The Construction of Synergetic Development System of Product Innovation and
Process Innovation in Manufacturing Enterprises
BI Ke-xin"12, SUN De-hua2, ZHENG Ren-feng2, LI Bai-zhoul
School of Economics & Management, Harbin University of Engineering, P.R.China, 150001
1
2 School of Economics & Management, Harbin University of Science and Technology, P.R.China, 150080
Abstract: The process of technological innovation in
enterprises is complex system engineering. Aiming at the
problems about the synergetic development of product
innovation and process innovation in the interior of
manufacturing enterprises in the process of technological
innovation, this paper constructs a synergetic
development system of product innovation and process
innovation in manufacturing enterprises (In this paper,
the system 'synergetic development system of product
innovation and process innovation in manufacturing
enterprises' is abbreviated to 'SDS') from the angle of
system science. And the paper deeply analyses system
elements, system structure, system function and external
environment etc. In SDS, system elements mainly
include product innovation subsystem and process
innovation subsystem; system structure mainly includes
invested resources, system main body, coordination
mechanism and its characteristics; system function
mainly includes integration function, learning function,
feedback function, risk down function and value
increment function etc; system environment includes
legal environment, economic environment, technical
environment and cultural environment. The aim is to
promote better the synergetic development of product
innovation and process innovation, and improve
technological independence innovation capability and
core competitiveness of manufacturing enterprises.
Keywords: Manufacturing enterprises, Product
innovation, Process innovation, Synergetic development
system, Technological innovation
1 Introduction
Product innovation and process innovation are two
important aspects of technological innovation in
manufacturing enterprises. And how to make them
develop more synergetically is a popular issue concerned
by experts and enterprise administrators. Since
C.Freenman put forward the concept of "national
innovation system" in 1987[1], some scholars have
carried on research on technological innovation on
different levels (nation, region, enterprise). They
regarded technological innovation as a system composed
of multielements and their interrelationship which is also
called innovation system 2-5]. Based on these, there are
deep research and extensive application on the theory
Supported by the National Natural Science Foundation of
China (No.70473019) and Postdoctoral Foundation of
Heilongjiang Province (No. LBH-Z05069)
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and methods of innovation system. This paper constructs
a synergetic development system of product innovation
and process innovation in manufacturing enterprises (In
this paper, the system 'synergetic development system of
product innovation and process innovation in
manufacturing enterprises' is abbreviated to 'SDS') in
terms of system science, and studies system element,
system structure, system function and external
environment of SDS. All of this study can provide
theoretical and decision-making basis for enterprise
administrators when they make decisions on the strategy
of promoting the synergetic development of product
innovation and process innovation with the goal of
improving independence innovation capability and core
competitiveness of technological innovation in
manufacturing enterprises.
2 System elements
SDS constructed by the paper, whose objective is to
promote the synergetic development of product innovati-
on and process innovation, is an open selforganization
innovation system with dissipative structure in the
interior of manufacturing enterprises, which is mainly
composed of product innovation subsystem and process
innovation subsystem.
2.1 Product innovation subsystem
(I)The boundary of product innovation subsystem
Product innovation defined by OECD is that "A
product innovation is the introduction of a good or
service that is new or significantly improved with respect
to its characteristics or intended uses. This includes
significant improvements in technical specifications,
components and materials, incorporated software, user
friendliness or other functional characteristics" 6].
According to this definition, the paper puts forwards the
boundary of product innovation subsystem of SDS.
Product innovation subsystem is composed of a series of
product innovation process: the conceit of new product,
research and development, manufacturing, marketing.
Through the action of system input resources which
mainly includes personnel, capital, technology,
information etc, process innovation subsystem, external
environment, it outputs new products (or improved
product) to the exterior of the system, which is an open
subsystem with the goal of realizing product innovation.
(2)The function of product innovation subsystem
The function of product innovation subsystem
mainly includes three parts in SDS. Firstly, it realizes the
function of product innovation of SDS, providing new
product continuously, which improves product
innovation capability of manufacturing enterprises.
Secondly, it improves the economical benefit of
manufacturing enterprises through new products entering
market gradually and occupying certain market share.
Thirdly, it promotes the synergetic development of itself
and process innovation subsystem through competition
and cooperation with process innovation subsystem, then
improves independence innovation capability and core
competitiveness of manufacturing enterprises.
