Innovation Policy Knowledge Bases 8 Challenges from the Policy Development Perspective

1
Innovation Policy Knowledge Bases8 Challenges
from the Policy Development Perspective
Per Koch, Director for Analysis and Strategic
Development The Research Council of NorwayVision
ERA-Net workshop, Vienna, October 23 2007
2
Challenge 1 To shift from a technology push
perspective to a vision of learning
3
The old linear model is dead
Basic research gives birth to an idea and
relevant new knowledge
The old belief was that industrial innovation was
predominantly the result of ideas born in
universities and transformed by companies.
Applied research turns the idea into something
practical
Industry development of new products and processes
The company brings the new product to the market
4
..or is it, really?
Research and technological development in
universities, RTOs and companies gives birth to
an idea and relevant new knowledge
The linear thinking lives on in a dominant
technology push model
Companies make use of these ideas in the
development of new products and processes
The company brings the new product to the market
5
The 3 percent objective is based on a linear model

• Increase national investments in RD
• Produce more knowledge
• Apply that knowledge to industrial production
• Result innovation
• and wealth creation

• There is nothing wrong in having increased
  investments in RD as a policy objective, but
  here it is used as a proxy for innovation

6
The systemic model of learning and innovation
market pull
New or improved products, processes or services
Knowledge of customer and market needs
User input
Commissioned RD
Marked knowledge
Tacit knowledge
Research is still very important, but is one of
many learning tools. Indirect flow of RD based
knowledge and technology.
Acquired technology
Literature
In-house learning
Conferences and fairs
New employees
In-house RD
7
Focus on other aspects of learning

• RD embedded in technology and human capital
• Design
• Branding
• Organisational change
• Management practices and types of ownership

8
A new focus on research as a learning tool

• The effects of RD products on the innovation
  system
• Company profits as result of sales of new or
  improved products, processes or services
• Spillover effect 1 the new products leads to
  increasing productivity among customers
• Spillover effect 2 the new products leads to
  innovation among customers and suppliers
• The effects of RD on learning in the innovation
  system
• Research builds competences that can be used to
  absorb knowledge and technologies developed
  elsewhere
• Research may lead to network building
• University research teaches students how to use
  the tools of science

9
Challenge No. 2 Understanding innovation in low
tech industries

• Resource based industries
• Services

10
OECD There is a puzzle about Norway

• Although measurement is incomplete,
• RD intensity appears weak,
• patenting is moderate and
• business surveys report a limited interest for
  innovative activity.
• Yet,
• the level of productivity is high in the mainland
  economy and
• its trend growth enviable,
• showing a capacity to absorb innovation
  spillovers
• and undertake organisational and managerial
  changes.
• OECD Economic Survey Norway 2007

11
Norway EU Innovation Scoreboard
12
Differences in industrial structure, 2003
Notes high tech includes telecommunications,
software, computing and other business
services And medium-low includes construction and
utilities. Source STAN database and NIFU STEP
13
Understanding innovation in resource based
industries

• Resource-based industries may be
  knowledge-intensive and profitable, but not RD
  intensive
• Farming, aquaculture fisheries, petroleum and
  mining
• Using generic high tech in low tech activities
• The word high tech is misleading, as it refers
  to RD as a percentage of company turn-over, and
  not to the companys use of advanced technology
  and knowledge

14

• Resource based companies do not invest much in
  RD, but they may make use of advanced
  technologies (often developed elsewhere) and they
  do employ highly competent engineers
• A lot of process innovation
• Use of other forms of innovation branding,
  marketing
• Little RD per company, but branches of industry
  as a whole may invest much (food)
• Oil- and gas is defined as low tech, but is in
  fact very advanced
• Companies underreport RD
• There may be a good integration between companies
  and knowledge institutions

15
Indirect use of research

• MS Kristian With Refrigeration/containership
  built by Vaagland Båtbyggeri AS on the
  North-West Coast of Norway
• Argon AS has installed the electronics
• Radar, satellite phone and TV-antenna delivered
  by ProNav
• Sonar, logg, radio and electronic map systems
  delivered by Furuno
• Gyro compass and autopilot delivered by Simrad

