Business/Innovation Eco-Systems in Europe an empirical study
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1 Business/Innovation Eco-Systems in Europe an empirical study Symposium Entrepreneurship and the Geography of Innovation FAPESP/Sao Paulo July Wolfgang POLT (JOANNEUM Research) Lisa Dale-Clough, Luke Georghiou (Uni Manchester), Katrin Hahn (Uni Delft), Enikö Linshalm, Angelika Sauer (Joanneum Research), Erkki Ormala (Aalto University)
2 The Industrial Innovation in Transition (IIT) Project The team: _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
3 The Industrial Innovation in Transition (IIT) Project The Industrial Innovation in Transition (IIT) project aims to understand how innovation processes in European industry are changing [in the past 10 years] and to disseminate the best practices in this field between companies and government agencies. 694 company case studies during European countries (Austria, Czech Republic, Estonia, Finland, Ireland, Italy, Germany, Netherlands, Portugal, Spain and United Kingdom) 5 sectors (Agri-Food, Bio-Pharmaceutical, Clean- Technology, ICT and Manufacturing) _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
4 The Industrial Innovation in Transition (IIT) Project Central instrument: a survey of innovative companies using in-depth interviews. Recorded, transcriptions subsequently coded for quantitative & qualitative analysis (n=694). Survey to triangulate hypotheses from the interview analysis (n=315). Key areas of investigation: Business/ Innovation Ecosystem New Tools for Innovation Management Open Innovation Innovation Management and Practice Absorptive capacity of firms Further aim to assess adequacy of current policy frameworks and instruments _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
5 Starting points perceptions of a changing paradigm Long term structures of post-war science and innovation built around largely self-sufficient major firms benefitting from science as a public good From 1980s cost pressures, rapid pace of technological change in critical technologies and political pressure for science base to demonstrate its contribution to socio-economic goals shifted system to a greater focus on externalisation / outsourcing and market transactions Policy thinking followed and key concepts of innovation systems were matched by stronger emphasis upon promoting collaboration By early 2000s crystallizing into concepts of open innovation and innovation ecosystems No The European Commission has no liability in respect for the above contents.
6 Key characteristics of the shift in innovation paradigms Large multiproduct, multi-technology firms complemented by dynamic population of smaller companies sustained by venture capital. Complex patterns of birth, growth, acquisition, or death of the firms enable effective selection of technologies. Increased outsourcing of R&D to specialist organisations & universities. Networks and alliances built around technologies, standards and supply chains. Globalisation in R&D driven more by local capabilities in people and scientific institutions. Lead markets precede adaptation to markets. 1. From Coombs R and Georghiou L, A New Industrial Ecology Science Vol April 2002 No The European Commission has no liability in respect for the above contents.
7 Distinguishing innovation ecosystems The innovation ecosystem focuses upon the dynamics of the wider environment in which innovation takes place. It encompasses both the opening up of innovation & the focus on institutions in the innovation systems approach. The distinction is on understanding interactions, flows and interdependencies at a systemic level: The added value of thinking of this system as an ecology is the focus it brings to the distribution and abundance of research performers and knowledge and their interactions with each other and the broader environment (ERA Rationales Report, European Commission 2008: 23) No The European Commission has no liability in respect for the above contents.
8 No The European Commission has no liability in respect for the above contents. Elements of Innovation Ecosystems Source: L.Georghiou cited in House of Commons Select Committee on Science & Technology Report Bridging the valley of death: improving the commercialisation of Research, March 2013
9 Percentage of firms considering ecosystem concept relevant for their innovation activities (interviews) Relevant Not Relevant Manufacturing 98,40% 1,60% ICT 92,40% 7,60% Clean technologies 94,80% 5,20% Biopharma 95,70% 4,30% Agri-food 83,70% 16,30% No The European Commission has no liability in respect for the above contents.
