Conference Paper:

“Abductive Innovation Strategy:Shortcut to the Top?”

International Interdisciplinary Research Conference

Botho College – BotswanaGaborone, 18./19.10.2012

Dr. R. J. Dreves @ T.E.C.

Introduction ‐ Abstract• Innovation Strategies have become the most prominent highest level policy tool to steer national and

regional competitiveness and development – worldwide. • The need for strategic intervention at state level thereby recognizing market failures and information

asymmetries, while the focus on innovation reflecting the decisive role of socio-economic relevant application of knowledge creation as the catalytic agent for further growth and development. Knowledge and explicitly not only its scientific expression in technological and process improvements reflected in productivity increase but also its accumulation and contribution as social capital to national development and national total factor productivity demonstrates the importance of national learning and innovation capabilities.

• Innovation strategies have to depart from recognized given situations, aiming at most relevant needs to improve and focus on differentiation as an advantage, which calls the attention to culture, diversity and institutional environment. Development and growth understood as a multi-dimensional human process and as a function of knowledge explains the nature and composition of most appreciated, instrumented and policy guiding indicators to compare respective international ranking.

• Not surprisingly, most internationally recognized development indicators focus on similar, most constituent respective impact factors which are in resume: (1) Knowledge imbedded in The People: Human, Intellectual and Social Capital / Education -Learning/ National Capabilities, (2) National Assets: Knowledge supportive Infrastructure, esp. ICT and R&D, related (3) Rules & Believes: Institutional and cultural environment, (4) National Productive Capability: entrepreneurship and economic competitiveness.

• This calls for leadership at all levels (political, organizational, entrepreneurial) and strategic positioning in the global context. Would an “Abductive Innovation Strategy” offer a “Shortcut to the Top?” Theoretic conclusions lead to the option of unlimited growth with development as a function of knowledge.

• The presentation demonstrates most relevant international innovation strategies and respective initiatives worldwide , as well as in Africa and at regional and national level; raising in the context of the conference the question of respective national preparedness and related policy issues to support the identified most relevant impact factors for successful further national development: Education & Research (Knowledge dissemination and creation) ,ICT, conducive environment / culture change and productive capabilities.

Objective:

To highlight the utmost importanceof an overarching strategic focus onthe Creation of Innovation Capabilityfor the successful Transformationinto a Knowledge driven Society aspart of the globalization process.

Overview:I. “Development as a function of Knowledge”: KNS 

concept, New Economic Thinking, Growth and Development Theories, Learning and Innovation 

II. Need for a Strategic Approach to DevelopmentIII. Selected international innovation strategies:        

EU, USA, China, LA: Col‐Bra, Africa, SADC, BWAIV. Selected Indicators as a tool for a situational 

analysis  of BW in the international and regional context: HDI, KEI, GCI, ICI, GEDI – NIS concepts.

V. Implications for Botswana National Development Strategy and Priorities for Success. 

Paradigm Change in Social ScienceWhat characterizes Society? Network of Social Relations , Individual Preferences and Competences, Legal Regulations – Market conditions - Institutions, Cultural environment; K. Marx: social classes, “method of production” - structure of society characterized by the dominating production factor → from Capital to Knowledge; from “traditional” over “industrial” to “knowledge society”; KN = key resource. Productivity of KN key issue, Application of specialized KN based on Scientific Methods in organizational context / teams key driver of performance. Paradigm change! “Knowledge has become the key resource …. Knowledge as the key resource is fundamentally different from the traditional key resources – land, labor, and even capital …. The newly emerging dominant group is “knowledge worker”… knowledge worker will give the emerging knowledge society its character, its leadership, its social profile … its leading class. … How well an individual, an organization, an industry, a country, does in acquiring and applying knowledge will become the key competitive factor. There will be no “poor” countries. There will be only ignorant countries. And the same will be true for companies, industries, and organizations of all kinds. It will be true for individual too. I fact, the acquisition and distribution of formal knowledge may come to occupy the place in the politics of the knowledge society which the acquisition of property and income have occupied in our politics over the two or three centuries we have come to call the Age of Capitalism. … This is far more than a social change. It is a change in the human condition. What it means – what are the values, the commitments, the problems, of the new society -we don not know. But we do know that much will be different. ”Peter Drucker, 1994: “The Age of Social Transformation”

