ict innovation for manufacturing smes -...

ICT Innovation for manufacturing SMEs

XS2-I4MS document

Webinar: Innovation Ecosystem Assessment Background infornation Partner overview

No Name Short name Country

1 NEDERLANDSE ORGANISATIE VOOR TOEGEPAST NATUURWETENSCHAPPELIJK ONDERZOEK TNO

TNO Netherlands

2 FRAUNHOFER GESELLSCHAFT ZUR FORDERUNG DER ANGEWANDTEN FORSCHUNG EV

FhG Germany

3 Teknologian tutkimuskeskus VTT Oy VTT Finland

4 THE MANUFACTURING TECHNOLOGY CENTRE LIMITED LBG

MTC United Kingdom

5 BRAINPORT DEVELOPMENT NV BPD Netherlands

Date: Thursday, 09 March 2017 Authors: Thomas Reiss Number of pages: 8 Number of Annexes: Version 1.0 Dissemination [public] Contract 678860

Innovation Ecosystem Assessment

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Table of Contents 1 Introduction ..................................................................................................................................................... 3 2 Objectives ........................................................................................................................................................ 3 3 Approach ......................................................................................................................................................... 3

3.1 The established innovation system framework ..................................................................................... 3 3.2 Towards a broadened innovation system framework ........................................................................... 4

4 Mapping the innovation ecosystem ................................................................................................................ 6 4.1 Geographic scope of the Digital Innovation HUB................................................................................... 6 4.2 Functions and actors of the innovation ecosystem ............................................................................... 6 4.3 Cooperation network of the innovation ecosystem .............................................................................. 7 4.4 Gap analysis ........................................................................................................................................... 7 4.5 Ecosystem SWOT analysis and conclusions for actions ......................................................................... 7

5 References ....................................................................................................................................................... 8


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1 Introduction Innovation does not evolve in a vacuum (Moore 1993). Innovation does not proceed in a linear mode from basic research to applied research, to development, to design, to production until marketing. Rather, innovation processes are characterised by a broad variety of linkages, interactions and feedbacks between a diverse set of actors and activities. Accordingly, innovation can be perceived as a systemic process (Freeman 1987, Lundvall 1992, Edquist 1997, 2005, Breschi & Malerba 1997). This implies that the creation and diffusion of innovation strongly depend on the interplay between different actors during the innovation process. These include not just the classical innovation actors such as research organisations and enterprises. Rather users, the demand side, political actors, administration, and other actors setting the framework conditions for innovations are moving into the centre. Following, actors, networks and framework conditions are key elements of the innovation landscape. From an industry perspective a company needs to be seen not as a member of a single industry, but as part of an innovation system which is composed of diverse actors which together create and capture new value through both collaboration and competition (Deloitte 2015). Against this background it is crucial for Digital Innovation HUBs (DIH) to be aware of their innovation ecosystem in order to operate in a most efficient way.

2 Objectives The goal of this paper is to provide DIH with background information and tools for analysing their innovation ecosystem. The purpose of the innovation ecosystem analysis is to identify weak points and gaps within the regional system that hamper operation of DIH in order to create and support innovation. This gap analysis allows developing strategies and implementing measures for enhancing the regional innovation ecosystem in a systematic way. The following part of the paper presents the general approach to innovation ecosystem analyses including methods and tools. Chapter 4 provides information on a step-by-step procedure for carrying out the assessment.

3 Approach

3.1 The established innovation system framework

Innovation systems are defined by “all important economic, social, political, organisational, institutional, and other factors that influence the development, diffusion, and use of innovation” (Edquist 2005: 182). Based on this definition innovation systems are constituted by four main elements (Nelson 1993):

The institutional structures of a country, region, or sector. These are formed by companies, universities, research and training organisations, norms, routines, networks, financial organisations, and policies targeting technical change.

The incentive system of a country, region, or sector which include incentives for innovation, technology transfer, learning, business formation, and others.

The skills and creativity of innovation and economic actors in a country, region, or sector.

The cultural peculiarities of a country, region, or in a sector. These could, for example, reflect different understandings and perceptions of technologies in different cultural settings.

