannot be classified will be classified twice and named accordingly, to create new tree nodes. (4) Realize the affiliation management between various concepts with the functions of free nodes and tree nodes. (5) Categorize and organize the concepts and categories of open coding with the axial coding. (6) Link open coding and axial coding, to form a theoretical framework and various core categories.

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8.3 Development of the High-Speed Railway Industry Based on Holistic Innovation 8.3.1 Concepts, Supplements and Propositions of “Strategic Orientation” 2003 and before was a stage of technological accumulation, where “independent R&D” strategy was adopted. Limited by the national strength, instead of massive introduction of technologies overseas, China had to develop the quasi-high-speed and high-speed trains independently and imitate merely through pictures and news before 2003. At that time, DDJ1, DJF2, M+5T+M and DJJ2 were developed, with a speed merely of 160–250 km/h and a short operation mileage. Besides, a variety of models were developed in absence of a strategic leadership, which contributed to the non-systematic development of China’s high-speed trains. From 2004 to 2008 was a stage of introduction and learning, where the “open indigenous innovation” strategy was employed. In this stage, backbone enterprises of China’s rail transit equipment manufacturing industry established partnership with overseas counterparts. CRRC Qingdao Sifang Co., Ltd., a subsidiary of the former CSR Group, joined hands with Bombardier to design and produce CRH1A EMU products and derivatives, and with Kawasaki (Japan) to design and produce CRH2A EMU products and derivatives; CRRC Tangshan Co., Ltd., a subsidiary of the former CNR Group, partnered with Siemens (Germany) to design and produce CRH3C EMU products and derivatives; CRRC Changchun Railway Vehicles Co., Ltd., a subsidiary of the former CNR Group, cooperated with Alstom (France) to design and produce CRH5A EMU products and derivatives. With the introduction and transformation of technologies, the derivative EMUs could basically be made in China now, even though a huge amount of technical transfer fees shall be paid. From 2009 to 2015 was the top-down design stage, where the “indigenous innovation” strategy was adopted. The “top-down design” stage decomposes the functional structure and system of the product and offers solutions to all subsystems and parts, aiming to produce products that could be mass manufactured and operate steadily, with market demands as the top-level design requirements. After the “market for technology” is successfully implemented, with the help of assimilation and indigenous innovation, nine key technologies, including high-speed bogies, traction control systems, high-speed brake and train network control systems, have been independently developed, and the establishment of the Chinese EMU standard system has also started. From 2015 to present is the stage of collaborative development, where “going global” and total indigenous innovation strategies are implemented to respond to the “Belt and Road” initiative, and total independence of key technologies is obtained via in-depth autonomy. The “Fuxing” China Standardized EMUs, with a speed of 350km/h and total independent intellectual property rights and technical standard system, has been officially put into operation. As a high-speed railway owner with the

8.4 Concepts, Supplements and Propositions of “Opening”

239

most complete systemic technologies, the strongest integration capability, the highest operating speed, and the longest operating mileage, China enhances its comprehensive strength and diplomatic image, follows the global trend of economic recovery and peaceful development, proposes the “Belt and Road” and coordinates the development of railway, highway, waterway, airway and pipeline, in a bid to realize the collaborative development against the “Greater Transportation” goal. China’s development marks an economic growth process of a late-mover economy with national characteristics, during which many new management phenomena have emerged. During the exploratory process, the “Crossing the river by feeling the stone” spirit shall be upheld. Under the thought centering on the dialectical unity of knowledge and practice, the “practical” strategic orientation has been proposed in addition to the aggressive and offensive strategic orientation focused by existing literature. Different from the clear-cut strategic positioning of the former two, the “practical” strategic orientation offers enterprises merely a vague strategic guidance, asking them to continuously assimilate external knowledge during practices, sum up and sort out internal knowledge of the enterprises. As a result, the strategic orientation is made clearer, which conforms to the exploratory, practical and uncertain properties of the innovation activities. Therefore, the concept of “strategic orientation” involves three types: the offensive, defensive and practical. The text encoding and tree node aggregation have further refined the connotation of each. The quotations of “strategic orientation” in the holistic innovation of China’s high-speed railway industry are listed in Table 8.3, which are explained as follows: (1) The offensive type fully targets at the competitors and pursues excellence at technological, market, management and standard making among industrial peers, during the target setting and strategic positioning process; (2) the defensive type, with stable technologies, markets and resources, focuses on the internal optimization and the shaping of core capabilities; (3) the practical type sets feasible targets, attaches importance to basic research and investigation in the operation process, fully considers the actual situation and takes practice as the guide. Based on what mentioned above, the research comes to the conclusion: Proposition 1 The ““strategic orientation”” in holistic innovation includes the offensive, defensive and practical types, which are intended to explain the overall strategic goal orientation of major innovation activities.

8.4 Concepts, Supplements and Propositions of “Opening” China’s high-speed railway innovation is a typical manifestation of the two-way opening of the equipment manufacturing industry. The open “introduction” is mainly reflected in the “introduction and learning stage”. In the acquisition of technical resources, the introduction of EMUs with a speed above 200 km/h, as well as 10 supporting technologies such as windshields,

240

8 Pillar of a Great Power: Holistic Innovation in the Development …

Table 8.3 Quotations of “strategic orientation” in the holistic innovation of China’s high-speed railway industry Secondary concept Evidential examples (typical citations) Offensive type

The top-level design indicators of high-speed Goal of advance trains are used as the basis for China to develop the high-speed railway technologies during the indigenous innovation period China’s high-speed railway practitioners... primarily compete with domestic counterparts in the domestic market, and with foreign rail transit equipment giants in the international market; Chinese high-speed train manufacturers... worked closely with giants before and are growing on their shoulders and starting to compete with them on the international market now

Offensive type

Keywords

Catch-up and compete

…have enabled the physical interconnection of High-standard positioning mechanical interfaces, the data interconnection of electrical interfaces, the logical interconnection of software interfaces, the intercommunication of operation interfaces, and the exchange of main hardware among standardized EMUs created by different platforms, and established the Chinese standard system that is different from the “European standard” and the “Japanese standard”; Establishing the Chinese high-speed railway standards turns out the correct choice for building a nation of innovation and implementing the “going global” strategy for Chinese high-speed railway practitioners Made in China 2025... in the coming decade, Technological leadership China’s rail transit equipment industry will focus on developing safe and reliable, advanced and ripe, and energy-saving and environmentally friendly product pedigrees using the digital/informationized technological platform, and new materials/technologies/processes

Defensive type

From the perspective of strategic orientation, R&D accumulation the previous R&D orientation upon exploration and experiment is shifted into that upon product demonstration, against the principle of mass producing commercial products that are independently developed and operating skillfully; “Unified bidding invitation, single-end external liaison, designated undertaker and transferor”... (continued)

8.4 Concepts, Supplements and Propositions of “Opening”

241

Table 8.3 (continued) Secondary concept Evidential examples (typical citations)

Keywords

For the sake of balancing the competition, the Resource coordination former Ministry of Railways... undertaken by different companies... The oligopolistic competition pattern in which no one gives in and each learns from others has undoubtedly stimulated the innovation vitality in enterprises and promoted the progress of technological capabilities of enterprises... Through government control of resources, the strengths of enterprises are balanced and a duopoly competition pattern is created Practical

During the actual development of new rolling Actual demands stock products... propose design requirements on behalf of users, review and issue design assignments; the development and design of the China Standardized EMUs, with a speed of 350 km/h, first involves the determination of technical indicators according to the demands... many links; the innovation of Chinese high-speed train enterprises is based on... the operating environment, such as the passenger flow and passenger habits The exploration and practice of vacuum Top-down design pipeline transportation has also begun; the “top-down” design works out relevant core parts and train head types starting from the R&D concepts and speed targets and eventually puts the new train models into service The former Ministry of Railways clarified the Feasible policy principle of introducing “advanced, mature, economical, endurable and reliable” technologies in the Main Technical Policies for Railway

auxiliary power supply systems, air-conditioning systems and couplers, was started in 2003 under the leadership of the former Ministry of Railways; Siemens, Alstom, Bombardier, Kawasaki and more big-name enterprises have entered into technical cooperation and technological transfer agreements with Chinese enterprises. In the acquisition of capital resources, the state has changed from financial appropriation to bank loans, and encouraged the development of national strategic industries by prioritizing loans, so as to follow the market changes. The open “going global” is mainly embodied in the “top-down design” and “ collaborative development” stages. In terms of technical resource output, China has obtained rich data and experience concerning the high-speed rail operation by taking advantage of the particularity of geological, landform and climate diversity. With this unique core competitive advantage, China’s high-speed railway industry can adapt to

242

8 Pillar of a Great Power: Holistic Innovation in the Development …

complex geological structures and extreme climates, thus ensuring the adaptability and reliability of infrastructure and equipment. In the end, technologies are applicable to a wider range of fields. In addition, the Chinese high-speed railway standard system established through assimilation and indigenous innovation can make products more systematic and unified, allowing technological research and development to evolve into an open system. Regarding the output of capital resources, China established the “Silk Road Fund” and the “Asian Infrastructure Investment Bank” (AIIB) to deal with the Western-dominated world financial pattern and undertook foreign high-speed rail projects through the Export-Import Bank of China; the Export-Import Bank of China provides loans to foreign buyers through high-speed rail projects, supports Chinese high-speed rail projects overseas and promotes interregional co-prosperity and development. Based on the literature review, the concept of “open innovation” can be divided into: single open, bilateral open and multilateral open, with measuring indexes for each. Text encoding and tree node aggregation have further refined the connotation of each. The “open”-related quotations in holistic innovation of China’s high-speed railway industry are listed in Table 8.4. Through the literature analysis and case analysis of the concept of “opening”, three main categories are formed: (1) Single open, the opening among departments inside the enterprise and among subjects inside the system; (2) bilateral open, the opening between two subjects from different systems to form a two-way point-to-point connection; (3) multilateral open, the all-round opening between subjects from different systems to form a networked connection relationship. Based on what mentioned above, the research comes to the conclusion: Proposition 2 The “opening” in the holistic innovation includes the “single open” with the innovation subject as the focus, the “bilateral open” based on the two-way coupling of subjects, and the “multilateral open” that concerns multiple subjects, which are used to explain the internal/external flow of resources among participating subjects of major innovation activities.

8.5 Concepts, Supplements and Propositions of “Collaboration” The “collaborative innovation” model of China’s high-speed railway industry is also evolving along the way: industry-university-research collaboration within the railway system → Sino-foreign technical cooperation in the onlooker’s competition pattern → national-level government-industry-university-research cooperation in the duopoly competition pattern → government-coordinated high-speed railway exports.

Single open

Keywords

CNR’s industry-university-research cooperation: State Key Laboratory of EMU and Locomotive Traction and Control, Liaoning Provincial Rail Transit Equipment Electric Drive and Control Engineering Technology Research Center, CNR-Beijing Jiaotong University Industry-University-Research Alliance, CNR-Tsinghua University Industry-University-Research Alliance, CNR-Czech Technical University in Prague Traction and Control Technology Joint R&D Center (traction and control technology), CNR-Swiss PROSE Bogie Technology Joint R&D Center (bogie technology), CNR-University of Michigan Welding Technology R&D Center (High-speed rail welding technology: to jointly complete the fatigue design of rail vehicle structures and the preparation of welding quality acceptance standards), Beijing Jiaotong University Electric Drive Technology Branch of CNR Research Institute, and Dalian Jiaotong University Welding Structure Technology Branch of CNR Research Institute (electric drive and welding technology)

(continued)

Open cooperation of enterprises

CSR’s global R&D system incorporates: overseas R&D institutions (such as the UK Corporate R&D system Semiconductor R&D Center, US R&D Center, etc.), national R&D and experimental institutions (including the National Engineering Research Center for Communication Technology, State Key Laboratory for Traction and Control of Locomotives and EMUs, National Engineering Laboratory for High-speed Train System Integration, and National Engineering Technology Research Center for High-speed EMU Assembly), comprehensive research institutions (CRRC Zhuzhou Locomotive Co., Ltd. and CRRC Qishuyan Institute Co., Ltd.), 7 nationally recognized testing and experimental centers, 8 post-doctoral workstations, 9 nationally recognized corporate technology centers, 10 provincial engineering technology research centers (engineering laboratories) and 8 provincially recognized corporate technology centers

Secondary concept Evidential examples (typical citations)

Table 8.4 “Open”-related quotations in the holistic innovation of China’s high-speed railway industry

8.5 Concepts, Supplements and Propositions of “Collaboration” 243

Multilateral open

Bilateral open

Keywords

Open to the outside world

(continued)

The Ministry of Science and Technology and the former Ministry of Railways jointly signed Industry-University-Research cooperation the Joint Action Plan for Indigenous Innovation of China’s High-speed Trains, claiming to develop Chinese high-speed train technologies and products (speed above 350 km/h) of independent intellectual property rights and international competitiveness, together with 25 universities, 11 scientific research institutes, 51 national laboratories and engineering research centers, 68 academicians, over 700 professors and researchers, and 10,000 technicians or so

It has successively undertaken tasks, such as the Ankara-Istanbul high-speed railway in Turkey, the Medina-Mecca high-speed railway in Saudi Arabia, the Sino-Thai railway, the Hungry-Serbia high-speed railway and the Moscow-Kazan high-speed railway, to export technological and engineering manufacturing capacity

On the basis of introducing and learning some quality management practices of Siemens, CRRC Tangshan has formed its own quality management system; products of different manufacturers can communicate with each other, EMUs of the same speed level can do coupled running, and EMUs of different speed levels can rescue each other; The OEM company has close cooperation with other companies in the industry chain, foreign companies and colleges and universities

CSR Qingdao Sifang-Canada Bombardier jointly developed the CRH EMU, CRH1A (speed Inward opening at 200 km/h); CSR Qingdao Sifang joined hands with 6 enterprises, including Kawasaki, to develop the CRH EMU, CRH2A (speed at 200 km/h); CNR Tangshan-Germany Siemens jointly developed the CRH3C EMU model (speed at 300 km/h); CNR National Engineering Research Center for Communication Technology partnered with French Alstom to develop CRH5A EMU model (speed at 200 km/h)

Secondary concept Evidential examples (typical citations)

Table 8.4 (continued)

244 8 Pillar of a Great Power: Holistic Innovation in the Development …

Multilateral open

Industry-University-Research cooperation

Keywords

Integrate the cultural elements of various countries and regions to reflect the diversified cultural characteristics; from the spatial structure of routes and bridges, to the station functions and design concepts, and even to the compartment floor and seat fabric patterns, all these contain new cultural concepts and elements... form a “friend community” and a “cultural community” that respect, blend and learn from each other

Industrial ecology

With the increase in market openness after China joined the World Trade Organization, Global network more and more foreign-funded enterprises are flocking into China... promote trade convenience and liberalization, and the construction of Brazilian freight railway, high-speed railway, and “Pacific-Atlantic Railway”...

The indigenous innovation of CRH380A, up to 380 km/h, involves more than 50 enterprises, over 330 scientific research institutes, nearly 60 academicians, over 500 professors, and roughly 10,000 R&D personnel from scientific research enterprises

Secondary concept Evidential examples (typical citations)

Table 8.4 (continued)

8.5 Concepts, Supplements and Propositions of “Collaboration” 245

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In the stage of technological accumulation, the industry-university-research collaboration was adopted within the railway system. The state put forward the development plan of “capacity expansion and acceleration” by means of top-level design. The former Ministry of Railways built a collaborative innovation platform with the help of directly affiliated enterprises, universities and research institutes, and developed the streamlined appearance technology, high-speed bogie technology and highpower traction power technology. The cooperation and collaboration mechanism has a semi-military management sense. At the introduction and learning stage, relying on the power structure of the rail transit industry, the former Ministry of Railways first limited the number of companies participating in the technological introduction to form an oligopolistic competition pattern in the industry. Secondly, it effectively controlled the whole process of technological introduction, carried out technical cooperation with 4 worldrenowned high-speed train manufacturers, i.e. Alstom of France, Kawasaki of Japan, Bombardier of Canada, and Siemens of Germany, and bisected the technological achievements and resources in CSR and CNR groups to balance the corporate competences inside the industry. Finally, it established an industry-university-research cooperation system that integrates organizational management, R&D and design, and manufacturing all in one: (1) A foreign-dominated manufacturing platform was built, and Sino-foreign cooperation was enabled through joint design, technical training and technical support; (2) an assimilation platform led by OEMs was built, and research institutes and universities were involved to assimilate and transform technologies introduced; (3) a reinnovation platform led by research institutes and universities was set up to carry out reinnovation in conjunction with China’s unique geological conditions and construction conditions, at the basic research, theoretical construction and product design levels. In the top-down design stage, the former Ministry of Railways formed a duopoly competition pattern in the rail transit industry by balancing the strengths of CSR and CNR groups; Subsequently, it cooperated with the Ministry of Science and Technology, the National Development and Reform Commission, the Ministry of Education, etc. to accomplish resource integration nationwide based upon the major project of “China research on key high-speed train technologies and development of relevant equipment”, and to co-build the national government-industry-universityresearch cooperation model and high-speed rail technology collaborative innovation center. The top-down form of collaborative innovation is conducive to the rapid formation of China’s high-speed rail technical standards. China Academy of Railway Sciences Co., Ltd., CNR, and China Railway Construction Co., Ltd. specially provided manpower, funds, venues, information, data and other support to various collaborative innovation centers, making the most of generic basic research and experimental resources to provide theoretical research basis and experimental data reserves for the establishment of high-speed rail technology standard system, and greatly shorten the innovation time. At the stage of collaborative development, the overall planning and coordination were chiefly realized through external and internal guidance of the government. Now that the high-speed train is a public, social and basic product of strategy,

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the realization of regional “collaborative development” must involve action of the nation and will of the government to certain extent. Through the top-level design, the government closely linked the “going global” strategy for high-speed rail and the “Belt and Road” initiative with the diplomatic behaviors of the country; During the construction, Chinese and foreign enterprises joined forces, with enterprises in various industries such as railways, finance, and insurance realizing resource sharing, risk co-assumption, cost allocation, market expansion and joint development through equity participation, alliance, joint venture, and OEM production. In the results of the literature review, the concept of “collaboration” engages three dimensions: collaborative subject, collaborative scenario and collaborative means, with specific measurement indicators for each. Text encoding and tree node aggregation have further refined the connotation of each. The “collaboration”-related quotations in holistic innovation of China’s high-speed railway industry are listed in Table 8.5. Through the integration of literature analysis and case studies, the research determines three categories: (1) Collaborative subject, the active subject with innovative vitality that participates in the innovation system. The quantity, quality and heterogeneity of the innovative subjects are all important measures; (2) collaborative scenarios, the external environment for innovation activities, including the industrial environment, market environment, competition environment and policy environment; (3) collaborative means, the specific ways to establish the collaborative relationships, including the technological transfer, enterprise alliance, risk sharing and achievement sharing. Based on what mentioned above, the research comes to the conclusion: Proposition 3 “Collaboration” in holistic innovation includes three dimensions: collaborative subject, collaborative scenario and collaborative means, which are used to explain the common behaviors, such as subject cooperation and mutual benefit, in major innovation activities.

8.6 Concepts, Supplements and Propositions of “Comprehensiveness” “Total innovation” covers the all-element mobilization, all-staff participation and all-time/space implementation, which is in essence a strategic, open and collaborative complex. The more complete the innovation system, the more prominent the importance of total innovation. At the introduction and learning stage, the high-speed rail development and the national development were closely linked in an aim to build the “Chinese High-speed Train” brand, set up the “Me-centered” strategy and boost the local manufacturing sector. As a late-comer endeavoring to catch up with the advanced high-speed rail technologies, China adheres to indraught assimilation innovation and encourages original/local/indigenous innovation to realize the high-speed rail “creation” to some

The former Ministry of Railways ended its long government-enterprise ambiguity by bisecting into the National Railway Administration (incorporated into the Ministry of Transport) and the China National Railway Group Limited; CSR and CNR officially remerged into CRRC... the regulatory environment for the high-speed rail industry has undergone considerable changes... the railway authorities have unified the institutional means such as the market, foreign negotiation, product procurement... the former Ministry of Railways used the network-transportation integrated management system... management power is further centralized through the legitimacy granted by the system

Collaborative scenario Locomotive parts, maintenance consumables and station operations will continuously benefit...

China’s railway industry has gradually formed a user-centered, industry-university-research-application integrated technological development system... ensure the division of labor and collaboration of high-speed train innovation-related institutions in technical capabilities and the industrial chain

(continued)

Management system and institutional platform

EMU platform

Industry-university-research-application

Keywords

Evidential examples (typical citations)

…including both Chinese and foreign parties; the innovation system involves three Industry-university-research subjects—the government, enterprises and universities; the carriers of the top-down design capability of China’s high-speed rail equipment are the industry-university-research talents, who specialize in their own professions

Secondary concept

Collaborative subject

Table 8.5 “Collaboration”-related quotations in the holistic innovation of China’s high-speed railway industry

248 8 Pillar of a Great Power: Holistic Innovation in the Development …

Evidential examples (typical citations)

Keywords

Collaborative means

Technological transfer

establish the vertical alliance, horizontal alliance, cross-industry joint ventures, Enterprise alliance mutual shareholding, mergers and acquisitions, technological development alliance, OEM agreements, cooperative production alliance, service alliance, franchising and outsourcing in the railway industry

……purchase foreign prototype trains and obtain technological transfer at preferential prices, and the EMUs jointly designed and produced use a unified Chinese brand; sign a complete technological transfer contract

Accelerate the improvement of the indigenous innovation capability of high-speed Domestic market rail enterprises via the market competition; the oligopolistic competitive pattern... form a competition pattern, stimulate the innovation enthusiasm of technology-importing enterprises, and establish a competition system among technology supplying enterprises; instead of letting a single company be responsible for this project, different companies are involved... control the number of winning bids, actively balance the competition pattern in the industry, and narrow the scope of competition again...

