Study on the concept, development and impact of co-location centres using the example of the EIT and KIC

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1 Study on the concept, development and impact of co-location centres using the example of the EIT and KIC Ref: Ares(2011) DG Education and Culture under Framework Contract EAC/50/2009 Extended Summary 28 February 2012

2 Extended Summary Introduction The European Institute of Innovation and Technology (EIT) is an Agency of the European Union charged with promoting and integrating higher education, research and innovation of the highest standards in order to reinforce the innovation capacity of the Member States and the EU. It represents a novel approach to stimulating innovation capacity within the EU in order to promote sustainable long-term economic growth, which involves establishing autonomous partnerships of higher education institutions, research organisations, companies and other stakeholders through competitive calls for application focused on identified priority themes. These partnerships are known as Knowledge and Innovation Communities (KICs) and are intended to be long-lasting and, eventually, self-sustaining. The first three themes to be addressed by KICs were set out in the establishing Regulation: Climate Change mitigation and adaptation, sustainable energy and future ICT. The first calls for KICs were launched in April 2009; and the first three examples were designated in December From the context of the original Call 1 it is apparent that two dimensions to CLCs were originally envisaged. The first emphasises the value of the physical co-location of people and activities. The second emphasises the structuring effect that the CLC might have in the organisation of KIC activities. It is intended that KICs should have in place: processes to stimulate working/studying together in colocation centres in diverse teams (p.3 Call text, 2009). By the beginning of 2011, KICs, while in broad agreement of the advantages associated with the concept of co-location, were still in the process of working out how to apply it within their different individual contexts 2. These contexts have a number of dimensions, including how the KIC partnership is geographically distributed, structured and governed, how the three key dimensions of education, research and business are organised and integrated, and where the emphasis lies in terms of thematic specialism attached to individual CLCs. In September 2011 ECORYS was commissioned by DG Education and Culture (EAC) to undertake a study on: The concept, development and impact of co-location centres using the example of the EIT and KICs. The question this study therefore addresses is: what evidence is available that will help us to better understand what co-location means; describe and analyse how it may be implemented in practice and set out what impacts we should expect (from the various approaches identified). The aim of this study has been to explore and describe how the co-location concept is being implemented by the KIC/CLCs, in order to understand the principle development paths being taken, with a view to reflecting on the original results expected, and to provide an analysis that should prove useful for the next 1 The European Institute of Innovation and Technology Call for proposals EIT-KICS-2009 Knowledge and Innovation Communities 2 External Evaluation of the EIT i

3 call for KICs. As such, the study does not provide a comprehensive or exhaustive analysis of KIC/CLC implementation activities across the board. Nor is its purpose to compare and evaluate KICs and CLCs against any set of standard criteria. Rather, we hope it provides a valuable snapshot of practice, from which stakeholders and policy-makers can derive lessons, and which illuminates potential avenues for further work in this area. Climate-KIC has introduced the concept of Regional Innovation and Implementation Communities (RICs). These are not equivalent to Co-Location Centres and do not form part of this study. The views of the RICs regarding the CLC concept were considered. Methodology As set out in the Terms of Reference (ToR), the aim of the study was to: " build on the information gained in the evaluation of the EIT, notably with a view to the co-location centres of the EIT. The Contractor must ensure that any overlaps are avoided. The study should seek mainly to assess the concept, implementation and the current as well as potential impact (in regional, economic and social terms) of EIT co-location centres. The study should include policy recommendations. The study should also assess, to the extent possible, the implementation of the provisions on co-location centres foreseen in the EIT KICS 2009 call for proposals". A qualitative approach was adopted, and the following research tasks carried out: Inception and data collection, including analysis of the wider conceptual context; In-depth case studies of the following CLCs, based on site visits: Climate-KIC UK, German and French CLCs; InnoEnergy KIC, Sweden, Poland Plus and German CLCs; together with a one-day workshop with ICT Labs CLC directors 3 ; Interviews with staff at EIT HQ, and Network analysis, using data collected