2.2 Process innovation subsystem
(I)The boundary of process innovation subsystem
According to the definition of process innovation
defined by OECD, "A process innovation is the
implementation of a new or significantly improved
production or delivery method. This includes changes in
techniques, equipment and/or software"[6], the paper
presents the boundary of process innovation subsystem
of SDS. Process innovation subsystem, which is an open
subsystem to mainly realize process innovation,
composed of a series of process innovation process
includes new idea of new process, process design,
experimentation and application etc. Through the action
of system input resources including personnel, capital,
technology, information and equipment etc, product
innovation subsystem, external environment, it outputs
new process (or improved process) to the exterior of the
system.
(2)The function of process innovation subsystem
In SDS, the function of process innovation
subsystem mainly includes the following three parts.
Firstly, it realizes the function of process innovation of
SDS, and meets the need of manufacturing tache in
manufacturing enterprises and improves product
machining quality, which improves process innovation
capability of manufacturing enterprises. Secondly, it
further reduces the production cost of manufacturing
enterprises and improves the productivity, economical
benefit and green manufacturing capability of
manufacturing enterprises on the basis of economizing
the productive material consumption and energy
consumption through the improvement of the design
level of new process. Thirdly, it promotes the synergetic
development of the two subsystems and improves
independence innovation capability and core
competitiveness through competition and cooperation
with product innovation subsystem.
2.3 The interaction between product innovation
subsystem and process innovation subsystem
There is interaction with mutual relation,
interrelationship, and mutual influence between product
innovation subsystem and process innovation subsystem
in SDS. Competition and cooperation are exact
description on the basic interaction between the two
subsystems.
(I)Mutual competition between product innovation
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subsystem and process innovation subsystem
A specified manufacturing enterprise must be
mainly engaged in product innovation and process
innovation the two activities in the process of
technological innovation. However, product innovation
subsystem and process innovation subsystem have
different station and function and have discrimination on
development degree on different periods in SDS, as a
result of the external environment of manufacturing
enterprise such as market competition status, consumer
demand and preference etc. and selfstatus of
manufacturing enterprise such as enterprise strategy,
enterprise size, the industry characteristics, enterprise
culture, enterprise development stages etc. Moreover, the
situation that a manufacturing enterprise itself possesses
limited resources makes manufacturing enterprises have
a selection to the two innovation activities. Under this
situation, the increase on system input and profit
distribution of SDS of one system element means the
decrease on system input and profit distribution of SDS
of the other system element. So the two subsystems
mutually compete for realizing the separate goals and
maximizing the local profit in system input and profit
distribution of SDS. The concrete representation is that,
on one hand, product innovation subsystem and process
innovation subsystem seize system input of SDS such as
personnel, capital, technology, information and
equipment etc. On the other hand, product innovation
subsystem and process innovation subsystem mutually
compete on profit distribution of SDS.
(2)Mutual cooperation between product innovation
subsystem and process innovation subsystem
Although there is competition between product
innovation subsystem and process innovation subsystem,
they cannot help but abandoning or sacrificing their local
interests and cooperating mutually, in order to maximize
the interests of SDS. When product innovation
subsystem in manufacturing enterprises developing new
product, high technology, high affixation, complicated
structure of new product must need advanced process
equipment and process method provided by
manufacturing enterprises which helps product
innovation subsystem to realize established objective.
This will make product innovation subsystem and
process innovation subsystem in manufacturing
enterprises work together in order that new process
outputted by process innovation subsystem offers more
superior realization condition for product innovation
subsystem, accordingly resolve many problems better
such as the bottom-neck of process technique, bad
machining quality, high consumption, low benefits when
product innovation subsystem produces new product. By
analogy, when process innovation subsystem in
manufacturing enterprises outputting new process, the
advanced process inspires enthusiasm of product
innovation subsystem engaging in product innovation
and farther promotes product innovation subsystem
pursuing in product innovation whose product is of high
quality, rational structure, perfect performance,
especially complicated product innovation. According to
the acceleration action that process innovation subsystem
imposes on product innovation subsystem, new product
produced by product innovation subsystem will be more
competitive in market. Obviously, mutual cooperation
between product innovation subsystem and process
innovation subsystem will make that product innovation
subsystem promotes process innovation subsystem
farther and process innovation subsystem also ensures
the objective of product innovation subsystem to come
true successfully. At last, all these impel the whole
objective of SDS to come through triumphantly.
