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Strengthening regional innovation capacity from the bottom to gain excellence on top-level


Smart specialisation in regional innovation policy is striving for excellence in specific sectors or market niches [1]. The identification of a limited set of key enabling technologies and their thorough application is indispensable for the market success. Does this mean at the same time that regional innovation strategies for smart specialisation should be limited to these top technologies with their related markets/sectors and should neglect the bottom of the innovation pyramid?

Written by Hans-Christian Jäger

Practitioner’s comment by Wirtschafts-Landesrätin Dr. Petra Bohuslav, member of the Lower Austrian Government

 

The concept

How to implement it?

Step in the RIS process

What can be expected?

A quote

References

Experts' comments

 

The concept


In literature and economy there is a strong consensus that companies’ innovation strategies should follow a broad approach, often described as research and development pipeline or innovation pyramid. The sole concentration on few ideas for radical innovation from the beginning usually fails due to high risk and unpredictable research results, high financial investments or changing frame conditions. Thus, the bottom of the “innovation pyramid” provides the substantial source of continuous food for identification and realisation of the radical innovation. The bottom level with its ideas and first steps of any kind of innovation implementation acts as feasibility check helping to identify and focus on promising ideas for midrange and radical innovation with higher profit potential.

Regional innovation policy can transform this concept of a successful company’s innovation strategy into a regional innovation pyramid.

 

How to implement it?


The practice of regional innovation policy shows that an exclusive focus on single key technologies or on dominating sectors in the region is neglecting existing and hampering potential innovation competencies of the region. On the other hand, an equal treatment of all regional research activities and the support of all companies’ innovation activities with spreading the funding too thinly does not allow the elaboration of an individual regional innovation profile with critical mass and unique selling propositions. Under these circumstances, a substantial increase of regional competitiveness is not possible, even with an above-average budget for regional innovation policy in European comparison. Thus, regional innovation policy should follow a balanced policy mix for diverse degrees of innovation and with involvement of a broad mass of regional companies instead of exclusive support of the TOP of innovation.

Together with regional Research and Technology Organisations (RTO) and Higher Education Institutes (HEI) potentially and already innovative companies form the pool of regional innovation capacity, doesn’t matter which sector, size or location within the region. All kinds of innovation have to be part of regional innovation policy in order to give every company the opportunity to become more competitive and more attractive for employees and at the same time increasing the number of regional jobs and regional prosperity.

The policy mix of the bottom part of the regional innovation pyramid reflects this broad approach. Increasing the awareness of regional economy for the importance of innovation, motivating regional companies for own innovation activities and facilitating the access of companies to external innovation competencies and external technology/service providers for support are a very important service in the bottom part. Innovation instruments at the basis of the pyramid can be either quite general like information events or more focussed like a consultation support for a production problem or a state aid scheme for a concrete R&D project in companies.

The wide spread of the service portfolio for innovation support for a broad target group with numerous beneficiaries at the bottom level is reducing the risk of overall failure of regional innovation policy, but usually at the expense of a lower degree of innovation. As an additional advantage support activities at the bottom of the innovation pyramid allows at an early stage the screening of high potentials under regional companies and research organisations to gain innovation excellence on top-level driven by single companies/RTOs/HEIs and in particular driven by the whole region. These insights can feed the innovation support for more ambitious and more strategic goals on the higher levels of the regional innovation pyramid.

The decision of individual innovation support at bottom level is depending on the individual company rather than on the region’s priorities for smart specialisation. E.g. the approval of an applying company for a R&D state aid scheme is depending on the expected R&D project results and their impact on innovation, on company’s global competiveness and on the creation of new jobs no matter whether the respective R&D topic is belonging to the strategic key technologies for the region or not.

Complementary to this bottom level the policy instruments of the upper levels of the regional innovation pyramid are more and more interlinked with the regional priorities for smart specialisation like clustering and strategic key technologies. Thus on the higher levels and in particular at the TOP of the regional innovation pyramid the relevant topics and the target of beneficiaries are limited, while the single measure is more cost and HR intensive with longer time horizon leading to much less initiatives compared to the bottom level.