10 (Overall) Change in relevance of innovation ecosystems in the last 5-10 years 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Change in IES relevance 56% 44% 0% Increased No change Decresed ALL (n=464) _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
11 ...increasingly engaged in associations/boards/committ ees to exert strategic influence on legal/standardization/...increasingly engaged with research organisations to learn about technological opportunities....increasingly engaged with external partners with different backgrounds to understand better the potential of...restricted engagement to long-term and trusted partners in a close bilateral way in order to protect internal...engaged less with others in their business environment....did not make changes in their collaborative innovation activities. Innovation ecosystem approaches: by company size (% of answering: fully agree, from survey) 35% During the last five years companies... 30% 25% 20% 15% 10% 5% 0% 28% 22% 21% 21% 21% 31% 29% 26% 22% 20% 23% 21% 19% 17% 15% 21% 17% 13% 13% 11% 8% 8% 8% 7% 5% 1% 3% 6% 7% 4% <10 Micro Small Medium-sized Large >3.000 Very large No The European Commission has no liability in respect for the above contents. Photo: _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
12 Most important elements of the innovation ecosystem (source: interviews) 80% 70% 60% 50% 40% 30% 20% 10% 0% knowledge flows mobility of people financial support services Other Agri-food Biopharma Clean technologies ICT Manufacturing No The European Commission has no liability in respect for the above contents.
13 Innovation Ecosystem enable new ways of knowledge creation and utilization to extended enterprise with capability Demand Demand Innovation Architecture Supply Innovation Architecture Supply Partners Demand Demand Architecture Core Core Architecture Innovation Supply Demand Innovation Demand Supply Demand From traditional large enterprise Innovation Architecture Supply Innovation Demand Architecture Innovation Supply Architecture Supply Innovation Demand Architecture Innovation Supply Architecture Supply No The European Commission has no liability in respect for the above contents.
14 Ecosystem perspective on innovation policy leads to different questions Is the population of actors balanced? Country/region has a balance between large multiproduct, multitechnology firms who can act as system integrators and coordinate ecosystem initiation, maintenance and development? Is there a dynamic population of smaller companies sustained by venture capital who can provide innovative ideas and products? What is the role for established SMEs? How different does this ecosystem look across sectors? Are those differences driven by the nature of the technology and/or market or historic drivers? Is there sufficient demand for innovation in the system? Are public and private procurers sufficiently capable and incentivised to drive demand for innovation? Are new solutions being crowded out by lock-in to existing standards, regulations and structures? No The European Commission has no liability in respect for the above contents.
15 Organising policy: capturing value and levers for change The innovation ecosystem leaders often design the roles of different actors (and their share of the value generated), coordinates interactions within the ecosystem and between ecosystems, and orchestrate resources flow between different partners as the system evolves (Adner, 2012) Therefore, innovation ecosystem leadership affects the innovation trajectories of the all of the actors involved underperformance or excessive dominance over value capture may require levers to change innovation ecosystem leadership. Licensing, corporate venturing and scaling-up new firms could induce a change in dominant actors or knowledge and be the target for policy interventions. A policymaker may apply incentives to change framework conditions such as reducing barriers to mobility. Companies may seek to establish new ecosystems. (e.g. via OI) No The European Commission has no liability in respect for the above contents.
16 Role of Policy in Innovation Ecosystems The policymaker s role is not Olympian overview - lack of any objective position and the essence of an ecosystem is shared governance. Policymakers become active players, able to adjust the balance, enhance or moderate flows through certain instruments, e.g. foresight and platforms to develop IES leaders, and frameworks of instruments. Policy adapts with ecosystem evolution? Early stages are potentially volatile, viable networks require certain conditions, resources and activities (Dedehayir et al., 2016). Core problem: policy boundaries and innovation ecosystems Innovation ecosystems are often international and not always clearly focused on a particular technology field, creating challenges for organising innovation policy. The value blueprint of different IES results from the location of, and links between, innovation ecosystem actors, with different advantages and shortfalls over time (Adner, 2012). Requires deployment of different instruments in different places, directed towards different actors at different times. Best way to support a deficiency in one actor may be targeting a policy at another. No The European Commission has no liability in respect for the above contents.
17 Future policy needs Emphasis on knowledge flows places focus on balance of actors & vectors of knowledge transfer population approach Findings stress importance of customers and suppliers but few policy instruments explicitly aimed at supply chains For new technologies challenge even greater to create new demand channels placing focus on procurement/lead market approaches Demand is a common deficiency in ecosystems explaining why national and regional administrations seek to attract and retain anchor firms but as these consolidate and become fewer in number there is a need for alternative approaches Need tools to open up underperforming existing innovation ecosystems (governance and demand) and create new ones Foresight needed as tool for ecosystem coordination No The European Commission has no liability in respect for the above contents.