These features of innovation systems can be summarised in an innovation system model. One of the models which is used quite frequently has been developed by Kuhlmann and Arnold (2001) and is presented in Figure 1. In the centre of this model two main subsystems are described, namely the industry system and the education and research system. These subsystems interact with the demand system, the framework conditions, the existing infrastructure systems, and are shaped by the political system.


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Recently it became obvious that this traditional understanding of the structure and functions of an innovation system is challenged by trends like sustainability, globalisation, increasing significance of socio-cultural issues, user demands, and new understandings of innovation, such as social innovation or open innovation. In order to take account of such trends, researchers at Fraunhofer ISI developed a modified and broadened innovation system framework (Warnke et al. 2016). Figure 1: Innovation system framework

Source: Kuhlmann & Arnold 2001

3.2 Towards a broadened innovation system framework

Warnke et al. (2016) recently proposed a modified innovation system framework which takes into account in particular the following trends of innovation thinking: User innovation

User innovation has become a major innovation mode with high socio-economic relevance. It goes far beyond the traditional customer orientation of innovative activities which considers customer mainly as passive objects of market research. In the user innovation mode, customers create their own products while manufacturers are providing tools for product development and adaptation by the customer. Accordingly, a more active role for the user of innovation needs to be considered by companies. Social innovation

The term social innovation has gained increasing attention during recent years. However, currently there is no common understanding of this notion. It can include innovations which provide new solutions that simultaneously meet a social need and lead to better capabilities and relationships between users of assets and resources. This implies that social innovations are beneficial for society and contribute to enhancing society’s capacity to act. Another understanding of social innovations differentiates such innovations from technological innovations because they involve novel practices i.e. other ways of doing, rather than novel technologies or products. Collaborative innovation

This type of innovation activities includes mainly commons based peer production, open source innovation and collaborative consumption. In particular, commons based peer production already had high impact for the development of open source software such as the Linux operating system. Already many established companies such as IBM, Google, HP, or Oracle have adopted such products and approaches in major parts of their technological business. It is obvious that collaborative innovation is of particular significance for Digital Innovation HUBs.

...

Education and Research System

Professional educationand training

Higher education and research

Public sector research

Industrial System

Large companies

New, technology-based firms

Intermediaries

Consumers (final demand)Producers (intermediate demand)

Demand

Banking, venture capital

IPR and information

Innovation and business support

Standards and norms

Infrastructure

PoliticalSystem

Government

Governance

RTD policies

Mature SMEs

ResearchinstitutesBrokers

Financial environment; taxation and incentives; propensity to innovation and

entrepreneurship; mobility

Framework Conditions


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New innovation intermediaries

Intermediaries are considered already in the classical innovation system model as moderating agents between knowledge production and knowledge use. In the last years it became obvious that the intermediary segment is much broader than perceived initially. It includes not only classical technology transfer organisations but also other actors like trade unions, clusters and networks, clubs, citizens, action groups, crowds. Venture philanthropy

The rise of venture philanthropy in the innovation environment is enhancing the diversity of potential funding sources. In particular in the case of social innovation such funding sources are playing an important role. They are different from classical funding sources since their funding activities are strongly shaped by normative considerations. Social and relational capital

