Characteristics of a National Innovation System

Presented to: AEA Research Technology and Development Technical Interest Group

CES / AEA Evaluation Conference

Presented by:George Teather

October 28, 2005

Tel: (613) 824-2423Fax: (613) 824-2583Email: gteather@sympatico.ca

Presentation Outline

Explore dimensions of the terms “Innovation”, “Innovation Process” and “National Innovation System”

Examine some specific models, their strengths and weaknesses and applicability

Describe the Canadian Innovation System

2

Innovation

There are a range of definitions, from the narrow technological version to the broader macrolevel interpretation

Cummins in 1998 defined innovation as “The first successful application of a product or process” (successful implies market acceptance -less costly to achieve same results, improved results, or a new application for which there is an existing market demand or one that can be developed )

OECD defines innovation more broadly as “The process through which new economic and social benefits are extracted from knowledge” (covers complete research to results continuum, includes longer term socio-economic outcomes and impacts resulting from application of knowledge)

Definitions are not in conflict, but are at different locations along the knowledge creation – application – utilization – outcomes continuum

3

Innovation Process Models

Many conventional models of the innovation process used in S&T focus on the early stages of the process of going from “Blue Sky“ to applied research, proof of concept to further technical development and commercialization

Process is assumed to be linear and controlled by the organization or organizations involved in the innovation process

Market acceptance / commercialization is presumed to occur because of the improved technology

Minimize the differences between technological success and commercial success or utilization in the marketplace

4

Innovation Process Models

There is a tendency to focus attention on the R side and ignore the complexities and many steps required to move from technical success to acceptance and utilization of the new or improved technology

The influence of external factors is usually not considered

Little consideration of the difference in the innovation process among technologies and industrial sectors (IT is quite different from pharmaceutical sector, and mining or manufacturing are different again)

5

The Innovation Process(Conventional Technology Development and Application)

Knowledge Creation

Knowledge Application

Technology Development

Prototype Testing

Commercialization / Application

Production / Market Acceptance

Utilization / Commercialization

The Innovation Process

Knowledge Creation

Knowledge Application

Technology Development

Prototype Testing

Technology Demonstration

National and International Innovation Systems

Examination of an innovation system requires

identification of the actors involved directly and indirectly in the innovation process,

their role,

the interaction between the actors, and

their level of influence on the system

8

National and International Innovation Systems

External Factors

The factors influencing a national innovation system are complex and different for every country education system (colleges and universities) Government laboratories Government funding (GERD) Government innovation support programs (R, D, technology

transfer, economic development) Private sector (R&D and purchasing) Public / private partnerships and networks Legal system Regulatory system, codes and standards Investment policies, environment

Sources and levels of early, intermediate and late stage funding Taxation system, reward for entrepreneurship

9

National Innovation System

Intermediate Stage Funding

Early Stage Funding

Legal Framework

Late Stage Funding

Government Laboratories

Education System

National Investment Framework

National Standards

Regulatory Framework

Production / Market Acceptance

Utilization / Commercialization

Knowledge Creation

Knowledge Application

Technology Development

Prototype Testing

Technology Demonstration

Innovation System Models

• Laredo considers a variety of actors and influences – education system / scientific and technical

capabilities– public policy, infrastructure– political environment – economic system– National competitive advantages (SWOT)

11

Innovation System Models

• Tassey considers innovation system and pathway from knowledge to commercialization / utilization from perspective of an economist – public policy, role of gov’t– important education system / scientific and technical

capabilities– contribution of technical infrastructure (infratechnology)– risk reduction (testing, standards) – economic system

• Model implicitly identifies:– actors involved at various stages– rationale, opportunities for intervention,

12

Outputs/MarketDevelopment

Value-Added

StrategicPlanning

GenericTechnologies

AppliedTechnologies

Science Base

Entrepreneurial Activity

National Innovation System (Tassey Model)

