AICE Panel 2: Boosting Innovation, Entrepreneurship capabilities and economic impact of zones. RENÉ VILLARREAL, PhD
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1 AICE 2017 Panel 2: Boosting Innovation, Entrepreneurship capabilities and economic impact of zones RENÉ VILLARREAL, PhD Cartagena, Colombia May,
2 The new competitiveness driver in the 21st century "In the new era of knowledge and global hyper-competition, the only source of Sustainable Competitive Advantage is the ability to learn and innovate faster than the competition." Global Economy Context: The binomial 1. The only constant is change. 2. The only certainty is uncertainty. The Global Factory and the integration of the global value chain In order for companies in free zones to compete and grow, they must integrate the global factory that operates more than 50% of world trade in goods and services. 2
3 Clusters: Innovation is the link that drives competitiveness and sustainability of businesses and free zones Integration of the 5 links of the value chain Innovation Supply Chain Manufacture Logistics and Distribution Marketing Learn to innovate faster Free Zones and Clusters The fastest fish eats the slowest Free Zones (FZ) and Industrial Clusters have been a successful binomial in the cases of China and Korea: just as the FZ provides commercial, fiscal, and administrative incentives, among others, and integrated clusters generate agglomeration economies and allow SMEs to partner and drive R & D & I centers.therefore one of the best practices to support the development of free zones is to develop industrial clusters. Successful free zones are integrated with competitive clusters. China and Korea are the most successful cases: 3
4 FREE ZONES AND CLUSTERS Zhongguancun Region Aerospace Technological Research Shandong Region Processed foods and freeze vegetable production Home appliances Delta Zhu Jiang Region PC's and components 50,000 service providers Electronic components Telecommunications equipment and electronic products CHINA S STRATEGY REGIONAL POLES CLUSTER-COMPANIES Shanghai Liadong Region (North-East) Heavy industry Delta Jiang Region Automotive High technology Finance Commerce and Commercial Port Xiamen Region Textile Processed foods 4
5 FREE ZONES AND CLUSTERS Eco-smart city for cutting-edge knowledge-based service industry and state-of-the-art convergence industry. Serves as a forward base for exports to China and a logistics hub of Northeast Asia with cuttingedge clusters including Pyeongtaek BIX & nhyeondeok area and Samsung Godeok Complex, and has attracted global leaders including LG, Hyundai Kia Motors, Ssangyong Motor, ABB, Delphi, and Bosch. SGFEZ has been developed, driven by the government, to nurture futureoriented new industries and international maritime tourism and leisure industries. The area has extensive state-owned land, offering the best place for investment with the highest level of flexibility and autonomy without any hassle or regulations. KOREAN FREE ZONES This center of global business has an industrial cluster for shipbuilding, carmaking and machinery, as well as being a center for tourism and leisure. It has created the nation s largest nonferrous metals cluster and invited a number of leading companies in the related business. Its future prosperity will be based on cutting-edge green materials industries, and an international logistics, using business complex and the winter sports hub of Asia as leverage. It is Korea s IT biotechnology convergence industry hub, equipped with a cluster of facilities for solar energy generation, semiconductor manufacturing and biotechnology businesses. It is also turning itself into the hub of Northeast Asia s aviation industry. Korea s knowledge-based industry and ideal service infrastructure. It offers development land, R&D facilities, commerce and residential areas with a focus on IT convergence, transport components and medical businesses. It is located in the heart of Korea's largest automotive cluster and a center of IT/SW, healthcare and steel industries. The area also boasts high-quality human resources. This center of global business has an industrial cluster for shipbuilding, carmaking and machinery, as well as being a center for tourism and leisure. 5
6 1. Innovation by design: Deliberate Policy Individual level: Learn to learn Learn to unlearn Learn entrpreneurdhip LEARNING REVOLUTION Organizational level: Intelligent organization that learns and innovates along the production chain, through innovation cells. The SME problem is not that it is a small, but that it works isolated. We need to partner through clusters to generate scale and agglomeration economies to increase competitiveness. " Cluster level: SMEs organized in a partnership scheme via clusters can generate agglomeration economies and innovation centers (IRI & D). 6
7 2. Metrics in Innovation a) Through productivity in the company: Added value / busy man b) At company level is measured by market share, how much is it increasing: The Sustainable Competitive Advantage. 7
8 Success Cases: Cluster I. Monterrey Knowledge City INNOVATION CLUSTER: The Triple Helix Model PARQUE DE INVESTIGACIÓN E INNOVACIÓN TECNOLÓGICA (PIIT) Innovation and Technological development UNIVERSITIES UANL offers professional studies at undergraduate and postgraduate level and has 38 research centers and 692 researchers recognized in the National System of Researchers (INS). New careers: Mechatronics, aeronautics, genomic biotechnology, among others. ITESM offers professional studies with four research centers, 206 researchers recognized by the SNI, 4 research centers and 40 groups in the research areas with a strategic approach. 8