A key element of innovation system concepts is the role of actors during the innovation process. Accordingly, the interaction between actors is an important feature. Therefore, social capital consisting of “the stock of active connections among people: the trust, mutual understanding and shared values and behaviours that bind members of human networks and communities and make cooperative actions possible” (Cohen & Prusak 2001: 4) becomes more important. Social capital can be considered as a public good. However, since a number of networks are not open to everybody, groups are also playing an important role with respect to social capital, thereby moving social capital into the area of club goods. Club goods frequently are also called relational capital. Looking at the established innovation system framework as shown in Figure 1 it becomes obvious that these trends cannot be accommodated by just modifying the model incrementally. Rather, a more fundamental revision is needed. This model should not only take account of these trends but also needs to meet the following two important conditions (Warnke et al. 2016): firstly, the framework should capture the broadest possible notion of innovation as “novel solutions” that are successfully embedded into society, be it new technologies, products, social practices, processes and concepts. Market uptake is one of the possible pathways for such an embedding. Others, for example, the implementation in a public sector organisation such as a hospital are equally important. Secondly, the framework should avoid to fix any assignment of actors and functions to certain positions or certain types. Rather, it should allow for multiple roles of actor groups and also for the fulfilment of functions by several different actor groups. The revised innovation system framework is shown in Figure 2. Three types of contributions to innovation processes as symbolised by the dotted lines are distinguished: innovation supply and demand, innovation input, and innovation frameworks. Actors that may contribute to the respective innovation types are shown in the coloured clouds. The fuzziness of the clouds illustrates that the presented list of actors is open, so that new actors could contribute at any time. Innovation supply and demand is situated at the core of the analytical framework. This type of contribution constitutes a direct impact on the dynamics of innovation. It can be fulfilled by a broad range of diverse actors from civil society, business and the public sector. These actors are engaged into the innovation process directly through generating, requesting or embedding innovations. Innovation input comprises the actor groups that feed the innovation process by providing crucial input such as research organisations providing scientific knowledge, education providing skilled innovators and users or financers providing financial resources. Actors from the first level can also provide important contributions. This is particularly relevant for business actors and public sector actors but also for customers and consumers taking into consideration the user innovation trend. At the third level the innovation framework is placed. One of the core elements of the framework comprises basic enabling infrastructures for different types of innovation ranging from fast Internet to co-creation platforms. Other crucial institutions at the framework level include intellectual property rights, standards and norms. But also the cultural context which is important for social and relational capital as well as various policies exerts a strong impact on the innovation landscape.


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Figure 2: Revised innovation system analytical framework

Source: Warnke et al. 2016

This general framework can be adapted to certain uses such as defined spatial or technological innovation systems. In the following we translate this model into a tool box for analysing the innovation ecosystem of Digital Innovation HUBs.

4 Mapping the innovation ecosystem Based on the novel innovation system framework as presented in Figure 2 a mapping of the innovation ecosystem of the Digital Innovation HUB can be elaborated. It comprises the following five steps:

Delineation of the geographic scope

Identification of functions and actors

Identification of networks

Gap analysis

SWOT analysis and conclusions

4.1 Geographic scope of the Digital Innovation HUB

As a first step the boundaries of the Digital Innovation HUB need to be identified. These delineate the core area of activities of the HUB. In addition, it would be interesting to identify external partners, which on the one hand could be important for future cooperation. On the other hand, it is also crucial to consider potential competitors. Carrying out patent analyses of the technological field of the Digital Innovation HUB can provide an overview of actors and technology trends based on objective quantitative data.

4.2 Functions and actors of the innovation ecosystem

Using the updated innovation system framework (Figure 2) key functions and actors of the innovation ecosystem are identified and characterised. Tables which could be used as mapping tools are provided (document “ecosystem.assessment-template”).

InfrastructureICT, Internet, databases, Co-

Creation Platforms …

InstitutionsIPR, standards, norms

CultureSocial and relational capitalValues, lifestyles, attitudes

Innovation Frameworks

PoliciesPs influencing innovation

framework conditions (RTI) and demand patterns (energy, environment, mobility, health,

defense, home …)

EducationPublic and private educators

on all levels

FinancersBanks, venture capital, philanthropists, crowds

Innovation Input

Innovation Supply and

Demand

MediatorsApplied research, Clubs,

associations, trade unions, cluster managers, NGOs

ResearchUniversities, RTOs, citizen

scientists ...

SocietyConsumers, User Innovators

Social Entrepreneurs, Collaborative innovators, citizens

Public SectorPS actors generating and demanding innovation

Cities, hospitals, administrations …

BusinessFirms of all sizes and sectors generating and demanding

innovation


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4.3 Cooperation network of the innovation ecosystem

In this step the interactions between the key actors of the innovation ecosystem are analysed. As a suitable tool a cooperation survey is recommended. A template for this survey is provided (document “ecosystem.assessment-template”). This part can also be carried out as desk resarch analysis or within a short DIH workshop via team discussion.

