Territorial Innovation Systems for the benefit of businesses

Namur, May 9, 2014

In most regions that are undergoing industrial restructuring, despite the benefit of considerable care and attention from the major players and undoubted strengths, many business leaders and not a few leading academics display a certain scepticism in their day-to-day approach that is in stark contrast with the collective ambition to bring about regeneration locally [1]. Much of the effort focuses on links, synergies and interfaces between research and industry, yet the issue of channels for the distribution and integration of innovation [2] remains sensitive. We know that the tools exist, that they are available and often effective, but we do not really see them… The boss of an SME in will still tell you that, despite being located near a leading university, he benefits little from this proximity, in terms of either patents or quality of recruitment. And yet he himself is a product of this self-same university, and knows everyone there, or almost everyone. The director of a laboratory or a research centre, meanwhile, will express surprise at the lack of interest from the business world in the work being done – remarkable though it is – in his chosen field, and will persist in the belief that were he to leave his home region for a more dynamic part of the world, he would be welcomed with open arms, if not an open wallet.

So what is the problem, given all the positive initiatives and proactive speeches? Analysis reveals that some players have real difficulty in clearly identifying both the current environment and the future landscape of development and innovation. And yet that same landscape is of manifest relevance right now, and has the potential to develop so as to boost competitiveness and benefit everyone in the future. Many territories and regions probably need a better conception, image and understanding – both today and tomorrow – of their territorial innovation system [3].

1. Developing a clear vision of the innovation system and what happens in it

To understand the territorial innovation system, one must of course study the networks created by and for businesses. This involves a description, taking account of the passage of time and of change, of the structure of the system for the production of the products under consideration and an analysis of the sequence of actions that are or need to be taken by actors in order to design, produce, process, sell and consume a product, whether agricultural, industrial, artistic, computer-related, etc. [4] These actions may be carried out sequentially, in parallel or to complement one another, and are organised into subsystems such as design, production, processing, marketing and consumption. Each of these subsystems encompasses a series of more or less important actions that make the transition possible from one set to another in a logical result of interventions; thus actions are said to be upstream or downstream of the network. Since Michael Porter’s work in this area, it has been customary to represent these activities as a value chain [5].

This analysis of the industry and/or value chain highlights the strengths and weaknesses of the system as well as the actors who are directly or indirectly involved, synergies, external effects, relations of cooperation and/or influence and strategic nodes whose control ensures domination by certain agents, bottlenecks and intersectoral linkages, the degree of competition and transparency at different levels of exchange, cost progression and so on. Although one of the approaches generally used to anticipate future sectors and industries is to rely on the identification of emerging key technologies which look promising within the chosen time period [6] – an analysis which should be done per sector – the most important thing is to take into account the potential of the region itself, and its ability to capture innovation and harness it in entrepreneurial processes.

The work carried out on the FutuRIS foresight platform [7] on the initiative of the French National Association for Research and Technology (ANRT) has made it clear that the scope of technological innovation has now expanded far beyond the confines of traditional product- and process-based research and development. It encompasses all aspects of the business (whether commercial or non-commercial), including marketing, organisational management, the training of human resources, financing methods, logistics and, more generally, any activity that helps put into practice a new idea or new expertise and improves part or all of the system. Globalisation has greatly increased companies’ needs for competitiveness. Whereas performance used to be measured by quality, cost and timing, a new competitive environment has developed in which, as FutuRIS noted in 2009, innovation turns out to be the only market penetration strategy that is effective in the long run. Similarly, in all the factors involved in the innovation process – the social climate, ease of entry into and exit from the market, a favourable market environment, the acceptance of experimentation, flexibility in response to economic, social and technological change, entrepreneurs who take risks, etc. – research and development appears to be just one factor among others, even though it is an element on which we can act in a territory. This point has two implications:

– on the one hand, it puts the importance of research and development into perspective compared with all the factors of the innovation process, showing that it is a necessary but not sufficient condition for restructuring;

– on the other hand, it puts research and development at the centre of the innovation process by showing that it is a variable on which direct action can be taken.

Factors of the Innovation Process

As FutuRIS researchers have noted, it is particularly important to act at the local level to develop close relationships between public-sector research and the business world.