Collaborative scenario Beijing-Shanghai high-speed railway project: The State Scientific and Research project Technological Commission, the State Economic and Trade Commission, and the National Economic System Reform Commission formed the “Preliminary Research Project Group for Beijing-Shanghai High-speed Railway” to demonstrate the feasibility of Beijing-Shanghai high-speed railway; Under the industry-university-research cooperation led by the said ministries and commissions, altogether 553 high-speed railway scientific research projects have been completed

Secondary concept

Table 8.5 (continued)

(continued)

8.6 Concepts, Supplements and Propositions of “Comprehensiveness” 249

Secondary concept

Table 8.5 (continued) Talent exchange and training

R&D investment

Foreign partners provide technical services and personnel training for Chinese enterprises; advanced teaching facilities and curriculum system offered to improve the quality of foreign teachers

From 2003 to 2013, natural science fund projects related to high-speed rail... R&D investment began to rise significantly; layout of scientific research projects in key areas concerning the high-speed rail technology... RMB2.2 billion granted as the R&D fund for high-speed rail technologies

The cross-team activities of scientific researchers have improved the real-time information exchange among Chinese high-speed rail equipment test teams; construct an industrial test database... share the experimental design, experimental data, experimental specifications and experimental techniques

Achievement sharing

China’s high-speed railway practitioners... by actively introducing... it features good Technological compatibility compatibility with advanced technologies in the world, and the ability of system integration and innovation; standardization of technology... enable compatibility and connectivity among products

Keywords

Evidential examples (typical citations)

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extent. In 2008, the Ministry of Science and Technology and the former Ministry of Railways jointly launched the Joint Action Plan for Indigenous innovation of China’s High-speed Trains and established the project for research and development of CRH380 series EMUs. It’s stressed in the plan that the high-speed railway technological system (speed above 350 km/h) be completed, and that major engineering technological innovation dominated by government, led by enterprises, oriented to the market and driven by the project cooperation be established. The determination of fully independent property rights is conducive to promoting the formulation of “Chinese standard system”. At the top-down design stage, the “Chinese Standard” enabled systematic construction of China’s high-speed rail industry. The China Standardized EMUs officially put into service in June 2015 marked the start of the establishment of the “Chinese High-speed Rail Standard System”. The standard system covers not only national standards, industrial standards and professional technical standards, but also advanced EMU technical standards introduced overseas, which spotlights the autonomy of the Chinese high-speed standard and interconnects with international standards: (1) The establishment of the standard system can direct the EMU design to gradually constitute a complete pedigree that could generate synergistic effects and systemize the functions and enhance the overall competitiveness of China’s EMUs; (2) keep compatible with international standards to make standard systems mutually compatible. The networking, pedigree orientation and globalization of railways, technologies and train models are the new development trends of China’s high-speed railway industry. The Medium- and Long-Term Railway Network Planning released in July 2016 upgraded China’s high-speed railway network from “four verticals and four horizontals” to “eight verticals and eight horizontals”, and called for gradually developing intercity railways and establishing urban traffic circles. To fit into railways of different characteristics, EMU series of different speeds that adapt to different environmental demands are developed on the platform. For its advanced technology, excellent stability and reliability, and strong adaptability, China’s highspeed train is gradually uplifting its brand value and international influence. With the comprehensive national strength as the basis, diplomatic activities as the driving force, and product value as the core competitiveness, China’s high-speed train has been exported to six continents and formed a portfolio of products, capital, technology and services. At the stage of collaborative development, the “total indigenous innovation” strategy was adopted to thoroughly demonstrate the total innovation. Through indepth autonomy, the complete autonomy of generic technology, core technology, key technology, supporting technology and overall/structural reliability design has been realized to finally establish a complete set of systems technologies and Chinese high-speed rail standard system, take the dominant control of technical standards for high-speed trains at a speed above 350 km/h, realize a high unity in technological design, service function and application and maintenance of EMUs and improve design/operation efficiency and lower operation/maintenance cost. In the results of the literature review, the “comprehensiveness” concept is divided into three dimensions: all elements innovation, all staff innovation, and

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all time and space innovation, with specific measurement indicators for each. Text encoding and tree node aggregation have further refined the connotation of each. The “comprehensiveness”-related quotations in holistic innovation of China’s highspeed railway industry are listed in Table 8.6. Through the literature analysis and case studies of the “comprehensiveness” concept, three categories are thus formed: (1) All elements innovation, in which all elements and channels can be fully used to provide a solid resource basis for innovation activities during the acquisition, integration, utilization and realization of resources in all innovation links; (2) all staff innovation, in which all stakeholders involved in the innovation activities are fully mobilized to ensure the compatibility of goals, coordination of actions, consistency of interests, sharing of results and rationality of distribution; (3) all time and space innovation, in which innovation activities are given the fullest play in terms of time and space, that is, innovation is happening anytime, anywhere. Based on what mentioned above, the research comes to the conclusion: Proposition 4 “Comprehensiveness” in the holistic innovation incorporates three dimensions: all elements, all staff, and all time and space, which are used to explain the resource basis and personnel participation in major innovation activities, and to realize the coordinated operation of innovation activities in terms of time and space.

8.7 Concepts, Supplements and Propositions of “Chinese Context” The leap-forward development of innovation in China’s high-speed rail fully demonstrates the major innovation practices in the Chinese context. With the outbreak of the global financial crisis in 2008, the world economy has obviously been going down. While China features an over capacity, there’s no room to consume the excess part on the international market. In this situation, there must be innovative projects serving as a fulcrum to stimulate domestic demands and open up international markets. As an infrastructure for economic development and a major innovation for the nation, highspeed rail will be a key point. China’s high-speed rail has entered into an important period of strategic opportunities: With the enhancement of China’s comprehensive national strength, it boasts sufficient budget to introduce advanced technologies overseas and sufficient, continuous resource input to bolster the total indigenous innovation of major national projects; While China’s international image and influence are constantly improving, it proposes as the proponent the “Belt and Road” and the “Community with a Shared Future for Mankind” initiatives to realize co-building and co-development with other countries in the world. Since the holistic innovation acts as a paradigm based on China’s innovation practice, the Chinese situation shall be considered when building the theoretical framework and exploring relevant mechanisms. A theoretical paradigm refers to a collection of values, beliefs, etc. shared by members of a community, which reflects

Rapid development

All time research and development

China’s high-speed rail construction is the fastest in the world: In 2004, China’s high-speed rail embarked on the journey of indraught assimilation innovation; in the past 10 years, the “four verticals and four horizontals” high-speed railway framework has basically taken shape... The express railway network that consists of interregional express railways, intercity railways and speed-up lines for existing lines has been basically completed, with a total mileage of over 40,000km that basically covers all cities of a population above 500,000 each

For so complex critical systems and technical barriers... led the team to work day and night, and broke through one software “bottleneck” after another through experimental analysis and verification; 8 months later... worked out the OEM control logic of the CRH5 EMU and put forward suggestions for improvement to Alstom... Professor Xu Bochu led the team to work overtime day and night to submit 30 bidding proposals to the former Ministry of Railways

All time and space

(continued)

Improve government management... the consultation mechanism, to clarify that all government Subject diversity agencies... many ministries and commissions, as well as financial institutions such as the China National Railway Group Limited and China Development Bank... relevant research forces, such as the government, universities, scientific research institutions and industries, are gathered; experts from high-speed rail enterprises, financial institutions, legal affairs institutions, national (regional) research institutions and other units

All staff

Keywords

Government resources, such as the Ministry of Transport, the Ministry of Commerce, the National Resource heterogeneity Development and Reform Commission, the Ministry of Foreign Affairs, the Ministry of National Defense, the State Bureau of Religious Affairs, the China National Railway Group Limited, and the China Development Bank, are coordinated; information resources from governments, chambers of commerce, enterprises, financial institutions and intermediary service agencies are integrated; in multiple dimensions such as politics, economy, industry, equipment, investment and financing, diplomacy, national defense and culture... rapid flow and distribution of the people, logistics, energy, capital and information in the areas along the line are realized

All elements

Secondary concept Evidential examples (typical citations)

Table 8.6 “Comprehensiveness”-related quotations in the holistic innovation of China’s high-speed railway industry

8.7 Concepts, Supplements and Propositions of “Chinese Context” 253

Domestic layout

Keywords

The “going global” strategy for China’s high-speed railway industry is intended for all aspects... a Global layout huge regional market community is formed through the high-speed rail

Starting from the urgency of industrial gradient transfer, economic development timing, geopolitical pattern and national security... the “four verticals and four horizontals” development of the high-speed rail network...

Secondary concept Evidential examples (typical citations)

Table 8.6 (continued)

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8.8 Theoretical Framework of Holistic Innovation in the Chinese …

255

the worldview and code of conduct adopted by the scientific community (Kuhn 1962). Based on the “Chinese context” involved in the holistic innovation, the research is primarily conducted upon the emergence of cases, from three dimensions of the responsibility view, coordination view and practice view, with specific measurement indicators for each which all originate from the text encoding and tree node aggregation. The “Chinese context” related quotations in the holistic innovation of China’s high-speed rail are shown in Table 8.7, which are explained as below: (1) Responsibility view, originating from “The benevolent loves others”, “Great virtue promotes growth” and “The world belongs to all the people” values in traditional Chinese culture, emphasizes that China’s innovative development is tolerant (Gu 2015; Xing et al. 2015), inclusive (Wu Zhongmin 2017) and accountable (Mei and Chen 2015), which respects the development vision shared by all people in the world, and seeks to enhance the well-being of all mankind in addition to self-development and build “a community with a shared future for mankind”. (2) Coordination view, deriving from the “overall planning” in the Eastern way of thinking. The overall planning of time and space in innovation activities emphasizes that the power of the nation be utilized in terms of time echelon, step-by-step progress, spatial layout and resource integration. The innovation activities shall be considered as a whole from top to bottom, against the big-picture awareness for national development and the far-reaching awareness for sustainable development. (3) Practice view, stemming from the Marxist epistemology and Mao Zedong’s theory of practice. In the process of innovation, after continuous indraught and assimilation of advanced technologies overseas, we must fully consider our national conditions coupled with specific innovation practices, underscore the optimization of subjects under technological introduction and conduct adaptive restructuring according to China’s basic conditions so as to realize local innovation. Based on what mentioned above, the research comes to the conclusion: Proposition 5 The “Chinese context” in holistic innovation incorporates the paradigm-related responsibility view, coordination view and practice view, which are used to explain the values and recognition at the innovation paradigm level embedded into the major innovation activities.

8.8 Theoretical Framework of Holistic Innovation in the Chinese High-Speed Railway Industry Based on the innovation practice in China’s high-speed rail industry, a theoretical framework for holistic innovation is constructed, which contains five dimensions of strategy, openness, collaboration, comprehensiveness and Chinese context, as shown in Fig. 8.2.

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Table 8.7 “Chinese context”-related quotations in the holistic innovation of China’s high-speed railway industry Secondary concept

Evidential examples (typical citations)

Keywords

Responsibility view Associated with China’s economic security National responsibility and Chinese people’s well-being, the science and technology of the rail transit equipment manufacturing industry must be learned by the country... Aiming to support “land power” with “road power”, China is entering into the era of “new land power” With the interconnection and extension of the Global responsibility road, human civilizations are spread, understood, drawn together and developed... The safe and comfortable, convenient and efficient, energy-saving and environmentally friendly green transportation will benefit all countries in the world, promote exchanges and mutual learning across borders, time and space, and civilizations and contribute to mutual trust/assistance among people of all countries and the prosperity of human society Coordination view

Like many others, the construction of railway Time planning network is a natural monopoly. Repeated construction by multiple companies will cause serious investment wastes; The primary, secondary and tertiary “time echelon”... Railways, highways, waterways, airways and Space planning pipelines are coordinated to form a five-in-one comprehensive transportation, three-dimensional transportation and intelligent transportation system... “Greater Transportation” pattern

Practice view

Based on the design concepts of the 4 existing Localization of demands platforms in China, the design requirements suitable for the domestic environment are determined in conjunction with the understanding of the actual application and application requirements Developed the China Standardized EMUs and Adaptive modification began to establish the Chinese industrial standards; all OEMs made adaptive modification of the technologies imported according to China’s basic national conditions

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Fig. 8.2 Theoretical framework of holistic innovation

The research framework of holistic innovation is built upon the East-West difference in institution, philosophy and cultural values (Barkema et al. 2015). This difference in thoughts and paradigms offers conditions for the holistic innovation. The Western atomic way of thinking spotlights the “decomposition” and “analysis” in the research process, starting by decomposing and slicing things into the smallest unit. The Chinese way of thinking, which “considers and thinks as a whole”, emphasizes the overall thinking and consideration of multiple dimensions, such as the part and the whole, the individual and the collective, the strategy and the culture, and the past and the future, so as to form a holistic view that deems all things a unity and values the integration of natural conditions and human efforts. Holistic innovation provides a way to establish the theoretical framework for China’s indigenous innovation paradigm, which can be effectively applied in major innovation activities such as the high-speed rail industry innovation. Among them, “strategy” offers a direction option for innovation activities, “opening” defines the scope of resource acquisition and the boundary of knowledge flow, “collaboration” provides the analytical basis for the connection and coordination between innovation subjects, “comprehensiveness” explains the unity of elements, people and time/space during the innovation management, and “Chinese context” is embedded as a value into innovative activities. They all provide interpretation meanings of the holistic innovation framework. Column 8.1: Theoretical Research Results Concerning China’s High-speed Rail As an exemplary Pillar of a Great Power, China’s high-speed rail has been the subject of papers in the management field from the perspective of holistic innovation theory, technological catch-up, complex product integration and disruptive innovation.

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Source: Wu et al. (2000). While the development of science and technology and innovation presents the attributes of uncertainty, discontinuity, knowledge intersection and interdisciplinary integration, there is limitation in the incremental innovation paradigm’s support to the research and growth. The realization of the “innovation-driven development” strategic goal counts more and more upon the major scientific and technological innovation projects and the national innovation system they’ve been embedded into. A theoretical framework for innovation paradigms that can help to analyze major scientific and technological innovation activities is urgently needed to be developed in the research. Thus, the theoretical framework for “holistic innovation” is proposed on the basis of strategy-oriented innovation, open innovation, collaborative innovation and total innovation, paired with the Chinese context. Then, using the case of China’s high-speed railway industry, relevant text materials are sorted, coded and analyzed to verify the application of the “holistic innovation” theoretical framework in major scientific and technological innovation projects, and to supplement the conceptual connotation of the framework. The holistic innovation and its application in China’s high-speed railway industry provide lessons for the emergence of innovation paradigms and the induction of major scientific and technological innovation practices in the Chinese context. Source: Lu (2019). The “Radical Policies” to focus on independent development and to substitute traditional railways with high-speed alternatives are universally reckoned the key for the great achievement in China’s high-speed rail. However, the two factors did not exist at the starting point of China’s construction of high-speed rail, but came up in the process. Through a panoramic analysis of the two “transition” processes from the procedural and historical perspectives, this article reveals the factors that have been extensively ignored in explaining the success of China’s high-speed rail—the technical basis of China’s railway equipment industry and the key role of the nation in unleashing the radical innovation in railways. These analyses deny the popular claim that “indraught assimilation innovation” is the cause of China’s high-speed rail technological progress, and reveal the reasons underlying the successful strategic actions. The article concludes at last that system-level innovation is the key to keeping China’s high-speed rail ahead of its counterparts. Source: He et al. (2018). In this article, the technological catch-up is understood as a process where microsubjects have continuously conducted high-intensity technological learning under the specific incentive structure. The technological catch-up process of China’s high-speed rail, from experimental exploration, indraught and assimilation, top-down design, to indigenous innovation in intellectual property rights, has been embedded into China’s macro backdrop of institutional reform and economic development. China’s rapid economic growth has

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provided broad market opportunities for the rapid development of its highspeed rail in the 21st century, and its overall reform process has opened up channels for the institutional reform of the high-speed rail industry. Together with the high-speed rail management system and organizational structure of the industry, it has shaped the microincentive structure of the high-speed railway industry. Such an incentive structure not only urges innovative subjects to carry out high-intensity technical learning, but also promotes an interorganizational partnership that differs from most industries in China, thereby achieving technological breakthroughs in the entire industry chain. “Learning by doing”, “learning by using” and “learning by experiment” are the core mechanisms for the technological and capacity accumulation of China’s highspeed rail, a typical complex product system. During the process, the formation and refinement of assimilation capacity, top-down design capacity, and independent intellectual property rights innovation have well demonstrated the constant improvement of the innovation system of the high-speed sector. The government has played a unique, powerful and irreplaceable role in the innovation system of China’s high-speed rail sector. However, the revelation of high-speed rail’s technological catch-up of other industries is by no means a generalization of “Concentrating efforts on major undertakings”, a development model with specific boundary conditions. It is inappropriate and even dangerous to simply copy the successful experience of high-speed rail to other industries without considering the differences in technological paradigms and competitive environments. Source: Hong and Lv (2019). The technological catch-up of complex product systems is more difficult than that of large-scale manufactured products, with its success depending on the development of the system integration capability and the influence of government subjects. High-speed trains are one of China’s complex product systems industries most successful in technological catch-up. Abandoning the traditional “institutional arrangement – corporate capability” analysis paradigm, this article adopts the evolution theory to regard the government and enterprise as two categories of capability subjects. The longitudinal case study of the industry’s technological catch-up reveals that the government-enterprise capability embodies apparent co-evolution features, and the co-evolution acts as the basic mechanism of the industry’s technological catch-up. Specifically, government capability determines the variation direction, selection criteria and replication probability of enterprise capability, and enterprise capability in turn affects the selection criteria and replication difficulty of government capability. Undergoing a co-evolution process of substitution, complementarity and differentiation, the government and enterprise capabilities are superimposed on each other at the industrial level to form a complete and advanced system integration capability structure, thereby achieving the technological catch-up. Source: Ling and Yu (2015).

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Delving into China’s high-speed rail innovation model helps with the industrial forecasts and prospects. Adopting the case history comparison analysis method, this article straightens out the successful disruptive innovation technology in history to summarize the technical characteristics and technical flow trajectory of disruptive innovation. By reviewing its background and process, and analyzing its technical characteristics, this article has found that China’s high-speed rail innovation conforms to the characteristics of disruptive innovation. It has explained the path of disruptive innovation of China’s high-speed rail. Studies have come to the understanding that policy guidance and R&D support of the government have made contribution to the disruptive innovation in China’s high-speed rail that cannot be ignored. Disruptive innovation is not necessarily completed by small enterprises in a thoroughly competitive market. Under the guidance and promotion of the government, large enterprises may also complete disruptive innovation.

References Barkema, H.G., X.P. Chen, G. George, et al. 2015. West meets east: new concepts and theories. Academy of Management Journal 58 (2): 460–479. Chen, Jin, Ximing Yin, and Liang Mei. 2017. Holistic innovation: An emerging innovation paradigm based on Eastern wisdom. Technology Economics 12: 1–10. Eisenhardt, K.M., and M.E. Graebner. 2007. Theory building from cases: opportunities and challenges. The Academy of Management Journal 50 (1): 25–32. Fei, Xu. 2017. Go across the “Belt and Road”: Global Strategy for China’s High-speed Railway Industry. Shanghai: Truth & Wisdom Press, Shanghai People’s Publishing House. Ferlie, E., L. Fitzgerald, M. Wood, et al. 2005. The nonspread of innovations: the mediating role of professionals. Academy of Management Journal 48 (1): 117–134. He Jun, Tie Lv, and Yanghua Huang, et al. 2018. Incentive structure and capacity accumulation of technological catch-up: Experience and implications of China’s high-speed rail construction. Management World (Monthly) 34 (10): 191–207. Hong Jiang, and Tie Lv. 2019. Government-enterprise co-evolution of capabilities and improvement of integration capabilities of the complex product system: A longitudinal case study of technological catch-up of China’s high-speed train industry. Management World (Monthly) 35 (5): 106–125. Kuhn, T.S. 1962. The Structure of Scientific Revolutions. Chicago: University of Chicago Press. Li, J.J., L. Poppo, and K.Z. Zhou. 2008. Do managerial ties in China always produce value? Competition, uncertainty, and domestic vs. foreign firms. Strategic Management Journal 29 (4): 383–400. Ling Feng, and Xiang Yu. 2015. Analysis on the disruptive innovation path of China’s high-speed rail. Science Research Management 36 (10): 77–84. Lu Feng. 2019. Breaking through the fog—Uncovering the cause for progress of China’s high-speed rail technology. Management World 35 (9): 164–194. Ma, Hao. 2019. Paradox of Strategy: Differentiation and Integration. Beijing: Peking University Press.

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Mao, Jiye, and Xiaoyan Li. 2010. The role of theory in case studies: A review and analysis of model essays on forum on case-based and qualitative research in business administration in China (2009). Management World 2: 106–113. Mei, Liang, and Jin Chen. 2015. Responsible innovation: Origin, attribution analysis and theoretical framework. Management World 8: 39–57. Shulin, Gu. 2015. Inclusive innovation and Taobao Village phenomenon: E-commerce and Chinese rural community embedded entrepreneurship. Economic Herald 9: 65–73. Siggelkow, N. 2007. Persuasion with case studies. Academy of Management Journal 50 (1): 20–24. Wu, Xintong, Liang Mei, and Jin Chen. Constructing the “holistic innovation”: Lessons from China’s Hhgh-speed rail. Science of Science and Management of S&T 41 (1): 66–82. Xing, Xiaoqiang, Jianghua Zhou, and Yunhuan Tong. 2015. Inclusive innovation: Research review and policy recommendations. Science Research Management 36 (9): 11–18. Yin, R.K. 2017. Case Study Research and Applications: Design and Methods. London: Sage Publications. Zhongmin, Wu. 2017. The balanced development logic of inclusive justice and differential justice. Social Sciences in China 9: 33–44.

Chapter 9

Urban Internet: Holistic Innovation in Smart Cities

The core of a smart city is a superbrain that directs operation of the city by breaking off the information wall. A city is a complex, huge system that copes with more than a single aspect of life. —Shan Zhiguang. (Speech at www.taibo.cn Big Data Smart City Summit on June 14, 2018).

Against the background of pursuing “maximized economic development” in the traditional urbanization, more people live together in a city to achieve rapid economic growth and fully lower the cost of industrial infrastructure. As a result, materials and energy are transformed into products, and wastes are discharged to the water, air and soil through simple treatment or no treatment. This “resource–product–waste discharge” model, intended for isolated development of a city and linear development of economy, makes low-efficiency, or even one-time use of resources. With the integration of the world economy, developed countries have begun to transfer pollution-intensive and resource-draining industries to developing countries. The environmental problems in urban development have gradually become a global concern, resulting in an urgent need to re-examine the urban development model. The future city is built to make continuous utilization of materials and energy in the ever-going economic cycles, with urban Internet as the main characteristic; a friendly environment, efficient economy, comfortable life, virtuous ecological cycle and improving utilization of resources as the basis; resource regeneration, recycling and harmless treatment as the means; sustainable social-economic development, harmonious human-nature development and improvement of human life as the objectives. The construction and development of cities for the future shall provide solutions to solve the sharp contradictions among the growing population, the shrinking resources and deteriorating environment, centering on the systematic optimization and sustainable development. It is a new urban development model proposed upon the rethinking and repositioning of the human-nature relationship, under the premise of an unprecedented rise in human subjectivity and an unprecedented improvement in human ability to transform nature. Built upon the subject consciousness incubated in modern civilizations, it seeks to well handle the city-region, human-nature and human environment-natural environment relationships, save resources and energy and establish a symbiosis similar to a natural ecosystem in the society, through © Science Press 2023 J. Chen, Holistic Innovation, https://doi.org/10.1007/978-981-19-8625-3_9

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collaboration of the human groups and the development of modern science and technology. It is the product of fundamental changes in urban production methods, living activities, and consumption patterns, and the result of men’s continuous exploration of urban development theories and intelligent technologies.