Therefore, mutual cooperation between product
innovation subsystem and process innovation subsystem
better accord with long-term interests of SDS.
3 System structure
The system structure is the basis of survival and
development of a system, which is also the warranty of
system function. As long as having rational structure,
system function will realize sufficiently. Product
innovation and process innovation the two subsystems
and external environment come into being steady
relationships according to mutual interaction. And then
the relationship displays certain structure and order
inside and outside of SDS. The system structure of SDS,
Fig. 1 is as follows.
In SDS, invested resources including personnel,
capital, technology, information and equipment etc is the
basis of this system, providing basic guarantee for the
realization of the objective of SDS; coordination
mechanism which is composed of organization,
institution, decision-making, management, impetus,
manufacturing and marketing etc, is the core of this
system. To a certain extent, the efficient operation of
SDS depends on the function of coordination mechanism;
product innovation subsystem and process innovation
subsystem are system main bodies, they will fulfill the
Personnel
*-Product ir rinov ation subsystem
| Capital
; Input
Av Technology
IlnformationH
Fig.1 The system structure of SDS
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objective of SDS and output new product and new
process to the exterior of SDS; external environment
which is a impact factor can determine the change of
system state.
3.1 Invested resources
(I)Personnel
Personnel is the key factor in SDS. T-here are three
levels of the elements of personnel, firstly, the
entrepreneur, secondly, the R&D personnel (product
R&D personnel and process R&D personnel), thirdly,
manufacturing and marketing personnel. By thinking of
the process of technological innovation, we can see the
elements of personnel running through the whole process
of technological innovation activities, while the
entrepreneur is a decision maker of technological
innovation, organizing and making decisions on the
objective and process of technological innovation; R&D
personnel is the executor of technological innovation,
who looks for the chance of innovation actively,
undertaking the design and the improvement task of the
new product and new process, and is also the
disseminator of new knowledge and new technology;
manufacturing and marketing personnel are persons
manufacturing and selling the new product. Therefore,
SDS must own high-quality innovative personnel, which
is basic assurance of success of this system.
(2)Capital
The life of manufacturing enterprises is
technological innovation, while the blood of
manufacturing enterprises' technological innovation is
capital. Without capital, manufacturing enterprises'
technological innovation will like that water without a
source, and a tree without roots. In this situation, every
innovation activity will be unable to implement.
Consequently, the capital which manufacturing
enterprises invest on the technological innovation, no
matter raised independently or acquired by the other
channels, such as granted by the loan etc, determines the
Output
-New product -
2
0
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scale and intensity of technological innovation directly,
and becomes one of the key factors influencing success
or failure of manufacturing enterprises' technological
innovation. Hence, SDS must have a stereoscopic
financing channel, only in this way, can innovation
activity of this system carry through favorably.
(3)Technology
Technology is the essential instrument of
manufacturing enterprises' technological innovation, and
technological innovation forms and develops on the basis
of enterprises' existing technology, that is, the process of
technological innovation is the process of technological
transformation and its realization. Generally, the whole
technology level of manufacturing enterprises restricts
the level of technological innovation. The manufacturing
enterprises with strong technology strength and stronger
independence innovation capability have advantages on
high-end product and core technology; the
manufacturing enterprises with lag in technology or
weak strength can make up the inferior position and
shortage of technological innovation through technology
introduction and technological transformation in order to
realize backwardness advantage. Apparently, SDS must
depend on the support of advanced technology
instruments, no matter how the technology strength of
manufacturing enterprises is.
(4)Information
Information is very important resource in the times
of knowledge-based economy. Because manufacturing
enterprises face the influence of competitors, technology,
market, customer demand, environment of policy etc
uncertain factors in the process of technological
innovation, and the master degree of these important
information of influential factors decides directly
whether the manufacturing enterprise's technological
innovation activity is success. Thus, the process of
manufacturing enterprises' technological innovation is
also a process of disposing information in essential. The
manufacturing enterprises collect, dispose, machining
and analyze diversified information in time through inner
and outer information management departments,
providing warranty for the decision in the process of
manufacturing enterprises' technological innovation, in
order to reduce risks, accelerate the process of
technological innovation, improve the probability of the
success of technological innovation. Thus it can be seen,
SDS must possess the channel of intercourse information
with outside.
