Session 5: Sub-national innovation systems. Challenges and experiences

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1 Minas Gerais meeting towards the national conference of S&T 2010 PRAGMATIC APPROACHES TO TECHNOLOGY TRANSFER AND COMMERCIALISATION Session 5: Sub-national innovation systems Challenges and experiences Zernike (UK) Limited Belo Horizonte November 2009

2 Structure and purpose Structure Discuss some of the key challenges relating to: Universities and the supply side Companies and the demand side Direct foreign investment and infrastructure New technology firms and finance Skills and specialist labour markets Highlight lessons learned from different strategies

3 Some first impressions of Minas Some real positives The integrated framework The quality of the science base The emphasis on partnerships Recognition and limits of IP And on incubation within specialist infrastructure But some alarm bells Companies and the demand side Governance and stakeholders Design for exchange and commercial focus

4 Differences in the knowledge economy Macro level Articulation new connections old parts International dimension - always Multi-directional both push and pull Meso level Combinatorial platforms developing competitiveness Collaborative action for knowledge and costs Continuity and centrality at the heart of business Micro level Competence matches inside and outside Short product cycles so speed and return challenges Longer development periods with more risks

5 Typical National Innovation Systems Model: Nelson Figure Demand 1: Typical National Innovation System derived Framework from Conditions Nelson Financial environment; taxation and Consumers (final demand) incentives; propensity to innovation Producers (intermediate demand) and entrepreneurship ; mobility... Industrial System Education and Research System Political System Large companies Mature SMEs Intermediaries Research institutes Brokers Professional education and training Higher education and research Government Governance New, technologybased firms The potential reach of public policies... Public sector research RTD policies Infrastructure Banking, venture capital IPR and information Innovation and business support Standards and norms

6 Typical Systems Model: overlapping interaction Processes Knowledge based firms Policies R&D performers Vision Culture Knowledge generators Infrastructure Active funds Competences Civil Society SHARING OVERLAPPING INTERACTING INTER-DEPENDENT MULTIDIRECTIONAL NEEDS A SHARED VISION

7 Two main themes: Mexican State s Innovation Plan SELECTIVITY focus where there is already some strength Jalisco specific aspects of ICT but isolated initiative of driver group no shared or inclusive vision ARTICULATION align and join up efforts of all agents Guanajuarto a strong administrative culture with academic underpinning emphasis on defining collaborative processes not yet addressed content success requires both to be covered

8 Universities in the Innovation System Knowledge generators R&D performers Knowledge based firms/knowledge users Innovation culture Active funds Competences and skills Processes and procedures for interaction Policies to stimulate innovation Specialist infrastructure Incentives and rewards

9 Bridging or translation institutions Linking technology and business OTRI model industrial liaison, reactive style CONNECT model university as contributing agent Competence Centre approach Taguspark Network development inside and outside, EMSEN Region wide Oslo technopole

10 Companies and the demand side - the start What do firms need? ACTIVE TOOLS Capital seed and venture especially Know how - available developable and excellent Information on markets, technologies and assistance Infrastructure hard, soft and cultural

11 With initiatives to help in each area Local presence Regional programmes National Donor/ international Investment credits Banking efficiency & Second exchange new technology Business angels Targeted grants Equity Retained income Third Party Financing Treasury management International investment Aid programmes Longer duration Lower cost Capital Wider access Factoring Information Asset registers Guarantees Leasing Working capital Physical Fairs & exhibitions Communications Special property Transport Regulations & procedures Requirements/ access Channels Intermediaries Networks Markets Information WHAT HELPS INNOVATIVE FIRMS Environment Policy Fiscal Sector/cluster Trade treaty Legal framework Product performance Process improvement Energy efficient Environmental Innovation Standards TQM Technology Professional specialists Networks Registers & regulation Training & standards Consultancy Initiative Know-How Training for skills Entrepreneurship Financial Productivity Marketing Corporate personnel Business Managing transition Business growth Investors in People Fiscal incentives Communications C of C Professional promotion Entrepreneurs clubs

