The Innovative Region as Catalyst for Economic Growth - STUNS

The Innovative Region as Catalyst
for Economic Growth


PD Philip Cooke. Cardiff, Aalborg & Toulouse
Universities

Presentation to STUNS 25
th

Anniversary Conference

Innovation
for Growth

Using Regions for the Delivery of the
I
-
economy
in
Europe

17 November 2010, Uppsala, Sweden



Aims of the Presentation

•
Provide examples from functioning innovation support systems (best practice) and also provide
insight into some of the difficulties.

•
“How do you know that the efforts made really makes a difference?” And, what kind of “return on
investment” should the public (as financers) expect? And, in what time frame?


•
First aim is both to show what we have achieved from collaboration to support innovations and
growth over the years, but equally to put the light on the many challenges that we still meet,
especially on the regional level.

•
The target group for the conference consists of policy makers on national, regional and local levels.
The platform for the discussions will be the EU 2020
-
program, that is supposed to be implemented
on in national and regional programs.

•
The presentation proposes an international outlook, bringing both an overview on how other
Innovation
-
based economies or regions work and develop, and how the national and regional levels
can cooperate to support competitiveness and growth.

•
Finally, given that, with others, I have scrutinized Uppsala Bio twice, included are references to
what has been seen here, in Uppsala and in VINNOVA’s program VinnVäxt.

•
Summarising, I try to show what has been really good, i.e. “for others to learn from”, and what
should STUNS can learn from others.



Response to issues raised by Curt Nilsson (CEO) & Madeleine Neil, Dir. of Communications

Uppsala BIO


Europe 2020 Priorities

•
Smart growth
–

knowledge & innovation economy

•
Sustainable Growth
–

more efficient, greener and
competitive economy

•
Inclusive economy
–

high
-
employment with social &
territorial cohesion

•
Flagships include ‘Innovation Union’; ‘Youth on the
Move’; ‘Resource efficient Europe’; ‘New skills & jobs
agenda’ etc., etc.

New Challenges for Regional Agencies


Issues from CES (Basque) and TMG (Upper Austria) Managing Directors
–

Leire
Ozerin Etxebarria & Bruno Lindorfer


•
-

SPEED is thought vital in transferring new R&D results into products for the
global markets

•
Prahalad said ("Competing for the Future“ 1993) SPEED is THE key success factor
in the global competition

•
H
e clearly concludes that Europe’s major problem is lack of ‘translation’ SPEED
compared to the US and Asia.

How to SPEED UP this transfer ?



•
H
ow to attract young talents (engineers) to/for

a region ?

(How to transfer a
brain drain region into a brain gain region ? )



•
H
ow to boost knowledge based services businesses

and/or industry

linked
services businesses ?



Eco
-
Innovation in the Current Regime


European Commission


EU 2020 Strategy

EACI

DG Environment

DG Enterprise

DG Research &
Innovation

ETAP


National

Roadmaps

Measuring

Eco
-
Innovation

Platforms

Eco
-
Innovation

Environmental

Technologies

SMEs
–

70%


Recycling

Construction

Ag
-
Food

Greening

The Linear
-
Interactive Innovation Models Narrative


Linear Innovation Model (Phase 1
-

Techno
-

Push)

•
Basic Science (R&D Lab)

•
Design & Engineering

•
Manufacturing

•
Marketing & Sales




Linear
Innovation Model (Phase 2
-

Market Pull)

•
Market ideas influence (‘pull’) R&D

•
Development

•
Manufacturing

•
Sales


Critique of Linear
Model

•
Ignored stage interactions

•
Did not recognise feedback
loops

•
Little attention to learning

•
Phase 1, no attention to market

•
Phase 2, over
-
estimation of
market



Interactive
Model

•
User
-
producer interactions

•
‘Organized’ markets, NIS

•
Network relations, learning

•
Buyer
-
supplier asymmetries

•
Proximities important (geographical,
cultural, economic, organizational)

•
Incremental innovation



Problems with Interactive Model

•

User
-
producer..why not producer
-
user?

•

Conceived for ‘Organized’ markets

•

Not accurate for liberal markets

•

Incremental innovation privileged

•

Problem of
radica
l innovation
–

‘epochal’, waveform, engineering
–

not
‘episodic’ e.g. design, ‘revolutions’

Classic Regional Innovation System

Regional socioeconomic and cultural setting

Knowledge exploitation subsystem



Customers



Competitors



Contractors



Collaborators


Industrial

companies

Knowledge exploration subsystem

Knowledge, resource, and

human capital flows and

interactions

Technology

mediating

organizations

Workforce

mediating

organizations

Public

research

organizations


Educational

organizations

NSI organizations

NSI policy

instruments

Other RSIs

International

organizations

European Union Policy
instruments










Figure 5.4: Schematic illustration of the structuring of RSIs (after Autio, 1998).





