Rigid agencies in complex economic change processes

The last few days I have been a participant in a conference about transformative innovation policy. It was quite a treat to be a participant in an event and not to be a moderator or speaker. The Transformative Innovation Policy Consortium is an initiative of the Science Policy Research Unit (SPRU) at the University of Sussex. Many other governments, research alliances and academics are part of this initiative.

It was great to hear the voices of the gurus whose material I usually only get to read. A core concept of the initiative is the idea that there are 3 frames of innovation policy (Schot & Steinmuller, 2016). In my vocabulary a frame is the punctuated equilibrium that exists between paradigm shifts. The first frame of innovation policy was mainly about R&D and regulation. The second frame shifted towards national systems of innovation and entrepreneurship. The third and most recent shift is towards transformative innovation policy. I will not go into the description of the frames, I want to focus on one thought that struck me during the conference, and it is about the organizations (or agents) that are supposed to help on this process of transformative innovation.

Economic change is a complex process. Transformative innovation tries to achieve a particular (broad) kind of change in a society. A wide range of organizations in the science, technology and innovation domain would have to collaborate and even change themselves to enable or promote transformative change. While some changes may have to do with technology development, adaptation or other kinds of innovation, other changes would be more about social technologies like improving cross silo collaboration, mobilizing a broader range of civil actors into innovation activities, experimenting with policy and learning by doing. However, many these organizations themselves are often very rigid, hierarchical, and to some degree clumsy, especially in developing countries. What I mean with clumsy is that research requires a degree of planning, organizations need to coordinate across disciplines and themes, and that governance and oversight remains necessary and important. So when there is a sudden shift these organizations struggle to change quickly. They are rigid, and many of their internal systems and the predominant organizations culture are designed to withstand distraction, and to plow straight on through obstacles, resistance and confusion. So to a large extent, many of these organizations are primed to ignore weak signals, soft voices and serendipity.

These kinds of organizations are my clients. So let me not complain too much about their ability to make sense of what is going on around them. The ideas shared in this conference would inspire many of my clients and friends working in the Department of Science and Technology in South Africa, and the network of academics, researchers and technology centers we have here. I am excited about many of the concepts, but also weary that there is little space to fail or time to lose due to political and societal pressure to show results.

 

New publication: Knowledge, Technologies and Innovation for Development in the Agenda 2030: Revisiting Germany’s Contribution

The discussion paper I co-authored with Frank Waeltring recently for the GIZ and the BMZ is now available online. The name of the paper is “Knowledge, Technologies and Innovation for Development in the Agenda 2030: Revisiting Germany’s Contribution“. The paper was commissioned by the GIZ Sector project “Development Orientated Trade and Investment Policy and Promotion” on behalf of the BMZ.

Here is the foreword of the paper. It explains in a nutshell what this document is about.

It was a great privilege to be asked by the GIZ on behalf of BMZ to write a discussion paper on Germany’s contribution towards the Agenda 2030 from a knowledge, technology and innovation perspective as well as a great responsibility. Much deliberation and reflection has taken place in the last six years around this topic, but this work has by no means reached a conclusion as there is much more that can yet be done.

We support the view that a broader understanding of the role of science, technology and innovation is needed, and that building the capacity and capability of innovation systems in developing countries is vital. This is precisely what the Agenda 2030 and the Addis Ababa Action Agenda are demanding from the international development community and developing countries. The long-overdue global consensus on the role of science, technology and innovation as a cross- cutting theme is an exciting development, one which requires a re-think of traditional sectoral or topical development programmes and how they can benefit from this theme.

Our work in this field has made us well aware of Germany’s long-standing track record as a development partner in science, technology, knowledge and innovation support for develop- ing countries. This has been occurring not only on the of cial public policy level, but also on
a broader level where universities, science and technology organisations, economic development programmes and private companies are interacting, sharing, learning and exploring with counterparts in developing countries. The sheer diversity, depth and scale of the options that Germany can now offer may even appear to developing countries to be overwhelming and hard to navigate.