18 Next steps and continuation Final report by End of July 2017 Final Discussion with EU Commission September 2017 Dissemination activities till December 2017 Possibility for continuation of research, bringing in more partners from other countries (to be discussed and agreed upon with EU COM) Trial access to project DB Future extension of country basis, cooperation with the team and access to DB _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
19 Thank you for your attention!
20 Supplementary Slides
21 New Tools for Innovation Management New innovation models and tools for innovation such as the customer driven innovation model, web enabled tools and big data allow companies to blend the physical and virtual worlds of innovation activities and they have become important means of supporting effective innovation practices. The physical and virtual worlds blend allowing people to contribute and be involved Clouds, Do-It-Yourself (DIY), social media, blended worlds and sensing surroundings will become key platforms for innovation. Creativity and imagination combined with good competence are key characteristics of future innovators. 31 NOKIA EO./ _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
22 Open Innovation......is the opening-up of innovation processes to allow ideas, new technologies or feedback from external partners to flow into the company, or actively seek out and use external knowledge. Engeging external partners: access and drive global intellectual vision and insight form strategic collaborations with world-leading institutions to multiply our efforts build global test beds to learn from broader audiences 32 NOKIA EO./ _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
23 Open Innovation/Knowledge Sharing Complementary competence and excellence Genuine commitment for knowledge sharing/trust Collaboration platforms/joint campus presence Mobility of research personnel R&D/recruitment/education all involved Transparent management and collaboration rules Fair rules for IPR ownership and use Reformed reward and incentive systems 33 NOKIA EO./ _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
24 Innovation management and practice The key question regarding the management structure of the innovation processes within a company is whether innovation activities take place in different business lines/units or within a centralized R&D department. The IIT results indicate that both principles are used by companies, and oftentimes in combination. State-gate model dominates Still most initiatives cost driven Top management has decisive role Dedicated central innovation committee Innovation knowledge sourced outside more important, but often difficult to absorb Changes in innovation management practice still in progress (customer involvement, business incubators, independent innovation units, web-enabled innovation platforms, etc.) 34 NOKIA EO./ _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
25 Big Data usage in Innovation; Industry Sectors Use of BIG DATA (ALL, n=563) 71% 70% 69% 29% 30% 31% Agrofood Biopharma Clean technologies 54% 46% ICT 23% 77% Manufacturing Yes NO _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
26 Open Innovation Engaging external partners Access and drive global intellectual vision and insight Form strategic collaborations with world-leading institutions to multiply our efforts Build global test beds to learn from broader audiences
27 30% 25% 20% 15% 10% 5% 0% 25% Customers Innovation Ecosystem Stakeholders 20% Public research Total n=694 18% 15% 11% 7% 4% Suppliers Regulators Finance Other Other infra ALL _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
28 IES interactions: OI-activities 100% Inno-related knowledge sourced from outside 80% 60% 62% 40% 27% 20% 14% 0% Rely on a regular basis Started to rely on outside organizations Do not rely on outside organizations ALL All, N = % of the companies indicated that they engage in OI-activities _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
29 Innovation management and practice Stage-gate Flexible Customer driven Other Agro-food Bio-Pharma Clean tech ICT Manufacturing _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
30 Innovation management and practice State-gate model dominates Still most initiatives cost driven Top management has decisive role Dedicated central innovation committee Innovation knowledge sourced outside more important, but often difficult to absorb Changes in innovation management practice still in progress (customer involvement, business incubators, independent innovation units, web-enabled innovation platforms, etc.) _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
31 Barriers to innovation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 55,6% 54,5% 52,7% 42,3% 41,9% 37,1% 34,3% 34,1% 23,8% ALL Includes only yes -answers, multiple choices were allowed _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
32 Main Factors at the start of an innovation project 200,0% 180,0% 160,0% 5,4% 14,1% 6,3% 21,2% 140,0% 6,1% 17,2% 50,0% 8,6% 20,7% 4,5% 16,7% 32,9% 120,0% 100,0% 80,0% 24,2% 29,3% 35,9% 29,3% 21,6% 28,8% 27,3% 28,6% 60,0% 64,7% 40,0% 57,6% 56,5% 52,6% 63,6% 20,0% 0,0% 17,2% 20,7% 19,0% 12,9% 26,3% Agri-food Biopharma Clean technologies ICT Manufacturing employee driven cost-driven customer-driven product-driven R&D-driven other No The European Commission has no liability in respect for the above contents.