9.1 Development of Urban Internet in China The construction of smart cities based on the urban Internet marks a major direction for China’s urban modernization in the future, and a typical outcome of the innovation-driven development. In the construction of urban Internet, holistic innovation is adopted to explain and guide the design of the smart city architecture and framework, in view of the integrity of urban development, the long-term nature of urban development strategies, and the unity of intercommunication protocols and standards, among other features. 1. From managing a city to running a city Intelligent technologies have been altering the industrial structure and development model of cities. A city is a residential area where non-agricultural populations live and get engaged in non-agricultural production, such as industrial and commercial activities. The role and responsibility of the city to the country or region are demonstrated through its industrial structure, where citizens engage themselves in various production and service activities. Industrial activities in the city are intended partially for the daily living and production of citizens, and partially for external demands of the region, country and even the globe. The more products exported from this part of activities, the wider the market coverage, and the more important role the city plays in the national economic development. In this sense, export-oriented industries are pivotal to the prosperity of a city. Intelligent technologies require the shift from managing a city to running a city. Service industries, such as information, consulting, commerce, finance, biopharmaceuticals, education and culture, have become the pillars of modern cities, and the general focus of urban industrial activities is placed on “ecological optimization, comfortable life and economic growth” (Chen 2010). Service industries account for over 70% of gross urban product of cities that are highly international. For instance, the service industries in Hong Kong contribute to 82% of its gross urban product, covering finance, insurance, commerce and trade, logistics, tourism, law, education and training, intermediary consulting, public relations, and electronic information network, among other fields. 2. From industrial cities to smart cities Intelligent technologies should be adopted to promote urban development, that is to say, intelligentization plays an indispensable part in urban development. Urban intelligentization acts as the extension and development of “urban informationization” and “digital city”. With the advance of the urbanization, the government is

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faced with growing complexity in city management, posing higher requirements on the applications of information technology in terms of urban planning, construction, daily management and public service system, in a bid to enhance the quality and rapid response of city management. An intelligent information system that integrates such comprehensive information as the administrative management, emergency command, social harmony, planning and social services should be established to cope with e-government, digital cities, e-commerce, intelligent transportation, intelligent buildings and many other fields. Comprehensive utilization is made of administrative management information within the jurisdiction to offer timely, accurate, effective and authoritative reference for administrative departments and leaders at all levels. Under its distinctive national conditions, China faces major opportunities and challenges of how to strengthen the construction and research of smart cities, speed up the process of urban informationization, promote the leap-forward development of urbanization and support the function optimization and economic development, paired with China’s industrialization and urbanization status quo. Intelligent urban construction is not only an inevitable requirement of the development of the times, but also a strategic choice for China’s urbanization. Intelligent technologies have accelerated the networking and informationization of cities. The research and development of intelligent technology center on the intelligent hardware and intelligent application products. Intelligent hardware includes interface-absent computers, biological computers, and optical computers, while intelligent application products embrace intelligent industrial robotics, intelligent household appliances, visual mobile communication equipment and intelligent transportation systems. The information highway shaped by communication network, computer network and information resource network functions as a large-scale urban information platform and the hardware to realize urban informationization. We shall construct the information highway and the network of various systems within the city to integrate the computer network, satellite communication, television and telephone systems, strengthen the comprehensive communication between the city and the country/world and promote the integration and resource sharing of production, circulation, management, service and other links. Increasing the number of telephones, televisions and computers owned by each urban unit (including individuals, families and companies) and their Internet access rate not only facilitates the citizens’ life, but also makes information the most important resource and an important industry for economic development. In 2005, New York City featured a MAN bandwidth of 259M/10,000 people, computer ownership of 75/100 people, domestic Internet access rate of 70%, corporate Internet access rate of 93.7% and a per-capita annual e-commerce turnover of USD3881. Advanced intelligent technologies have kept New York the center of information production, communication media, finance, tourism services and culture. Intelligent technologies have contributed to making the industries lightweight and high-tech. Intelligent technologies have brought about major changes to the characteristics of the city’s industrial structure, and the formation and development of industries. High-tech industries, such as electronic information, bioengineering technology, new materials, marine engineering, aerospace technology and mechatronics, have continued to develop. Service industries have become

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the economic mainstay of the city, accounting for over 70% of GDP, where the traditional commerce and trade have turned into e-commerce. Science and technology, education, culture, sports and health have become major pillars of the city. Through modification of the traditional industries and agriculture, intelligent technologies have shifted the economic growth model from the previous one that consumes natural resources and labor force to the new one that counts upon technologies. Cities now act as the R&D center, production center, circulation center and consumption center of knowledge products. Intelligent technologies continue to improve the knowledge and intelligence of citizens. Knowledge improvement of citizens mainly refers to the improvement of citizens’ knowledge penetration rate, their educational level and their learning ability. Knowledge improvement refers to not only the possession of existing knowledge resources, but also the ability to conduct knowledge management and knowledge innovation on a certain intellectual basis. The widespread use and rapid development of intelligent technologies have constantly increased the proportion of scientists and engineers engaged in scientific and technological development and management, other technical personnel and senior management in the total population. As the indicators of scientific research achievements, such as the number of R&D projects, the number of results published and the number of patent applications, have been continuously improved, cities have become the center for formation and discovery of various thoughts, operation philosophies and creative ideas, and the center for distribution of all inventions. Intelligent technologies provide a scientific basis for urban management decisions. An intelligent software network, built upon the Internet for computer hardware, information analysis and decision support, and function realization, incorporates decision-making activities of the government and various organizations into a scientific, standardized and democratic process. Think tanks, staff offices and other planning and consulting agencies play as important parts of the intellectual system. Thanks to the electronic information technology and management methods, the interests of various subjects can be easily coordinated to realize a high degree of integration of different ideological concepts and scientific methods, improve the intelligent management and control of urban traffic, water supply and drainage, and electricity, enhance the monitoring and sustainable utilization of urban resources, boost the urban emergency response and disaster prevention and treatment, and lower the management cost. Alvin Toffler once predicted in his “Future Trilogy”1 that the establishment and popularization of computer networks will completely change the way of human existence and life. Intelligent revolutions, such as information networks and digital technologies, have profoundly impacted the fields of urban production, life, transportation and recreation. The function, spatial structure and social structure of traditional cities are undergoing profound transformation. The urban functional structure in the industrial economy era has two features: (1) Different functional zones are isolated, and each zone runs against the agglomeration effect and scale effect; (2) the 1

Future Trilogy refers to Alvin Toffler’s three books in terms of the development of the future world, including Future Shock, The Third Wave, and Powershift.

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connection and completion of different cities or different urban functional zones need to be realized through tangible networks such as transportation, with accessibility as the criterion. The above-mentioned characteristics are manifested in space as the zoning formats that are distributed upon constraints of the cost and traffic. However, intelligent technologies have fundamentally changed the way cities exist. First, changes in the urban spatial structure. The spatial distribution of cities has begun to transform from the agglomeration type to the dispersion one. The spatial organization formats and operation models of material production in cities start to shift from large factories and industrial zones to scattered small businesses and production units based on information networks. The traditional production line and “large batch, small lot” production model have gradually transformed into the “small batch, large lot” one, with an international network formed among enterprises. Corporate production can make rapid adjustment according to the market demands, and overall coordination in R&D, production and marketing through open cooperation and information sharing. The mastery and control of information have become the key for the survival and development of enterprises, and the agglomeration effect, scale benefit and location benefit no longer function as the dominant factors. The more informationized the enterprises, the smaller and cleaner the enterprises, and the more symbiotic the economic and other activities in the city. With the support of intelligent technologies, the dispersed distribution of social and economic activities breaks the concept of large-scale concentrated industrial zones, making isolation no longer needed between production activities and others, and bringing in more and more production-living combined communities. Second, changes in the social structure of the cities. The urban residential format is gradually shifting from communities in city proper to ones in suburbs and rural areas. Since the large factory system came into existence after the industrial revolution, lands have been divided into two types: those for industrial use and those for commercial use, due to the yield rate of different economic activities. Largesized, standardized and single-functional residential areas are circled out of the urban structure. Isolated from industrial zones, they are built for living and recovery of physical strength of residents. With the widespread use of intelligent technologies, the intermediary function of the original business during the product exchange could be completed just through a high-speed information network. Image information, such as the product models and specifications, can be directly communicated between manufacturers and users, with information feedback directly formed between producers and consumers. People can proactively search for the product information required through the network services, and users can place orders directly from manufacturers. The city’s production function and circulation function are integrated through the Internet. Due to the blurred definition of economic function, industrial lands and commercial lands are mixed. The blend of residence and work has increased the ambiguity of production land and residence land. According to a survey, about 43.2 million Americans worked at home, in part time as minimum, in 1994, a third of the total American workforce increases by 15% per annum. Advanced information interconnection networks make it possible to work wherever there is power and the Internet. In the selection of the company address, location and traffic

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conditions are no longer the first considerations. Small and lightweight companies make it possible to select production sites nearby living quarters. Work and leisure may be unified, land is used for business, industrial production and living altogether, and residence in the city downtown may not be an ideal choice. Third, changes in the realization of urban functions. Urban functions are manifested spatially as the nature of land use. The proportion of land of different use attributes defines the city’s land use structure. The application of intelligent technologies will inevitably lead to the adjustment of the urban land use structure. For example, compared with traditional shopping malls, e-commerce spends none on physical stores. A network server connected to the Internet is all that is needed to complete the investment, consumption, remittance transfer and cash flow, thus weakening the function of commodity logistics center and capital flow center in traditional financial/business/office districts. The social service system supported by the information interconnection network replaces part of the activities taking place in physical space through distance education, telemedicine and distance entertainment, which brings challenges to large medical, educational and recreational facilities and institutions. In the era of industrial economy, the function and development of the city rely on the transportation network. The faster the urban development, the high requirements will be placed on the road system and transportation system. The expansion of road coverage always fails to follow the growth in traffic demands. However, the information network built upon the Internet can assume and take over the transportation functions of part of the physical transportation network. Home working, video conferences, information circulation and remote services have virtualized some of the physical flow of materials and people; a great number of urban activities could be done with the information interconnection network; even for the traffic needs that still shall be satisfied in a physical manner, the route could be optimized through electronic information (e.g. intelligent global positioning system) to ease the pressure of urban road supply. It can be deduced that the urban functions in the era of intelligent technologies will be reorganized in a certain spatial range, and the urban spatial structure will shift from the traditional circle format to the networked one. The alternation of urban functions has changed the land use demand-land use proportion on one hand and overturned the spatial layout of the land use function zone to refit the urban spatial structure. 3. From building a beautiful China to new urbanization The report of the 19th National Congress of the CPC called on to “accelerate the reform of the ecological civilization system and build a beautiful China” and proposed four paths: First, promote the green development; second, focus on solving prominent environmental problems; third, strengthen the protection of ecosystems; fourth, reform the ecological environment supervision system. Building a beautiful China is proposed to achieve sustainable development, which echoes General Secretary Xi Jinping’s proposal that “The ecological civilization construction will benefit not only our own generation, but generations to come” (Xinhua News Agency 2017a). China entered the decisive stage of building a moderately prosperous society in an all-round way and a critical period of deepening the urbanization in 2014.

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The National Plan for New Urbanization (2014–2020) issued by the CPC Central Committee and the State Council clarified the strategic tasks, main goals and development paths of urbanization in the future. With the advance of the urbanization, the proportion of the primary industry is gradually declining, and that of the secondary and tertiary industries is ascending step by step. Key points of new urbanization: Without sacrificing agriculture, food, ecology and environment, we must concentrate on farmers and rural areas, realize integration of urban–rural infrastructure and equal access to public services, promote the economic and social development and achieve the common prosperity, with urban–rural planning, urban–rural integration, industrial interaction, conservation and intensiveness, ecological livability, and harmonious development as the basic characteristics. Resolving to promote urbanization against the backdrop of large population, relative shortage of resources, fragile ecological environment, and unbalanced urban–rural development, China must respect the reality that it’s still at the preliminary stage of the socialism construction, obey the laws of urbanization and find out a new urbanization path with Chinese characteristics. 4. From big data strategy to AI 2.0 The 18th National Congress of the CPC proposed the implementation of the “innovation-driven development” strategy, emphasizing that scientific and technological innovation, as the strategic pivot for improving the social productivity and comprehensive national strength, must be prioritized in the national development agenda. To speed up the implementation of this strategy, the CPC Central Committee and the State Council issued the Outline of the National Strategy of InnovationDriven Development in May 2016, putting forward the three-step strategic goal: Step I, build China into a country of innovation, and basically establish a national innovation system with Chinese characteristics to strongly support the building of a moderately prosperous society in an all-round way by 2020; step II, rank China top among the countries of innovation, realize radical conversion of development driving force, and hugely improve the economic/social development level and international competitiveness, thereby laying a solid foundation for building an economic power and a society of common prosperity; step III, create China into a power of scientific and technological innovation, and build China into a world science center and an innovation mecca, thus offering robust support to build a strong, democratic, civilized and harmonious modernized socialist country and realize the dream of the great rejuvenation of the Chinese nation by 2050. What’s more, The Thirteenth Fiveyear Plan also proposed to implement the national big data strategy, take big data as the fundamental strategic resource, take full moves to promote the development of big data, speed up promoting the sharing, opening, development and application of data resources and contribute to the industrial transformation and upgrading and social governance innovation. In December 2017, General Secretary Xi Jinping supported the in-depth study of big data of the Political Bureau of the CPC Central Committee and stressed the need to promote the implementation of the national big data strategy, accelerate refining the digital infrastructure, propel the integration and sharing of data resources, ensure the data security, accelerate the construction of a

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digital China, and better serve China’s economic and social development and the improvement of Chinese people’s living standards (Xinhua News Agency 2017b). As an innovative technology that rivals big data, artificial intelligence has always been taken as the leading strategy in the future by governments around the world. All of them have issued development strategic plans around artificial intelligence, established relevant R&D and promotion mechanisms, and made overall promotion at the national strategic level. In the era of AI 1.0 (1956–2016), while Chinese enterprises lagged behind, the AI industry of the USA took the lead in the layout at the basic layer, technological layer and application layer (Tencent Research Institute 2017). Nowadays, we have come to the era of AI 2.0, expecting to embrace a leap-forward development. It is a turning point for technologies, for corporate development, and more for national revitalization (Pan 2017). Similar to the case of Internet, China will become the largest market for artificial intelligence applications, with enriched application scenarios, the largest number of users in the world, and active data producers. It is in urgent need to further strengthen the construction of basic disciplines and the talent cultivation, conduct forward-looking studies and make arrangement as soon as possible. 5. Comprehensively promote the development of urban Internet Industrial Internet is the product of the deep integration of informationization and industrialization. As the outcome of the fusion of the global industrial system with advanced computing, analytics, sensing technologies, and Internet, the Industrial Internet realizes human–machine connections through connection of intelligent machines. Coupled with software and big data analysis, it reshapes global industries and spurs productivity in an attempt to make the world a better, faster, safer, cleaner and more economical place. Industry-city integration is the product of benign interaction between industrialization and urbanization. Industry-city integration refers to the integrated development of industries and the city. With the city as the basis, it offers space for industries and develops the industrial economy. Under guard of the industries, it drives the urban renewal, refines supporting services and further uplifts the land value, thus vitalizing the industries, city and people for a continuous ascendance. Smart city is the result of the coordination of informationization and urbanization. Smart city is a form enabled by the new generation of information technology under the next-gen innovation of knowledge society (Innovation 2.0). Based on a comprehensive and thorough perception, ubiquitous interconnection and application of intelligent integration, it builds the institutional environment and ecosystem that are conducive to the incubation of innovation so as to achieve the people-centered sustainable innovation that features user innovation, open innovation, crowd innovation, and collaborative innovation, create public values of the city and unique values for each citizen, and realize sustainable development of the city and the region. Urban Internet is the fruit of the symbiosis of the Industrial Internet, industry-city integration and smart city. By means of the Internet of Things, blockchain and other technologies, the Urban Internet is built upon the cloud platform to realize industrial interconnection, government-enterprise interconnection and government-people interconnection

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in the city. Through big data, artificial intelligence and more technologies, it releases data dividend of the city to realize intelligent urban operation. Xiong’an New Area is a typical prototype of Urban Internet’s development in China. On April 1, 2017, the CPC Central Committee and the State Council decided to establish the Xiong’an New Area in Hebei. It marks a milestone decision made by the CPC Central Committee with Comrade Xi Jinping at its core, and a typical prototype of China’s Urban Internet. Xiong’an New Area is positioned as: a digital city, a city of innovation, and a city of sharing and interconnection. As an innovation mecca with global influence in the future, it will embrace great strategic opportunities. Today, interdisciplinary fusion and technological integration are accelerating, a new round of scientific and technological revolution is emerging, emerging industries and disruptive technologies are becoming major forces leading the future development, and the trend of integration of basic research, technological innovation, and industrial development is becoming more obvious. Strengthening the construction of a national innovation mecca is conducive to grasping the important period of strategic opportunity at present, accelerating the advanced deployment in several emerging fields, raising the global competitiveness of Chinese science and technology and laying a solid foundation for further building China into a power of science and technology (Chen 2017).

9.2 China’s Unique Town-Level Urban Internet The application of holistic innovation in the Urban Internet is chiefly analyzed with the typical development model of intelligent characteristic towns. As a combination of modern information technology and urban system, Urban Internet plans and operates a city and enhances the overall living standards of citizens through intelligent technologies and means such as the Internet of Things, big data, cloud computing and urban informatics from a more comprehensive and holistic perspective. The construction of Urban Internet relates to all aspects of the city, for instance, economy, environment, life, government, people, transportation, etc., and events and details, large or small, associated with the life and urban development, such as the travel model, green energy, e-government, open data, urban planning, public services, innovation economy, inclusive social environment and innovative education. The primary task of building an urban Internet is to collect and store all kinds of data and information reserved by the government, enterprises and non-profit organizations through the Internet of Things, blockchain, cloud platform and other technical means, so as to break the data silos and realize data flow between cities. However, limited by China’s national conditions and the status quo of big data security, it is difficult to realize the intercity data exchange and sharing in the short term. In the context of China’s new urbanization development, since an iTown features an organizational structure that radiates outwards with the management committee as the core, it’s easy to achieve data communication and sharing within the iTown. Therefore, the Chinese-style development of urban Internet is the town-level urban Internet.

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The iTown is of great significance to the development of urban Internet. In terms of space, iTowns and their surrounding cities are inseparable. As to the intelligent construction, intelligent towns feature better data circulation and sharing than smart cities. To promote the coordinated development of large, medium and small cities and small towns, build smart city clusters that envelop smart cities and iTowns, and drive overall regional development are major nodes on the “Belt and Road” and main engines for the urban development, which may make contribution at the national level that cannot be ignored. From Apple’s iPhone, Tesla’s iCar, to Haier’s iHouse, all of them aim to enhance the product value through intelligent means. The “i” in iTown stands for intelligent, Internet, interconnected and innovation. ITown is an intelligent characteristic town featuring industry-city integration, which marks an artificial compound ecosystem for the coordinated development of society, industry, nature and science & technology. The system has three characteristics: taking enterprises as the subject of construction and operation, value enhancement as the core goal, and market operation as the primary method. Against the five construction goals of a rational city structure, human-nature integration, thriving industries, contented living and working, and people first in scientific and technological development, such methods as big data and cloud computing are adopted as the engine to unleash the potential of the town via big data, empower town residents, boost the organic development of town industries, and build a friendly ecosystem, thereby realizing the intelligent operation of the town, enhancing the economic value of the town, and driving the economic transformation and upgrading of the region. Different from characteristic towns in the general sense, iTowns feature a new set of construction ideas and models: Against the objective to build intelligent characteristic towns, they focus on end users, establish industrial ecology and interaction community through continuous iteration, optimization of user’s experience, and innovation in strategy and business model, tap into the potential of intelligentization, and uplift the economic and social values. The core of the development can be summed up as connection, aggregation, ecology and fission, detailed as: (1) The big data center receives data transmitted from terminals of the town to enable data sharing and interconnection between departments and industries of the city; (2) through professional operation and intelligent management, superior capital is gathered to form a value chain; (3) an innovative industrial ecology, industry-university-research ecology, innovation and entrepreneurship and other formats are established; (4) when the new ecology accumulates to a certain stage, fission will occur to reshape the entire industrial ecology and business model, erect an intelligent brand in the form of a characteristic town, create economic value and complete value enhancement through intelligent operation, and drive the transformation and upgrading of the regional economy.

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9.3 iTown Development Pathways Based on Holistic Innovation The holistic innovation in iTown’s development is predominantly demonstrated in the standard and design of the holistic architecture. From the “strategic leadership– innovative foundation–institution empowerment” perspective, the realization path of holistic innovation in iTown’s development is analyzed, and the standard and framework of iTown are established. For iTown’s development path based on holistic innovation, the holistic innovation thought is formed, and a general framework with overall planning as the guidance, construction planning as the subject, and intelligent operation as the basis is constructed (Yu et al. 2018).