from CLCs, including from an online survey of all CLC partner institutions 4. The network analysis draws on material provided by each KIC relating to the project linkages between KIC members. This data was analysed using Cytoscape, an open source software platform that is commonly used by social scientists for complex network analysis and visualisation. The approach uses a spring-embedded visualisation of the network created by the activity of the activity based interactions of KIC partners. The model is based on the idea that nodes repel and linkages attract, thus institutions (nodes) which have no links are distant from each other and those which are linked are closer together. The strength of the link depends on the number of linkages. Overall, the evidence base is satisfactory and provides a sound basis for developing robust conclusions and recommendations. The study comes at a time when KICs/CLCs are continuing to develop and in most cases are starting activities within the framework of organisational structures that have been established relatively recently. This means approaches are not yet fully formed, but nevertheless the research provides a valuable opportunity to identify a range of emerging patterns, and to capture learning 3 In total, some 49 interviewees were conducted, including EIT HQ staff. 4 A total of 17 responses were received, from the 50 contacts invited; a response rate of 34%. ii

4 in practice. Although the use of selected case studies has meant that coverage of CLCs was partial, the material gathered is considered broadly representative. The research addressed only a partial element of KIC activities and wider KIC activity has only been included to set CLCs in context. Description of CLCs The principal practical activities of the EIT are undertaken autonomously by designated KICs. For the EIT, the KICs are at the heart of all its activities, its focus is first and foremost the KICs and the unique contribution that, through them, the EIT can make to Europe s innovation agenda 5. The first three KICs appointed on 16 December are: KIC Innoenergy (sustainable energy) 7 ; EIT-ICT Labs (future ICT) 8 ; and Climate KIC (climate change mitigation and adaptation) 9. Each KIC comprises a number of partners from the worlds of business, Higher Education and research, joined together in a single structure. The focus of the KICs is, broadly, to stimulate entrepreneurial education, innovation activities, business creation and value formation through combining and integrating education, business and research activities. The KICs are each led by a full-time Chief Executive Officer (CEO). Each KIC is also organized around a small number of co-location centres (CLCs) which are intended to act as geographical hubs for the practical integration of the knowledge triangle. The diagram below presents a visualisation of the KICs/CLCs: 5 Triennial Work Programme p.4 6 from a shortlist of six candidates iii

5 Figure 1 Current Co-location Centres (CLCs) Source: ECORYS Some commonalities or models for CLCs are discernable at this stage: a compact geographical node, where there is a concentrated core of key partners located within less than about 50km of each other (this is common in ICT Labs for example); a broader geographical model, where CLC partners are more spread (around 150 km apart at most), as is often the case within InnoEnergy; and a distributed or hub-and-spoke model, characterised by the Climate-KIC CLCs, where partners are quite widely spread geographically. Context Co-location Centres (CLCs) form a significant element of the approach to the integration of the knowledge triangle in the EIT. In the context of the EIT, Co-Location Centres were defined in the following terms in the original Call for Knowledge and Innovation Communities 10 : KICs will be characterised by geographically distributed people who are brought together for significant periods to work in centres where individuals from different types of organisations and cultures (nationalities, industry, academia, research etc) are co-located in significant parts of the innovation chain (co-location centres). This co-location of people will allow stakeholders to work together face-to-face and move forward effectively towards KIC goals. The co-location centres are expected to be the lead nodes amongst a much larger number of partners in the network. It is anticipated that KICs will typically involve four to six colocation centres or lead nodes. 10 The European Institute of Innovation and Technology Call for proposals EIT-KICS-2009 Knowledge and Innovation Communities iv