(5)Equipment
Equipment is material foundation of realizing
technological innovation in manufacturing enterprises. A
new idea or an invention wants to realize
industrialization of technological fruit or commercizliza-
tion of sized production that depends on the level of
manufacturing enterprises' equipment largely. Consequ-
ently, it is necessary to pay attention to hold and renewal
of existing production equipment, and make use of the
whole level of equipment of manufacturing enterprises
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sufficiently in order to provide advantageous material
warranty for completing the objective of SDS.
3.2 Coordination mechanism
The coordination mechanism of SDS is an
important tache making the synergetic development of
product innovation subsystem and process innovation
subsystem, and is nerve center of SDS, which can make
sure that product innovation subsystem and process
innovation subsystem collaborate sufficiently, share risks,
shares interests for the sake of fulfilling the whole
objective of SDS. The coordination mechanism mainly
includes two stages, namely seven parts, organization,
institution, decision-making, management, impetus in the
first stage, manufacturing, marketing in second stage,
thereinto, the first stage plays an important role in
promoting the synergetic development of product
innovation and process innovation.
(1)Organization
The execution of the synergetic development of
product innovation and process innovation refers to
different departments and people of the organizations in
manufacturing enterprises, for example, the operation of
product innovation subsystem mainly depends on
product R&D department, manufacturing department,
marketing department etc. Then the operation of process
innovation subsystem mainly depends on process R&D
department. Therefore, it is necessary to try to make
organizational structure flatten so as to reduce
administrative levels, broaden span of management of
product innovation subsystem and process innovation
subsystem in the system. At the same time, it is also
necessary to turn organizational structure as matrix
organization and team-based organization ,which build
up new product or new process development groups
crossing functional departments, and provide a platform
for valid coordination of product innovation subsystem
and process innovation subsystem, and break up
information barrier between every department, finally
achieve valid communication and cooperation. Besides,
if necessary, we can establish a coordination agency
composed of executives. When product innovation
subsystem and process innovation subsystem need
cooperate or conflict of interests, it will take charge in
the coordination between the two subsystems.
(2)Institution
Institution, as a guarantee and norm, will be good
for SDS on the synergetic development of product
innovation and process innovation. Therefore, when
establishing every enterprises institutions, the
manufacturing enterprises should consider the
coordination of product innovation subsystem and
process innovation subsystem adequately. In this way,
establishments of institutions of new product or new
process must pay attention to some process and tache
harmonizing with product innovation and process
innovation on the production and development institution;
to improve service efficiency of innovative resources
largely, the manufacturing enterprises must pay attention
to adjusting distribution of each property right between
product innovation subsystem and process innovation
subsystem on the property relations; in order to eliminate
jamming interference factor as far as possible, the
manufacturing enterprises would select people with spirit
of innovative collaboration to direct and undertake
technological innovation on the personnel system; to
avoid vicious competition between every department of
product innovation subsystem and process innovation
subsystem, each obligation of all organizations could be
regulated definitely, this will guarantee the smooth
development of the synergy of product innovation
subsystem and process innovation subsystem on the
organizational institution.
(3)Decision-making
Because each objective of product innovation
subsystem and process innovation subsystem is not the
same, the decision-making of product innovation
subsystem and process innovation subsystem belongs to
multiobjective decision-making. For product innovation
subsystem harmonizing with process innovation
subsystem well, when making decisions, the dominant
decision maker must firstly possess stronger
decision-making ability and decision -making rights.
Secondly, the decision maker must understand the
current whole subjective of SDS and some information
about schemes of product innovation and process
innovation in depth so as to avoid making decision
blindly and peremptorily, reduce risk and uncertainty[7].
The function of decision-making of coordination
mechanism is that under the leadership of future
development strategy of the manufacturing enterprises
and from the perspective of the whole objective of SDS,
the decision maker should keep one eye on contradiction
between short-term interests and long-term interests of
manufacturing enterprises, contradiction between local
interests (product innovation, process innovation) and
general interest. And on this ground, the decision maker
should make decisions carefully, decidedly, in time under
considering the characteristics of industry, market
situation, technology strength and innovative resources
of the manufacturing enterprises, avoiding wrong
decision-making which makes product innovation
subsystem and process innovation subsystem develop
uncoordinatedly.