The advanced technology has been black-boxed.
You do not need to know how to build a TV to
watch the Simpsons.
16
Challenge 3 We need to get a better
understanding of the role of services

• The largest part of the economy
• A very heterogeneous sector
• A residual factor (whats left when we leave out
  manufacturing and food)
• We need a new categorization

17
Three important service sectors

• B2C services non-RD companies, including
  retail, people care and tourism
• Retail Innovation in transport, storage,
  delivery and customer care
• Tourism Innovation in product range,
  presentation, transportation and marketing

18
Services as partners and knowledge providers for
industry

• Advanced knowledge providers, e.g. RD intensive
  B2B ICT companies (Knowledge intensive business
  services)
• These companies may compensate for the lack of
  RD in others.
• Low RD measurements in some industries may be an
  effect of outsourcing

19
Challenge 4 Understanding the effects of public
sector innovation

• Innovation in the private sector is understood as
  an investment, in the public sector as an expense
• Innovation in the public sector and the effect on
  industry
• Public/private learning arenas
• Public procurement
• The effect of social welfare on risk taking and
  company behavior
• We have no output indicators!

20
Challence 5 Understanding competence flows in
the innovation system
Industrial structure
International framework
Policy- institutions
Customers and users
RD Institutions
Company Learning Networks innovation
Suppliers
Consultants
Financial Institutions
Public policy
Cultural framework
21
The role of competence flows

• The role of education
• User-driven innovation
• Customer/supplier relationships
• Open innovation and industry collaboration
• The role of KIBS
• The role of public sector institutions

National innovation systems must have porous
boundaries. The EU is not competing with the US
or Japan. This is not a zero-sum game!
22
Challenge 6 Understanding the heterogeneity of
innovation systems

• Norway, Sweden, Iceland, Finland, the
  Netherlands, Bravaria, Catalonia, Northern Italy
  and the UK have all successful innovation systems
  that produces wealth.
• But they are all totally different from each
  other.
• Unique historical trajectories.
• Unique socio-cultural framework conditions
• There is no best practice.
• Finland and Ireland cannot be used as models for
  other countries!

23
Challenge 7 Understanding socio-cultural
framework conditions

• Stable macro-economic framework conditions
• Disciplined fiscal policy
• Disciplined use of petroleum income on shore
• Competition policy encouraging innovation
• Relatively low taxes
• An open economy
• Socio-cultural framework conditions
• Egalitarian culture with high social mobility
• High wages for blue collar work gives impetus
  towards innovation (robots, internet banking)
• High educational levels based on public (as
  opposed to private) schools and state support
• An relatively efficient public sector
• A trustworthy welfare system

24
Challenge 8 Cultural understanding in a
globalised economy

• Globalisation means that we have a cultural
  convergence at the same time as we see the birth
  of a large number subcultures
• The Long Tail
• International trade requires new language and
  culture skills
• A new division of labor and specialization in the
  global markets

A new important role for the humanities and the
arts
25
Cultural decoding
26
THE ENTERTAINMENT INDVSTRY REQUIRES HELP FROM THE
ARTS AND THE HVMANITIES
TV series Rome
27
High Tech Tourism
MSNBC June 12 2007 Rome Reborn 1.0 was
unveiled on Monday, showing nearly the entire
city at its peak in A.D. 320, under the Emperor
Constantine when it had grown to a million
inhabitants. The 2 million project is the
brainchild of the University of Virginias
Bernard Frischer, and has been more than 10 years
in the making. Rome Reborn will eventually show
the city's evolution from Bronze Age hut
settlements to the Sack of Rome in the 5th
century and the devastating Gothic Wars.
28
Understanding and developing sub-cultures
29
Design and identity Apple Jonathan Ive
30
Challenges

• A shift from a technology push perspective to a
  vision of learning
• Innovation in resource based industries
• Innovation in and the role of -- services
• The effects of public sector innovation
• Understanding competence flows in the innovation
  system
• Socio-cultural framework conditions
• The heterogeneity of innovation systems
• Cultural understanding in a globalised economy