6 Where an exceptional case for this is made, applications involving more than six may be considered. Notwithstanding geographical co-location, all necessary means should be used to ensure a continuous linkage between all the partners in the KIC. The original approach to Co-location Centres owes much to concepts such as Porter s original model of economic clustering and stresses the value of geographical proximity in the innovation process. The concept acknowledges the breadth of knowledge present within a KIC, from diverse sources, and suggests that the value of this is more readily realised through face-to-face contact. There is no doubt that physical proximity assists in the exchange of knowledge, particularly that which is tacit. There is also a strong literature which emphasises the value of the geographical clustering of economic activity. It has been argued that the competitive advantages of particular clusters, presented by good infrastructure and social capital etc, lead to existing companies setting up new ventures within them 11. As a result, there is strong evidence that the presence of a strong cluster surrounding a regionindustry accelerates the growth in start-up activities 12. Essentially, those within clusters may become interlinked, with networks of networks being created through parent-spin out company relationships. This is illustrated in research that showed industries within what were classified as strong clusters, were associated with higher growth rates in the formation of new firms and in start-up employment 13. One reason is that individuals within a cluster are able to use the expertise, infrastructure and capital to gain a heightened awareness of market risks and opportunities. In this sense, the use of networks may be viewed as a way of tapping into an information channel to obtain risk-reducing signals about a venture opportunity. 14 In instances where the CLCs bring together actors in a space, and indeed through more intangible network connections, they are well positioned to take advantage of such possibilities. Amongst the benefits of such co-location are improved social transactions. In the same way as personal relationships may allow average market participants to gain discounts from friends, so the social transactions within a cluster may provide an opportunity for resources [to] be acquired far below the market price, [as] the entrepreneurs (as well as intrapreneurs) employ social assets such as friendship, trust, and obligation 15. Similarly, a form of integrated network is created so that participants are able to capitalize quickly on market opportunities 16. It is also argued that the manifestation of strong bonds will also reduce the time spent on monitoring and bargaining over agreements: free-riding is discouraged and transaction costs are lowered. 17 If, however, CLCs exhibit weaker instances of networking due to a decentralised approach, there is the potential for benefits such as the above to be diminished if not lost. 11 Delgado, M. Porter, M. E. and Stern, S. (2010). Clusters and entrepreneurship. Journal of Economic Geography (2010) pp1-24. [online] p21 12 Delgado, M. Porter, M. E. and Stern, S. (2010). Clusters and entrepreneurship. Journal of Economic Geography (2010) pp1-24. [online] p19 13 Delgado, M. Porter, M. E. and Stern, S. (2010). Clusters and entrepreneurship. Journal of Economic Geography (2010) pp1-24. [online] p20 14 Fiet, J. O. (1996). The information basis of entrepreneurial discovery. Small Business Economics, 8: pp Elfring, T. and Hulsink, W. (2003). Networks in enterprise: The case of high-technology firms. Small Business Economics. 21: pp p Elfring, T. and Hulsink, W. (2003). Networks in enterprise: The case of high-technology firms. Small Business Economics. 21: pp [online] p Elfring, T. and Hulsink, W. (2003). Networks in enterprise: The case of high-technology firms. Small Business Economics. 21: pp [online] p411 v

7 In a review of the literature, Boschma argues that geographical proximity - described as the spatial or physical distance between economic actors (Boschma 2005 p ) - is just one of five forms of proximity which influences the propensity of individuals, and by extension, the ability of firms and other organizations, to learn and so to innovate. The others are cognitive proximity, where a shared knowledge base enables learning to occur; organizational proximity (both across and within organization s), which influences the capacity to co-ordinate an effective exchange of knowledge; social proximity, where embedded social relations support trust and reciprocity in the sharing of knowledge, and institutional proximity, where common habits, rules and routines encourage a sharing of knowledge. Where these other, relational, forms of proximity are present it is argued that learning need not be spatially constrained and distanciated learning will occur (Allen 2000, Amin and Cohendet ). One of the elements to be explored in this work is the extent to which CLCs might be fostering stronger forms of relational proximity by bringing together geographically distributed individuals from different backgrounds. For some, this is the key to developing true breakthrough innovations, for others it is essential for more incremental and adjacent innovation. In an attempt to combine the importance of contextual practice and relational activity, Amin and Cohendet argue for a geography of heterarchic novelty (2004, p.110) which combines face-to-face contacts with distanciated relationships, prompting ideas of inter-connected nodal points of rich knowledge generation, combination and recombination. Such a notion is supported by the work of Sole and Edmondson ( ) who illustrate how geographically dispersed teams are able to draw upon knowledge situated in the multiple physical locals they