2. Learning to model territorial innovation systems

Territorial innovation systems (TISs) are becoming increasingly well-known as models: they consist of all the actors and resources that interact more or less effectively to drive innovation in a given region, and they help optimise collective learning and partnerships between different development actors [8]. Drawing inspiration from the work of Jean-Claude Prager [9] on regional innovation systems, and applying it to an area the size of a city or a living zone, we can identify four modelled spaces:

– the global environment, which is of considerable importance, but over which little influence can be exerted at local level;

– the European, national and regional environment, which constitutes the framework for policies and actions in the areas of law, taxation, technology, culture, finance and science;

– the territorial innovation system itself and its basic physical characteristics: specialist structures, financial resources, the local dynamics of innovation, human resources, etc.

– the system of interaction between actors and their networks: this is about local efficiency and dynamism, and will play a key role in the long term.

The Territorial Innovation System

 

The closer we move towards the heart of the system, the more we go from the global to the specific and confront the actual room for manoeuvre of public and private actors, underlining the importance of the heart of the TIS in the dynamics of research, development and local innovation.

The Heart of the TIS

The heart of the system brings into play public or semi-public bodies that are highly diverse in terms of status and resources, and companies which differ greatly in nature, from multinationals to start-ups whose owners are themselves young researchers.

3. Envisioning the future territorial innovation system

The effort to build a clear vision of the future territorial innovation system in a territory involves a number of steps. The first is to describe the heart of the TIS as it currently exists, by creating a comprehensive model that includes actors, interactions and networks, the current research and development capacities of public and private laboratories and research centres and of businesses, and the open innovation approach that exists within the zone and towards the outside. Close attention will need to be paid to the different types of actors that drive the system. Manfred Fischer identifies four types:

– actors in the manufacturing sector: the companies that act as key players by funding R&D through their laboratories

– actors in the field of science: on the one hand education and training establishments, and on the other hand, the universities in their role as research bodies and various governmental research organisations, non-profit organisations, elite higher education establishments, etc.

– actors providing commercial assistance and support services to industrial companies in sectors such as finance, consultancy, expert appraisal, marketing, training, etc.
– actors in the institutional field – whether market coordinators or otherwise – such as those that regulate the relationships between the actors themselves (e.g. employers’ associations), the institutions that establish legal frameworks, or informal organisations [10].

The second step consists of explaining, on the basis of international comparative studies, how the system might evolve in the medium term (five to ten years), taking account of the current data (clusters, European Framework Programme for Research, European Structural Funds, etc.). Finally, in the third step a proactive model is developed for the construction of the heart of the TIS for open innovation over the long-term period chosen: until 2030, 2040, etc. This involves showing how the territory could reasonably develop its technological, cultural, creative, and economic systems during this period and what concrete results it could achieve in terms of specific strategies. This panoramic view must take account of the collective ambition of the major players over this time period.

Having described a new territorial innovation system model rooted in the near or not-so-near future, one can then work on describing the transition from one model to another on the basis of defined main strategic thrusts to which can be allocated specific and concrete actions leading to the collectively dreamed of, expected or envisaged structural change.

Conclusion: a step in the direction of intelligent specialisation

A recently compiled ‘decalogue’ of innovation policy criteria rightly pointed out that there is no automatic relationship between the amount of technology acquired and a company’s success or its propensity to innovate. It has been known for several decades that ‘the effectiveness of technological factors is closely linked to that of non-technological factors’ (economic environment, business strategies, cultural norms, management skills, etc.)[11].

Like the regional innovation system, the territorial innovation system (TIS) sheds light on the relationship between the key innovation players in a given area and the possible ways in which they could develop. The analysis also highlights the prerequisites for improving the organisation of the territory to allow businesses, industries and value chains to develop more effectively. Thus innovation and technology analysis (ITA), successfully developed by the German Federal Ministry of Education and Research (BMBF), shows that this approach can make useful knowledge available so that the actors involved in innovation processes can improve the quality of their decision-making in the fields of research, technology and innovation [12]. In addition, a better knowledge of the TIS promotes intelligent specialisation as an action framework reinforcing the scientific, technical and industrial capacities of business owners, and of all the agents involved in the territory’s economic development.