Although many elements of the German Innovation System are plainly visible and well known, beneath the surface there are elements that even our German counterparts sometimes overlook or take for granted. The German Innovation System is a complex one that is still evolving. It has a long history, and many of the current system features were shaped by intentional and unintentional decisions made long ago. Developing countries need help to fathom which ideas can be transferred and learned from, and which ideas are not suitable to their particular context. Furthermore, there are many factors that are not so obvious, which makes it harder to learn from or transfer ideas from Germany to developing contexts. In this respect we should always be aware that Germany’s science and technology activities are organised on a highly decentralised way, whereas in many developing countries science and technology decisions are often more centralised.

As Mesopartner we often work both on the side of the developing country and on the German side to broker relations, build networks, enable exchange and support knowledge and technology transfer. We have seen the extent to which German technology, support and expertise have made a difference in the countries in which we work, even when science, technology and innovation are not the main issues being dealt with. But we have also seen the shortcomings of too great a focus on hardware, training, patents and blueprints and too little emphasis on human capacity, partnerships, networks and adaptation to the local context.

 

We would love to hear your feedback on this discussion paper. It provided us with an opportunity to rework much of our previous work on innovation systems promotion in developing countries. There is also a chapter about the evolution of the German Innovation System.

You are welcome to also visit the publications page on this website where several of the other papers that I have contributed to are listed.

REPOST: The difference between academic and industrial science

In the last 5 years I have posted my blog articles on the topics around my work. I re-use many of these articles in my ongoing consulting and training work. Below is an article that I originally posted on 20 August 2011. This is one of the popular posts on my blogsite that was posted before I had the current following.

For my frequent readers, please forgive my trip down the archives!

 

One of my favourite authors on the topic of science is the late John Ziman. Ziman played an important role in popularising science and its role in the technological evolution of societies. We have some of his books on our Mesopartner bookstore (You can also click on the images on the right of the screen) .

In his last book, Real Science, he made an important distinction between science in academia, and science in industry. This is relevant to me because I am assisting universities to conduct more relevant scientific research that will benefit industry. At the same time I am assisting industries to intensify their scientific research.

According to Ziman, academic science works towards the Mertonian norms introduced by Robert K Merton in 1942, also known as CUDOS. Merton advanced our understanding of the ethos of the scientific process. I like Ziman’s (2000) discussion of the Mertonian principles. CUDOS is as an acronym that denotes good academic research and stands for:

• Communalism – fruits of academic science should be public knowledge (belongs to the whole scientific community), and the communication and dissemination of results are as almost as important as the research itself,
• Universalism – researchers and scientists relate to each other regardless of the rank and experience of the researcher. The norm of universalism requires that scientific findings are evaluated objectively regardless of the status, race, gender, nationalism or any other irrelevant criteria,
• Disinterestedness – academic scientists have to be humble and disinterested. Work is done in a neutral, impersonal and is often recorded in the passive voice. It disassociates with the personal or social problems, and focus on advancing knowledge or solving a very specific problem in an almost clinical way.
• Originality – every scientist is expected to contribute something new to the archive, while building on the knowledge of predecessors. Unfortunately this also sometimes constrains how creative academic research can become. “new” could mean new data, questions, methods and insights.
• Scepticism – This norm triggers important brakes on scientists, as it involves critical scrutiny, debate, peer review and contradiction before being accepted. It is important as it deepens understanding and knowledge from different research perspectives, and should not seen as being completely negative, rather it should be seen as being necessary.

 

Industrial science works towards what Ziman (2000:78-79) calls PLACE:

• Proprietary – the knowledge is not made public (or at least as little as necessary is made public),
• Local – it is focused on local technical problems rather than on increasing general understanding,
• Authoritarian – Industrial researchers act within a hierarchy and must work to please senior management, in other words, it is not serendipitous,
• Commissioned – it is undertaken to achieve practical goals rather than to just improve knowledge, and
• Expert – industrial researchers are employed as expert problem solvers, rather than for their personal creativity and writing or teaching skills.

 

Ziman argues that when universities undertake contract research for industry, they somehow cross the boundaries between these two approaches to research. For instance, industry is more interested in solving a specific technological challenge and would prefer that senior researchers work on a problem. In the last 50 years it has increasingly become necessary for universities to raise 3rd stream income, so it a universally accepted practice that universities undertake research for and in cooperation with industry.  However, a university must prioritise the development of interns and junior researchers (and achieve other social goals). Furthermore, industry may not be interested in registering a patent (immediately), otherwise their secrets gets shared with the whole world. Academic researchers on the other hand, are expected to deliver publications when they cannot deliver patents or licenses, thus there is another conflict of their objectives. Perhaps a last comment is that universities are under pressure to solve social problems that are deemed “relevant” by prevailing political pressures, while industry prefer to solve problems that are immediate, relevant and that may even be in contrast with the desires of the prevailing political and social debates. Practically this means that at the moment industry may need to automate to remain competitive, thus incurring job losses, while government and the society may be demanding job creation for people with little or no technical education.