9.3.1 Strategic Leadership 1. Planning Concept The strategic leadership for iTown chiefly intends to upgrade the town into a variety of iTowns, such as a digital town, wireless town, sensing town, ecological town, lowcarbon town and intelligent town. In this huge system, global thinking and systematic planning are required to realize intelligentization. Based on the holistic innovation thought, the four planning concepts for iTown are thus proposed (Chen et al. 2018), as shown in Fig. 9.1. First, overall planning and unified construction. At present, the planning of characteristic towns typically lacks a top-level design and concentrates merely on the construction of a single project, leaving such disadvantages as lack of organic correlation between projects, difficulty in collecting data at late stage, inability to conduct unified management and analysis, fragmentation and extensiveness, which would seriously affect the subsequent operation of the intelligent towns. Therefore, Fig. 9.1 Planning concept for iTown

Overall planning

Industrial ecology

Application pilot

Data operation

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iTown must be constructed under an overall planning, a holistic perspective and a collaborative operation. Second, foundation consolidated and application piloted. Informationized infrastructure is the foundation for the construction of iTowns. Only by well building the basic information facilities such as the basic communication networks, data centers and command centers in accordance with the overall planning principle can the most basic guarantee be provided for the realization of intelligence. On top of the infrastructure, the core is to design scenario-oriented, problem-solving intelligent applications. The implementation and improvement of intelligent application scenarios are realized through the application of business scenarios and the analysis of data information. Third, data operation and intelligent innovation. Intelligent operation and development of the town is attained by establishing a unified intelligent data center in the town, connecting various terminal applications in the town, collecting /integrating/precipitating the town’s big data, and conducting innovative data analysis with data operation as the core. Fourth, industrial upgrading and ecological convergence. Through cloud computing, big data, Internet of Things, mobile Internet, artificial intelligence and other emerging Internet technologies, industrial resources of the town are gathered to guide the industrial reform and upgrading as driven by innovation, build the industrial ecology, realize upgrading of industrial values and promote the economic development and value appreciation of the iTown. 2. Overall Planning The overall planning is the top-level design and the soul of the iTown, covering thematic features and industrial planning. An iTown is supposed to be characteristic. It ought to embody the trademark characteristic in its production, construction and operation. Therefore, the intelligentization of the iTown shall consider its thematic characteristic, start from the local actuality and advance based on local cultural elements and exploration. There are two ways to determine the thematic characteristic: First, delve deeper upon the characteristic. In-depth local inspections may be conducted to explore regional cultural elements and determine the theme of the town with core of the local culture. This method imposes relatively high requirements on the locality. There should be a natural characteristic that could be used as the theme to promote the industrialization of the town. Second, involve external forces to design a theme. According to the actuality, external forces are involved to design a theme. This method is good for places without distinctive characteristics. Based on his/her understanding of the town, the designer picks a theme. Compared with the inherent characteristic, the designed one requires a greater talent of imagination and embodies a greater sense of innovation and vitality. According to the theme, full attention should be paid to the economic development status of the region, the nation and the globe, in order to make reasonable planning of the industrial system, industrial layout and industrial chain. By optimizing the industrial configuration, straightening out the key formats

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Intelligent brand

Operational appreciation

Industrial extension

Featured positioning

Fig. 9.2 Overall planning for realization path of iTown intelligentization

and attracting investment, it realizes a sustainable development of the iTown, where industries rely on the theme, the theme promotes industries, and equal attention is paid to the theme and the industries. The intelligentization of the iTown could be realized through four steps, as shown in Fig. 9.2. Step 1: Thematic positioning. The positioning shall be clarified and the feature be explored to give the town a theme and achieve town positioning and industrial layout through design. Step 2: Industrial extension. Industrial formats are designed according to the characteristic positioning of the town. Since the construction of a characteristic town is an arduous task, the industrial layout must be flexible and scalable. Step 3: Operational appreciation. According to the characteristic positioning and industrial extension, the town’s basic structure is enhanced and operation function is activated to uplift its profitability. Step 4: Intelligent brands. It is entailed to build intelligent brands of the town and take them as examples to facilitate investment attraction and branding of the town and eventually make the life intelligent and industries lucrative.

9.3.2 Innovation Foundation Innovative foundation mainly refers to the intelligent architecture of the iTown, including the cloud network, cloud brain and cloud engine systems. Cloud network as the perception center, cloud brain as the decision-making center, and cloud engine as the power center, the three systems are integrated and organically coordinated to realize the intelligent upgrading of the iTown.

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1. Cloud Network System The cloud network system functions as the perception center of the entire iTown intelligent architecture, which constructs an entire physical operating environment and provides hardware support and data for the cloud brain layer. Cloud network construction involves three parts of infrastructure construction, cloud platform construction and IoT data platform construction. The infrastructure construction covers: Network environment construction such as the special network for smart cities, communication network, Internet and Wi-Fi, and IoT hardware construction including the temperature sensor, humidity sensor, illuminator and intelligent street lamp; the cloud platform construction covers: “Infrastructure as a service” (IaaS) platform construction such as the cloud computing, cloud storage, network equipment, and security equipment, and the “Platform as a service” (PaaS) supporting service construction including the unified location service, unified authentication service, unified geographic information system service, video collaboration service and data exchange service; the IoT data platform construction mainly deals with the data access, storage and management, and the key lies in the construction of a unified management platform for the applications of the cloud brain system. 2. Cloud Brain System The cloud brain system is the decision-making center of the entire iTown intelligent architecture, which unleashes the potential of the town’s big data to provide a decision-making basis for the cloud engine layer. The cloud brain construction involves three parts: big data center construction, data interface construction and town operation center construction. As the core hub of the town’s intelligent construction, the big data center perceives the town’s operation by collecting, acquiring and integrating the basic data deposited from all application platforms, promotes the data sharing among all town departments, makes general analysis and prediction of the town’s operation and lays a foundation for the application of AI technology. The construction of big data center covers the collection and arrangement of original data, the establishment of standard library and theme library, and the construction of the big data management platform. Data interfaces act as the bridge that links the town’s big data center and its operation center. By the privacy of the data involved, there are two categories: government interfaces and third-party application interfaces. The town operation center is an important place for the daily operation and emergency command of the town. The visual display of data enables the operators and decision-makers of relevant departments to control the overall operation of the town. The town operation center can guide specific businesses, coordinate and allocate resources, command in emergencies or major events, assess the operation efficiency and results, take control from the macro to the microsense, enhance efficacy through centralized management and data utilization, and achieve the flat-type management. The construction of the town operation center incorporates the construction of a unified operation management platform, a unified industrial service platform and a unified convenience service platform.

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3. Cloud Engine System The cloud engine system is the power hub of the entire iTown intelligent architecture, which directly promotes the operation and development of the town’s intelligent operation. It is the ultimate embodiment of the value of the cloud network layer and the cloud brain layer. The cloud engine construction refers to the standard system and operation and management system formulated in addition to the unified operation and management platform, the unified convenience service platform, and the unified industrial support platform. Among them, the standard system means that the construction and operation of the town shall follow the standard. The overall framework shall be coordinated via the standard system, and the constituent parts shall be constructed as per the standard. The standard system can be categorized into the technical standards, data standards, management standards, operation standards, service standards, etc. The standard systems shall meet the requirements on collectivity, goal orientation, decomposability, correlation, integrity and environmental adaptability. Furthermore, in the process of system construction and operation, it is necessary to continuously enrich and improve the standards, and form a set of standard systems that entirely cover the town management, service, operation, data and technology throughout the entire lifecycle of the town management and operation. The management and operation system engages the innovation of the town’s management and operation model. It seeks to explore innovative management models through the thoughts and methods of scientific management, build an intelligent organization of strategic, learning and continuous improvement ability, and establish a distinctive set of town management systems to guide the construction and operation of the iTowns. The management and operation system, incorporating the system innovation, mechanism innovation, normative design and evaluation construction, intends to change the refined, long-acting management model, and realize an accurate, agile, efficient, full-time and all-round coverage of the town’s management and operation system.

9.3.3 Institutional Empowerment Institutional empowerment mainly includes construction planning and intelligent operation, which guarantees the normal intelligent operation of the iTown through relevant institutional design. 1. Construction Planning Construction planning is the realization path for intelligentization of the iTown, which embraces the layout planning and application import. It is the key for implementing the top-level design and for securing the success of the iTown. Under the premise of scientifically planning the theme and industrial formats of the town, the construction is properly planned based on the positioning of the town, covering the layout planning and application import. Construction planning is the key for implementing the overall planning. The planning schemes are properly designed from such

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dimensions as space, time, resources and functions, which cover the space layout, exterior design, infrastructure, underlying architecture of intelligent cloud brain, various application terminals, construction period, capital budget and team building. By planning the town construction scheme, the conceptual design is transformed into functional design, and the concept is turned into action, thus outlining the blueprint of the town more intuitively and vividly to better embed into the intelligent applications and make the town “alive”. Finally, with the goal as the orientation, resources are allocated in a low-cost, high-efficiency and high-quality manner so as to realize the economic and technological feasibility of the design. The realization of iTown’s construction planning contains three steps. The first step is space planning. The spatial layout is designed upon the town’s positioning and functional requirements, and optimized according to the business formats, infrastructure, transportation and operation. The second step is application connection. Based on the intelligentization concept of the town, application scenarios are designed to connect with various intelligent applications, making the town’s operation organic and vigorous. The third step is project control and management. The iTown appears a complex system, and its construction is a more complex process that requires scientific planning and reasonable management via the nine project management elements. 2. Intelligent Operation Intelligent operation is a collective expression of the iTown’s intelligent effect, which contains data operation and intelligent ecology. It is the key for the town to realize intelligent management and value appreciation. Intelligent operation is a collective demonstration of the overall planning and construction planning, which incorporates the data operation and intelligent ecology. Operation is needed to invigorate the iTown upon its construction. It is the most direct manifestation of intelligence. These intelligent scenarios will be applied for industrial investment attraction, marketing planning, life convenience management and industrial enterprise management for the town. Innovative operation models shall be explored continuously according to the actual construction and application scenarios. Intelligent operation must rely on the town’s unified, centralized big data operation center and command and dispatch center to continuously transmit data from the front end to the town’s “cloud brain”— the big data operation center and command & dispatch center. The town’s “cloud brain” makes operational decisions based on these data to make the town vital and intelligent. The realization of intelligent operation requires three steps. The first step is taking data as the basis. Data is the basis of the town’s operation. First, the big data center receives data transmitted from the town terminal to form the town’s big data foundation. The second step is maintaining professional operation. Data, if unavailable for circulation, is useless. Upon the data basis, the operation index analysis system is designed to realize professional operation that covers the industrial enterprise service, life convenience service and basic town management service of the town. The third step is performing intelligent management. Intelligent operation of the

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town is realized through professional analysis and operation to eventually enable intelligent decision-making and intelligent management.

9.4 Integrated Structure Standards and Frameworks in iTown Development The operation model of the iTown intelligent architecture is shown in Fig. 9.3, and detailed below: Upon construction of the basic hardware equipment at the cloud network layer, the big data center receives, links and shares data deposited from all departments, industries and applications of the town. Against a professional operation management methodology, it constructs an index system that directs intelligent operation of the town. With continuous operation of the town, it further analyzes the operation status quo through the quantitative index system, offers decision-making support to the town’s scientific management, and conducts innovative iteration of the intelligent operation system, thereby promoting the intelligent operation and management at the cloud engine layer, and realizing scientific, effective industrial service and life convenience service. The integration framework built upon the iTown intelligent architecture standard, implementation steps, implementation paths and operation model is shown in Fig. 9.4. Urban Internet is an important means for China to realize urbanization, industrialization, informationization and agricultural modernization. The iTown

Fig. 9.3 Operation model of the iTown intelligent architecture

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marks a typical development model of urban Internet in China’s current era, a development model compliant with China’s national conditions, a major channel to implement the national informationization development strategy and iTown development strategy, and a strategic initiative to deepen the structural reform at the supply side and promote the iTown construction to a new stage. It is of great value and far-reaching significance in the town governance and operation, acceleration of the transformation and upgrading of the town’s industries, and breaking of the bottleneck of the town development. The iTown construction takes a process of continuous exploration and development, which cannot be accomplished overnight. Viewed from the existing experience and development, combined with the iTown integration framework, the following three aspects shall be concerned: (I)

Comprehensiveness. Whether it is the top-level design in the early stage, the implementation and development in the mid-term, or the intelligent operation in the later stage, holistic thinking is required. Centering on the iTown’s overall

Fig. 9.4 Integration framework of iTown

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strategic planning and layout, at the premise that the design contents can solve actual problems, the key in industry-city integration is valued to highlight the industry-cored and people-first characteristic, and avert the data fragmentation, system isolation and gingerbread function. (II) Ecological feature. Two ecologies of environment and industry are involved. Against the objective of saving energy, reducing pollution and increasing efficiency, the environmental ecology seeks a balance among the town demands, friendly environment and prosperous economy. In the end, it strives to improve the ecological environment, increase the efficiency of resource utilization and enhance the ability of sustainable development. With characteristic industries as the core, the industrial ecology covers the whole industrial chain by introducing the upstream and downstream sectors to create an ecosystem with industrial characteristics. Only a firm grasp of the iTown’s ecological development can generate nonstop momentum to create a vigorous, economical and intelligent town. (III) Forward-looking feature. The rapid development of new technologies and the innovative thinking requires that the design of iTown be forward-looking, combine advanced technologies and ideas and look into the future development trend. Among them, the iTown’s big data center is a direct and important manifestation of intelligence. New generation information technologies such as cloud computing, big data, Internet of Things, mobile Internet and artificial intelligence are utilized to build a data decision-making center to function as the operation center of the town. Through collection, arrangement and learning of big data, and intelligent operation of the town, the self-organization, selflearning and self-decision-making intelligent operation is enabled for iTown like a human brain.

Column 9.1: Construction of Intelligent Town and Intelligent Tourism in Beijing WTown, Miyun District, Beijing It’s proposed in the Notice on Establishing iTowns and Corresponding Highquality Development Mechanism issued by the General Office of the National Development and Reform Commission on August 30, 2018, to “Accelerate establishing iTowns and corresponding high-quality development mechanism”, and “Follow the examples. Gradually explore the typical cases of iTowns, summarize and refine, establish benchmarks, promote experience, give positive guidance, lead high-quality development by means of “guiding big with small” and ensure a healthy advance along the right path”. While intelligent construction is an indispensable link for the high-quality development of characteristic towns, iTowns mark the absolute development direction of characteristic towns. In order to lead the scientific construction and healthy development of intelligent towns, the Ministry of Housing and Urban–Rural Development, the

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National Development and Reform Commission, and the Ministry of Finance jointly issued on July 1, 2016, a notice to cultivate characteristic towns nationwide, requiring that around 1000 towns themed on leisure and tourism, trade and logistics, modern manufacturing, education and science and technology, traditional culture, and landscape and living be built by 2020. The proposal is chiefly raised to promote a better development of characteristic towns. The development of certain industries can boost the development of local economy, offer jobs to rural labor force around the town and improve the quality and health of urban citizens. In the construction of characteristic towns, it’s a major trend nowadays to develop tourism with the town as the core. As a major part of China’s service industry, tourism spans multiple industries, like transportation, catering, entertainment, accommodation, shopping, etc. The intertwining of industries has also brought in more and more restrictive factors. As early as in 2014, the National Tourism Administration proposed the “Year of Intelligent Tourism”, calling on all localities to construct tourism destinations, such as intelligent tourism cities and scenic areas, based on the development direction of tourism, against the theme of intelligent tourism. At present, the traditional tourism industry has shortcomings in IT informationization construction. The “intelligent tourism” is hard to realize, typically because of the non-systematicness, poor practicability and informationization construction that lags behind the overall development needs of tourism; there are also problems like the more emphasis on hardware and less on software, scattered tourism information resource and poor sharing availability, low development of tourist information resources and service quality, and lack of tourist information technicians. The tourism economy is still facing issues such as: basic systems of tourism cities are isolated from each other to become information silos; in the visit, tourists find problems in traveling, eating and entering the scenic site; in the highly informationized era today, the development in traditional methods has encountered bottlenecks. How to help operators with their management through fast and efficient IT information means, and at the same time provide the public with convenient and timely intelligent tourism service information have challenged more and more scenic areas. Gubeikou Town, Miyun District, Beijing, was included in the 2019 list of intelligent towns, and the intelligent tourism APP “Beijing WTown” won the 2019 Red Dot Design Award. Beijing WTown, sited in Simatai Village, Gubeikou Town, Miyun District, Beijing, is a model of the integration of intelligent town and intelligent tourism. Beijing WTown International Tourism Resort, with a total area of 9 km2 and a total investment of RMB 4.5 billion, is a signature international tourism resort of top-notch services and facilities and high participation and experience, which integrates sightseeing, relaxation, commercial convention and creative culture all in one. As a successful model of “intelligent tourism”, the Beijing WTown Tourist Attraction in Miyun District,

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Beijing, has avoided the following problems encountered in the development of other scenic areas from the very beginning: The inefficient manual ticketing system, and complex verification terminal; cumbersome channel interconnection procedures, and high labor costs; overcrowded holidays when real-time monitoring is unavailable; untimely and inaccurate data analysis; and many more. 1. Strategic leadership At the beginning of its establishment, Beijing WTown learned from the experience of other scenic areas to prioritize the tourists’ experience. From the perspective of the operation model, the professional team for Wuzhen Town took charge of the unified development, design and planning of Beijing WTown. Based on the “overall property right development, compound and diversified operation, equal emphasis on vacation and business, and overall asset appreciation” strategy contrived for Wuzhen Town, customization based on Beijing suburb’s characteristics is made for Beijing WTown. 2. Innovation Foundation To avoid problems such as difficulty in traveling, eating, and entering the park in other scenic areas caused by the rapid increase of tourists, the “Zhongjing Cloud Intelligent Tourism Plan” is formulated through rounds of inspections and tests. Coupled with the practical application of modern scenic area construction and the rich experience in public/private cloud construction, a set of overall solutions has been created. Lenovo ThinkCloud AIO machines are used for the bottom layer of the plan as the IT resource pool, to provide a stable architecture of reliable performance, flexible extension and simple operation maintenance. The upper layer adopts the Zhongjing Cloud Intelligent Tourism Plan to allow a platform system meeting specific demands to be quickly established in the scenic area, thus ensuring the stable and rapid development of the tourism service sector in the scenic area. The upper layer can develop an “intelligent brain” through the Zhongjing Cloud Intelligent Tourism Platform, so as to realize the data sharing and intelligent interaction between Zhongjing Cloud Tourism System and the scenic area, hotels, travel agencies and catering establishments. First, the tourism analysis and prediction, and proactive push services shall be enabled. Through the traffic guidance and intelligent video monitoring subsystems in the scenic area, the travel route information and nearby people/vehicle flow information, and parking lot locations and vacancy information near the destination could be provided to tourists at self-guided tour. The self-service tour guide client can be downloaded from terminal devices, such as the self-service tour guide instruments, intelligent phones, and tablets, to realize self-guided tour in the scenic areas, optimization of route and navigation to the destinations, and guidance to consumption in hotels, catering establishments and entertainment facilities.

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Second, intelligent perception management can be realized. By establishing front-end sensors around the scenic area, Zhongjing Cloud Intelligent Tourism Platform realizes the real-time perception of the dynamics of the scenic area, the intelligent perception and management of the scenic area, and the virtual tourism oriented to the tourists. Tourists can connect to the intelligent perception terminals scattered around the scenic area through the public service portal of the scenic spot for a virtual tourism, including the 360° panoramic browsing and real-time experience, so as to obtain an immersive feeling, and enrich the ways to get information of and comment on the scenic area. With Lenovo ThinkCloud AIO machines as the IT resource pool, the bottom layer provides the upper-layer system with a structure of stable and reliable performance, flexible extension and simple operation and maintenance. First, it is imperative to greatly improve the input and output performance. Lenovo ThinkCloud AIO offers better performance than traditional discrete architectures. The traditional architecture only realizes virtualization at the computing level, making it hard to guarantee the performance of virtual machines or support greater business systems. As a result, it cannot meet the client’s demand of diversified resources and guarantee the client cloud services. Lenovo ThinkCloud AIO achieves the multi-channel concurrency of data through a fully distributed storage architecture. It automatically layers the storage mechanism through the solid-state hard disks and serial hard disks, to greatly improve the data access availability by several times than traditional architectures; moreover, it ensures the high performance of the system at multiple levels through many other software-defined technical mechanisms designed for virtualization. Second, it truly realizes the on-demand extension. Lenovo ThinkCloud AIO features a better scalability. The bottom layer of the traditional architecture uses shared storage devices, whose scalability is limited by the control units, i.e. the host headers, and interfaces and bandwidth of the host headers are limited. With business expansion in the future, the data volume will constantly increase and the scalability of storage units will inevitably decline along with the storage performance. Each node machine of the Lenovo ThinkCloud AIO set contains a data control unit and a data storage unit, and all node machines have the same status. For extension, node machines could be added to constitute a cluster with existing ones, thus expanding the capacity and improving the overall performance of the system in a linear manner to strengthen the scalability. Third, it features eminent reliability and availability. The bottom layer of the traditional architecture uses the single-point shared storage. Failure of the storage system means a huge disaster for the entire system. Lenovo ThinkCloud AIO set adopts a distributed architecture at the storage layer and a multi-data copy mechanism at the data protection layer. Therefore, damage of any node in the cluster will not affect the overall performance, so that the high reliability of the system is guaranteed and the system has a mechanism for auto-recovery

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of the data copies. This ensures when a single point of failure occurs in the system constituent unit, the upper-layer service will not be interrupted to disable services for users and availability of the business system is guaranteed. Fourth, it greatly reduces the operation and maintenance costs. Virtualized servers, optical switches, disk arrays, virtualized software and cloud management suites, needed for building a traditional architecture, are produced by different software/hardware manufacturers. The complex hierarchical relationship makes the architecture hard to maintain. Adopting a flat hyper-converged structure to eliminate complex hierarchical relationship, Lenovo ThinkCloud AIO set has undergone strict compatibility test and performance tuning at the ex-factory stage. Therefore, it enhances the maintainability at later stages and greatly lowers the operation and maintenance cost for the clients. Fifth, the infrastructure could be quickly deployed. The resource pool needs to be rapidly expanded on demand to ensure that the needs of resource users can be quickly responded to and satisfied. Lenovo ThinkCloud AIO set makes available the rapid delivery of IT resources through automated deployment methods. Pre-installed at the factory and unpacked at the customer’s site, it enables a one-hour rapid deployment on the cloud platform to greatly enhance the rapid scalability and lower the implicit capital consumption caused by prolonged deployment and debugging. 3. Institutional Empowerment A major reason for Wuzhen Town, another example of characteristic town in China, to stand out of the ubiquitous waterside towns in the southern region of Yangtze River is its unified management. Beijing WTown takes over the model of Wuzhen Town. Generally speaking, there are two management models for ancient towns and villages in China, the spontaneous management by the people, and the unified management. Either of them has its own pros and cons. Management of the ancient town can be generalized as: Unification kills the vitality and laissez-faire muddles things up. Therefore, it is necessary to find a balance between unification and self-management in formulating the experience and profit model of Beijing WTown, thus promoting the overall development of the town. Its business model and profit model are shown in Tables 9.1 and 9.2. Speaking of the business model, Beijing WTown attaches equal importance to sightseeing and relaxation and makes profit with the tickets and secondary consumption in the scenic area. Two business formats are engaged: (1) specialty snack stores, bookstores and costume stores, which are built beside homestays to enrich the travel experience through shopping; (2) the stores on classic Beijing business street, which are the highlight of Beijing WTown. The developer is responsible for approving the power of management of all stores, taking an overall control and offering local residents job opportunities, for which original residents primarily work for homestays and stores.