(4)Management
So far as time is concerned, the synergetic
development process of product innovation and process
innovation in manufacturing enterprises is composed of
some subprocess, such as product R&D and process
R&D, production manufacturing, marketing application,
etc. So no matter which subprocess goes wrong, all
influence the synergetic development of product
innovation and process innovation and the realization of
the whole objective of SDS. Consequently, the manager
of manufacturing enterprises should take managerial
approach that combines objective management with
process management. Which is to say, under the situation
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of determining innovative objective of this system, the
manager divides this objective into some operant
objectives done by each subprocess[8 , and makes use of
innovative objective management, process management,
relevant management means which ensure the realization
of the objective of SDS. In addition, the manager of
manufacturing enterprises could reinforce management
on innovative resources including personnel, technology,
equipment, etc so as to provide basic warranty for the
realization of the objective of SDS. On human resources
management, setting down the development scheme of
human resources, at the same time, reinforcing the
education and training of employee in order to improve
the faculties of employee; on technology management,
building up a set of strict, right, complete management
means, fulfilling technological responsibility system,
carrying out technology standard and technology
regulations correlative to the synergetic development of
product innovation and process innovation; on
equipment management, establishing equipment
management means, at the same time, implementing total
equipment management, so as to make equipments run
safely and steadily and make the synergetic development
of product innovation and process innovation carry
through smoothly.
(5)Impetus
Impetus is a necessary part of coordination
mechanism in SDS. From this point, firstly, the
manufacturing enterprises ought to build up benefit
allocation mechanism of the synergetic development of
product innovation and process innovation, which adjusts
the assignment proportion of interests between product
innovation subsystem and process innovation subsystem,
according to the contribution of product innovation
subsystem and process innovation subsystem in
technological innovation, in order to provide spirit and
guarantee for the synergy of product innovation
subsystem and process innovation subsystem one another.
Secondly, the manufacturing enterprises should establish
premium mechanism of the synergetic development of
product innovation and process innovation, commending
product R&D department, process R&D department and
corresponding people, especially by way of the stock
rights and options rights, in technological project with
the participation of product innovation subsystem and
process innovation subsystem, which could manoeuvre
corporation enthusiasms of each department and people
of product innovation subsystem and process innovation
subsystem. Thirdly, the manufacturing enterprises should
cultivate innovative culture of synergetic development of
product innovation and process innovation so as to
provide spirit impetus for the synergy of product
innovation subsystem and process innovation subsystem.
(6)Manufacturing
Firstly, depending on CIMS, the manufacturing
enterprises integrate some disperse systems in
manufacturing process organically, such as CAD, CAM,
CAPP, MRP, and FMS etc. This makes the process of
product design, process design, process and manufacture
combine with a whole, offering better technology support
for the synergy of product innovation subsystem and
process innovation subsystem in manufacturing.
Secondly, the manufacturing enterprises should use CE
which is concurrent product development mode, that is,
setting up a multisubject product development group
working coordinately, by some secondary tools and
means, such as VM, etc, when product innovation
subsystem develops new product, at the same time,
process innovation subsystem could engage in process
design, this will help to find many possible problems of
new product development during early of new product
development; consequently, it reduces the new product
development cycle, and improves product quality,
reduces cost, increases possibility of seizing the moment
and occupying markets for manufacturing enterprises.
And at this process, information feedback plays an
important roleE91. Thirdly, the manufacturing enterprises
make use of FMS which will make product innovation
subsystem and process innovation subsystem
development synergetically well, namely, after products
are renovated or changed completely, product innovation
subsystem could not only have the successive and
compatible ability for the availability of old products, but
also have the throughput for producing new product
rapidly and economically; process innovation subsystem
make process flow in accordance with the change of
product or raw materials['0].
(7)Marketing
The manufacturing enterprises will communicate
with customers necessarily, and get to know some
customers' requirements on new product or some
modification requirements on old products in
technological innovation, and this needs customer
participating in technological innovation. The manufact-
uring enterprises make customers participate in product
design and product manufacture by means of CRM and
PLME'l". In succession, the manufacturing enterprises
could adopt QFD which converts customers'
requirements to characteristics of new product,
requirements of components and parts, process and
production requirements, even service requirement at one
time. Then the manufacturing enterprises could use CE
which will help to the synergetic cooperation of product
innovation subsystem and process innovation subsystem,
making new product come into market and accepted by
some customers at last.