Vertical


networking





Horizontal


networking

External influences


Regional system of innovation

Back to Linear or Neo
-
linear?

•
In their re
-
appraisal of the ‘linear model’ of innovation, Balconi et al. (2010)
note that much innovation has to be
linear
. This is more true in some fields
than others (e.g. Biotechnology)


•
Interactive innovation devoted to making incremental changes in response to
well
-
defined market demands (
user driven innovation
) (‘user
-
producer
interactions’
–

Lundvall 1992)


•
Different from laboratory driven innovation by many characteristics but one of
the key ones is
time
.


•
Thirty years plus timelines for the development of cancer therapeutics are not
unusual.


•
Hence, the originating research from which radically innovative products
eventually evolved was not conducted at the point in time when market
demand was well
-
defined.

Neo
-
linear plus ‘open’ innovation

•
Accordingly such research and its translation into innovations frequently gives
rise to
bottlenecks
. These may be tackled in sequence according to the nature
and extent of relevant new knowledge over the intervening period, or
solutions have to await technical innovations facilitating hitherto difficult or
impossible manipulations (e.g. polymerase chain reaction for genetic
engineering).


•
In the latter case there clearly can be simultaneity in knowledge evolution and
capability that has to be discovered through the exercise of
lateral ‘absorptive
capacity’
especially if the parallel innovation occurs extra
-
murally.


•
This implies two things: first, that large corporations may not be the only or
main actors of consequence in breaking through particular innovation
bottlenecks;


•
But second, even if they are, they must rely increasingly on ‘complex webs of
social relations among individual scientists...[as well as]... broader professional
groups’


•
In other words, lateral absorptive capacity in a matrix
-
like search process.
Some new research, e.g. In demand driven and design driven innovation is
linear, or neo
-
linear


The world is changing: knowledge moves
more horizontally


Industrial Model

•
Knowledge stocks

•
Knowledge transfer

•
Codified knowledge


•
Transactions


•
Technology Push


•
Scalable efficiency

•
Stable environments


Source: J. Hagel & J. Seeley Brown (2009)


Knowledge Model

•
Knowledge flows

•
Knowledge creation

•
Tacit knowledge

•
Relationships

•
Innovation Pull

•
Scalable learning

•
Turbulent environments

Supply
-
side
–

Financial Innovation

•
Knowledge economy valuation/accounting rules
(essentially self
-
assessment of intangibles, like
‘goodwill’)

•
De
-
regulation of financial (earlier utility, e.g. telecom,
energy) markets

•
Off balance sheet SPVs

•
Securitisation of debt repayment flows (CDOs from
student loans, car loans, sub
-
prime mortgages)

•
High risk = high return

•
Uncertainty modelled as risk (Monte Carlo simulations)

User Driven Innovation

•
Users = firms or consumers expecting to benefit from
using

a product or service

•
Manufacturers expect to benefit from
selling

a
product or service

•
New research shows 10
-
40% innovations user
-
’modified’
(Von Hippel, E. (2004) Democratizing Innovation: the evolving
phenomenon of user innovation,
http://web.mit.edu/evhippel/www/
)



Consumer products

•
“Extreme
” sporting
equipment
-

197 members of 4 specialized sporting
clubs in 4 “extreme” sports
-

37.8%

•
Mountain
biking
equipment
-

291 mountain bikers in a geographic region
known
to be
an “innovation hot spot.”
-

19.2
%

•
Interesting but ‘leisure
-
limited’

•
Nordic variants
-

higher ‘general consumer’ focus




Design Driven Innovation


•
Design
-
centred
-

‘design circles’

•
Transversality
–

cross functional expertise

•
Social Constructivist
-

creativity

•
Radical
–

‘episodic’ not ‘epochal’

•
Socio
-
cultural regime change

•
Within fashion markets (kitchenware; lighting;
furniture; boats; functional food)

•
R. Verganti (2006) Innovating through design,
Harvard Business Review
, December,
Reprint R0612G, 1
-
9

Demand Driven Innovation

•
Meta
-
transitional
-

new Socio
-
Cultural
Landscape

•
(e.g. post
-
hydrocarbon society)

•
Protected niches, Strategically managed

•
Knowledge ‘hybridisation’ & ‘Relatedness
&Transversality’ knowledge dynamics

•
Public procurement in ‘lead markets’

•
e.g. Eco
-
design & Innovation: ‘Creative &
Clean’


Transitions in Innovation

•

Normally regional innovation agencies 'support' innovation,
entrepreneurship and enterprise.