9 CLUSTER OF INNOVATION AND MINDFACTURING: RESEARCH AND TECHNOLOGICAL INNOVATION PARK (PIIT) PIIT is the first research and technological innovation park in the country and in Latin America, which has a combination of public and private centers that promote open innovation and synergy between companies. The strategic but not exclusive areas to be developed in the PIIT are: Nanotechnology, Biotechnology, Mechatronics and advanced manufacturing, Information technologies, Sustainable housing, Health, Clean energies and Advanced materials. PIIT is a 4th generation park, has a 70 ha area of, an investment of 7,500 million pesos and is operated by the Institute of Innovation and Technology Transfer of Nuevo León. The PIIT has an area of 110 hectares with world-class infrastructure and services where more than 30 institutions - both public and private - are involved in R & D & I, as well as the development of technologybased companies. 26 Research Centers. 2 High Value Added Incubators. 2,360 jobs generated (researchers, technicians and administrators)+300 linked projects. Accumulated investment of US $ 600 million (state, federal and private funds). Sustainable Urban Development through the "Innova City" project on 2,500 hectares around the PIIT. It is expected that by 2025, there will be more than 50 Research and Development Centers in operations. 17
10 Innovation and smart business In order to promote innovation at the company level, it is necessary to develop smart business or smart organizations, which are organizations with the capacity to learn and innovate along the production chain through innovation cells -as at some point there were quality circles- with the aim of continuously develope new products, new processes and new business models. Artículo René Villarreal- Células de Conocimiento PIPSA 10
11 TOWARDS A NEW MODEL OF ORGANIZATIONAL INNOVATION: KNOWLEDGE DEVELOPMENT MANAGEMENT Quality base of Competitiveness From Quality Circles to Innovation Cells Continuos innovation base of competitiveness Quality circles Transition to a New Organizational Model Innovation cells: Learning and Productive Knowledge Creation (Innovation) Organizational Capital for Total Quality Management. R&D department for Innovation Intellectual capital for Innovation and Sustainable Competitiveness Total Quality Management (TQM) Knowledge Development Management (KDM) 11
12 II. PIPSA Success cases: Companies Multiprocess- Multiproduct- Multihabilities Innovation in the production chain The key is to develop a "new organizational model for innovation and competitiveness" based on both intellectual capital and innovation cells. Through innovation cells, we tried to produce different types of paper in the same line. The result was that the same production line could produce newspaper, bond or directory paper. Artículo René Villarreal- Células de Conocimiento PIPSA 12
13 Success case: Sector III. Footware Cluster: León Guanajuato, México Innovatio n Supply Chain Manufactur e Logistics and Distribution Marketing Intellectual Capital Organizational Capital Entreprenurial and Labor Capitals Logistic Capital Commertial Capital Macroeconomic Guvernamental, Social, Institutional, Financial Capitals Innovation Centers Supply chain articulation program Flexible Manufacture Program Infrastructure and logistics programs Commercialization CIATEC Tannery chamber IFA Companies Customs, Interior Port SAPICA 13
14 Centro de Innovación Aplicada en Tecnologías Competitivas Center for Applied Innovation in Competitive Technologies CIATEC, through its Scientific and Technological staff (150 in total), is oriented to the development of projects with great impact for the industry, covering current and future needs of the same mainly in the short and medium term. In recent years there has been a constant strengthening of the technological platform composed of the following areas: environmental, development of new materials, biomechanics for the industries of the leather-footwearsupply cluster, as well as related areas. Innovation Programs Laboratories Postgraduate courses With a team of more than 150 Access the entire list of tests specialists and a first class that we perform in each of our infrastructure. laboratories. Education and constant preparation are the key to success in uniting science and business. 14
15 Final Comments The new generation of free zones must be framed in the new characteristics of the global economy: the knowledge era, global hypercompetence and continuous and uncertain change. In that context, being immersed in the knowledge age implies passing from manufacturing to mindfacturing. Therefore, the new generation should promote free zones with technological and innovation parks with these characteristics: some specialized in areas of innovation and technological development, but also for small and medium industry to develop clusters and centers of innovation and technological development, that allow them all to have technological support, develop their activity and participate in mindfacturing. We must not only develop research programs, but seek for the formation of intellectual capital, which is human capital with the capacity to learn and innovate. This implies that technological centers and universities must have specialties in the areas of: software, nanotechnology, biotechnology, among others. In other words we need: At companies level- Intelligent Organizations At cluster level - Develop clusters of innovation and technological development. SMEs- Develop mindfacturing clusters but creating innovation centers for companies in the specific required areas. 15
16 Final Comments Finally, the new generation of free zones has to work and deepen the integration of the global value chain in trade and the five links that integrate it: innovation, supply chain, manufacturing, logistics and distribution and marketing. The key links are innovation and logistics and distribution. Free zones, almost by definition, have a logistical advantage that needs to be deepened through new information and communications technologies. On the other hand, implementing the Triple Helix Model in the free zones will allow to promote their development through the inclusion and integration of universities and technological centers that can contribute not just in innovation but in the development of human resources. 16
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