3.3 System characteristics
SDS has the ability to form dissipative structure in
terms of theory of dissipative structure. The reasons are
as follows: the system is open, which exchanges material
(capital, equipment, technology), energy (personnel), inf-
ormation with the exterior of SDS; SDS is far from
balance because of the difference of product innovation
subsystem and process innovation subsystem , such as
the difference on functions of the two subsystems, the
difference on human resources of each subsystem, the
difference on input of capital, etc; there is nonlinear
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relationship action between product innovation
subsystem and process innovation subsystem in SDS;
some random minor fluctuations are full of SDS, such as
appearance of new research, application of an advanced
manufacturing technology, etc. Thus SDS is a
selforganization system. It exchanges material, energy,
information with outside of this system, and imports
minus entropy flow eliminating entropy production, then
improves degree of order constantly itself, under certain
conditions, all these make SDS form dissipative structure.
The System characteristics of SDS are as follows:
(1)Wholeness
Product innovation subsystem and process
innovation subsystem the two system elements are not
only integrated similarly , but also consist of this system
with a certain type of action which is mutual interaction,
mutual influence, mutual restriction in SDS. That is to
say, the change of nature and behavior of one system
element in SDS, will influence the other system element,
and then further influence the whole system. Therefore,
we should not separate product innovation subsystem or
process innovation subsystem from SDS to investigate
them alone. It is true that under the objective and request
of SDS, we should look for the optimum of SDS as a
whole.
(2)Emergence
Emergence is the characteristic which the whole has,
but the independent parts don't have, nor the sum of all
parts. It is the system law "the whole is greater than the
sum of its parts" brought forward by L. V. Bertalanffyl'2 .
By way of nonlinear mutual action, product innovation
subsystem and process innovation subsystem restrict
mutually, coordinate mutually, reinforce mutually, this
makes the system function increase in amount and leap
in essence.
(3)Dynamics
Dynamics refers to that SDS always stands in the
process of development and change. Because of the
dynamics of external environment of SDS, such as the
adjusted national policies and laws, the improvement of
the level of science and technology, the change of the
market demand and consumer demand, etc, and product
innovation subsystem and process innovation subsystem
and their interaction in the interior of SDS are changing
continuously, SDS always changes the movement
methods continuously and stands in the development and
change. Dynamics increases the risks of the operation of
SDS to some extent.
(4)Complexity
Both of the process of product innovation and
process innovation are complex system engineering. And
the interaction between them makes SDS appear the
characteristics of complexity. That is, the synergetic
development of product innovation and process
innovation presents higher requirement to SDS which
must have more reasonable and agile system structure,
perfect and stronger system function, more definite and
long-term system goal, more well-developed and
effective coordination mechanism.
 (5)Selfadaption
SDS is an open selforganization system with
dissipative structure. In the operation process of SDS, it
is unavoidable to be impacted comprehensively by
various uncertain factors, to meet various problems and
be often trapped in the state of chaos, disorder and
unbalance. Just because of the selfadaption, the body of
the system can itself state and performance according to
the environment and itself change and form a new
steady structure.
4 System function
The system function is the description on system
performance, which is the relationship of mutual-related
and interaction between the whole system and external
environment, and is also the dynamic exterior
presentation of system structure. The core content of the
function of SDS is to improve technological innovation
capability of manufacturing enterprises. On the whole,
SDS has integration function, learning function,
feedback function, risk down function and value
increment function etc.
4.1 Integration function
Under the condition of market economy, in order to
realize survival and development respectively, product
innovation subsystem and process innovation subsystem
in manufacturing enterprises make use of the
decision-making rights such as choice of innovation goal,
determination of innovation project, acquisition and
application of innovative resources to carry on the
innovation activities independently with the primary goal
of maximizing their own interests. However, in SDS, the
maximization of the two subsystems' interests may not
make the whole interests maximize, even may hinder the
maximization of the system's interests. Therefore, by
integrating the innovation goal, innovation project,
innovative resources of product innovation subsystem
and process innovation subsystem, the integration
function of SDS makes the system's interests maximize
under the cooperation and interaction of the two
subsystems.
4.2 Learning function
In SDS, there are mutual and bidirectional circular
organizational learning processes between product
innovation subsystem and process innovation subsystem
and various activities of in the interior of each subsystem,
with the amalgamation process of information flow and
the knowledge of resources inside and outside of SDS.