span and so leverage local competencies that would not be available to teams that were located in one place only. The concept of Co-location Centres appears to be strongly engaged with this style of thinking. It is important to see Co-location Centres not only as places where things happen (a geographical) space but also as a structured activity space (the notion of a network space). The question here is whether the structure offers benefits which might not be realised by alternative forms or structures. The importance of collaborative research for high quality outputs is now widely recognised (Bozeman, B and Lee, S ). Collaboration, and untraded interdependencies, are equally significant in realising the outputs of this research through innovation, a relationship which is not based on any linear model but on a dynamic and ongoing iteration (Nonaka and Takeuchi 22 ). It has, though, been argued that the EU and US have different patterns of knowledge exchange. In the US higher levels of mobility of capital, workers and knowledge promote strong agglomerative functions which combine to promote external economies and localised interactions. In contrast, these mechanisms are at best only weakly present in the EU. However, Rodriguez-Pose and Crescenzi 23 argue that compensating forms of geographical 18 Boschma, R. (2005) 'Proximity and Innovation: A critical assessment' Regional Studies Vol pp Amin, A. and Cohendet, P. (2004) Architectures of Knowledge: firms, capabilities, and communities Oxford University Press 20 Sole, D. and Edmondson, A. (2002) Situated Knowledge and Learning in Dispersed Teams. British Journal of Management 13 pp. S17-S The impact of research collaboration on scientific productivity Social Science Studies 35 (5) pp Nonaka, I. and Takeuchi, H. (1995) The Knowledge-Creating Company Oxford, OUP 23 Rodriguez-Pose, A. and Crescenzi, R. (2008) Research and Development, Spillovers, Innovation Systems and the Genesis of Regional Growth in Europe Regional Studies 42 (1) pp vi

8 processes might be emerging leading to stronger flows of knowledge between agglomerations of activity than is the case in the US. It is this tendency which CLCs may act to reinforce and to accentuate. The benefit of geographically diffuse networks is that they allow access to more diverse sources of knowledge and open up greater opportunities for adjacent innovation (Johnson, ). But the CLCs are not just networks of actors; they are based upon the strategic behaviour of agents which decide to engage with the legal and administrative structures of the CLCs and the KICs. In doing so, the CLCs appear to meet the condition of longevity in that they support the establishment of long-lasting relationships which makes an individual or organisation capable of more effective, or different, action (Drucker, ) and capable of action in its own right. They also embody Huggins idea of network capital, which is based on calculative relations where investments are expected to yield economic returns (Huggins 26 ). This differs from the notion of social capital which is individually held and yields personal returns. One of the aspects for this study to consider will be the extent to which social capital may be created through the CLCs and which may then act as the means for realising the desired economic returns. As the lead node in a network of actors the CLCs may also act as pipelines of knowledge (Barthelt 27 ) or knowledge aerials (Fritsch, M and Schwirten, C 1999) 28. Through this the CLCs are able to transform regionally embedded knowledge to the benefit of the network as a whole. This recognises that the knowledge base of advanced local and regional economies is positioned within global knowledge networks (Wolfe, D and Gertler, M 2004, Huggins, R and Izushi, 2007, Lorentzen, M 2008) 29, and that high performing network structures can transmit knowledge across spatial boundaries. In the case of the CLCs they are able to do so owing to their construction of strong forms of institutional, organisational and cognitive proximity. However, inter-organisational knowledge flows are configured not only by the network space 30 occupied by institutional actors, but also the geographic space in which they are set. CLCs offer the opportunity for engaging with this geographic space in a structured manner and may represent means of connecting regional economies with dispersed knowledge. Whilst most research has focused on the idea of knowledge diffusion through networks (Cowan, R and Jonard, N 2004, Valente, T. 1996) 31, there is less work on the co-creation of knowledge and innovation through network structures. Even Huggins work speaks only of the role of networks in accessing 24 Johnson, S. (2010) Where do Good Ideas Come From: The natural history of innovation. Allen Lane 25 Drucker, P (1989) The new realities: in government and politics/in economics and business/ in Society and World View New York, Harper and Row 26 Huggins, R; Thompson, P; and Johnston, A (forthcoming) Network Capital, Social Capital and Knowledge Flows: How the nature of inter-organisational networks impacts on innovation. Industry and Innovation. 