33 Main decision making actors 350,0% 300,0% 250,0% 26,7% 200,0% 150,0% 100,0% 50,0% 0,0% 14,4% 57,8% 8,0% 34,0% 52,2% 35,6% 52,0% 12,0% 26,7% 50,7% 40,0% 20,0% 25,0% 4,0% 10,7% 3,8% 0,0% 4,5% 88,9% 11,8% 4,0% 5,8% 10,7% 71,1% 13,0% 13,6% 0,0% 8,3% 2,2% 18,8% 68,0% 15,1% 72,0% 90,7% 93,8% 73,3% 59,4% 56,8% 59,1% 62,5% 52,2% 57,8% 36,0% 13,3% 20,0% 12,5% 24,6% 25,0% 24,7% 8,3% AT CZ DE EE ES FI IE IT NL PT UK R&D deparment General management Dedicated central innovation commitee Development department only Research department only Strategic business units Marketing Other No The European Commission has no liability in respect for the above contents.
34 Most frequently mentioned policy gaps Insufficiently skilled people and development of talent/capabilities Systemic bias/difficulties for small firms Regulation around innovation (seen both as barrier and positive factor) Need for more demonstrators, pre-commercial procurement, procurement of innovation Insufficient grant funding available Insufficient seed, venture and growth funding Global trade difficulties Difficulties in knowledge transfer from research sector Bureaucracy and complexity in policy support Lack of coordination and consistency over time in policy environment _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
35 MOST IMPORTANT PUBLIC POLICY INITIATIVES UK 32% 5% 16% 5% 11% 6% 14% 11% PT 24% 12% 12% 0% 26% 26% NL 38% 6% 28% 3% 3% 22% IT 18% 13% 10% 11% 5% 20% 23% IE 30% 6% 22% 4% 10% 10% 9% 9% FI 44% 2% 2% 24% 3% 11% 14% ES 19% 15% 15% 15% 4% 17% 17% EE 39% 2% 1% 4% 15% 12% 13% 13% DE 42% 1% 1% 35% 20% CZ 56% 3% 3% 10% 12% 1% 3% 13% AT 44% 5% 16% 5% 14% 7% 3% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% R&D Grants R&D Loans Tax incentives Public procurement Educ& Training Cons. Support Publ. Research Other _dcbcda7fea_o_Flickr_CCAttribution_BY_Horia_Varian_Modified
36 Flow Addressing barriers and policy deficits a systematic overview Ecosystem Barriers Policy challenge People Lack of capabilities or skills Finance Access Insufficient access Policy measures Skills deficits Training and advice in capabilities Encourage recruitment of skills Reduction of mobility barriers Conditions and priorities of public funding Knowledge Access Partnership issues Services Exchanges enable innovation IP system Patent box Reliance on external knowledge for innovation Grants, loans and fiscal incentives Mobilise private finance (co-investment, risksharing, facilitate venture capital Simplification (processes) Foresight on priorities/strategy Timeliness (evolution of ecosystems) Coherence and consistency Promotion of science-industry links Diffusion measures Support RTOs, standards bodies, measurement and testing services, access to consultancy and professional services. Digitalisation and adoption of ICT within business and innovation planning and implementation.
37 Systemic considerations Addressing barriers and policy deficits a systematic overview Ecosystem Barriers Policy challenge Policy measures Regulation and Standards Low demand for innovation Intermediary institutions Reg tion Challenging frameworks (e.g. REACH) or clinical trials regulation and costs of compliance. Lack of stability in regulation. Varied compliance prevents level playing field. Simplification Proactive regulation Embed regulators in ecosystems. Standards Standards projects Access to Market barriers in the PPI markets public sector PCP International trade issues [Lack of middle TRL R&D] [Lack of technology infrastructure] [Lack of capacity to assist firms] Supply chain measures Support RTOs, standards bodies, measurement and testing services, consultancy support, business support agencies
38 Systemic considerations Addressing barriers and policy deficits a systematic overview Ecosystem Barriers Policy challenge / gap Policy measures Populations of actors and entry/exit conditions System transformation [Deficiencies in anchor firms] [Lack of entrepreneurship] [Lock in] [Coordination failure] Promote technological inward investment Support for scale-up firms Support for start-ups Student entrepreneurship education & support Challenge-based initiatives New mission-oriented research
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