 

Universities must understand this tension, and must operate within and between different modes of conducting research. Current legislation perhaps assumes one standard approach to university research, that always results in something that can be published and or patented (licensed), and it further assumes that the value (and cost) or research is known at the time of start of the research or after completion. Practical experience indicates that this is not always the case. Sometimes the value of research only becomes apparent when it faces market forces.

 

Sources:

ZIMAN, J.M. 2000.  Real Science: what it is, and what it means. Cambridge: Cambridge University Press.

 ZIMAN, J.M. 2003.  Technological Innovation as an Evolutionary Process. Cambridge Cambridge University Press.

Making science and inquiry interesting to a younger generation

One of the challenges that we have to deal with when trying to Universities to work closer with industries in South Africa is a general lack of “inquisitiveness” by younger students. They want management jobs, not jobs in factories, research labs or out there. Well, I guess the problem start at a younger age. But just before you call me a stereotypical or a racist, consider this: Its not only happening here in South Africa. Other countries have the same problem.

So how do we make children more intrigued in science? Well, good teachers sounds obvious. Interesting school projects is another. But how about the media, television and all the other signals that a society broadcast? Here in South Africa, the air is thick with politics and bad news. Our family cannot even listen to the radio on our way to school.

So with all of this said, lets give credit to NASA for this parody on Gangnam Style (for older readers, Gangnam Style is a song that has become one of the most watched videos of Youtube). It explains the work of NASA and several science principles.

Last year in November I had the privilege to take my family to Washington DC. After 6 days of visiting mostly free museums, like the Smithsonian Air and Space museum, I have 2 eight year old scientists in my house. I confess I also bought several books and gadgets, but hey. THE KIDS want to investigate things. Everything. They want to understand things. They argue about how to solve problems. Although they are in a good school and we try to raise them to be inquisitive, nothing prepared us for this excellent exposure in Washington DC.

So perhaps we should make funny video clips like this one too, targeted at younger people. Lets get younger people to WANT to visit factories, research institutions, universities and labs. Lets get cameras in there and get the message out that we too are working not just on social problems, but also on scientific problems! Science is not just a subject or a project in school, a scientific approach opens up the beautiful mysteries of our world.

The difference between academic and industrial science

One of my favourite authors on the topic of science is the late John Ziman. Ziman played an important role in popularising science and its role in the technological evolution of societies. We have some of his books on our Mesopartner bookstore (You can also click on the images on the right of the screen) .

In his last book, Real Science, he made an important distinction between science in academia, and science in industry. This is relevant to me because I am assisting universities to conduct more relevant scientific research that will benefit industry. At the same time I am assisting industries to intensify their scientific research.

According to Ziman, academic science works towards the Mertonian norms introduced by Robert K Merton in 1942, also known as CUDOS. Merton advanced our understanding of the ethos of the scientific process. I like Ziman’s (2000) discussion of the Mertonian principles. CUDOS is as an acronym that denotes good academic research and stands for:

• Communalism – fruits of academic science should be public knowledge (belongs to the whole scientific community), and the communication and dissemination of results are as almost as important as the research itself,
• Universalism – researchers and scientists relate to each other regardless of the rank and experience of the researcher. The norm of universalism requires that scientific findings are evaluated objectively regardless of the status, race, gender, nationalism or any other irrelevant criteria,
• Disinterestedness – academic scientists have to be humble and disinterested. Work is done in a neutral, impersonal and is often recorded in the passive voice. It disassociates with the personal or social problems, and focus on advancing knowledge or solving a very specific problem in an almost clinical way.
• Originality – every scientist is expected to contribute something new to the archive, while building on the knowledge of predecessors. Unfortunately this also sometimes constrains how creative academic research can become. “new” could mean new data, questions, methods and insights.
• Scepticism – This norm triggers important brakes on scientists, as it involves critical scrutiny, debate, peer review and contradiction before being accepted. It is important as it deepens understanding and knowledge from different research perspectives, and should not seen as being completely negative, rather it should be seen as being necessary.