27 Barthelt, H, Malmberg, A and Maskell, P (2004) Clusters and Local knowledge: Local buzz, global pipelines and the process of knowledge creation Progress in Human Geography 28 (1) pp Fritsch et al, (1999) Enterprise-university co-operation and the role of public research institutes in regional innovation systems Industry and Innovation 6 (1) pp Clusters from the inside and out: local dynamics and global linkages Urban Studies 41 (5/6) pp Competing for Knowledge: Creating, connecting and growing Routledge, London knowledge networks in local and global space Entrepreneurship and Regional Development 20 (6) pp Network spaces can be defined by the nature of the relationships, interactions and ties underlying particular networks. (Huggins p.2). 31 Network Structure and the Diffusion of Knowledge Journal of Economic Dynamics and Control 28 pp ; social network thresholds in the diffusion of innovations Social Networks 18 pp vii

9 knowledge (stronger he feels than acquiring information) where the role of inter-organisational networks is principally a means of utilizing the knowledge of others (Dutt on 32 ). This is an aspect which merits attention in the CLCs. Emergent concepts of open innovation (Tapscott and Williams, ) are beginning to suggest that networks which combine different knowledge sources, and which are not necessarily project or activity led, may be beneficial to innovation processes. It seems that there is a consensus emerging that it is now the interplay of new knowledge and market opportunities in networks of collaboration and partnership that is crucial (EC, ). Whether CLCs are acting to provide this market knowledge remains an open question. Conceptually then, Co-location Centres appear to offer a means of combining notions of social capital (Putnam) with the emergent notion of network capital (Huggins 35 ) in that they constitute interorganisational networks which consciously act to facilitate and develop knowledge flows for innovation, education and research purposes. They also draw together notions of physical proximity (often temporary) with more relational concepts. In this regard, Co-location Centres can be viewed as a means of embedding a relational or network space into geographical space and vice versa. This concept of relational space begins to combine the notion of cognitive proximity (Capello 36, Boschma 37 ) and institutional proximity (Boschma 38, Gertler 39 ) with the formation of substantive network spaces focused around temporary formations of geographical proximity. This is a much more complex understanding of the role of Co-location Centres and one which we are keen to explore in practice. Conclusions We have drawn upon the evidence and analysis set out above to draw a number of conclusions concerning the concept, development and impact of co-location centres (CLCs) in the context of EIT/KICs. Firstly we provide an overview of the key strategic messages from the research. This is followed by more specific conclusions concerning implementation (delivery, process and function); and impact and added value. Overview 1. There has been a positive response to co-location in the context of EIT/KICs: the concept is widely supported and well understood. It is currently being put into practice, via Co-location centres (CLCs), so in 2011 there has been a focus on forming and structuring organisations and operations, and learning by doing. As a result of the experience gained, buy-in to the co-location dimension of 32 Dutton, W (2008) The Wisdom of Collaborative Network Organisations: Capturing the Value of Networked Individuals Working Paper Oxford Internet Institute 33 Tapscott, D and Williams, A (2008) Wikinomics Atlantic Books 34 EC/DG INFSO Working Paper: Evaluating the effectiveness of European ICT RTD and Innovation Systems 2005: 3 35 Op cit 36 Capello, R and Faggian, A (2005) Collective Learning and Relational Capital in Local Innovation Processes. Regional Studies 39 (1) Op cit 38 Op cit 39 Gertler, M. (2008) 'Buzz Without Being There? Communities of Practice in Context' in Amin, A. and Roberts, J. (eds) Community, Economic Creativity and Organization Oxford Oxford University Press viii

10 EIT/KICs has been reinforced. Leadership, at KIC and CLC levels, plays a central role in achieving positive outcomes from co-location. 2. CLCs are the primary delivery mechanism for KICs, and as such are essential mechanisms for implementing a range of activity underpinned by the aim of integrating the three dimensions of the knowledge triangle (education, research and innovation). Consequently, CLCs should be seen as the fundamental architecture of the KICs and not entities in their own right. Integrated approaches are becoming embedded in KIC/CLC structures, governance and culture, promoting and facilitating a high degree of cross-clc activity. On the whole there is little evidence of CLCs focusing internally or operating as isolated entities within the KICs. 3. A range of different interpretations of co-location is apparent within the overall CLC approach, both between and within KICs. While it is possible to broadly characterise each KIC using different theoretical spatial models, the actual geographical and structural patterns taking shape are complex and are not easily categorized. Rather, the reality on the ground reflects a range of contextual factors, including pre-existing networks, the design of the original KIC applications, national and regional policies and institutional drivers. The results of initial analysis and visualisation of CLC network dynamics is consistent with this qualitative picture, and further work of this nature may deepen understanding of this issue. 