Innovation

RiskReduction

Economic, Social and Environmental Conditions

*

Production &Processes

- Economic Development- Public Health & Safety- Environmental Protection

G. Tassey, National Institute of Standards and Technology, U.S.A. 1991

Outputs/MarketDevelopment

Value-Added

StrategicPlanning

GenericTechnologies

AppliedTechnologies

Science Base

Entrepreneurial Activity

Funding andTechnicalAssistance

NationalResearchFacilities

Government Policy Interventions in the National Innovation System

Innovation

Direct Funding

for universities,

Federal labs, industry

Joint IndustryGovernment Planning Risk

Reduction

IntellectualPropertyRights

TechnologyStandards andNational Test

Facilities

Economic, Social and Environmental Conditions

S&T Educationand Promotion

*

Production &Processes

- Economic Development- Public Health & Safety- Environmental Protection

Derived from G. Tassey, National Institute of Standards and Technology, U.S.A. 1991

Improve Research

and ProductionEfficiency

Innovation Environment in Canada

Federal investment in R&D is seventh out of eight G8 countries (GERD = 1.7%)

Innovation performance overall is low

Scientific Research Tax Deduction (SRED) to firms conducting R&D (Frascati definition) is very high

Data on firm expenditures across innovation spectrum

Graph of relative spending of government and industry across innovation spectrum

15

Canadian Innovation SystemPerformers

Basic research - universities, government laboratories, private sector, colleges

Applied research - universities, government laboratories/agencies, private sector

Technology development - government laboratories/agencies, universities, private sector, colleges

Prototype testing - private sector, government laboratories, universities, colleges

Commercialization / utilization – private sector government laboratories / agencies

18

Canadian Innovation SystemFunders

Basic research - Government (Natural Sciences and Engineering Research Council, Gov’t Departments/ Agencies)

Applied research - Government (Natural Sciences and Engineering Research Council, Gov’t Departments, SRED, IRAP), private sector

Technology development - Government (Gov’t Departments, SRED, Technology Partnerships Canada), private sector

Prototype testing - private sector, Government (IRAP, TPC)

Commercialization / utilization – private sector Government (Gov’t departments)

19

Canadian Innovation Strategy 2002

20

Innovation Target

* by 2010

Input Activity / Output

Outcome / Impact

Top 5 in R&D performance*

X

Double federal investments in R&D*

X

Rank among leaders in % of sales due to new innovations*

X

Raise venture capital investments per capita to U.S. level*

X

Increase admissions to M.Sc. & Ph D by 5% a year*

X early

Canadian Innovation Strategy 2002

21

Innovation Target Input Activity / Output

Outcome / Impact

Increase adults pursuing learning by 1 million*

X

Complete reviews of most important stewardship programs*

X

Develop at least 10 innovation clusters*

X

Improve innovation performance of communities

X

Implement guidelines to make effective use of S&T in gov’t decision making by 2004

X

Generic Program Logic Model

Program Objective: high level strategic purpose Program Objective: high level strategic purpose

HOW?HOW? WHO / WHERE?WHO / WHERE? WHAT do we want? WHY?WHAT do we want? WHY?

ResourcesResources ReachReach ResultsResults

• Program / Service Delivery

• Client Management

• Policy & Issue Management

• Financial Management

• Human Resources Management

• Asset Management

• Program deliverables

• Policy guidelines, regulations

• Communications- plans - internal

communications- promotion- info transfer- consultations- meetings/events

• Funding

• Service Outputs

• Primary Targets (clients, ultimate beneficiaries)

• Co-delivery Agents

• Other Stakeholders

activities outputsusers / clients / co-deliverers / beneficiaries

direct outcomes

intermediate outcomes

ultimate impacts

• Client Service- addresses needs- meets / exceeds

expectations- service quality

• Behavioral Influence- awareness- understanding- attitude /

perception- support

• New knowledge

• Improved capability

• Improved decision making

• Target group changes in behaviour / other outcomes

• Sector / Industry / Regional Impact

• Economic/ Environmental/ Societal Impact

• Contribution to organizational objective

22

OperationalYour operational

environmentYou have direct control

over the behaviours within this sphere

Behavioural ChangeYour environment of direct influence

e.g.people and groups in direct contact with your programs, staff (i.e. clients, target

audience, co-delivery partners

StateYour environment of indirect influence

e.g., Industrial sectors, government decision makers, other communities of interest where you do not

make direct contact

Spheres of Influence*Spheres of Influence*

TimeTime

*reference S. Montague, www.pmn.net 23