12 Directions of travel in technology assistance Public service to partnership Push to pull Technical to integrative Single to multiple Long term horizons apply

13 Legitimate but different objectives: Chile The missionary service Target all SMEs in neutral approach The focussed provision Assist firms interested in innovation and technology The leading edge stimulation Accelerate adoption and development of world class technology in priority clusters

14 Programme content: the missionary Objective Develop awareness of innovation and technology as a key competitive strategy for all businesses Activities Promote the concept and raise awareness Offer grant assistance for early adopters Actively seek clients across the spectrum and regions Develop standard methodologies for mass adoption Train and accredit a cadre of implementation agents Publicise success to foster wider adoption Outcomes Improved competitiveness across the board

15 Programme content: the focussed provider Objective To assist companies already aware of need to upgrade technology but uncertain of how to do it Activities Publicise offer of help and request bids Offer a tailored service with help from (accredited) specialists Assist with costs through shared cost scheme Develop alumni, clubs and networks to foster mutual support Seed collaborative approaches Promote successful practice Outcomes Assist firms to increase own competitiveness and encourage cooperative behaviour through mutual interest groups

16 Programme content: the leading edge Objective To develop sustained world class technology development capability in priority clusters Activities Build on consortia to create substantial research institutes Create significant institutions with key technology competences Develop partnership working and business participation Fund longer horizon R&D in emerging technologies Ensure business ownership and direction Outcomes World class technologies developed domestically tailored to Chilean cluster priority needs owned and run by private led institutions

17 Differentiation and focus One size does not fit all Market dynamic innovate and die v innovate or die Technology imperative bio compared to ICT Purchasing dynamic security and health BUT SUSTAINED SUPPORT IS ESSENTIAL

18 Underpinning profit models: business drivers Customer driven cost competitive - supply chains Some interaction Premium pricing for leading edge performance NTBFs and cluster models IPR rent with legal protection traditional drug development companies

19 Profit and differential research intensity More extensive R&D 90% Average proportion of turnover devoted to R&D 80% 70% 60% 50% 40% 30% 20% 10% 0% Telecomms Services Biotechnology Software More intensive R&D R&D Consultancy Instrumentation 0% 20% 40% 60% 80% 100% Proportion of firms undertaking R&D

20 New technology based firms, and finance Growing your own rooted and relevant Creating the culture, building the history Incubation as a process, commercialisation as a challenge Venture capital in all its forms

21 Attracting mobile technology investment: FDI A well used strategy Where technology embodied in capital goods migrates to low cost labour economies How to attract more and reduce vulnerabilities? How to maximise the benefits? Markets Infrastructure Skills and Incentives

22 Technology zones / Technoparks / S&T Parks Provide for their occupants infrastructure to meet their accommodation needs incentives to accelerate their development soft support to reduce their costs culture to stimulate the knowledge economy Visibility to their partners in the knowledge economy Networks and connections to other partners A current example follows:

23 CONCEPTUAL MASTER PLAN OF HI-TECH PARK INTEGRATED COMPONENTS service hub in flagship building Universities Incubator Exhibition and conference space R&D Zone 400 ha Communication and Call Centre Zone High Tech Manufacturing and Assembly Cluster Business and Commercial District Bonded Road Access to Airport Free Zone / Logistics Park

24 The challenges and dilemmas Differentiation to different stakeholders regional and national government partner universities and service providers firms on Park Connectivity to wider regional assets Iskandar region initiatives Singapore, a collaborating neighbour Malaysian technology businesses new and existing Return to private investor in the park overall, and the businesses that set up

25 Skills and competitiveness The essential national competitive resource Develop evolutionary strategies Look to Singapore as a benchmark Identify where it is working and build Encourage sticky people

26 Thank You BOB HODGSON ZERNIKE (UK) Ltd The Grove High Street Sawston Cambridge UK CB2 4HJ 0(044)

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