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Table 9.1 Business model of Beijing WTown Type

Business model

Project features

The existing Simatai Fort is a key cultural relic protection unit in Beijing, and the Great Wall and ancient town are combined to form a rare historical and cultural scenic area

Project positioning

A complex scenic area that integrates sightseeing, leisure, vacation and conference functions all in one

Development Learning from the “overall property right development, compound and model diversified operation, equal emphasis on vacation and business, and overall asset appreciation” business model of Wuzhen Town, Beijing WTown attaches equal importance to sightseeing and relaxation and generates income by ticket and operation to realize the construction and operation of high-quality cultural tourism destination Development The development subject with the tourism company holding the most shares, subject integrating the government, enterprises and fund companies all in one Business subject

CYTS International Travel Co. Ltd. takes control of Beijing WTown Tourism Company through additional holdings

Development It is determined to set up two separated areas, one for the protection of the measure Simatai Great Wall and the other for tourism Scenic area creation

Specific measures include relocation, demolition, renovation, repair and decoration. Local residents are relocated to the periphery of the ancient town, and all the original houses are used for commercial development into hotels, restaurants and businesses. Local residents are privileged to return to the ancient town to participation in the tourist service sectors

Table 9.2 Profit model of Beijing WTown Area type

Investment content

Business channels

Ownership of property rights

Exclusive area for protection

Renovation of the overall environment of the ancient great wall and its remains

Cableway

Company

Moderate repair of the main body

–

Local government

Construction of tourist route facilities

–

–

Scenic spot (display of folk features)

Protection fee for the ancient great wall

Ancient great wall protection fund

Unified ticket

Company

Room revenue

Company

Exclusive area for tourism

Hotels and specialty homestays

(continued)

References

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Table 9.2 (continued) Area type

Inside and outside the area

Investment content

Business channels

Ownership of property rights

Business format

Sales revenue

Company

Various supporting entertainment facilities

Sales revenue and rent

Company

Creation of general environment (roads, waters and afforestation in the area)

–

Company

Public facilities (visitor – center, toilets, electricity, water and drainage, cable TV, heating, etc., in the area)

Company

Tourism real estate project

Company

Income from property sales

Source Selection for China Best Cases of Intelligent Town in 2019 http://shenbao.zctra.cn/; 2019 Top 200 National Intelligent Towns have been released! How many of these characteristic towns have you ever been to? [EB/OL]. http://www.sohu.com/a/341439517_106843, 2019-09-17; Beijing WTown teamed up with Lenovo ThinkCloud AIO to set a new model of “intelligent tourism”. https://bai jiahao.baidu.com/s?id=1614628788173055029&wfr=spider&for=pcm, 2018-10-18; The “2017– 2022 China Healthy Town Construction Planning and Operation Management Analysis Report” released by the Prospective Industry Research Institute

References Chen, Jin. 2010. Green smart city (1). Informationization Construction 3: 6–11. Chen, Jin. 2017. Xiong’an new area: A new mecca for global innovation and development. Bulletin of Chinese Academy of Sciences 11: 1256–1259. Chen Jin, Yu Fei, and Xie Jun, et al. 2018. Blue Paper of Characteristic Towns: Report on Intelligent Operation of Characteristic Towns (2018) Top-level Design and Intelligent Architecture Standards. Beijing: Social Sciences Academic Press (China). Netease. 2017. Academician Pan Yunhe: AI 2.0, the development direction of China’s new generation of artificial intelligence [EB/OL]. http://dy.163.com/v2/article/detail/CNVEM7DH0511 8EHH.html. Tencent Research Institute. 2017. Comprehensive interpretation of the development of artificial intelligence industry in China and the United States [EB/OL]. http://www.199it.com/archives/ 619696.html. Xinhua News Agency. 2017a. Xi Jinping pointed out, we must accelerate the reform of ecological civilization system and build a beautiful China [EB/OL]. http://cpc.people.com.cn/19th/n1/2017a/ 1018/c414305-29594512.html. Xinhua News Agency. 2017b. Xi Jinping: Implement the national big data strategy to accelerate the construction of a digital China B/OL].http://cpc.people.com.cn/GB/http:/cpc.people.com.cn/n1/ 2017b/1209/c64094-29696290.html. Yu, Fei, Lu Yu, and Jin Chen. 2018. The typical model of urban Internet’s development in China: Connotation and intelligent architecture standard of iTown. Urban Development Studies 25 (11): 71–78.

Chapter 10

Rural Revitalization: Holistic Innovation in Rural Construction Experiences

Rural revitalization is an all-round move that covers industrial revitalization, talent revitalization, cultural revitalization, ecological revitalization and organizational revitalization. —Xi Jinping. (Speech at the deliberation of the Henan delegation at the Second Session of the 13th National People’s Congress on March 8, 2019).

Since the reform and opening up policy was proposed, China has made remarkable achievements in her urbanization and rural revitalization. Specifically, the proportion of urban population in the total has risen from 17.9% in the early stage of the policy implementation in 1978 to 58.52% at the end of 2017, and the proportion of poor population in the total has decreased from 88.32% in 1981 to 3.1% in 2017.1 Nonetheless, China is still confronted with contradictions and challenges such as the low competitiveness in quality and efficacy of agricultural development, the difficulty in continuous increase in farmers’ income and the weak self-development of the rural areas. In this case, the innovative development and comprehensive revitalization of rural areas are in urgent need. Issues concerning the left-behind children, underworld forces in rural areas, and corruption take place from time to time in recent years, and problems such as the environmental pollution, unbalanced urban and rural development (Ye 2017), insufficient collective action in rural areas (Wang 2017), and inadequate support from scientific and technological innovation to rural development are getting increasingly serious. Therefore, the reform of the rural governance system brooks no delay. Since entered the new era of socialism with Chinese characteristics, the principal challenge facing Chinese society has evolved into “one between unbalanced and inadequate development and the people’s growing needs for a better life”, shifting from the “material and cultural needs” to the “needs for a better life” and from the “backward social production” to the “unbalanced and inadequate development”. 1

In 2020, China has achieved the feat of removing all 832 counties from the country’s poverty list. The poor population mentioned in this section is the population that has not been lifted out of poverty by 2020.

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Currently, China’s biggest unbalance in development is still the unbalanced urban– rural development, and the biggest inadequacy is still the inadequate development in rural areas. It’s clearly put forward at the 19th National Congress of the CPC to “implement the rural revitalization strategy” (Xi 2017). The CPC Central Committee and State Council Opinions on Implementing the Strategy of Rural Revitalization issued on January 2, 2018, further emphasizes that “implementing the strategy of rural revitalization is a must to solve the contradiction between unbalanced and inadequate development and the people’s growing needs for a better life, fulfill the two centenary goals and meet the requirement of common prosperity for all”. Park, a well-renowned sociologist of the Chicago School, made it clear that the city is the laboratory of Western sociology, while the countryside of Eastern sociology. While the Western modern society is troubled by urban problems, the Eastern counterpart is dogged by rural problems. In his article On China, Park pointed out that “the fundamental difference between the Eastern civilization and Western civilization is the one between rural society and urban society” (Sun 2005). The first of the United Nations Sustainable Development Goals is to eradicate poverty. Without rural modernization, there will be no modernization of the nation. The solution to China’s problems lies in the rural areas. The key to rural revitalization is to gradually establish a rural innovation system by refining the rural innovation capabilities, achieve sustainable rural development and promote people’s happiness. When it comes to international competition, China’s development also faces competitive pressures and practical challenges. While the innovations in China’s manufacturing and service industries are highly concerned with rapid advancement, China is seriously lagging behind in agricultural innovation. Countries represented by the USA, Israel, Canada and Australia have explored many successful models for agricultural innovation, which help shorten the gap between urban and rural areas and boost the rural revitalization. For example, attaching great importance to the scientific and technological investment in agriculture, Israel takes a resourceintensive path for agricultural development. In the 1980s, the contribution of Israel’s scientific and technological advancement to agricultural growth reached 96% (Guo 2006). Although China has made incredible progress in scientific and technological innovation of engineering, and taken the leading position globally in quantum communication, aerospace engineering, artificial satellite, and artificial intelligence, innovation is still low and apparently ineffective in industries related to people’s livelihood, such as agricultural and non-staple food processing, furniture manufacturing, textile and costume, wood processing and bamboo/rattan/palm grass products, leather, fur, feather and feature products, and shoe making (Chen and Huang 2017). China spends 0.3% of agricultural output value on agricultural science and technology, while that number for Israel is 3%. Now that strengthening the scientific and technological innovation in agriculture has become a new and promising development direction, establishing a scientific and technological innovation system for agriculture that fits the national conditions functions as the cornerstone for developing modern agriculture of the country. In terms of innovation research and development, a succession of topics have emerged including the jugaad innovation (Radjou and Prabhu 2015; Weyrauch and

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Herstatt 2016; Leliveld and Knorringa 2018), responsible innovation (Stilgoe et al. 2013), inclusive innovation (Sonne 2012; Soman et al. 2014; Foster and Heeks 2016; Pansera and Owen 2018), innovation and anti-poverty (Bradshaw 2007), innovation and peace (Miklian and Hoelscher 2017; Chen and Huang 2017), innovation and sustainable development (addressing climate change with innovation, global warming and other social challenges), and innovation and talent training (Wagner 2015). Establishing a non-governmental innovation system and a rule-by-innovation social participation mechanism are the new tasks for building a power of science and technology, in which the most important part is establishing a rural innovation system. How to stimulate the vitality of grassroots innovation with new economic formats, such as experience economy, community economy, and sharing economy, based on the national strategy, to gain lasting innovation benefits has become a new research focus. As to categorization of innovation research, if categorized by the region, there is national innovation system (Freeman 1987; Lundvall 2010; Nelson 1993), regional innovation system (Cooke 1992), and national entrepreneurship system and regional entrepreneurship system (Ács et al. 2014); if categorized by the industrial economy, there is industrial innovation system (Malerba 2002) and corporate innovation system. This categorization lacks the analysis of the innovation system from the urban–rural dual perspective and lacks the systematic research of the rural innovation.

10.1 Rural Innovation Systems 10.1.1 Rural Innovation System and Urban Innovation System: A Comprehensive Analysis Framework for Urban–Rural Dual Innovation Rural areas cannot be left behind in the national modernization (Ye 2017). Rural innovation development is an inseparable part of the national innovative development. As major pillars of the national and regional innovation system, the rural innovation system and urban innovation system are of great fundamental significance in improving the construction of the national and regional innovation systems and enhancing the national innovation capacity. In the 1990s, Chinese scholars put forward the concept of urban innovation system based on the innovation theory, regional economics and systems theory (Zhao and Leng 2002; Zhao and Li 2003) to study the principle and operation process of the urban innovation system and provide corresponding theoretical basis for the correct formulation and effective implementation of China’s urban innovation strategy (Lu and Wang 2010). Urban development needs to rely on the urban innovation system. As a bridge between the national innovation system and the corporate innovation system, the urban innovation system plays an important role in building an innovative city and an intelligent city (Liao and Zhang 2005). The important support and revitalization path for the implementation of the rural revitalization strategy is to establish and

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improve the rural innovation system, so as to fundamentally promote the solving of the agriculture, rural areas and farmer issues, and realize the sustainable development and modernization objectives of the agriculture and rural areas. Echoing the urban innovation system, we’ve formally proposed the concept of “rural innovation system”. Rural innovation system refers to the socioeconomic system formed upon mutual dependence and action of various innovation-related subject elements (innovation subjects and organizations, including farmers, grassroots governments and autonomous organizations, small- and medium-sized enterprises, etc.) and non-subject elements (materials and resource conditions required for innovation), geographic and spatial–temporal elements, as well as institutions, policies and cultures that coordinate the relationship between these elements, against the theme of rural revitalization and sustainable development. To help academic researchers and public policy makers form a clearer understanding of the similarities and differences between the rural innovation system and the urban innovation system, we’ve made a preliminary comparison of the urban and rural innovation systems to provide a framework for comprehensive analysis from the ten perspectives of innovation goals, innovation subjects, innovation elements, innovation models, innovation environment, innovation challenges, action mechanisms, industrial support, innovative talents and innovative policies (Table 10.1).

10.1.2 Path Mechanism for “Trinity” Construction of Rural Innovation System to Drive Rural Revitalization The rural innovation system is intended to mobilize rural innovation subjects to fully participate in the rural innovation, through the generation, diffusion and application of new knowledge, new technologies and new business models, so as to promote the free flow of basic and supporting elements within the rural innovation system. Also, through the Internet and other intermediary organization networks, it achieves synergistic linkage with the urban innovation system and uses the innovation diffusion of the urban innovation system to accelerate the ecological development and value creation of the rural innovation system. Specifically, through the implementation and evaluation of innovation policies and activities, and the supply and optimal allocation of innovation resources, the rural innovation system establishes infrastructure, capital system (Zhang 2015) and cultural atmosphere that are conducive to rural innovation, refines the innovation system and innovation policies, cultivates the spirit of new innovation and entrepreneurship in rural areas, promotes the generation of new knowledge and new technologies and their diffusion/application in the rural innovation system, increases the proportion of technology-driven innovation in rural areas, propels the integrated development of the primary, secondary and tertiary industries in the rural areas (Ma 2015) and finally realizes the sustainable development of the trio of agriculture, countryside and farmers. Innovation is never an input of technologies or elements alone,

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Table 10.1 Rural innovation system and urban innovation system: a comprehensive analysis framework for urban–rural dual innovation Analytical perspective

Rural innovation system

Urban innovation system

Innovation goals

Rural revitalization, anti-poverty and sustainable development

Industrial upgrading, intelligent city and sustainable development

Innovation subjects

New types of farmers, grassroots governments, self-government rural organizations, small- and medium-sized enterprises and collective enterprises

Businesses, entrepreneurs, governments, universities and research institutions

Innovation elements

Labor, capital, knowledge, information, technology, land, institution, culture and norms

Innovation models

New cooperative medical care in rural areas, bringing science and technology to the countryside, urban–rural linkage, Internet+, and transformation of scientific and technological achievements

Innovation-driven development, industry-university-research collaborative innovation and open innovation

创新环境 Loose network, small farmer Innovation environment economy, labor-intensive model, imperfect market mechanism, insufficient innovation resources, backward innovation infrastructure, high transaction costs, low stock of creative resources and low liquidity

Perfect infrastructure, agglomeration of innovation resources, intensive interaction of network subjects, mature development of market economy and sufficient resource flow

Innovation challenges

Rural depopulation, unbalanced urban–rural development, weak self-development ability, bottleneck in property rights reform, low efficiency in allocation of innovative resources and challenges for social governance

Traffic congestion, environmental pollution, industrial upgrading, high cost of living and challenges to sustainable development

Acting mechanism

Agricultural modernization, urbanization of locality, integrated development of industries and innovation governance

New industrialization, urbanization and informatization

Industrial support

Modern agriculture, modern tourism and handicrafts

Secondary, tertiary and strategic emerging industries

Innovation talents

New types of professional farmers, returning migrant workers, entrepreneurs and college-graduate village officials

University talents, enterprise R&D personnel and overseas talents

Innovation policies

In a limited number, difficult to implement

In a large number, implemented efficiently

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but a complex process of collaborative promotion of science, technology, policy, system and network construction. Starting with the innovation in agricultural science and technology, system and management, and network and intermediary organization, it follows the holistic innovation policy thinking to promote the improvement of comprehensive innovation capacity in rural areas, comprehensively implement the innovation-driven strategy and precise poverty alleviation strategy, and realize the rural revitalization and sustainable development. 1. Technological innovation empowers the development of modern “agriculture, rural areas and the well-being of farmers” Science and technology are the primary productive forces. The core of the development of the rural innovation system is the innovation and application of agricultural science and technology, and that of agricultural science and technology innovation is the establishment and improvement of the agricultural science and technology innovation system. This is a network composed of the national agricultural science and technology innovation system, the agricultural enterprise technological innovation system, the agricultural science and technology intermediary service system, and the domestic and foreign agricultural science and technology innovation environment that is made up of agricultural science research institutions, colleges and universities, and agricultural science and technology promotion service institutions in the public sector, with the production, circulation and application of agricultural science and technology knowledge as the core. In recent years, China has been always spending about 0.3% of its fiscal budget on public investment on agricultural science and technology, less than the international average of 1%, and far less than the 3% of Israel, a model of agricultural science and technology innovation. The technological innovation system, with enterprises as the subjects and established upon the industry-university-research collaboration, is not only the core component of the urban innovation system, but also the most fundamental driving force of agricultural science and technology innovation. Different from the urban innovation system, the rural innovation system lacks the knowledge producers of universities and research institutions, and the collective economies and township SMEs feature a technological innovation capacity far worse than the enterprises running in cities as limited by their scale, capital and management experience. Therefore, while increasing the investment in agricultural science and technology innovation and the construction of scientific and technological innovation teams, construction of the rural innovation system also needs to collaborate with urban innovation elements, and strengthen the industry-university-research cooperation and the transformation/application of scientific and technological achievements, through the indigenous innovation of agricultural science and technology enterprises and the user innovation joined by the new professional farmers. In view of the agricultural development experience of all countries in the world and the agricultural development exploration of China, agricultural science and technology innovation is a key factor that impacts the rural economic growth of a nation, a major component of the national innovation system and rural innovation system, and a mainstay of the development of modern agriculture. Delving into the development

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of agricultural science and technology innovation capabilities in developed countries such as the USA, Japan and Israel, we’ve learnt that based upon the governmentdominated investment in scientific and technological innovation, the market competition and cooperation mechanism is introduced and the fundamental role of universities in agricultural science and technology system is utilized to properly guide the corporate and non-governmental public investment in the construction of the agricultural science and technology innovation and application system, pour more scientific and technological elements into the agricultural development through transformation of scientific and technological achievements and improvement of farmers’ quality, and uplift the production efficiency of unit land and input elements. 2. System and management innovation encourage all-people participation Innovation doesn’t come up naturally or occurs upon the improvement of a single aspect. It is the result of an organized and designed process (Curral et al. 2017). The rural innovation capability is refined by not only establishing and improving the government-led diversified scientific and technological innovation system, but also strengthening the service and support capacities of the rural governance system through the reform of urbanization, land system, collective property rights system and management system according to local conditions, and mobilizing all people to participate in the all element innovation to establish a cultural atmosphere of all-people innovation and entrepreneurship. One of the consensuses of institutional economics is to stimulate the enthusiasm and creativity of social subjects to participate in economic development, through the reform of the property rights system. The household contract responsibility system of China sets a typical example to guarantee the participation initiative of agricultural innovation subjects through institutional reform. The “three rights” reform of the rural collective land and homesteads (Wang 2017), the improvement of the agricultural production support and protection system, and the establishment of the property rights protection system for agricultural science and technology achievements are important institutional guarantees to adapt to the trend of marketization and internationalization, protect and mobilize farmers, enterprises and scientific research institutions and other innovative entities to participate in the construction of the rural innovation system, and achieve the improvement of rural innovation and entrepreneurship and comprehensive capacities. Besides, governmental organizations shall also increase investment in protection technologies for the agricultural ecological environment and accelerate the formulation and implementation of policies and laws for agricultural high-tech development, thus achieving the simultaneous advancement of agricultural development, environmental protection and indigenous innovation. Management innovation based on institutional reform is an important guarantee for realizing the reform of the rural governance system. Grassroots self-governing organizations and township enterprises are an important way to achieve prosperity, poverty alleviation and rural inclusive growth by encouraging and driving the allpeople innovation through management model innovation. Encouraging the development of specialized agricultural services and accelerating the construction of a

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new agricultural management system (Wu 2017) will help reduce the loss of agricultural labor and attract agricultural innovation talents. In addition, e-commerce and rural e-government are popular new methods to improve the agricultural and rural management efficiency (Wang 2017). 3. Network and intermediary organization innovation accelerates the free flow of innovation elements The fundamental purpose of the construction of the agricultural science and technology innovation system is to increase the output of scientific and technological innovation, ensure the participation of multiple subjects in the rural innovation process, achieve the supply-side structural reform in rural areas using the market forces such as the network, intermediary organizations and industry associations, and lower the time and capital cost of innovation elements flow (Wang 2013). Moreover, sharing a similar mechanism with the national innovation system, the rural innovation system is more a static innovation environment than a dynamic system that boosts the free flow of innovation elements and the rapid diffusion of innovation results and empowers the development of agriculture, countryside and farmers. The free flow and application speed of knowledge, talents, capital and new technologies determine the speed of improvement of rural innovation capabilities. Therefore, the key to promoting rural innovation capabilities and accelerating rural revitalization is to strengthen the development of network organizational capabilities, speed up the free flow of innovation elements and facilitate the efficient transfer of innovation achievements. In this process, the construction of intermediary organizations and network systems, such as the socialized, three-dimensional and networked intermediary service systems, new agricultural cooperatives, inclusive financial systems, agricultural technology distance training networks, information service systems, and modern logistics systems, is of great supporting significance. In particular, the popularity of the Internet and modern logistics contribute a great deal to refine the infrastructure of rural innovation network and link the rural innovation system with urban innovation system. It is apparently conducive to accelerating the flow of urban–rural manpower and intellectual capital, matching the urban–rural innovation elements with commercial opportunities and lowering the cost for matching the modern agriculture and tourism sectors with urban demands.

10.2 Experiences of Rural Construction in China As to the best practice of rural construction in China, cases of the Hexi Village, Babu District, Hezhou City, Guangxi Zhuang Autonomous Region; Jinggangshan City, Jiangxi Province; Yuan Longping Agricultural High-Tech Co., Ltd.; Shenzhen Huada Gene Technology Co. Ltd.; Hesilu Village, Yiwu City, Zhejiang Province; Tengtou Village, Fenghua District, Ningbo City, Zhejiang Province; Taobao Village, Lishui City, Zhejiang Province are studied to discuss China’s rural construction measures with the traditional Chinese culture as the soul, agriculture as the basis, farmers as

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Traditional Chinese culture as the soul Intermediar y network organizatio n as the carrier

Agriculture as the basis

Reconstruct the rural order and farmers' confidence Rural governance as the means

Farmercentred

Technological innovation as the guide

Fig. 10.1 Main measures adopted for China’s rural construction

the center, scientific and technological innovation as the guide, rural governance as the means, and intermediary organizations as the carrier, as shown in Fig. 10.1.