4. It is apparent that CLCs are not, by and large, developing as locations for investment or activity, although having a physical hub is important to co-coordinate and aggregate activities. There are also benefits to having a flagship office and dedicated meeting place. Providing a space to meet is a valuable tool for promoting and facilitating interactions between partners (including across the three knowledge triangle dimensions) and to stimulate the development and delivery of joint activity. However, the primary current and potential impact lies in CLCs as connectivity hubs and sites for knowledge exchange. It then follows that physical proximity should not be assumed, with implications for potential changes to future Call texts. It is therefore more likely (for reasons of cost apart from anything else) that people will move, rather than laboratory facilities for example. 5. Significantly, the co-location approach is considered unique and to have a number of advantages over alternative network approaches, specifically relating to the robust management and governance structures, which increase efficiency and effectiveness, promote trust and favour long-term, stable knowledge networks. CLCs are not duplicating activity, but are building on existing provision (including clusters) and embedding themselves in local and regional contexts. 6. CLCs provide an effective means for leading European institutions and organisations to adopt an integrated approach to education, research and innovation; to focus on priorities set by societal challenges and to strengthen knowledge networks and collaboration over a comparatively long timescale. CLCs also provide valuable opportunities for more peripheral organisations with strong research capacity to access leading mainstream European teams. 7. CLCs are bringing people together in new ways, including interactions that cross traditional domain boundaries (in particular through the involvement of business). This is happening through shared goals and shared infrastructure, capacity and activities; via trusted networks that exploit social capital and by the adaption and strengthening of pre-existing networks to make them more permanent and ix

11 effective. CLCs offer a platform for integration which gives people and organisations clear structures and rules, and also a focal point (often in a well known innovation hot-spot, potential brand identity local presence and long-term permanence. This (sometimes unpredictable) human connectivit y is facilitated by efficient co-ordination and communication by CLCs, supported by strong leadership and direction. Delivery, process and function 8. CLCs are delivering KIC objectives through a number of common functions: o o o o Activity management: CLCs are meeting the need to coordinate and manage partner activity effectively and efficiently, structure and implement appropriate governance arrangements and facilitate collaborative working from an operational and content perspective. As such, CLCs are the primary mechanism for operationalising KICs. Knowledge management: CLCs function as knowledge exchanges (within and between CLCs) and repositories. This is primarily carried out through managing knowledge networks, often built on pre-existing, more informal relationships, but where in the KIC/CLC context these become stronger, more formally structured and longer lasting. Physical location of activity: CLCs provide a physical space for interaction, comprising meetings, short-term visits and student mobility rather than locations for research or investment activity. Physical locations also act as points of attraction for a range of actors (e.g. students, start -ups, industry, policy makers). Connectivity hubs: CLCs serve as points of contact, providing connectivity between CLC partners, between CLCs and between CLCs and KIC management. They are a means to connect local partners to wider national and European partners. CLC hubs also provide communications infrastructure such as websites, and publicity functions. 9. CLCs tend to be nationally bounded in terms of their membership (but not in terms of the project activity which they facilitate). This represents an approach where people are as important as places and collaborative projects appear to be proceeding on the basis of multiple CLC involvement. A clear strategy and leadership is required to ensure cross-fertilisation between CLCs and to avoid them operating as stand-alone bodies. 