 

Industrial science works towards what Ziman (2000:78-79) calls PLACE:

• Proprietary – the knowledge is not made public (or at least as little as necessary is made public),
• Local – it is focused on local technical problems rather than on increasing general understanding,
• Authoritarian – Industrial researchers act within a hierarchy and must work to please senior management, in other words, it is not serendipitous,
• Commissioned – it is undertaken to achieve practical goals rather than to just improve knowledge, and
• Expert – industrial researchers are employed as expert problem solvers, rather than for their personal creativity and writing or teaching skills.

 

Ziman argues that when universities undertake contract research for industry, they somehow cross the boundaries between these two approaches to research. For instance, industry is more interested in solving a specific technological challenge and would prefer that senior researchers work on a problem. In the last 50 years it has increasingly become necessary for universities to raise 3rd stream income, so it a universally accepted practice that universities undertake research for and in cooperation with industry.  However, a university must prioritise the development of interns and junior researchers (and achieve other social goals). Furthermore, industry may not be interested in registering a patent (immediately), otherwise their secrets gets shared with the whole world. Academic researchers on the other hand, are expected to deliver publications when they cannot deliver patents or licenses, thus there is another conflict of their objectives. Perhaps a last comment is that universities are under pressure to solve social problems that are deemed “relevant” by prevailing political pressures, while industry prefer to solve problems that are immediate, relevant and that may even be in contrast with the desires of the prevailing political and social debates. Practically this means that at the moment industry may need to automate to remain competitive, thus incurring job losses, while government and the society may be demanding job creation for people with little or no technical education.

 

Universities must understand this tension, and must operate within and between different modes of conducting research. Current legislation perhaps assumes one standard approach to university research, that always results in something that can be published and or patented (licensed), and it further assumes that the value (and cost) or research is known at the time of start of the research or after completion. Practical experience indicates that this is not always the case. Sometimes the value of research only becomes apparent when it faces market forces.

 

Sources:

ZIMAN, J.M. 2000.  Real Science: what it is, and what it means. Cambridge: Cambridge University Press.

 ZIMAN, J.M. 2003.  Technological Innovation as an Evolutionary Process. Cambridge Cambridge University Press.

Responsive but not pro-active innovation in business

During last year I conducted more than 100 interviews at engineering and high-tech firms in South Africa. This fieldwork was part of trying to better understand the innovation systems of which these firms formed part. On reflecting on the interview notes, I am shocked by a pattern that shows that the greater majority of these firms had a mainly responsive strategy to innovation. This means that many firms mainly did development and research work once customers asked for a specific improvement or change in a product. At least they are very responsive, but how to get from responsive to pro-active?

Although there were many firms that had a more pro-active approach to research and development, they were in the minority. Very few firms started from a scientific or technological base, combined with some or other research problem. Even firms that reported formal research and development budgets were mainly busy with incremental improvements on existing products.

From the very small sample that I have I can see that firms that had some kind of official or formal approach to research and development outperformed firms without these systems. It begs the question whether they first performed better and then engaged in product development (based on some research), or whether they first formalised research and then improved their performance. This question leads us nicely to the important point that innovation goes beyond product and process research, and that it also includes business management innovations. My research definitely supports the idea that more innovatively managed firms seems to be more creative in terms of research and development aimed at product or process innovations.

Many firms in South Africa complain that being pro-active requires fast amounts of working capital, as the economies of scale are too low to warrant huge investments. So many firms work from a successful past product. This has two implications. Firstly, that new entrants will struggle to get in at all. Secondly, that firms without a product to build on would be in deep water. But does this also pose an opportunity? Does this mean that if we can find new technological ways to overcome scale dependencies we can create new markets? Secondly, in a country with very demanding and sophisticated customers, should there not be many entry points that are not so scale dependent?

My New Years resolution is to investigate the relationship between science in business and innovation in business. Why are so few firms using a more scientific approach or basis in their business? Can science in business be stimulated? Can we use our technological and scientific base to create completely new markets, thus moving from fast and customised response to pro-active market creation?