10.2.1 Traditional Chinese Culture as the Soul During the rural construction of Hexi Village, traditional Chinese culture has played a key role in the township development and the characteristic town construction. “Traditional Chinese culture” here chiefly refers to the cultural background based on China’s northern Jiangsu culture and Hexi culture. 1. Northern Jiangsu Culture Traditional culture is the wisdom deposited and crystalized throughout history. Local culture can display the local wisdom, establish a local brand, enhance the local image and boost the soft power of urban development. The city cluster in the northern part of Jiangsu Province, consisting of Yangzhou, Taizhou, Lianyungang, Nantong,

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Yancheng, Huai’an, Suqian and Xuzhou, is situated in the Han cultural region. Though the Northern Jiangsu Culture is not clearly defined in historical literature, the five cities in this region are generally deemed a major part of the Northern Jiangsu Culture. First, the regional culture of Yancheng. Yancheng is a city rich in sea salt. Its city development history is the history of people’s development of the blue ocean. The regional culture of Yancheng is in fact the culture of sea or sea salt. Besides, the red army culture is also a signature of Yancheng. The Communist Party of China established a branch in Yancheng as early as in the 1920s, making it a cradle of the red culture. During this historical period, an array of patriotic generals, including Chen Yi and Liu Shaoqi, wrote the history of the Chinese red army in Yancheng and jointly established the red culture of Yancheng. Second, the regional culture of Huai’an. The regional culture of Huai’an is characterized by “neutralization”. Huai’an, a traffic and military hub since the ancient times, has reserved the essence of Confucianism, the doctrine of the mean, throughout its historical development. Part of the reason is its location at the geographic boundary that divides China into the north and the south. Besides, Huai’an, long being an important water transportation center, has gathered businessmen from all over the country here to form a distinctive “neutralization” culture. Third, the regional culture of Lianyungang. One of the earliest developed coastal cities in China, Lianyungang acts as the bridgehead of the New Eurasian Continental Bridge in East Asia. With the proposal of the “Belt and Road” initiative, Lianyungang turns into a pivot of land and sea transportation in the East along the way. Unrivaled natural conditions have laid a natural foundation for the development of Lianyungang’s regional culture. One of the four most prestigious Chinese novels, Journey to the West, has something to do with Lianyungang, and the excellent cultural works Essence Oil starts also with the city. The well-known tune of Liuqin Opera is an important representative of opera culture in northern Jiangsu. Fourth, the regional culture of Xuzhou. Xuzhou, one of the nine prefectures in ancient China, dates its history back to the end of the primitive society. Xuzhou has been a major hub of business, economy and trade since ancient times, with its influence radiating to the southern Jiangsu region, Shandong and Henan. Compared with other cities in northern Jiangsu, Xuzhou prides itself most on its imperial culture. A large number of historical sites related to Peng Zu, Liu Bang, Xiang Yu and so on could be found here. In addition, the folk art occupies a very important position in the regional culture of Xuzhou. Intangible cultural heritage, such as the martial art, takes up a big share and acts like a calling card of the regional culture of Xuzhou. Fifth, the regional culture of Suqian. Suqian is considered the cradle of Jiangsu culture, and the birthplace of Chu-Han culture and Huaihe civilization. The Xiacaowan Cultural Site in Sihong, Suqian, the largest human civilization site discovered in Jiangsu Province, confirms the city as the originator of the northern Jiangsu culture. For Suqian, the Beijing-Hangzhou Grand Canal plays an important role. Running through the city, the canal functions as an important communicator and inheritor.

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2. Hexi Culture Hexi Village, located in Babu District, Hezhou City, 18 km away from the city proper, boasts outstanding geographic conditions, convenient traffic, picturesque landscape, and profound history and culture. Hexi Village was included in the fifth batch of national key cultural relics protection units in 2001, the sixth batch of national historical and cultural towns in 2014, the first batch of Chinese characteristic towns in 2016 and the fourth batch of national beautiful and livable towns in 2016, and the fifth batch of traditional Chinese villages in 2019. In ancient times, Hexi Village stood on the Xiaohe Ancient Road. The Hexi City Site of the Linhe Ancient City has been well preserved today. In the city, there are still the largest and best-preserved rammed-earth city walls of Han Dynasty discovered by archaeology. There are the Wenbi Tower built in the fifth year of Emperor Qianlong’s reign (1740) and the Confucian Temple erected in the Yuanyou period of the Northern Song Dynasty; the ancestral halls constructed one after another as spiritual comfort during the operation of the Xiaohe Ancient Road; the Jiang’s Courtyard built in the second year of Emperor Qianlong’s reign in the Qing Dynasty (1737), as well as traditional buildings such as the Hexi Wharf and Osmanthus Well. Funded by a variety of sources like the national key cultural relics protection units, historical and cultural construction for civil administration, and construction of characteristic towns, Hexi Village has made great progress in the protection of traditional streets and historical/cultural buildings so as to better protect the Hexi culture.

10.2.2 Agriculture as the Basis Agricultural modernization is the basis for promoting the rural modernization and realizing the sustainable development of farmers. Through the reform of property rights system, management system, and financial and taxation system, the deep integration of industries is promoted. The development of county economy, collective economy and rural SMEs is an important part of the rural innovation system. How to realize the integrated development and innovation of primary, secondary and tertiary industries in rural areas through the construction of rural innovation system, how to innovate and improve the agricultural industrial system, how to refine the innovation ability of the agriculture and rural management talents and new professional farmers, how to enhance the quality and efficiency of rural economy through the transformation of scientific and technological achievements and the construction of scientific and technological service system, what is the innovative economic mechanism for the input and output of agricultural scientific and technological innovation factors, how to break down the existing obstacles in property rights and land system reform and realize the free flow and effective allocation of the elements of urban and rural innovation system, these are unique issues beyond the scope of general urban economics and innovation economics. To cope with them, a “Chinese solution” for building the rural innovation system shall be worked out through practical exploration.

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Jinggangshan implements the poverty alleviation through agriculture and forestry. Adhering to the thought of “an industry for a township, a variety for a village, and a project for a household”, Jinggangshan City has formed the model of poverty alleviation and development through industries featuring “Party branch + leading enterprise/base + cooperative + poor households + characteristic greenhouse” in a move to guide and help townships develop specialty industries. For instance, Jinggangshan Jingxiang Fungus Bio-tech Co., Ltd. employed local poor population, offered fungus cultivation technologies for local poverty-stricken households through the “Jinggangshan Jingxiang Fungus Academician Workstation”, and purchased fungus products from the industrial cooperatives formed by impoverished locals in 2017, thus giving them a path to earn stable income. The city has also launched a special campaign to use abandoned land for the cultivation of agricultural and forestry products, such as bamboo, tea and fruits, in specific steps as: The appointed poverty alleviation group coordinates the reclamation of abandoned land in different villages limited by transportation with inefficient planting of a single plant, cooperatives are established and capital stock certificates are issued to original poor households, and tenants plant suitable plants according to characteristics of the field. For example, there is a piece of wasteland in Xincheng Village, Xincheng Town, Jinggangshan City, which is put under the management of the Zhengyuan Black Rice Professional Cooperative. Through the poverty alleviation campaigns in the “10th Five-year Plan”, “11th Five-year Plan” and “12th Five-year Plan”, Jinggangshan City has added more than 20,000 mu of agricultural arable land (1 mu ≈ 666.7 m2 ) and more than 400 farmers’ professional cooperatives, and established mature industries such as the teaoil tree and Jinggang honey pomelo of Nashan Township and Longshi Town, moso bamboo and kumquat of Huang’ao Township and Xiaqi Township, and pigs and aquaculture of Maoping Township and Eling Township. Also, the red kiwi fruit of Jiangbian Village of Nashan Township, lotus of Damiao Village of Hehua Township and Nai plum of Jiaotang Village of Mucun Township have also formed brands.

10.2.3 Farmers as the Center Jinggangshan regards “farmers as the center” to lay a mass foundation for the sustainable development of the rural construction. First, assistance in education and vocational skills. Education is of fundamental and prolonged importance in poverty alleviation. Against the developmental support philosophy of “intellectual and aspirational assistance to eradicate roots of poverty”, Jinggangshan City has been implementing the one-package mitigation or subsidy policies for poverty-stricken/poverty-alleviated population and their children that cover education from kindergartens to universities, such as the half-reduction of preschool education tuition, subsidy for boarding fees of compulsory education, tuition and books fee exemption for high-school education, and subsidy for tuition of full-time colleges/universities and vocational colleges. In such ways, it ensures education for children from poverty-stricken families and cuts off the transmission

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of poverty to later generations. The secondary technical schools in Jinggangshan offer children from poor households a fixed percentage of quotas for enrollment, and bonus scores for choosing specific majors such as water conservancy. To improve the scientific and cultural quality of the younger generation, the municipal government has set up “Youth Science and Technology Book Stations”, equipped with computers, teaching equipment and science and technology books, in middle schools in Jinggangshan City, Ninggang County 2 and more. What’s more, it makes the most of local conditions to implement the “New-type Vocational Training for Farmers” and “E-commerce Training for 10,000 People and Startups for 1000 People” programs, and special campaigns like the “Spring Breeze Movement” and “Employment Assistance Month”, offered trainings on planting techniques of yellow peaches, housekeeping services and e-commerce to those capable of labor including poor population, and issued allowances to those attending the trainings and succeeding in upgrading their living-earning skills, so as to continuously refine the employment and entrepreneurial skills of poverty-stricken population. Besides, through the appointed assistance groups of the Ministry of Science and Technology, leading enterprises or public welfare funds, a distance education and training base has been established to offer the poverty-stricken/poverty-alleviated population regular training on planting techniques for flowers, vegetables and tea and e-commerce knowledge, thereby hugely enhancing their production capacity. Second, assistance in innovation and entrepreneurship. “Mass entrepreneurship and innovation” is one of the key ways to stimulate the entrepreneurship of the poor and realize endogenous development of the poverty-stricken areas. To release the potential of innovation and entrepreneurship for long-term poverty alleviation, Jinggangshan City issued the Implementation Opinions on Vigorously Promoting Mass Entrepreneurship and Innovation to offer entrepreneurship training and guidance free of charge to qualified labor forces, and implement the “license first and permit later” reform to streamline the working and transaction procedures and provide convenient registration services to innovation and entrepreneurship. Various methods are adopted to strengthen the publicity for building a beautiful village, and the Letter to Outside Workers of the City is issued during the Spring Festival period when most workers working outside would return home to encourage them to find a job or start a business back home. Also, the support for entrepreneurship guarantee loans is strengthened, the small guarantee loan is modified into entrepreneurship guarantee loan, the quota of subsidized loan is increased, and RMB100,000 is offered as personal entrepreneurship guarantee loan as maximum. Furthermore, a risk compensation fund has been established for industrial poverty alleviation guarantee loans to boost industrial development by leveraging bank funds in a certain proportion. The appointed group would help expand the sales channels to effectively eliminate worries of the poverty-stricken in business running and industrial development, and massively encourage farmers of certain capability and consciousness to engage in the business trend. Typical cases include the bamboo cupping utensil processing by Liu 2

In May 2000, Ninggang County and Jinggangshan City merged and were integrated into the newly formed Jinggangshan City.

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Yonghua in Louxia Village of Dalong Town, the nursery stock planting in circulation land by Wu Jiafa in Guixi Village of Nashan Town, the selling of bamboo fungus through e-commerce by Huang Xiaohua in Hongshi Village of Huang’ao Township, and the development of hybrid eco-agriculture that mixes the planting of stropharia rugoso-annulata and flos hibisci and the breeding of geese by Zhang Zhengming in Xiaping Town.

10.2.4 Scientific and Technological Innovation as the Guide Yuan Longping Agricultural High-Tech Co., Ltd. and Shenzhen Huada Gene Technology Co. Ltd. are good examples to take “scientific and technological innovation as the guide”. Founded in 1999 and named after the Academician Yuan Longping, the “Father of Hybrid Rice”, Yuan Longping Agricultural High-Tech Co., Ltd. adheres to the mission of “promoting the advance of the seed industry and benefiting people around the world”. By building a global commercial breeding system and a worldleading bio-tech platform, it starts with the “seed industry operation” and “agricultural services” to promote the advance of agricultural science and technology innovation capacity and industrial reform through continuous research and development. Yuan Longping Agricultural High-Tech Co., Ltd. has a global R&D team of more than 500 members, which spends around 10% of its turnover on R&D and has set up R&D organs and experimental bases in countries including China, the Philippines, India, the USA and Brazil. Currently, its R&D innovation in crop seeds is leading the world. Besides, the company relies on Longping High-Tech Public Welfare Foundation to implement charity activities for scientific and technological services in the agricultural field, and actively carries out foreign-aid agricultural training and project cooperation. So far, it has trained more than 5000 people in more than 60 developing countries in Asia, Africa and Latin America. Ranking top 10 global seed enterprises in 2017, it has made noteworthy contribution to the seed industry and agriculture development of China and even the world. Gene technologies are employed to ensure the agricultural and food security and to benefit the mankind. In response to the national agricultural development policies and the “Belt and Road” initiative, Shenzhen BGI Millet Industry Co., Ltd. (hereinafter referred to as BGI Millet) was incorporated in 2015 in Shenzhen to improve the global ecological environment and human dietary structure. Counting upon various high-tech platforms of Shenzhen Huada Gene Technology Co. Ltd., BGI Millet is dedicated to the entire industrial chain from breeding, planting to deep processing of millet. Due to the research results of genomics and molecular breeding with cereals as model organisms, it has mass obtained and protected the core intellectual property rights on the cereal genetic information, drawn the cereal genome map, and revealed the anti-drought, water-saving, high-yield and anti-infertility mechanisms of the millet. Offering a robust support of agricultural science and technology to the deep understanding of the millet’s biological traits, phenotypes, and physiological mechanisms, and to the development of the new agricultural economy, it may

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become one of the technical engines driving the agricultural science and technology development in modern China.

10.2.5 Rural Governance as the Means The Hesilu Village, Jinhua County-level City, Yiwu City, Zhejiang Province, and the Tengtou Village, Fenghua City, Zhejiang Province are examples taking “rural governance as the means”. Endeavoring to give play to the principal role of villagers, Hesilu Village in Yiwu has explored a new governance path of “merit bank + grassroots Party building” in its rural governance innovation. By recording good deeds of the villagers and converting them into points for each household, the merit bank encourages the villagers to help each other to develop a spirit of dedication. Credit is the passport in the society of acquaintances in the countryside. Without credit, the rural governance will be empty talk. Hesilu Village has created a rural society of mutual trust and benefit by concretizing the credit and asking Party members and representatives to play as the role model. Tengtou Village was originally a wellknown poor village in Xiaowangmiao Sub-district of Fenghua City. 3 Criticized for its backward agricultural production and farmer’s living conditions, it used to be billed as the “last choice for marriage”. In the mid-1980s, with the rapid development of township enterprises, farmers relinquished their land to work in cities, resulting in large areas of land abandoned. Fu Qiping, then the deputy secretary of the village Party branch, proposed a reform plan for the appropriate-scale land management and led the villagers to start the land management reform. Subsequently, Tengtou Village successfully implemented three projects: old village transformation, collective enterprise shareholding system transformation, and ecological agriculture construction, to upgrade a poverty-stricken village of 300–800 residents into a UN “Top 500 Global Ecological Villages”, one of the first batches of Chinese civilized villages, a national ecological demonstration zone, and a national AAAAA tourist attraction. It is the continuous reform of the rural governance system that has helped Tengtou Village to work out the ecological innovation development model of “chained Tengtou”.

10.2.6 Intermediary Organizations as the Carrier Taobao Village, Lishui City, Zhejiang Province is listed as an example to enhance the rural innovation capacity through reform of the Internet-based intermediary network organizations. Alibaba’s rural strategy is a typical example to penetrate “Internet+” in rural areas and promote the construction of rural network organizations. With the improvement of the rural logistics system and the expansion of Internet coverage, 3

In 2016, the State Council approved the abolishment of Fenghua county and the establishment of Fenghua District in Ningbo City.

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some Taobao villages have gradually developed into a certain scale. By the end of 2017, the Ali platform had spawned 2118 Taobao villages, and e-commerce has offered more than 28 million jobs. In 2017, the sales of Taobao villages nationwide reached RMB120 billion in total. Let’s take the Taobao Village in Lishui, Zhejiang as an example. Through neighbors’ demonstration, socializing demonstration and mutual learning/exchanges of e-commerce associations, it has spontaneously promoted villagers’ enthusiasm in starting their own businesses and further attracted supporting service providers, e.g. logistics suppliers, to gather here, which in the end promote the development of rural e-commerce. With the innovative management model of big data and new retail, it propels the construction of rural innovation network to set up typical examples of urban–rural linkage, poverty alleviation of farmers and rural development.

10.3 Realization Pathways for Rural Construction Based on Holistic Innovation in China Since the reform and opening up, China has made remarkable achievements and accumulated rich experience in rural construction. Learning from the realization path of holistic innovation, it endeavors to build a model that bases itself on the practical exploration and innovation of the rural construction with Chinese characteristics to elaborate on the rural construction experience in holistic innovation and promote the dynamic function mechanism of poverty alleviation and community development. Rural construction in holistic innovation is a dynamic process that contains multiple elements and multi-dimensional performance. With reference to the research by Chen et al. (2018a), the rural construction experience in holistic innovation is divided into the three parts of “strategic leading–innovative foundation–institutional empowerment” and subdivided into the six dimensions of scientific and technological innovation, educational innovation, institutional innovation, inclusive finance, social entrepreneurship and cross-border collaboration. The rural construction in holistic innovation strives to override the simple investment and single-dimensional innovation of technology, education, finance and other elements. Through innovation in processes such as institutional innovation, social entrepreneurship and cross-border collaboration, it boosts the free flow of technological/manpower/financial capital in ordinary people, so as to enlarge the ecological value of technologies, education, finance and other investment elements, realize rural construction and targeted poverty alleviation based on emerging technologies such as big data, promote the “hematopoietic” development and “empowerment-type” development transformation, achieve multi-dimensional goals such as rural population dividend growth and ability improvement, and contribute to the dynamic and community-based sustainable development. In a nutshell, the rural construction in holistic innovation is predominantly realized by integrating the element innovation with the process innovation to empower the

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rural population and communities, improve the income and welfare of rural residents and boost the rural construction upon endogenous development momentum. Rural construction and community development are product of the element innovation and process innovation in rural construction, which ushers in new driving force to make available the mutual improvement and dynamic enhancement.

10.3.1 Strategic Leadership The strategic leadership in holistic innovation mainly refers to the strategic goals and strategic arrangements set by international, national and local governments/organizations on rural construction. 1. Inclusive Growth Strategy The Asian Development Bank and the European Union put forward the concept of “inclusive growth” in 2007 and 2010, respectively, stressing that the huge benefits of economic growth shall benefit ordinary people in a contribution to equal opportunities, fair participation and regional sustainable development. Inclusive growth incorporates both value creation, and diffusion and application of knowledge outcomes. The concept of inclusive growth requests that social development benefit every citizen. It sets a starting point for value creation in rural construction, namely innovation is intended for creating wealth, promoting the advance of ordinary people through a marketized mechanism, and enhancing the social fairness by optimizing the social welfare distribution model. The performance of rural construction is primarily measured and evaluated by the inclusive growth effectiveness, including the welfare growth represented by the improvement of income, residence and living conditions (Maasoumi and Racine 2016), as well as the refinement of cognitive, social participation and other capacities. The former can be regarded as the increase in the stock capital of the rural population and communities, and the latter as the increase in their incremental capital. It should be noted that the appraisal of rural construction focuses on the welfare and capacity improvement at both the personal and community levels, so as to guarantee the sustainable efficacy of rural construction. 2. Poverty Alleviation Strategy At the meeting of the Political Bureau of the CPC Central Committee held in May 2018, the Strategic Plan for Rural Revitalization (2018–2022) and Guiding Opinions on the Three-Year Action for Poverty Alleviation were reviewed and approved; it’s clearly specified in the Decisions of the CPC Central Committee on Adhering to and Improving the Socialist System with Chinese Characteristics and Promoting the Modernization of the State’s Governance System and Governance Capability that: “We must resolutely win the battle against poverty, consolidate the achievements of poverty alleviation and establish a long-term solution to address relative poverty”; it

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was proposed in the Central Economic Work Conference that the goal for all povertystricken population to be lifted out of poverty would be fulfilled by 2020. These policies have specified the policy goals and directions for China’s rural construction.