10. Physical proximity is valuable through the provision of space for promoting and facilitating interactions between partners (Imperial Climate -KIC, KTH InnoEnergy, ICT Labs Helsinki etc.) CLC hubs also benefit from being located at innovation and research hot-spots, where a critical mass of activity and traffic helps to stimulate interactions and where key actors are already in close proximity. (Eindhoven, London, Berlin). Physical co-location seems to be strongest in the case of education (where many of the CLCs are providing a home ); largely as a result of the development of masters programmes and student mobility between CLC institutions. CLCs are better located in neutral spaces rather than attached to a single partner. While it was an efficient solution as a starting point, lead organisations recognize the value of moving CLC hubs away from their own premises and are starting to initiate this. 11. CLCs also seem to operate more effectively when they have a purpose (e.g. thematic leadership) beyond acting as a physical centre (Poland Plus clean coal). Two of the CLCs were structured strongly around technical or market-themed areas (InnoEnergy and ICT Labs) from the beginning, x

12 whereas Climate-KIC adopted an approach which has seen priority research themes emerge during 2011 (these are not fixed from one year to the next, unlike the other tw o KICs where the themes aligned with individual CLCs). 12. Activity patterns are still evolving: collaborative projects are exhibiting multiple CLC involvement. Strong networks are being created as partners explore, develop and implement a range of joint activities which are different from previous types of collaboration. We are also beginning to see multipolar CLCs where activity is being concentrated in one site e.g. Berlin, Stockholm. 13. Strong networks are being created within CLCs, as partners explore, develop and implement a range of joint activities which are different from previous types of collaboration (more market-driven, greater industry involvement, longer term etc). The CLCs are forming networks within the KIC networks (and this is proving to be a valuable, efficient and effective structure). In some cases this is leading to the transfer of experience between the CLC structures, in others it is helping make connections for CLC members. These are long-term structures that are being established, which are more substantial than traditional networks, but have a wider reach than traditional clusters. The challenge now is to develop European level networks through CLCs. 14. The potential benefits for business and industry participating in KICs are starting to become clearer through CLC activity these include providing access to human capital (for example firms are interested in identifying talented individuals taking EIT masters courses who might become employees and this activity is likely to take place at CLC level), intellectual capital (primarily through participating as partners in collaborative research projects) and opportunities to test new products. The available evidence on participation of businesses in joint projects suggests strong engagement. 15. Entrepreneurship is still an emergent activity and here it is important for CLCs to act within existing regional resources (for example incubation facilities). CLCs provide a valuable route into new markets (both in new geographies and as a means of accessin g new clients). Innovation (resulting from research) tends to be largely around the combination of knowledge through contacts brokered through the CLC. The value of CLCs at the moment is largely in terms of bringing parties together, opening access to and increasing the capacity of innovation services, rather than in providing these types of services directly. However the role also extends beyond simple signposting. Thus the innovation management aspect of CLCs is as yet unclear, and needs to be explored further, potentially at EIT/KIC level. 16. Investment is happening at several locations although not all. Examples include the Berlin Climate- KIC incubator units ( Green Garage); ICT Labs Helsinki Open Innovation House; Climate-KIC Paris CLC offices at Saclay, and the ICT Labs Software Campus in Berlin. However these investments aris not always directly from CLC/KIC sources; rather we arer seeing CLCs become the focus for investment, in concert and not in competition between KIC/CLC and wider resources. 17. In terms of the a priori co-location criteria outlined in the first Call for KICs in 2009, CLCs are acting strongly as lead nodes, creating continuous linkages and establishing processes to stimulate people to work together (not necessarily through physical co-location). We also conclude that CLCs are not commonly bringing people together for significant periods, or promoting or facilitating working together face to face on a significant scale. Impact and added value 18. Overall, CLCs add value to KICs in terms of knowledge creation, but importantly they also have institutional and organisational impacts. CLCs are becoming institutionalized and as such are giving xi