•
The next step is to be a
catalyst

for these activities by managing
innovation opportunities.

•
Some leading agencies use new, change management methods to
facilitate firm understanding of change opportunities like 'Corporate
theatre‘, ‘Research
-
based theatre‘, Living Labs' and 'Storytelling' as new
instruments.
Also
‘Decision Theatre’
.

•

Prominent recently are perspectives and critiques concerning the
relevance of the
‘relatedness’ and

'transversality'
concepts to regional
economic development and its associated governance.

•
Also thinking and practice about
‘branching’
from path dependence and
the creation of new paths for firms and regions.

•
Evidence for key spatial processes of
path transition
provided with new
insights into the contributions of regional innovation policy to
path
evolution
.

Relatedness & Innovation

•
Regional innovation agency is
catalyst

among
firms & clusters

•
Horizontal knowledge flows ignored in the past

•
But
–

e.g. ‘reconstructive surgery’ (hip & knee
joint replacements) involved medical, chemical
(US) and plastics (Germany) path inter
-
dependent
‘socio
-
technical systems’

•
Human insulin>functional food involved 4.

•
Difficulties:



•
Cognitive Dissonance/Understanding

•
Change
Management/Different Frames

•
Inertia


1. Co
-
evolutionary (Aspatial) Transition Model:
Niche>Regime>Landscape

(Source: Geels, 2006)

Co
-
evolutionary
Transition Model:
Niche>Regime>Landscape for
Regenerative Joint Therapy

(
Source:
After Geels
, 2006)

Competing Prosthetics


Dominant Design

T

E

F

L

O
N

P
O
L

Y
E
T
H
Y

L

E
N
E

STS 1

STS
2

STS 3

Co
-
evolutionary
Transition Model:
Niche>Regime>Landscape for
Human Insulin & Functional Food

(
Source:
After Geels
, 2006)

Competing Human Insulin


Dominant Insulin Design

N
O
V
O

N
O
V
O



D

I

A
B
E
T
E

S

STS 2

STS
3

STS 4

G
E
N
E
N

T

E
C
H

ProViva

Probiotic Drinks

Polymerase Chain Reaction

C

H

I

R

O

N

STS 1

Transition Region Model : West Midlands Automotive





























































































Morgan:
Dominant Design

AML

ProDrive

Zytec

Modec

Niche Automotive Innovations

Superform

Radshape

Socio
-
technical Regime
: Green Automotive Innovation & Market



Transition Regional Space


Exacting
Customers

Regional Innovation


Support

Socio
-
technical Landscape
: Green Production
-
Consumption System

Entrepreneurship


Technology,


Skills

Regulation

New Potentials

Co
-
operation

Competition

Green Cars

Light Weight Materials

New Engine Technology

Aerodynamics

BMW

Transverse Inter
-
cluster
Marketing

Knowledge Flows

•
‘
Jaeger
-
Le Coultre and Aston
Martin
, in a similar spirit of innovation

•
Now the official Watch Partner of Aston
Martin Racing

•
strong ties between fine watchmaking and
fine mechanical engineering’.

Mulliner Tourbillon for Bentley

The Spirit of Exclusivity


Skåne’s ‘White Spaces’ &


Värmland’s Innovation Platforms

Cluster Odyssey narratives

UppsalaBio Algae
-
based Battery




Microalgae Biofuels, Pharma and Functional Food
Production Clusters in southern Portugal & Spain

New Regional Innovation Process & Policy
Convergence Concept




Recombination


White Spaces


Transversality


Related Variety


Platforms


Matrix Methods


Dramaturgy


Orchestration


Process
Sub
-
system


Practice
Sub
-
system

Bad but lively dramaturgy (or
metatheatre
–

Boje, 2002)

•
Enron
is

Metatheatre in 3 ways

•

First, Enron is Metatheatre
in how it set out to
deceive using façade and illusion.

•
For example, each year (between 1998 and 2001),
an elaborate theatre stage was constructed on
Enron’s 6
th

floor to simulate a
real

trading floor;

•
it’s expensive theatre, $500 to set up each desk,
and more for phones in this stage
-
crafted spectacle,
more still for the 36
-
inch flat panel screens, and
teleconference conference rooms;

•
the entire set was wired by computer technicians
who feed fake statistics to the screens.>>>>>>>

•
>>>>. On the big day several hundred
employees, including secretaries, played
their rehearsed character roles,
pretending to be ‘Energy Services’ traders,
doing mega deals, while Jeffrey Skilling
and Kenneth Lay played their starring role
in the Enron
Dramatis Personae
to a
target audience of invited Wall Street
analysts, who cannot tell
real

from
fake
.