PS. With scientific approaches in business I do not necessarily mean having labs full of white coated scientists brooding over bubling concoctions.  More about that in a next post.

How do you think we can deepen the use of science in business?

User-led innovation

Here is another short article that I wrote on the topic of user-led innovation. Many of my clients are asking about this topic. Because we are so far away from the industrialised countries, and because we have such huge geographical spaces to cover, we are faced by sophisticated and sometimes unreasonable demands. Therefore lead firms, lead customers, government and problems solvers are all asking for some very demanding solutions. Many of them are not waiting for new innovations to come from the markets, they are simply innovating to solve their own problems.

In recent years the focus in value chain promotion has increasingly emphasised the importance of systematic and market-based interventions. Within innovation system promotion, markets are important not only as selectors or buyers of successful innovations. Specialised users or unmet local needs could also be used as an impulse to stimulate innovation in a specific part of a value chain. The challenge here is not to ‘import’ technology or ‘solve’ a problem, but to get industry and its supporting structures to respond to this opportunity. This can often be achieved by better articulating unmet needs, or facilitating interaction between innovative producers and user groups.

Authors such as Von Hippel (2005, 1988) have over the years made a strong case for recognition of the innovations introduced by users, especially lead users. For instance, Von Hippel argues that customers (markets) often know what design criteria they have, and if a producer can capture this knowledge then new products could be created. Other authors, most notably Michael Porter, has in several publications indicated that the force of market demand not only shapes the design of products and technologies or strategies of firms (i.e. 5 Forces analysis), but that it could affect industry structure (i.e. the Diamond of Competitiveness). In his work Porter also emphasises the role of sophisticated or demanding customers in the innovativeness of firms.

Lead users may also provide unique opportunities for firms to innovate by customising or combining existing elements of technologies to respond to the needs of a potential customer group. For instance, many medical devices originate from the US or Europe. But surgeons and operating theatre staff working in distant locations may have unique functional requirements for these instruments, and if approached or observed in their working environments may provide important clues or insights on how instruments can be customised to improve their functionality. While firms in developing countries may be far from large markets, they are often close to specialised or niche users that may then create opportunities for innovators.

The risk of an emphasis on user-led innovation is that path dependence may occur and that blindness to rival technologies may result in a marketplace being disrupted by a rival technology. Path dependence occurs when producers respond to the demands of a certain kind of customer through investment choices that do not allow the producer to switch to a different technology or market. These customers may in turn be exposed to other market forces or technological change processes that may affect their continued demand for a given technology. The risk of the strong governance of strong buyers in the chain may then lead to a tunnel view that does not consider the upgrading potentials and requirements of the whole innovation system in the sector or region, but a too-narrow perspective on companies and their need to upgrade according to the demands of the main buyers and final customers[1]. The insights as well as interventions may be too narrow and may not lead to more proactive knowledge loops but to a reactive orientation that does not encourage new ways of doing things in the system.

Experienced value chain practitioners will be able to identify the opportunities and the risks of working with lead users as sources of innovation, as in value chains lead customers often emerge who can be used to better position certain actors in a chain. Although this usually works to the benefit of certain kinds of chain actors, it could also be argued that it deepens the dependence on specific kinds of customers (resulting in path dependence).

Sources:

VON HIPPEL, E. (1988) The sources of innovation, New York, NY, Oxford University Press.

VON HIPPEL, E. (2005) Democratizing innovation, Cambridge, MA, MIT Press.

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[1] For instance, the IDS has published several papers on this and related topics which can be found at http://www.ids.ac.uk/go/idsproject/clusters-in-the-global-economy

Connecting innovation systems with local and regional economies

Many of you have asked me how I connect my current focus on innovation systems and technological upgrading with industries with my past experiences of local and regional economic development. I thank you for repeatedly asking this question, and apologise for not providing you with an answer. The reason for my silence was that I was also not exactly sure how to connect these topics. But I think I am now starting to understand how these topics relate to each other.

Let me try to explain this.

Before I continue I need to make sure that you understand that an innovation system is far more than one or two innovative firms.  Freeman (1987:1) defined an innovation system as “the network of institutions in the public and private sectors whose activities and interactions initiate, import and diffuse new technologies.” The emphasis is mainly on the dynamics, process and transformation of knowledge and learning into desired outputs within an adaptive and complex economic system.