4.4 Gap analysis

Based on the previous steps a summary assessment of gaps of the innovation ecosystem is elaborated. This summary should answer the question which functions and which key actors are weak or missing in the innovation ecosystem. It is recommended to carry out this assessment during a workshop to be organised by the Digital Innovation HUB.

4.5 Ecosystem SWOT analysis and conclusions for actions

The overall assessment of the innovation ecosystem could be carried out in the form of a SWOT analysis. The SWOT analysis compares internal factors which are directly controllable by the key actors of the innovation ecosystem with external factors which are not directly controllable but which characterise the competitive environment of the innovation ecosystem. It is recommended to carry out the SWOT analysis during a one-day workshop. As a template for the analysis the following figure could be used. Figure 3: SWOT analysis

It is suggested to start the analysis with the external dimension: opportunities and threats. This allows to discuss the bigger picture of the environment of the innovation ecosystem, thereby setting the scene for the following discussion of internal strengths and weaknesses. The external factors could be clustered into the following categories:

Market

Application opportunities and requirements

Issues related to supply and value chains

Framework conditions The discussion of strengths and weaknesses can be structured along the framework and assessment tool for the ecosystem analysis. Based on the SWOT analysis conclusions can be drawn for future action points which are most suitable for enhancing the function of the innovation ecosystem.

Internal factors

controllable byDIH

• technological aspects(enabling factor)

• non-technological aspects

• production, process, implementation

• knowledge base and maturity

External factors • markets/trends

• requirementsof applications

• strengths/weaknessesof state of the art/competing technology

• (EU) value chains

• (EU) innovation ecosystem

• frame conditions

External

supportive aspectsExternal hindrances

Advantages (over others)Disadvantages

(relative to others)Strengths Weaknesses

Opportunities Threats


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5 References Breschi, Stefano; Malerba, Franco (1997): Sectoral Innovation Systems: Technological Regimes, Schumpeterian Dynamics, and Spatial Boundaries. In: Charles Edquist (Hrsg.): Systems of Innovation. Technologies, Institutions and Organizations. London/New York: Routledge, S. 130-156. Deloitte Development LLC (2015): Business ecosystems come of age. Deloitte University Press, Part of the Business Trends series. Edquist, C. (2005): Systems of Innovation. Perspectives and Challenges. In: Fagerberg, J.; Mowery, D.C.; Nelson, R.R. (Eds.): The Oxford Handbook of Innovation. New York: Oxford University Press, 181-208. Edquist, Charles (1997): Systems of Innovation Approaches – Their Emergence and Characteristics. In: ders. (Ed.): Systems of Innovation. Technologies, Institutions and Organizations. London/New York: Routledge, S. 1-35. Freeman, C. (1987): Technology Policy and Economic Performance: Lessons from Japan. London, New York: Frances Printer Publishers. Kuhlmann, S.; Arnold, E. (2001): RCN in the Norwegian Research and Innovation Sys-tem. Background Report No. 12 in the evaluation of the Research Council of Norway. Karlsruhe, Brighton: Fraunhofer ISI, Technopolis. Lundvall, B.Å. (1992): National Systems of Innovation. Towards a Theory of Innovation and Interactive Learning. London: Pinter Publishers. Moore, James F. (1993): Predators and prey: A new ecology of competition. Harvard Business Review. https://hbr.org/1993/05/predators-and-prey-a-new-ecology-of-competition/ar/1 (last access September 2016). Warnke, Philine; Koschatzky, Knut; Dönitz, Ewa; Zenker, Andrea; Stahlecker, Thomas; Som, Oliver; Cuhls, Kerstin; Güth, Sandra (2016): Opening up the innovation system framework towards new actors and institutions. Karlsruhe: Fraunhofer ISI Discussion Papers Innovation Systems and Policy Analysis No. 49, ISSN 1612-1430.

https://hbr.org/1993/05/predators-and-prey-a-new-ecology-of-competition/ar/1

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