These models do not represent alternatives to other approaches that have been put to use: learning regions, creative territories, knowledge regions, sustainable cities, cities of tomorrow and so on. Rather, they can be added to them and overlap with them. In addition to the actors of the territorial innovation system, there are also certain structural factors arising from individual or collective strategic intentions: the examples of Lille 2004 or indeed Liège 2017 or Mons 2015, as well as territorial foresight initiatives that encourage the pooling of intelligence and projects, lead to the creation of development boards, city or regional contracts, and serve as accelerators of development and catalysts for entrepreneurship. As Thomas Froehlicher (HEC-Liège) suggested in a helpful response to a first version of this text, the creative and international polarities are fundamental for developing the TIS and making it an open system: the creative polarity because it introduces the ability to adopt a cross-sectoral approach, to self-reinvent using new business models and new practices and functionalities, and to use the skills of “creative agents”; and the international polarity because it strengthens our ability to forge links with other territories: the flow of talent and new ideas is an essential engine of transformation for the ecosystem. It is thus a question of ‘leaving in order to return refreshed’. Which sums it up beautifully.

At a time of a fresh overhaul of regional policies, which have been comprehensively called into question by the Europe 2020 strategy, the new ERDF programme and the preparation of a new EU Research Framework Programme Horizon 2, it is both salutary and a matter of some urgency to recall this…

Philippe Destatte

https://twitter.com/PhD2050

 

[1] A shorter first version of this article was published in Veille Magazine, 132, Paris, July-August 2012, Spécial Liège 2017 et Cahier spécial Wallonie, p. 35-37.

[2] Innovation can be understood here as a resource of scarce information circulating at the heart of a systemic process mobilising diverse actors. Yves AUNEAU, Construire un système d’innovation régionalisée : propositions à partir d’exemples bretons, p. 40, Rennes, Université de Rennes 2, 2009 (Doctoral thesis in geography and spatial management). See also Bengt-Ake LUNDVALL ed., National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning, London, Pinter, 1992.

[3] However, we should recall with Pierre Bitard that ‘systemic’ means that dealing with services cannot be reduced to considering the sum total of the sectors classified by the NACE nomenclature, and that innovations of products and services are often complementary.Pierre BITARD, Les innovations de modèle d’activité, in Jacques LESOURNE and Denis RANDET, La recherche et l’innovation en France, FutuRIS 2011, p. 191, Paris, Odile Jacob, 2011.

[4] Noëlle TERPEND, Guide pratique de l’approche filière, Le cas de l’approvisionnement et de la distribution des produits alimentaires dans les villes, p. 2, Rome, FAO, 1997.

[5] Michael PORTER, Competitive Advantage, Creating and Sustaining Superior Performance, p. 52, New York, The Free Press, 1985.

[6] See for example Les 40 technologies-clés pour la Wallonie, Les domaines technologiques du futur pour la Wallonie à l’horizon 2010, Une étude réalisée dans le cadre du projet RIS / Prométhée avec le soutien de la Commission européenne, Namur, MRW-DGTRE, 2001.

[7] In 2001, the Board of Directors of the ANRT launched the FutuRIS foresight exercise. The objective was to give fresh impetus to the French Research and Innovation System (FRIS). The operation mobilised business, government, the research community and members of civil society. The ambition was to build a shared vision of the future prospects for French research and innovation. In 2005, FutuRIS became a permanent platform hosted and moderated by the ANRT, but kept its original mission: to aid decision-making and support the deployment of concerted strategies.

[8] See also Manfred Fischer’s definition: A system of innovation may be thought of as a set of actors such as firms, other organisations, and institutions that interact in the generation, diffusion and use of new – and economically useful – knowledge in the production process. Manfred M. FISCHER, Innovation, knowledge, creation and systems of innovations, Paper presented at the 40th European Congress of the Regional Science Association, Barcelona, August 29 – Sept. 1, 2000. See also Annals of Regional Science, vol. 35/2, 2000, p. 199-216.

[9] Jean-Claude PRAGER, Méthode de diagnostic du système d’innovation dans les régions françaises, p. 26, Paris, Agence pour la Diffusion de l’Information technologique, 2009.

[10] Manfred M. FISCHER, Innovation, knowledge creation and systems of innovations…, p. 11-12.

[11] Canada’s future as an innovative society. A decalogue of policy criteria, p. 8, Ottawa, ISSP, 2013.

[12] Nora WEINBERGER, Michael DECKER, Torsten FLEISCHER, Jeno SCHIPPL, A new monitoring process of future topics for innovation and technological analysis: informing Germany’s innovation policy, in European Journal of Futures Research, vol. 1, Issue 19, October 2013, p. 3-9.

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2 commentaires
  1. Torsade de Pointes a dit:

    Y aura-t-il une version française de cet article, ou cela ne concerne-t-il pas les francophones?

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