10.3.2 Innovation Foundation Building a foundation by innovation mainly refers to giving play to the holistic innovation and realizing rural revitalization through combination of new elements, breakthroughs in new technologies, exploration of new business models or stimulation of human creativity. 1. Agricultural Innovation Scientific and technological innovation plays as the No. 1 driving force of development, for its value in developing new technologies and making new breakthroughs, and for the significance of transformation and application of innovation results and knowledge diffusion in improving the national economic development and capacity of rural population (George et al. 2012), especially the significance of diffusion of generic technologies to the developing countries (Andergassen et al. 2017). Existing studies suggest that technological innovation and related knowledge diffusion can give full play to the positive externalities of innovation (Andergassen et al. 2017), and benefit low-income groups and developing countries through the “trickle-down effect” (Huang and Liu 2016), “bringing science and technology to the countryside” (Zhou et al. 2017) and other diffusion models. Therefore, they have great social value. IT, a generic technology represented by Internet, not only brings innovative development to e-commerce and express logistics sectors, but also breaks the limit of geographic location, making obvious contribution to enhancing the ecommerce development in rural areas, establishing a rural innovation ecosystem, accelerating the transformation of scientific and technological achievements, and popularizing the achievements of agricultural science and technology innovation (Prahalad 2012; Wang et al. 2016). However, it should be noted that technological innovation centering around enterprises features an obvious profit-seeking trend and a market-oriented mechanism of technological transfer, which is largely possible for innovation achievements to diffuse to the rich group and developed regions of perfect market mechanism (Yin et al. 2017), thus generating a crowding-out effect on the rural construction. This requires public sector participants represented by governments and intergovernmental organizations to give full play to the stimulating effect of innovation policies, and cope with the “Matthew Effect” brought by the paralyzed market, the uneven distribution of innovation resources, and the unavailability of innovation achievements for the impoverished population (Martin 2016). The transfer of technological innovation achievements to and digestion by the poor areas need to be done with improvement in accessible financial capital and manpower. This process must rely on innovation of elements like education and finance, reform of management model and cross-boundary collaboration (Chen et al. 2018b). In

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the future, it is necessary to further introduce and apply new technologies and new business models, including blockchain, artificial intelligence, agricultural robots and smart logistics, to speed up the innovation in agricultural science and technology, and the diffusion and application of innovation achievements, and to enlarge the contribution of scientific and technological innovation to the rural construction. Scientific and technological innovation and achievements transformation are the core driving forces for rural construction. Modernization is never possible without the guidance and driving of scientific and technological innovation. The effective promotion of rural revitalization and the development of agriculture, countryside and farmers would be impossible without the input of scientific and technological innovation elements and the diffusion of scientific and technological achievements. Technology-driven rural construction features a high precision and strong sustainability, which is particularly important for promoting innovation in the agricultural industrial chain and value chain. On the one hand, innovation is conducted according to local conditions on the agricultural income-increasing technology, rural environmental protection technology, agricultural product deep-processing technology, and medical technology for the rural population, which boosts the supply-side reform for scientific and technological resources, lowers the risk of rural population and families to be impoverished by diseases, and offer industrial science and technology capital for poverty alleviation. On the other hand, the diffusion of agricultural science and technology innovation achievements to rural areas will help improve the scientificity of agricultural production and the efficiency of unit output, and propel the development of new types of farmer, agricultural and rural self-management entities. In addition, applying the innovation achievements of emerging technologies, such as big data, artificial intelligence, blockchain and biotechnology, to rural areas through technological transfer models of “bringing science and technology to countryside” and industry-university-research cooperation is also a major means to improve the agricultural productivity and the development of agriculture, rural areas and the well-being of farmers. For example, the Guangxi Zhuang Autonomous Region has implemented the innovation and entrepreneurship service action with science and technology commissioners since 2016, which selected more than 1000 science and technology commissioners and sent them to poverty-stricken areas for poverty alleviation through scientific and technological innovation. The science and technology commissioners and the agricultural technological backbone form an embedded and distributed technological innovation and transformation team to make an organic combination of the rural construction projects and local industrial foundation, development resources, industrial planning, and agricultural science and technology innovation resources inside/outside the region, thereby promoting the development of local specialty agriculture and boosting the rural construction. 2. Big Data Technology While rural governance is a major link in the modernization of social governance, the rural governance innovation represented by management model reform is an important means to achieve rural construction. The lack of system, norms and culture is

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the main cause of the institutional dilemma (Myrdal 1991). The rural construction under the government leadership also encounters problems such as the distortion of poverty data, the information black box, the mismatch between poverty alleviation policies and poverty alleviation needs, the lagged policy tracking and inspection (Mo and Zhang 2017). Promoting the management system and social governance model with emerging technologies, such as big data and mobile Internet, can effectively enhance the rural construction and dynamic governance, boost the flow of scientific and technological, educational and financial resources from cities, developed countries and regions to rural areas and rural populations, and optimize the efficiency and effectiveness of cross-regional poverty resource allocation (Wu 2015). In addition, the initiative of private sectors and international organizations to participate in the rural construction is spurred by the public–private partnership (PPP) model and social governance innovation (Chen et al. 2018a), which is of great social and economic value to the rural construction. 3. Education Popularization Education popularization is one of the most effective ways to promote innovation, help with knowledge dissemination, enhance human capital, solve incapability and promote self-development (Zuo and Yang 2013; Peng 2002), which is conducive to accelerating the improvement of human capital of rural popularization and communities. Education popularization also plays a fundamental, pioneering and sustainable role in rural construction. It can not only improve the human capital of the rural population through ability cultivation and knowledge imparting, but also boost the enthusiasm of the rural population and children of rural families to change their destiny through value shaping. The uneven distribution of educational resources between urban and rural areas, and between developed areas and underdeveloped areas is a major challenge for improving the educational level of the rural population. Public sectors are required to increase investment in educational resources and budget in rural areas, and higher requirements are proposed on the dissemination of science and technology and knowledge, and the assistance models (Zhou et al. 2017). The construction of IT infrastructure and the popularization of mobile Internet have spawned the online large-scale open courses, e.g. MOOC, and open-source education and training communities. Promoting the educational and teaching innovation through the Internet, distance education and vocational education, and Sino-foreign cooperation can effectively alleviate problems, such as insufficient stock, low quality and low conversion of educational resources in impoverished rural areas, and offer diversified options for refining human resources in rural areas. It is of great significance for improving the trans-regional flow of educational resources, lowering the access threshold of educational resources and reducing the marginal costs. Moreover, it is also necessary to promote the reform on education policies and university education, so that rural areas and rural families can obtain more opportunities and rights for group mobility and human capital improvement; it is also an important way to boost the development of basic education and vocational education by promoting the sharing of hardware and software resources in colleges and universities and developed areas among teachers and students in poor areas through innovation in educational

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models and community entrepreneurship (Najafizada and Cohen 2017). Besides, the new technologies, new educational models and new educational concepts can not only improve the efficiency of education and teaching so as to indirectly improve the educational quality in rural areas, but also realize the cross-time/-space, low-cost flow of educational resources, thus directly acting upon the poverty-stricken areas and individuals. Educational innovation is utilized to promote the sinking of highquality educational resources, lower the threshold for rural population to acquire knowledge, enhance the efficiency of agricultural knowledge popularization and transformation of knowledge capital into productive capital and provide rural population and communities with human capital leverage for sustainable development and self-reliance. Take XuetangX, the world’s first Chinese-language MOOC platform launched by Tsinghua University, as an example. XuetangX, officially put online in 2013, is built to “promote online education with innovation and promote educational innovation online”. XuetangX has teamed up with top international universities to introduce high-quality courses and present to registered users for free online; it has cooperated with local governments to set up a MOOC platform powered by colleges and universities, so as to deliver high-quality educational resources to remote areas and help the curriculum construction and development of colleges and universities in West China. Besides, it has paired with the International Engineering Education Center to promote the engineering education for Africa and the sharing of educational resources on a global scale. As of March 7, 2018, XuetangX had more than 10 million registered users, offered over 1300 courses, received 18 million + course selections and covered users from 209 countries and regions around the globe. XuetangX has promoted the education reform through technological and model innovation, greatly reduced the threshold for access to high-quality educational resources in rural areas, refined the teaching and learning efficiency and contributed to the application of knowledge capital in the era of knowledge economy and the improvement of rural population’s capabilities.

10.3.3 Institutional Empowerment Institutional empowerment mainly refers to forming the requirements on opening, collaboration and comprehensiveness in holistic innovation by formulating systems, strategies and policies at the corporate, industrial and national levels, so as to stimulate the innovation vitality and fulfill the goal of rural construction. 1. Open Financial Services The lack of productive financial capital and difficulty in obtaining financial capital in rural areas brought about by the financial exclusion effect are major constraints for rural population to get rid of poverty and become rich. Addressing the issues of difficulty and risk of obtaining productive capital by rural population through financial science and technology and business model innovation is a significant path

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to empower the mutual assistance and production development of the rural areas (Wu 2013). Open financial services are an innovative model of inclusive finance for rural areas and residents, which can not only solve the problem of deficiency in productive capital for rural population, but also promote the scientific and technological innovation, and the diffusion and application of scientific and technological achievements. The deficiency of and difficulty in obtaining productive capital in rural areas, resulted from the imperfect credit system, asymmetric information in financial market, and low matching efficiency, are major constraints for rural residents to get rid of poverty and become rich. As a new financial system oriented to rural areas, urban and rural groups, and small and microenterprises that have been neglected by traditional finance, the open financial services aim to provide vulnerable groups, including the rural population, with the right to enjoy financial services on an equal footing with other traditional financial customers. It is a subversion of the traditional financial concept of “Finance for the Rich”. The international inclusive finance innovation model of Grameen Bank of Bangladesh (Wang 2007) has a significant role in helping solve the credit difficulties, lower the threshold for obtaining productive capital, and improve capital flow in rural areas. It is needed to further promote the reform of the rural financial system, incorporate the open financial services into the national financial system, and pay attention to the application of financial technologies, the innovation of financial products, and the establishment of financial risk prevention mechanisms, so as to jointly ensure the promotion of financial innovation to rural construction, and realize the transition from finance for the rich to inclusive finance (Wu 2015). Through innovation in financial science and technology and business model, the open financial services can help build a financial service network and social credit system that cover urban and rural populations and improve the penetration rate of financial services. Breaking through the financial exclusion effect with open financial services can effectively improve the risk hedging ability and credit repayment ability of farmers and agricultural production, thereby promoting the transformation from subsistence-oriented production to development-oriented, large-scale production for rural population and communities. Open financial services can help promote the supply-side structural reform and industrial structure adjustment in rural areas on one hand and encourage rural residents to take active part in the production and operation activities through small loans and financial mutual assistance, thus obtaining persisting business income on the other. It is of great significance for bettering rural residents’ ability to get rid of poverty and become rich, establish an effective risk compensation and sharing mechanism, and propel the rural revitalization. 2. Comprehensiveness Rural construction requires the full and extensive participation of multiple subjects at all levels. By roles of the participants, rural construction involves the providers of innovative elements, diffusers, conflict resolvers and beneficiaries of results. Viewed from the participating subjects of different element innovation, governments and intergovernmental organizations are generally believed to be subjects of the rural construction (Jin and Pan 2012; Fagerberg 2003), and entrepreneurs are

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typically deemed subjects of the innovation (Schumpeter 1982). Speaking of the rural construction or innovation, an extensive participation of governments, enterprises, intergovernmental organizations and international organizations is required (Chen 2018). Governments at all levels and even international intergovernmental organizations, such as the United Nations and the World Bank, are the subjects of the basic education, financial transfer and payments, implementation of public poverty alleviation policies, and planning and construction of poverty alleviation projects involved in rural construction. Participating subjects of education and technical training are universities and local education and training institutions. Besides, elements and processes, such as healthcare and scientific and technological dissemination are increasingly highlighted by industrial associations and NGOs. Also, in exploratory and profitable fields, such as technological promotion, inclusive finance innovation, and product innovation for the low-income market, the full participation of entrepreneurs, farmers, and small and microbusiness starters is needed (Prahalad 2004). By the level of innovation, subjects of rural construction can be divided into four categories: (1) Individuals of subjective initiative, including entrepreneurs, farmers, freelancers, volunteers, science/education/culture/health workers, women and teenagers; (2) enterprises and organizations that organize and promote the flow of innovation resources, including small and microenterprises, large- and mediumsized innovation enterprises, domestic and multinational enterprises for pairing assistance and investment and social startups; (3) communities for resource interaction and collaboration among organizations, including local autonomous organizations such as village committees and neighborhood committees, regional mutual aid organizations, online communities, financial networks, supply chain networks, industrial associations, international voluntary organizations and NGOs; (4) decision-makers responsible for formulating and implementing poverty alleviation policies, such as domestic governments at all levels, the United Nations and the World Bank, the International Monetary Fund and the International Court of Justice. Multi-subject participation and multi-level collaboration are the basis for achieving the goal of rural construction. This collaboration is attained through an interconnected, complex social network to promote the resource agglomeration, knowledge flow, and diffusion and application oriented to the rural population and communities. Rural construction cannot be possible without the extensive and creative participation of rural communities and rural population (Wang 2016), as well as the social startups dedicated to serving the development of rural areas (Najafizada and Cohen 2017) and social innovation and entrepreneurship for ordinary people (Ansari et al. 2012). Community-based social entrepreneurship models, such as small and microenterprises and new rural cooperatives, can promote the mutual development of rural population by addressing the deficiency in productive capital and revitalizing the community resources (Park and Wang 2010), thereby realizing the industrial prosperity. “Mass entrepreneurship and innovation” will continuously drive the industrial development, job creation and income growth, and Taobao e-commerce rural network and migrant workers returning home for starting their own businesses can accelerate the flow of human capital, technical capital and industrial capital, thus associating small production with big market, and injecting nonstop momentum for

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implementing the innovation policies and exerting the leverage effect in rural areas (Ansari et al. 2012). Social entrepreneurship advocates that enterprises undertake social responsibilities and solve social problems while pursuing economic returns. Social entrepreneurship for rural areas and rural populations will fully release the “humanistic dividends”, such as the entrepreneurship, to greatly promote the rural revitalization. The traditional relief and blood transfusion type of poverty alleviation cannot truly mobilize the enthusiasm of the rural population and other social subjects, thus failing to make the most of rural construction or to boost the continuous productivity of social subjects including rural residents. As an emerging format around the globe, social entrepreneurship champions that the organizations or individuals take the initiative to undertake social responsibilities, encourage multiple entities to participate in solving the social problems and meeting social needs with market-based methods, and create social and economic values. Social entrepreneurship is a new channel to deal with the failure of market allocation of resources in rural areas and public service sectors, which helps to break down the boundaries between business and public welfare. While carrying out production and business activities for vulnerable groups and ordinary people, it unites forces of the market and public sectors to create more social connections and social capital for the rural communities and regions. The model and concept of social entrepreneurship will help to promote the collaboration of multiple subjects and roles in an open and highly interconnected era, stimulate the creativity of rural population and communities with new methods and models, attract a wider participation in business, and usher in enduring vitality for the development-oriented and growth-oriented poverty alleviation. The Taobao Villages built upon promotion of Alibaba are typical cases of social entrepreneurship. Taobao villages are those where over 10% of local households are running their own active online stores, with a total e-commerce turnover exceeding RMB10 million each year. Through Alibaba’s “Internet + E-commerce” rural ecommerce poverty alleviation model, it links the virtual e-commerce communities online with Taobao village offline by means of “low-cost start-up by online merchants—development of online stores—creating direct employment opportunities—driving upstream/downstream industries—creating indirect employment opportunities”. This model has driven the extensive participation of rural populations, promoted the linkage of urban–rural capital, technologies and demands and achieved the dual effect of “eliminating poverty and creating wealth”. The expansion, interconnection and upgrading of Taobao Villages have spurred the formation of regional innovation networks, thus becoming a new engine for rural economic development. By the end of 2017, Alibaba’s rural e-commerce platform had spawned 2118 Taobao villages and 242 Taobao towns, which ran more than 490,000 active stores online and offered more than 28 million jobs. In 2017, Taobao villages recorded a total sales volume of RMB120 billion.

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10.4 Implementation Frameworks of Holistic Innovation in China’s Rural Revitalization Rural revitalization marks an inevitable requirement for realizing the common prosperity and building a moderately prosperous society in an all-round way, and also the primary prerequisite for realizing the all-round development of human beings. General Secretary Xi Jinping pointed out in the report of the 19th National Congress of the CPC that the socialism with Chinese characteristics has entered a new era, and the main contradiction in our society has been transformed into one between unbalanced and inadequate development and the people’s growing needs for a better life (Xi 2017). A prominent manifestation of this contradiction is the unbalanced urban– rural development, and representative phenomena of it include the high incidence of rural poverty, unbalanced resources for poverty alleviation and unequal opportunities. In response to the changes in the main contradiction and the new task of poverty alleviation in the new era, it’s clearly specified at the 19th National Congress of the CPC to “implement the strategy of rural revitalization” (Xi 2017). The Opinions of the CPC Central Committee and the State Council on the Implementation of the Rural Revitalization Strategy further emphasizes that “rural revitalization is a prerequisite for getting rid of the poverty”. Therefore, it can be understood that the poverty alleviation centering on rural revitalization and sustainable development are basic national policies of China today, and an important part of the realization of a well-off society in an all-round way. Exploring the experience of rural revitalization in holistic innovation is an inherent requirement for implementing the innovation-driven national development strategy, and an essential way to implement the Xi Jinping’s Thought on Socialism with Chinese Characteristics for a New Era and promote the inclusive growth. It is of great significance for China’s building a moderately prosperous society in an all-round way and realizing the comprehensive, green and sustainable development of rural residents and areas. Zuo and Yang (2013) pointed out that the experience of rural revitalization in holistic innovation is not only a livelihood project to help the poor, but also an innovation of the national governance system. Coupled with the realization path of rural revitalization in holistic innovation, the implementation frameworks of holistic innovation in China’s rural revitalization are thus proposed and improved, as shown in Fig. 10.2. Promoting rural construction through innovation is one of the important foundations and core contents of rural revitalization, an inevitable requirement for implementing Xi Jinping’s Thought on Socialism with Chinese Characteristics for a New Era, and a necessary requirement for completing the building of a moderately prosperous society in an all-round way. The policy research on rural construction can start with the model and dynamics of rural construction, and delve deep into the practical challenges that may be encountered during element innovation and process innovation of the rural construction. During the policy implementation, we must combine the implementation of “targeted poverty alleviation” and “rural revitalization” strategies and the practical experience of rural construction at home and abroad to improve the theoretical system of rural construction with Chinese characteristics, refine the

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Rural revitalization

Holistic innovation

Elements input

Scientific and technological innovation

Strategy

Education popularization

Innovation

Financial inclusion

Npening

Public participation

Macro policy

Collaboration

Strategic leadership

Rural construction goals

Welfare growth

Innovation foundation

Institutional empowerment

Capacity enhancement

Comprehensiveness

Fig. 10.2 Implementation frameworks of holistic innovation in China’s rural revitalization

top-level design for rural governance and development, enhance the social/economic benefits of the rural construction policies and practices, accelerate fulfilling the goals of targeted poverty alleviation and promote the comprehensive, green and sustainable development of the rural population and communities. Specifically speaking: First, it is imperative to establish a holistic view of rural construction, conduct overall planning and design, form a dynamic closed loop, shape a spiral-up boost to the development of rural population and rural communities, make full use of the economic benefit transmission mechanism of the three major process elements (institutional innovation, social entrepreneurship, and cross-border synergy), integrate input elements such as science and technology, education, and finance, simultaneously propel the “Five Batches” poverty alleviation project and enhance the efficiency and effectiveness of the rural construction policy. Second, the rural construction policy is paired with the rural revitalization strategy to actively promote the reform of the collective property rights system in rural areas, improve the social governance system and the agricultural management service system, and boost the simultaneous development of rural population and communities through rural revitalization. Besides, social innovation and entrepreneurship targeting at the rural population and community are encouraged to release the innovation and practical vitality from the front line of poverty alleviation, improve the socialized poverty alleviation system, enhance the efficiency of social collaboration, and propel the steady poverty alleviation in rural counties. For the vast rural areas, education is one of the most effective ways to promote knowledge dissemination, enhance human capital, and boost self-development. It is necessary to increase the proportion of national education funding spent on rural areas, basic education, and

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vocational education, encourage social forces to participate in educational innovation, help rural areas improve the school-running conditions and give special care to children in rural families, especially the left-behind children. Third, in the new stage to open wider to the outside world, new collaboration for all-round rural construction is driven on a global scale through intergovernmental cooperation, and China’s rural construction will greatly promote the sustainable development worldwide and the building of a community with a shared future for mankind. Finally, promoting the integrated development of innovative-themed theoretical research and policy practice is of great value in optimizing the targeted poverty alleviation policies and handling a series of policy implementation challenges encountered in rural construction. For example, further attention shall be paid to the sustainability and scalability of rural construction and poverty alleviation (Sun and Zheng 2017), and the formulation and optimization of rural construction-oriented policies. Emerging challenges such as the crowding-out effect of technological and financial innovation (Wu 2013), targeting bias (Zhu and Li 2017), and potential threats to the human settlement environment (Zhang et al. 2015) are handled. The linkage between rural innovation system and urban innovation system, and between corporate innovation system and national innovation system, and the sustainable development of rural population and areas are made key subjects of studies (Chen et al. 2018b). The innovation and entrepreneurship in rural areas and among rural population present a huge market that was neglected in the past (Prahalad 2012), and the outflow of rural population also interacts and evolves dynamically with the domestic poverty (Xiang and Liu 2016). How to see the difference between innovation and entrepreneurship among low-income groups in rural areas and immigrant populations (Liu et al. 2017) and innovation and entrepreneurship based on big cities and technological advantages is the key to effectively promote the social entrepreneurship in rural areas (Rahdari et al. 2016). Since rural construction involves a wide range of cross-organizational and cross-boundary collaborations, future studies are needed to focus on how to reduce the social, economic, institutional and cultural barriers to cross-boundary collaboration, especially how multinational enterprises and international intergovernmental/non-governmental organizations cope with the conflict of culture, policy and institutional logic during rural construction (Feng 2017). In addition, now that emerging technologies such as artificial intelligence, blockchain, industrial robots, genetic technology, telemedicine, and new business models including “Internet+”, smart logistics, smart farms and ecological agriculture are promoting the industrial upgrading, mass applying them in the production and living in rural areas and communities in a low-cost and accountable manner turns out a new step of the rural construction (Mei et al. 2018).

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Chapter 11

Earth 6.0: Integrated Contemplations in Global Development

Giving the undergoing environmental crisis, the current crisis is an unprecedented wake-up call. We need to turn the recovery into a real opportunity to do things right for the future. —António Guterres. (Bilingual address on the Earth Day on April 22, 2020).

Throughout the global development, all countries have proposed major strategies and measures for social development according to their own national conditions. Nonetheless, peace and development are still the two themes of our times, and international competition and conflict, global warming, air pollution, and unbalanced global development are common problems haunting all countries in the world. Therefore, to solve global problems, it is necessitated to embed holistic thinking into the global development and seek new solutions for global development through holistic innovation.