So how does innovation systems work within regions or places? Well, it is often affected by issues such as trust, social and informal networks, formal relationships, common customers or common inputs and other factors. You will notice that it sounds very similar to the characteristics of a cluster in its early days. The main characteristic of a local or regional innovation system is that it is mainly focused on a specific geographic space and on the specific knowledge spill-overs that occur around certain firms, industries or institutions unique to that space.

You will immediately notice that innovation thus favours places with more people and more firms. You are right, a close relationship exist between density of interactions between people (provided for by towns and cities, nightlife, and frequent social exchanges) and the innovation system. It does not mean that innovations are limited to these spaces, but simply that they emerge faster or with more success in these spaces. This is largely caused by the increasing importance of knowledge exchange and interaction between firms, knowledge service providers and technological and educational infrastructure. But more about that in a seperate post.

I want to leave you with 3 questions that I have found to be useful to better understand the relationship between places and innovation systems. I use it frequently at the start of an assessment into an innovation system, or to stimulate thinking of public and private leadership.

1) Why are people innovating in this specific location (and not on another space)?

2) How does this space or place support innovation, and more specifically, how does it reduce the costs of innovation?

3) How do innovations in firms affect this space?

Bear in mind that with innovation I mean product, process as well as organisational or business model innovations.

Ask these questions and let me know what you find. I am sure that you will find that many places do not actively support innovation (unless you have some really determined or stubborn innovators there). Nor do they make it cheaper for people to innovate, exchange knowledge or stimulate joint problem solving (or opportunity exploitation). To me it also seems increasingly obvious that the role of cities and towns in Africa are not fully exploited in national economic development as spaces for innovation.

In South Africa, innovation happens mainly in 9 major and about a dozen secondary urban spaces. No amount of public policy will break this pattern until settlement patterns change, or until smaller places start to attract skilled people that can afford to innovate from cities.

So how can we support innovation systems in each and every town? How can we built regional and local institutions that reduce the cost and risk of innovation. Again, I dont mean only product development as an innovation. I mean process and business model innovation as well.

Until we can build our own local technological and educational institutions using local priorities and local resources from the bottom up the trend of urbanisation and migration to the major centres will continue. This is great in terms of reducing the costs of innovation, but it makes us very dependent on national policy, and only a few good local administrations. I would prefer a situation where we can build our local institutions around local issues, this giving firms in for example a mining region a head start in innovating around problems or opportunities related to mining.  For instance, in the Mpumalanga  province (South Africa) we have a lot of coal mining with its associated problems. Why is it so difficult to create a small but focused research institute or technological institute in a town that will focus on applied research and knowledge generation around environmental technology related to coal mining? Could this not be an impulse with environmental solutions as well as innovation as outcomes? I could imagine that such an institute could create positive externalities in a space that would lead to innovation that our both cutting edge and relevant to our society.

Now if you think about it, then Africa is rich with millions of ideas (also known as opportunities, challenges and obstacles) that could serve as impulses to create, stimulate or grow local innovation systems around relevant issues. Dont get me wrong, I dont mean that the public sector must do the research, and then the private sector must commercialise the research (although a little of this certainly helps). I mean that public funds or public private partnerships could be used to establish local institutions that create positive advantages for firms to innovate within regions through reducing the costs of finding relevant information (about a problem, opportunity or technology) and by highligthing opportunities for application of new ideas (by better articulating demand or applications). But there must be sufficient scale of infrastructure to allow the people with the right knowledge, experience and perhaps financial resources to settle in the region to exploit (or address) the opportunities through innovation.

Let me know what you find when you ask these questions.

PS. I know I will receive hundreds of angry e-mails that I am implying that rural areas are doomed.  Re-read my post before hitting ‘send’.

Sharing links: Scidev.net and the new manifesto

I frequently receive requests for more links, papers and ideas around how science can be related to development. Add Scidev.net to your favourites.  (Thank you, Lucho for bringing the website to my attention.)

At the same time you might want to look at “a new manifesto” that deals with new ways of linking science and innovation for development.  This is an update of the 70’s publication of a radical and controversial document that helped shape modern thinking on science and technology for development. It was called The Sussex Manifesto: Science and Technology to Developing Countries during the Second Development Decade.

Let me know what you think!