As the integration of innovation process of SDS, the
cooperation and knowledge communication between
product innovation subsystem and process innovation
subsystem are required. In order to complete the objecti-
ve of SDS, it is necessary to improve learning capability
and obtain knowledge through knowledge flow and
absorb the information, which is propitious to innovation.
According to Peter M. Senge's Learning Organization
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Theory[13], manufacturing enterprises can not only
improve the coefficient of utilization of inner resources
and knowledge of SDS, but also can make product
innovation subsystem and process innovation subsystem
create new knowledge continuously and improve
independence innovation capability continuously and
then improve the coordination capability product
innovation subsystem and process innovation
subsystem..
4.3 Feedback function
In SDS, according to the change of environments,
this system turns innovative input resources including
personnel, capital, technology, information, equipment,
etc as new products and new process, and outputs them
to the exterior of the system to realize the development
goal of SDS continuously. During this process, feedback
function plays an important role. There are mainly two
feedbacks in SDS: positive feedback and negative
feedback. Positive feedback refers to that the differentia
of input and output of SDS is divergent, which makes the
goal of SDS off-target and intensify the system's
instability, even can destroy steady state of SDS;
negative feedback refers to that the differentia of input
and output of SDS is convergent, which makes the
process of system deviating goal converge and makes
SDS tend to the steady state. With the change of external
environment and its condition, SDS can make its state or
structure change suddenly, and then form a new steady
state or a steady structure through positive feedback;
SDS can correct the deviation of system continuously
and finally make itself be in the steady state through
negative feedback. By way of continuous feedback, we
can discover the problems in the process of the
synergetic development of product innovation and
process innovation as early as possible, and then take
efficient measure to ensure the realization of system
holistic goal.
4.4 Decrease risk function
Usually, there are risks in various innovation
activities of product innovation subsystem and process
innovation subsystem in manufacturing enterprises, such
as innovation orientation risk, financing risk, R&D risk,
market risk and technical risk etc. However, in SDS,
through mutual learning and cooperation of product
innovation subsystem and process innovation subsystem,
mainly through the coordination mechanism composed
of seven parts which are organization, institution,
decision-making, management, impetus, manufacturing,
marketing, etc, which efficiently harmonizes product
innovation subsystem with process innovation subsystem,
and makes the two subsystems realize to share risks
together and make the various innovation activity risks
of product innovation subsystem and process innovation
subsystem down to minimum. And this ensures that the
innovation activities of SDS achieve lower cost, faster
velocity and higher efficiency and adapt the changes of
external environment.

4.5 Increment value function
SDS can effectively promote the synergetic
development of product innovation subsystem and
process innovation subsystem, and improve product
innovation capability and process innovation capability
of manufacturing enterprises, furthermore, can also
improve independence innovation capability of SDS,
which makes the innovation capability value of
manufacturing enterprises realize increment. Product
innovation subsystem and process innovation subsystem
can meet the demand of market through outputting new
products and new process to the exterior of the system,
which can create a mass of social fortune and actively
promote the increment of social economy and technical
advancements, and also make social value of
manufacturing enterprises realize increment. Meanwhile,
with the improvement of new product's market shares
and the decrease of production costs, manufacturing
enterprises can realize the economic value increment of
their own.
5 External environment
The external environment of SDS refers to the
general appellation of correlative factors which are
relative to manufacturing enterprises such as law,
economy, technology and culture etc the exterior of this
system. There are interactive and mutual-impact relations
between SDS and external environment. On one hand,
SDS outputs new products, new process to external
environment, meanwhile, SDS also outputs new
technology, new knowledge and new thoughts to the
exterior of the system. Furthermore, it impacts on the
external environment. On the other hand, SDS operates
under the influence and control of external environment,
and the functions of external environment on SDS are
showed mainly in the changes of the inputs of SDS.
External environment mainly includes legal environment,
economic environment, technical environment and
cultural environment etc.