11.1 Trends in Global Development 11.1.1 Thinking About the Fate of Mankind 1. The Limits to Growth and Beyond the Limits by the Club of Rome A rather renowned reflection on the fate of mankind should be The Limits to Growth, published by the Club of Rome, which expounds on the fundamental factors that ultimately limit and determine the continued growth and development of the planet Earth (Meadows 1984). The Club of Rome, established in April 1968, intends to reveal the impact of future development and changes of science and technology upon major global challenges and human development and formulate research reports to warn mankind of major difficulties and attract the attention of policymakers. In its reports, the Club of Rome expresses chief concerns over major global challenges such as population, food, industrial revolution, environmental pollution, large-scale resource development, poverty and education, so as to urge international organizations and relevant departments of all countries to fully realize the seriousness of © Science Press 2023 J. Chen, Holistic Innovation, https://doi.org/10.1007/978-981-19-8625-3_11

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global problems, raise their global awareness and take necessary collective actions to refine the governance of the planet. In its first official research report, The Limits to Growth, published in 1972, Club of Rome predicted that limited by natural resource supply of the planet, social and economic growth will come to a halt someday; a world crisis will ensue when natural resources are depleted. Then, the club proposed the “zero growth” countermeasure, which sparked a global debate that has persists to this day. According to the research and analysis of the global model, the report holds that to sustain future development for Earth, a global equilibrium status must be attained to shift focus from the labor efficiency to the individual life; as a result, humans have more spare time and living space to establish an individual equilibrium. In the early 1990s, it issued another report, Beyond the Limits (Meadows et al. 2001), in celebration of the 20th anniversary of the publication of The Limits to Growth, conducting a self-examination and selfjudgment of viewpoints in the first report and updating some that were deemed unfit. In opinions of the Club of Rome, new technologies, new concepts and new development models invented in the past 20 years have made a sustainable future possible, thus outlining a new limit for human beings; meanwhile, many natural resources are facing the dual crisis of supply deficiency and extensive pollution, and approaching their limits of tolerance. It is thus urgent to establish a sustainable social development model. Both The Limits to Growth and Beyond the Limits issued by the Club of Rome come to three important conclusions on the development of human society, as shown in Table 11.1. 2. The Club of Budapest The Club of Budapest, its predecessor being the Club of Rome, pays more attention to environmental protection, ecological protection, green development and peaceful development. It is founded to remind and warn modern people of shaping the planetary development awareness so as to protect the ecological environment and avert global-scale ecological disasters. The Latest Report on Global Issues by the Club of Budapest issued in 2004 specifies three major challenges and negative effects worldwide now and in the future, including population explosion, resource deficiency and environmental pollution. If population growth, resource consumption and industrial pollution go beyond control, Earth’s support to humanity will decline rapidly as it cannot take the environmental stress brought by the skyrocketing population. When the global ecological environment reaches the sudden-change point, a serious global ecological disaster will break out, which may endanger the survival and development of human beings. Reflecting on the progress of human civilization since 2000, the Club of Budapest comes to the conclusion that when the third millennium is coming, a new alternative human culture shall be created to view “human evolution as an important opportunity” and incubate hopes for the pessimistic fate of humanity and Earth.

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Table 11.1 Comparison of the Conclusions of The Limits to Growth and Beyond the Limits Conclusions

The Limits to Growth

Beyond the Limits

Main challenges

In the upcoming century of human development, we will face the problems of population expansion, industrialization, environmental pollution, food scarcity and resource consumption. Sudden and uncontrollable decline in planetary development brought about by population expansion and industrial production will probably occur

Due to the supply deficiency and environmental pollution, there will be an uncontrollable decline in per capita food output, per capita energy use and industrial production efficiency in the future development

Solutions

It is feasible to stop the decline and establish a stable development model. The global equilibrium design marks an effective solution that enables individuals on Earth to meet their basic material needs, and enjoy an equal opportunity to tap their individual potentials

Two changes are needed to curb the uncontrollable decline. One is to formulate relevant policies and systems for material consumption and population growth; the second is to improve the use efficiency of natural resources and non-natural resources through technological innovation

Possible outcomes Establishing a global equilibrium enables individuals to work and live efficiently, thus increasing the likelihood of their success

To make the two changes happen, long-term and short-term goals for human development shall be established. Both the quantity of short-term production shall be considered, and the long-term adequacy, fairness and quality of the living environment shall be guaranteed

3. World Development Report The World Bank publishes the World Development Report every year to shed lights on the world development that year. The World Development Report 2020: Trading for Development in the Age of Global Value Chains issued by the World Bank in 2019 pointed out that the continuous development of global value chains has promoted the transformation of the world economy, reduced the poverty and provided more jobs. In the era of global value chains, the open environment and social support of each country can bring itself huge benefits in the global value chain. Today, global value chains account for nearly 50% of the world trade, and factors such as trade frictions, uneven distribution of production benefits, concentration of environmental costs, and declining demographic dividends have slowed the sustainable growth of the global economy. The biggest reason is that developed and developing economies find it hard to reach consensus on deepening the policy reforms, establishing an open economy, and reducing trade frictions and conflicts. When participating in the global trade,

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each country seeks the largest possible economic value for itself as much as possible, ignoring issues such as whether sustainable social support can be obtained through trade, and whether trade is conducive to tackling the world poverty and uneven distribution of resources. However, all countries shall be part of a community of the world economy, and there is no zero-sum game in the global trade. Excessive uneven distribution of resources or global trade gains will cut off the trade sustainability, thus affecting the reasonable flow and configuration of global production means such as resources, capital and labor forces, and eventually damaging the interests of each participating country. John Donne describes the interconnected and interdependent relationships of modern societies with a visual language: No one is a completely self-contained island, and everyone is a small piece of the continent, a part of the whole. The death and attrition of anyone you hear are the decay of yourself, because all individuals are part of the human community. Therefore, send not to know for whom the bell tolls, it tolls for thee.1

11.1.2 Industry 4.0 Industry 4.0 is a concept officially proposed by Germany at the Hannover Messe 2013. Upon its proposal, it was widely recognized around the world and set off the Fourth Industrial Revolution (Spatter 2015). Governments around the world have also formulated their industrialization strategies according to their own national conditions: the USA proposed the “Industrial Internet”, China declared the “Made in China 2050”, France announced the “New Industrial France”, the UK put forward the “Modern Industry”, South Korea followed suit with “Manufacturing Innovation 3.0”, and Japan bet with “Interconnected Industry”. For Germany’s national development strategy of Industry 4.0, the government is expected to invest EUR200 million in promoting the digital, networked and intelligent development of Germany’s domestic manufacturing industry, in a bid to improve the core competitiveness of German industries and take the lead in the new round of international manufacturing competition. At the strategic level, the German government has formulated the high-tech strategy, and the Federal Ministry for Economic Affairs and Energy, Federal Ministry of Education and Research, and other relevant departments are responsible for the implementation of specific high-tech strategies. Subsequently, relevant government departments appointed the high-tech platform, innovation dialogue mechanism and EFI, and integrated them into three expert advisory bodies. EFI, founded in 2006, is specialized in scientific research and innovation policies and consists of 6 top-notch German scholars who are dedicated to the analysis and evaluation of innovation policies; the innovative dialogue mechanism, put in place in 2008 upon the German National Academy of Sciences, functions as a platform for dialogue between the German federal government, the business community and the academia; the high-tech 1

From the English poet John Donne’s sermon No Man is an Island.

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platform was put into service later, mainly dealing with the specific implementation of the high-tech strategies. The core organizations to implement Industry 4.0 include: (1) The Industry 4.0 Platform, currently one of the world’s largest and most mature platforms that have successfully enabled the digitalization of manufacturing, established by the German Mechanical Engineering Association (VDMA) and other institutions to act as a bridge to connect the German government, academia, business community and trade unions. It chiefly functions to assign tasks among all working groups, which are coordinated and supported by experts in various fields, large and small-medium enterprises, universities and research institutions and takes active part in international cooperation to ensure the full flow of research and innovation knowledge. (2) Standardization Committee primarily functions to propose relevant digital product standards for Industry 4.0, and coordinate the implementation of digital products in Germany and around the world. With cross-domain cooperation and collaborative innovation as its biggest feature, it has fixed partnership with related companies in China, the USA, Japan, Australia, France, Italy and more countries. (3) The laboratory network, mainly responsible for standardized testing, experimentation and feedback. It is an enterprise-oriented application organization that enables a most likely consensus at the enterprise level of the implementation of Industry 4.0-related policies and standards and publicizes it to various German enterprises via project implementation and practice. With deeper digitalization and intelligentization of the global manufacturing industry in the context of Industry 4.0, we gradually come to the realization that apart from the upside-down technology-driven model of innovation, a bottom-up method (i.e. design at policy level) is also available to guide the business scenario and model and promote the development of innovation. In the end, it derives a great many technological innovations in application instance and boosts the continuous updating and improvement of new products, solutions and services.

11.1.3 Society 5.0 At the 2019 World Economic Forum, Japanese Prime Minister Shinzo Abe formally proposed the concept of “Society 5.0” to the world. Society 5.0 is a new social form spawned by the continuous iteration of the hunting society, farming society, industrial society and information society. Also known as the super-intelligent society, it features a high degree of integration of the virtual and real space, as shown in Fig. 11.1. As people make full use of technologies such as artificial intelligence, the Internet of Things and robots in Society 5.0, data is used to replace traditional capital in connecting and driving production, which is conducive to a narrower gap between the rich and the poor; basic social services like health care, e-commerce and popular education are extended to marginal areas, opening up a wider world (H-UTokyoLab, Japan 2000).

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Hunting society

Farming society

Industrial society

Information society

Superintelligent society

Fig. 11.1 Iteration of social development forms

In the Society 5.0 proposed by Japan, necessary living materials and services can be precisely allocated to individuals, so as to meet the needs of social diversity and differentiation in detail, enable higher-quality life services for people, reconcile the difference in age, gender, region and language and build a more inclusive society. The core element of Society 5.0 is precise service. Leveraging big data in social subsystems such as transportation, medicine and geography, it realizes demand analysis and matching at individual level to complete precise services and avoid waste of resources. Compared with the national development strategies proposed by Germany, the USA, France, etc., Japan’s Society 5.0 not only focuses on digital and intelligent manufacturing models and the establishment of standardization guidelines for manufacturing sector, but also emphasizes a more comprehensive and broader scope of social services, in an ultimate effort to serve the overall social-economic development. Therefore, Society 5.0 intends to improve not only the competitiveness of manufacturing and even core industries, but also the intelligentization level of life. By enhancing living convenience in terms of living materials and services, strengthening the prevention and handling of disasters, addressing social challenges such as aging and environmental pollution and improving the social inclusion, it resolves to build a wealthy and vigorous country. However, Japan’s Society 5.0 faces the same problems with Germany’s Industry 4.0. In Japan, especially among small- and medium-sized enterprises, there are still doubts about whether big data can promote the innovative services, whether the initial investment in super-intelligent production will become massive sunk costs, whether corporate information can be secured, and whether the technical and personnel quality can meet the requirements of Society 5.0. All these are hindering the advancement of Japan’s Society 5.0-related policies. At present, the Japanese government has concentrated efforts on industry-university-research cooperation, especially on the linkage between industries and that between ministries, and made unremitting efforts for the smooth implementation and completion of Society 5.0.

11.2 China’s Experiences on Global Development Having witnessed all countries that make every effort to develop the manufacturing industry in a desire to enhance their industrial competitiveness and national strengths, the Chinese government has fully absorbed and learned from their experience in economic development and put forward the concepts on global development.

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11.2.1 A Community of Shared Future for Mankind On March 23, 2013, President Xi Jinping formally proposed the concept of “community with a shared future” in his speech at the Moscow State Institute of International Relations. In September 2015, he delivered another speech titled “Working Together to Forge a New Partnership of Win–win Cooperation and Create a Community of Shared Future for Mankind” at the United Nations Headquarters, proposing that we build a new type of international relations with win–win cooperation as the core and a community of shared future for mankind. To build a community of shared future for mankind, it is first necessary to take a deep part in global technological innovation and governance of technology. In the process of international cooperation, it is required to fully realize that innovation is the primary driving force. Only with high-quality scientific and technological supply and innovation achievements can we have strong national strength to support the construction of a modern economic system, and to further promote the building of a community of shared future for mankind. Furthermore, with the advance of economic, cultural and political exchanges between countries, it is a must to further deepen scientific and technological communication and cooperation among countries based upon indigenous innovation, fully deploy innovative resources and establish partnership on a global scale, and seek partners to jointly address major social challenges such as food security, energy security and climate change that are prevalent in the world. While reinforcing our own national strengths, we ought to benefit more countries and people. Given more complex and interdisciplinary technologies, multilateral international R&D cooperation emerges as a mainstream scientific research method in the global scientific and technological innovation and governance. Therefore, it is needed to integrate domestic and local industry-university-research scientific and technological forces and extensively carry out international scientific and technological cooperation and exchanges, so as to continuously improve China’s scientific and technological innovation capabilities, drive the generation of innovative achievements and make relevant contributions to the development of a community of shared future for mankind. Besides, cultural confidence needs to be established. Cultural confidence is the source of national development and social progress. It is the dynamic, balanced and holistic way of thinking underscored in traditional Chinese culture that leads the country to propose the building of a community of shared future for mankind, seek peaceful rise, and step on the road of indigenous innovation with Chinese characteristics featuring “open and comprehensive innovation”. Especially in the face of the rapid development and the rise of emerging technologies such as artificial intelligence and genetic technology, the Eastern wisdom shall be fully leveraged and absorbed in the national governance, corporate governance and technological governance so as to better enable enterprises to undertake the historical mission of the new era and promote the inheritance and development of Chinese culture.

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11.2.2 Five Development Concepts The Proposal of the CPC Central Committee on Formulating the Thirteenth FiveYear Plan for National Economic and Social Development reviewed and approved by the Fifth Plenary Session of the 18th National Congress of the CPC at the end of October 2015 formally proposed the five development concepts: innovation, coordination, green, openness and sharing. These five keywords collectively reflect the laws the Communist Party of China has revealed during China’s economic and social construction, which serve as the powerful ideological weapons that will lead the people of the whole country to win the great victory of building a moderately prosperous society in an all-round way in the future. The innovation out of the five development concepts chiefly incorporates theoretical innovation, institutional innovation, technological innovation and cultural innovation. Innovation is the core driving force for development and the most essential national endowment of the Chinese nation. Innovation can help China continuously cultivate new driving forces and delve into new space in the process of economic and social construction, build new industrial systems through innovation in technologies, products and services, adjust and develop new systems accordingly, and continuously refine the macro-control mode, thereby gaining a core competitiveness in the fierce international competition and enhancing its comprehensive national strength. The coordination in the five development concepts means both a means and a goal of development. Under the special national conditions, China is required to achieve the coordinated development between urban and rural areas, between material civilization and spiritual civilization, between economic and social development, and between economic development and national defense construction, thus continuously supplementing China’s shortcomings in economic and social development and tapping its development potential. The green in the five development concepts chiefly aims to solve the problem of sustainability in the process of socio-economic development. To promote the green development, it is imperative to adhere to the environmental protection, vigorously develop the low-carbon economy and circular economy, and strengthen the environmental governance, so as to promote the synergistic symbiosis between man and nature. We must pay attention to the ecological environment and civilization environment of people’s living and ensure efficient production development, rich living conditions and good ecological civilization. The opening in the five development concepts requires the country to proactively follow the trend of economic globalization in its socio-economic development, adhere to opening up and exchange with the outside world, so that advanced science and technology, innovation achievements and management experience can flow freely among countries. To achieve this goal, China ought to deeply mingle with the world economy, adhere to a win–win strategy of opening up, develop a higherlevel and higher-quality open economy, proactively undertake international responsibilities and obligations in the global economic governance (including providing public goods, actively participating in global economic governance, and accelerating

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the improvement of China’s new opening-up system), enhance China’s institutional voice in global economic governance and establish a broad community of interests on the international arena. The sharing in the five development concepts predominantly stands for the sharing of results of national economic and social development among the people, which embraces not only issues concerning people’s livelihood, availability of public services, urban–rural income gap, and disparities in education quality, but also the construction of the social security system, the construction of citizen health projects and the balanced development of the population. The said series of people-sharing projects can effectively improve the fairness of opportunities and enable the people and the nation to share opportunities for growth and progress.

11.2.3 China’s Role in the UN Sustainable Development Goals When questioned how the United Nations achieves the sustainable development goals, the director of the Economic Cooperation and Trade Department of the United Nations Economic Commission for Europe said that the PPP model is mainly used to complete the construction of sustainable development projects. The new investment in high-quality infrastructure, especially investment in low- and middle-income countries, is critical to achieving the UN Sustainable Development Goals. China supports the cooperation between government and social capital, which can play a very great role here. In developed countries, the cooperation between government capital and social capital has become the mainstream. In some developing countries, the government can play an overarching role, assuming a better demonstration and leading role in the process of project construction. This approach is particularly conducive to China’s implementation of the “Belt and Road” initiative and its contribution to the global economy. What’s more, Chinese enterprises are growing more mature. They can thus be a role model in the international cooperation and assumption of social responsibility. Let’s take the construction of super highways and the development of the Internet as an example. China’s Alibaba has become a fundraising platform for the global ecommerce and Internet-oriented financial services industries, which can help large, medium and small enterprises solve financing problems and better participate in international trade and market competition. It will greatly promote the growth of international trade, help to build an inclusive economy and society and boost the inclusive growth of the world.

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11.3 Earth 6.0 Program Based on Holistic Innovation Referring to the implementation of Industry 4.0 by Germany, Society 5.0 by Japan, and sustainable development goals by the United Nations, this book hereby proposes the concept of Earth 6.0. Earth 6.0 describes the future super-intelligent transformation of society, deep changes in individual life and global collaboration. Compared with Industry 4.0 and Society 5.0, it marks a more forward-looking and holistic thinking contrived to achieve the synchronized economic and social development of the globe. See Fig. 11.2 for the development goals. Earth 6.0 is proposed upon reference to many international organizations’ thinking on the destiny of mankind, the development of Industry 4.0 and the imagination of Society 5.0, grouped with the experience accumulated by China in its economic and social construction. The implementation framework of holistic innovation in Earth 6.0 is shown in Fig. 11.3. In the leading position lies the “human survival and development”, which lays more emphasis on the consciousness of the planet and the human destiny, and thus pays more attention to strategic, long-term and forward-looking thinking. Earth 6.0 sees Industry 4.0 as a major tool to drive the transformation of economic development, which involves also a holistic global awareness. Industrial development shall not only benefit the economic development of a certain country, but also pay attention to global issues such as the unbalanced regional development, the gap between

Technological innovation drives global economic transformation and development

Technological innovation promotes fair and inclusive enjoyment of social dividends Fig. 11.2 Development goals of earth 6.0

Technolo gical innovatio n Technological innovation spurs changes in human life forms

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Fig. 11.3 Implementation framework of holistic innovation in earth 6.0

developed countries and developing countries, and regional disparity and conflict, thereby ensuring a coordinated development of global economy, and a relatively even distribution of regional resource benefits among the participating countries. Technically, it is imperative to implement the digital, networked and intelligent development trends related to Industry 4.0. Horizontal comparison suggests that Germany’s Industry 4.0 has been fully recognized and jointly promoted by academic and industrial peers such as German Research Center for Artificial Intelligence, German National Academy of Sciences, and Siemens, so that related measures could be implemented; Japan’s Society 5.0 has also received support from decision-making and implementation departments such as the Council for Science, Technology and Innovation, National Strategy Special Regional Consultation Council, Economic Regeneration Headquarters under the Cabinet, IT Comprehensive Strategy Headquarters, and Future Investment Council, so that the promulgated strategies are aligned with the implementation principles. In face of the increasingly complex and intersystematic R&D and innovation of new technologies, new products, new processes and new services, the integration of science and technology, crossfield cooperation and collaboration, and transformation of knowledge achievements become particularly important. In addition, since Earth 6.0 places more emphasis on the application and popularization of scientific and technological achievements, the following issues shall be considered when promoting the technological innovation. First, we must gradually implement the social practice of scientific and technological innovation achievements to ensure that such achievements are practicable and easy to promote in the society. Social experiments typically focus on the practicality and installability of technologies. The former highlights the availability of technologies, and the latter underlines the adaptation to various dimensions such as the diverse social needs, laws and regulations, and economic environment. Second, we must focus on evaluating the problem orientation and driving force of scientific

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and technological innovation achievements. Science, technology and innovationrelated activities shall be carried out for exact social issues, upon comprehensive consideration of such social aspects as ethics, laws, social issues, talent development, supporting facilities and environmental promotion and popularization, as well as the nation’s healthcare strategies, development goals in strategic innovation fields and sustainable development requirements. Third, scientific and technological innovation shall be provided with a clear timetable and roadmap, through full consideration of the implementation order and importance to the country’s economic and social development. In the commercial field, scientific and technological innovation activities with short-term economic value will typically be prioritized for implementation or development, while those with large investment, whose economic value could barely be shown in a short term, will be postponed or ignored, such as agriculture, forestry, fisheries and healthcare industry. Therefore, to determine the implementation sequence of scientific and technological innovation activities, it is entailed to evaluate in the early stage their importance to the country’s economic and social development so as to clarify the priority of their implementation and ensure that fields with long-term significance to the social development are developed. Fourth, we must attach importance to the reform of the scientific research system and changes in the evaluation of universities, so as to promote the sustainable industry-university-research cooperation and enhance the core competitiveness of scientific and technological innovation. As to the reform of the scientific research system, while more emphasis is placed on individual teaching and research, the establishment of patents and scientific research projects traditionally, the chronicity, interdisciplinarity, industry-universityresearch cooperation, and social contribution shall be considered as a whole in the future, with a flexible personnel system that encourages innovation and industryuniversity-research cooperation built accordingly. In terms of university evaluation, it is requested to make innovation encouragement a key in the talent cultivation and selection system, especially the cultivation of talents in key fields who can assume industry-university-research cooperation R&D projects, so as to help convert the knowledge learnt in universities into contributions to the society. In terms of social development, Earth 6.0 absorbs the imagination of the future social life of human beings in Society 5.0 to spotlight the significance of innovation in the process of super-intelligent transformation of society. Different from the national innovation system in the catch-up period, it advocates the collaborative innovation, open innovation and comprehensive innovation in a broader sense and establishes a global knowledge system and learning system, thus guaranteeing the knowledge flow on a global scale to spur the production of innovative results. It underscores the networked, digital and intelligent transformation of the national industries, manufacturing and strategic emerging industries to ensure the transformation and development of the national economy, stresses the impact of profound digitalization of the society upon the living habits, life trajectories and even professional development of individuals, and makes clear that the innovative technologies, products and services shall be applied to both domestic and overseas markets, and more importantly promoted for general use in low-/middle-income countries, thereby making

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more scientific and technological innovation achievements available worldwide to realize fair and inclusive application.

References H-UTokyoLab. 2000. Society 5.0: Human-Centered Super-intelligent Society. Translated by Shen Dingxin. Beijing: China Machine Press. Meadows, D.H. 1984. The Limits to Growth. Translated by Yu Shusheng. Beijing: Commercial Press. Meadows, Donella H., Dennis L. Meadows, and Jorgen Randers. 2001. Beyond the Limits: Confronting Global Collapse, Envisioning a Sustainable Future. Translated by Zhao Xu, Zhou Xinhua, Zhang Renli. Shanghai: Shanghai Translation Publishing House. Spatter, D. 2015. Industry 4.0 Practice Manual. Translated by Zhou Jun. Beijing: Beijing Institute of Technology Press.