Usually the risk of failure of such more ambitious initiatives is dramatically increasing. But as the decisions for the strategic priorities and the related support measures at the TOP of the regional innovation pyramid are based on the experiences with the bottom level activities of the regional innovation pyramid and additional analysis the likelihood of successful innovation support on excellence-level is higher than without bottom level. With early identification, assessment, and prioritisation of risks already at the bottom level the application of the regional innovation pyramid fulfils essential requirements as risk management tool in regional innovation policy.

 

Step in the RIS process


Strengthening innovation capacity from the bottom to gain excellence on top-level is in particular required for the following RIS3 steps:

  • Step 1: Analysis of the regional context and potential for innovation (Competitive advantages and support environment
  • Step 4: Selection of a limited number of priorities for regional development (Smart Choices and Critical mass)
  • Step 5: Definition of coherent policy-mix roadmaps and action plans

 

What can be expected?


  • High satisfaction and commitment of a broad range of regional companies with regional innovation policy – not only the most innovative ones as many companies are being involved and benefitting from the broad approach and service rang of the regional innovation policy
  • High share of innovators among regional companies, even though mainly in incremental innovation
  • Continuous food for radical innovation leading to a continuous upgrade of innovativeness in the region and thus making the regional economy more competitive in global markets

 

A quote


Rosabeth Moss Kanter is pointing out in her article “Innovation: the Classic Traps” [2] that companies should broaden the scope of their innovation strategy and should follow the “innovation pyramid”, a three level approach: “A few big bets at the top that represent clear directions for the future and receive the lion’s share of investment; a portfolio of promising midrange ideas pursued by designated teams that develop and test them; and a broad base of early stage ideas or incremental innovations permitting continuous improvement. Influence flows down the pyramid, as the big bets encourage small wins heading in the same direction, but it also can flow up, because big innovations sometimes begin life as small bits of tinkering —as in the famously accidental development of 3M’s Post-it”.

 

References


 

Mr Hans-Christian Jäger


Since almost 20 years Hans-Christian Jäger is working as IDEUM for public authorities and intermediate organisations in the field of regional innovation systems and entrepreneurship as well as management of related interregional projects including transfer and improvement of policy instruments. Hans-Christian has particular interest in monitoring and impact measurement of regional innovation policies and its related instruments which is strongly interlinked with Regional Innovation Strategies for Smart Specialisation.

In addition and in cooperation with other business consultancy companies like conmotion Hans-Christian is consulting the private sector in the field of lean management, process re-engineering and KAIZEN since almost 25 years.

These complementary activities allow an integrated consulting approach bearing in mind both private sector and public sector as beneficiaries.

HCJaeger@IDEUM.de

 

Practitioner’s comment by Wirtschafts-Landesrätin Dr. Petra Bohuslav, member of the Lower Austrian Government


Over the last decade Lower Austria has undergone a successful transformation from a pure agrarian and industrial region towards an economic region of science. Lower Austria’s “Economic Strategy 2015” puts major emphasis on the preparation of our companies for the global competition and for related challenges. In this context the “Lower Austrian Innovation Pyramid” is broadly acknowledged as powerful policy engine for growth and establishment of new supply chains. The Lower Austrian Technology and Innovation Partners TIP NÖ are forming the broad basis for the pyramid and have direct links with the regional clusters which are an important component of the middle part of the NÖ Innovation Pyramid. The innovative Technopol Program stand at the top of the pyramid.

Without targeted and systematic support by the European Union some parts of the successful policy mix of the Lower Austrian Innovation Pyramide would have not have been possible. At the same time Lower Austria demonstrates as “Best Practice” how European state aid can be used in a very effective and efficient way. Henceforward in the upcoming years the European Union can position itself as Innovation Union by development and implementation of a sound Smart Specialisation Strategy.

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