•
Second, Enron is Metatheatre

as a way to
control and motivate employees using the
technology of theatre; several times a year,
Enron hired choreographers and dramatists
to coach executives in character roles in
elaborate corporate extravaganzas;
executives and staff would dress in Star Wars
or other costumes; executives would enter
the ballroom riding Harleys or elephants to
the thundering applause of employees and
spouses.


•
Finally, Enron
is

Metatheatre

in a much
more important sense of Shakespeare’s “Life
is theatre” a part of our daily lives in work
and consumption. For example Rebecca
Mark’s globetrotting visits, on the Enron jet,
became a road show complete with an
entourage of WB, WFO, IMF & CIA agents
mixed along with Mark’s hair dresser, make
-
up artist, and a flock of assistants. When
Mark landed, the force of the White House
landed with her.


Enron Intertextuality among
Antenarrative Clusters

Multiple Frames and Dramaturgy

•
Dramaturgical analysis focuses ‘centre stage’ but also ‘back stage’ and within the audience.

•
Narrative analysis may also deploy a variety of performative styles such as: heroic; tragic;
romantic; ironic; and comedic.

•

Cairns & Beech (2003) describe change management in a services organisation moving from
a paper
-
based to an IT
-
based managerial system.

•
Senior management and consultants designed new working practices and office layouts
(
heroic

narrative).

•
These had significant implications for middle management, expressed in their removal from a
supervisory ‘head of the class’ position managing paper to ‘supportive’ participant in an
open
-
plan, IT
-
enabled, customer friendly office space (
tragic
).

•
Then senior management invited administrative staff to comment (
romantic
).

•
Responses registered in the thousands to an extent they could not be processed; accordingly
administrative staff views were ignored (
tragi
-
comic
).

•
Middle management felt excluded and eventually many left, were made redundant or joined
the administrative staff as IT raised the autonomy and security of the latter (
ironic
).

•
The administrative staff then did an about
-
turn on flexitime which they and their unions had
previously rejected (
comedic
) which nevertheless boosted senior management’s desire for
the organisation to operate customer
-
friendly hours (
ironic
-
heroic).

•
They also dismantled the consultant’s open plan floor design before incrementally re
-
designing an almost identical one (
comedic)
but without acknowledging the consultant’s
input (
tragic
). Evidently, at no point in this process did anyone receive any training.


Research
-
based Theatre

Source: Pässilä & Oikarinen (2010)

Multiple

diverse

world

views

Reflecting

,

nurturing

and

understanding

diverse

views

Discursive

actions

to

frame

new

shared

views

and

meanings

Rich

shared

polyphonic

understanding

Development

need

Agreement

on

focus

and

aspects

of

development

ORGANIZATIONAL INNOVATIVENESS DEVELOPMENT

RESEARCH BASED THEATRE

Subcultural

Storytelling

-

Narratives

of

work

stories

through

theatrical

pictures

-

Dialogical

scripting

Dramatization

of

Performative

narratives

-

Narrative

analysis

-

Performance

scripting

Presenting

scenes

-

Theatre

as

communicative

medium: as is / as

if

,

familiar

/

theatrical

reality

-

Significant

incompleteness

Interpretation

Meaning

making

Decision Theatre,
Arizona





Decision Theatre is a
world
-
class research
facility and decision lab for
exploring and
understanding decision
-
making in uncertain times.
By using state
-
of
-
the
-
art
visualization, decision
systems science,
simulation and solutions
tools, we enable decision
-
makers to address today’s
challenges and conquer
tomorrow’s emerging
issues.


Arizona’s
Solar
Market and
Research
Tool
(AzSMART)
integrates
disparate
data and
research
related to
location of
solar power

Enabling Smart Growth

Strategies >>>>>>>>>>>


Conclusions: Meeting the Challenges

•
Increase SPEED of knowledge
-
transfer from research to
business by regional catalyst seeking ‘white spaces’

•
Recruit and retain engineers by targeting ‘clean
technologies’ and a ‘creative ambience’ (‘Bilbao effect’)

•
Boost knowledge services by seeking innovation
opportunities, niches and new socio
-
technical system
-
effects (e.g.
f
ilm tourism; renewable energy; innovative
business processes*;high quality built & natural
environment, functional food**)

•
* Japanese camera/copier firm Canon signs deal with
Accenture to enter
€
10 billion European BPR market


(
Independent 17 October 2010, p. 78
)

•
**ProViva sold to Danone for
€
60 million in 2010