13 the KICs structure, processes and capacity. European Added Value is also strong, in terms of public goods (constructing the networks of trust and reciprocity to enable knowledge exchange to occur which would not otherwise happen); actions that Member States and regions cannot finance themselves (bringing in non -domestic partners and facilitating cross-border knowledge exchange) and the achievement of better results (in terms of scale and scope). 19. CLCs have very different regional contexts: in some places the collaborative ecosystem needs to be established, in some the CLC is an integral part of a planned strategy, and in some the CLC is part of a wider strategy, in some places the CLC is competing with other parts of the innovation ecosystem. Regional synergies are variable across the CLCs, but are strong in several places where they build on existing regional clusters. Examples include the Poland Plus InnoEnergy partnerships; Paris Climate-KIC where the CLC acts as an intermediary between cluster initiatives on climate issues linked to local territories; the German InnoEnergy CLC which benefits from regional funding and strategic support; and the Berlin Climate-KIC node which also fulfils an intermediary role, and is involved in local cluster initiatives. 20. Potential and current impacts regional and economic impacts are likely to be closely linked (scale and location) and to focus on: impacts on SMEs (regional); investment from wider sources; reputational impacts and knowledge spillovers (outwards and inwards). 21. Social impacts are difficult to identify except in the case of educational benefits and the CLCs coordinating and facilitating activity that seeks to address a range of societal challenges, as articulated in the KIC Call. 22. Specific to the Climate-KIC, Regional Innovation and Implementation Communities (RICs) are not comparable to CLCs and should not be considered as such. They are however involving public sectors actors in collaborative projects and offer potential benefits in terms of regional test beds. The participation of these types of (public sector) actors is important and there are other mechanisms that enable CLCs to do this. 23. There is no evidence the activities of CLCs are being monitored systematically. At KIC level there is no wish to see formal EIT involvement in monitoring CLCs. Recommendations CLCs are developing positively and are demonstrating a range of benefits compared with alternative network-based approaches. CLCs have evolved significantly during 2011, organisationally and institutionally, and are set to consolidate and deliver in We therefore make the following recommendations, which should be used to guide the future development of the current KICs/CLCs, inform the conceptual and practical underpinning for new KICs/CLCs and suggest ways to learn from the practical experience of implementing CLCs as the operational dimension of KICs. 1. CLCs are developing positively and are demonstrating a range of benefits compared with alternative network-based approaches. The concept should therefore be retained as the main delivery mechanism for the KICs, with the number per KIC remaining broadly similar (with 5-6 as the norm and up to eight in exceptional circumstances). 2. CLCs are integral to KICs and should not be considered in isolation. Broadly speaking, existing CLCs should be subject to a minimum of disturbance to allow them to continue developing along their current paths. xii

14 3. The development and application of KPIs at CLC level would not be appropriate and should not be considered at this stage. CLC managements are already collecting and using a range of appropriate data (on collaboration for example) and using it effectively to plan and guide CLC development. 4. There is no single model to which CLCs should conform. Sufficient flexibility should be extended to allow for different interpretations of co-location within overall EIT/KIC aims, objectives and frameworks. 5. The role and diversity of context and pre-existing networks of intellectual and social capital should be recognized (including in the new Call). These play a key role in determining the scope and nature of CLC/KIC knowledge networks. 6. The emphasis (in the first Call) on the physical dimension should be reduced and relational structures should be emphasised more. Temporary mobility of long duration (e.g. 2 days a week) should be encouraged. 7. There is significant potential for CLCs to learn lessons from each other and this is a role that it would be appropriate for the EIT itself to take forward. This may take the form of sharing best practice for example but the precise mechanism should the subject of discussion between the CLCs/KIC and EIT. 8. The educational dimension of KIC/CLCs is working satisfactorily; entrepreneurship elements are proving valuable, and research (although not physically based) is progressing through collaborative projects with partners from across CLCs. The area where most work remains to be done is innovation in particular the role of CLCs in managing innovation projects in terms of physical space (for example to open access to increase capacity, rather than delivering innovation products and services directly) and beyond signposting. 9. Consideration should be given to how CLCs might be linked with and play a role in delivering on the EU s Smart Specialisation Strategies agenda, through the Cohesion Policy Funding for example. 10. CLC activity webs are critical to KICs. The results of initial analysis and visualisation of CLC network dynamics has provided some valuable initial insights, and further work of this nature may deepen understanding of this issue. xiii