5.1 Legal environment
Legal environment of SDS refers to the institutional
and legal system relative to manufacturing enterprises
made and promulgated by government. Through the
promulgation and implement of the correlative laws and
regulations, we may create the fair and stable legal
environment for manufacturing enterprises, protect
manufacturing enterprises and their legitimate rights of
technological innovation on legal aspects, and push the
technological innovation which they are engaged in to
develop rapidly. This gives the powerful legal and
institutional supports on the aspects from capital,
entrepreneurship, market development, socialized service,
patent protection, achievement protection etc. At the
same time, it will give the legal basis to the
manufacturing enterprises and their technological
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innovation activity. Otherwise, the imperfect legal
environment may make the normal operations of
manufacturing enterprises in difficulty and undertake
great risks, and so that there is no fair competitions
among the manufacturing enterprises. This also
influences the technological innovation activity of
manufacturing enterprises, especially the enthusiasm
promoting the development of product innovation
subsystem and process innovation subsystem.
5.2 Economic environment
The influence on manufacturing enterprises from
economic environment may directly determine their
development level and maturity. In economic
environment, mainly including market environment and
economic policy environment, the most importance of
them is the market environment. In the market
environment, market demand and market competition are
the most positive factors to stimulate manufacturing
enterprises to involve in technological innovation activity.
To a certain extent, it determines the investment intensity
of the manufacturing enterprises' technological
innovation, and the strategic choice of the synergetic
development of product innovation and process
innovation in manufacturing enterprises. This requires
that manufacturing enterprises can make exact
predictions for the future development tendency to urge
effective developments of technological innovation
activity. In addition, in the economic environment, labor
force structure can impact the personnel structure of
manufacturing enterprises in certain degree; the
consumption conditions can impact the economic
efficiency of manufacturing enterprises; the industrial
structures and the international economy development
dynamics can also influence the manufacturing
enterprises and their technological innovation activity.
5.3 Technical environment
Technical environment mainly refers to the
technical level, technical policy, innovation capability
and technical development tendency of countries or
regions an enterprise belongs to. Usually, the technical
level of the manufacturing enterprises are influenced by
the technical level of their countries or regions; the
technical policy will propel to improve the technical
level of the manufacturing enterprises, while innovation
capability exactly is one of the most important
capabilities, which is essential for manufacturing
enterprises to engage in technological innovation. As for
manufacturing enterprises, in order to have an
impregnable position in the intense market competition,
they must carry out technological innovation activity
unceasingly, and must pay great attention to the
synergetic development of the product innovation and
the process innovation. This requires the manufacturing
enterprises to adapt the influences of the technical
environment unceasingly, to improve the technical level
and innovation capability of their own, and to master the
relative technical policy accurately.

5.4 Cultural environment
Cultural environment mainly includes national
characteristics, cultural traditions, values, religious belief,
educational levels, social structures, and customs and so
on. Cultural environment plays an important role on the
development and the innovation of manufacturing
enterprises; the different cultural environments also may
bring about the different important degrees to the product
innovation and the process innovation'141. At the aspect
of cultural environment construction, we should create
soft environment to be advantageous to innovation and
construct a good atmosphere to advocate innovation,
support innovation and pursue innovation in the whole
society. Meanwhile, we should advocate respecting
knowledge and talented people, and encouraging not
only the individualistic spirit of adventure but also the
collective spirit of cooperation.
6 Conclusion
According to research on system elements, system
structure, system function, external environment of SDS,
this paper draws the conclusions as follows:
(1)There should be good coordination mechanism
as the guarantee to make product innovation subsystem
and process innovation subsystem develop synergetically.
Through the mutual competition and cooperation
between the product innovation subsystem and the
process innovation subsystem, which makes SDS
selforganized; furthermore, in order to adapt to the
changes of external environment, this system will adjust
its behaviors initiatively and develop constantly.
(2)Because SDS has a chance to form dissipative
structure, SDS should improve the degree of openness,
and import minus entropy flow to eliminate entropy
production, and then improve degree of order constantly
itself, at the same time, take effective measures, make
use of fluctuations actively, and make itself become a
new ordered state namely the dissipative structure on
time, space, function. The dissipative structure makes the
system display wholeness, emergence, dynamics,
complexity and selfadaption thoroughly.
(3)The system function of SDS is realized under
certain external environment, and this requires the
system adapts the impacts of legal environment,
economic environment, technical environment and
cultural environment etc.
In sum, the synergetic development process of
product innovation and process innovation in
manufacturing enterprises is complex system engineering.
We should study SDS from the systematic viewpoint,
with the principles of entirety, satisfaction, integration,
dynamics, and we also should get to know and master the
operational characteristics and disciplinarians of SDS at
the point of the strategy of manufacturing enterprises.
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