Paradigm loss in Economic ScienceLimits of Economic Knowability (2009), Imperfect Knowledge of Economics and respective impossibilities of predictions; Financial assessments on capital not on knowledge, mobility of KN, market “failures” as information asymmetries. Paradigm lost! Creation of Institute for New Economic Thinking (INET) in Copenhagen (2009/10), Board with 6 Nobel Prize Winners in Economics: “The main reason why “one” confronts inherent limits to knowability is due to permanent changes in capitalist economies, which cannot be adequately represented in advance with mechanical rules and procedures. In modern economies, individuals, and companies engage in “innovative” activities, discovering novel ways to use existing physical and human capital and new technologies. The institutional and broader social contexts within which these activities take place also change in novel ways.” Roman Frydman 2010;INET Annual Conference April 2012 in Berlin: New economic thinking for a new paradigm! “The old paradigm of neoclassical economics is broken. But what comes next isn’t as clear. “New thinking requires massive and systemic changes. … Abductive interference is pragmatic but looking only at outcomes, guessing at the rule and identifying the cause.” Andrew Sheng: 2012,

Development as a growth residual?Development & Growth Theories: House divided between mathematical and historical strains: “Because economic growth is determined by production, the mathematical strain of growth takes it self-evident that to understand economic growth is to understand the accumulation of production factors and model growth by writing production factors into the aggregate production function. … When the accumulation of physical capital can only account for a small fraction of the growth (12.5% to be exact) however, most of the growth has to be attributed to “total factor productivity (TFP)” or “the Solow Residual”. S. Tang, 2005 in: Knowledge as Production Factor. Chinese Academy of Social Science. Robert Solow himself considered “technical change” as accountable for seven-eight of the total growth (1957 in: Technical Change and the Aggregate Production Function)Although neo-classical growth models consider the “residual” as technological progress, it is not “a measure of the advance of applied knowledge (= improved technological process) alone, it is a “grab-bag” or “some sort of measure of ignorance” (Moses Abramovitz, 1993, in: The Search for the Sources of Growth: Areas of Ignorance, Old and New.

Contribution of Organizational LearningGrowth measurements focusing not only on the direct impact of the technological progress (adoption, learning-by-doing) but also on its impact on Human Capital accumulation (education, on-the-job-learning) and respective improvements in “managerial and organizational knowledge” ( see: Edward Denison, 1985 in: Trends in American Economic Growth) can then at best “account for 44% of the growth” (M. Abramovitz, 1993) and shifted the focus to “the learning organization” and “competence building” at the level of the firm. The knowledge of the firm is considered as either epistemological (explicit / tacit) or ontological (individual/ collective) and classified as embrained, encoded, embodied and embedded and organizations are respectively typed (standardization / knowledge agent) to differentiate competence building systems and their dynamics for learning. “What is really new is the high rate of change … and what constitutes success in the current market economy for individuals, firms, regions and national economies is rapid learning … In this new context the learning capability of firms becomes a major concern for national governments”. (EC 2007). Combining normative “Theories on Learning Organization” (focus on: Knowledge Management) and “Theories of the Firm” (focus on: Functions, Performance) to a “Learning based Theory” shows that limits to growth are (apparently) set only by “… the organizational ability to learn”. But, “the relative dominance of different knowledge types, and the ability of an organization to mobilize tacit knowledge as a source of learning are powerfully influenced by the wider societal and institutional factors …. There is a process of mutual adaption between knowledge types, organizations and institutions”. (Lam/Lundvall 2007, EC 2004: How Europe’s Economies Learn)

Social Capital - Social Sector Capability“still leaving a large chunk [56% to be precise] of growth unaccounted” (Abramovitz) …. “singles out social knowledge as embodied in institutions and culture to be crucial factors for understanding why the potential provided by technological knowledge may or may not be realized in a society” (S. Tang 2005). – so, several additional social and organizational concepts as well as non-economic factors revealed by economic historians contributed for understanding economic growth: “Cultural Capital” (W.A. Lewis, 1955), “Social Capability” (M. Abramovitz, 1986) “Social Capital” (J.S.Coleman, 1988), and most recently the introduction of the “non-profit Social Sector” (P. Drucker ,1994), the concept of “Social Co-Production” (S. Jasanoff, 2006), “Societal Models” (different linkages between the education and the labor market based on a given institutional logic / environment, EC 2007) and “Intellectual Capital” (∑: Structural + Relational + Human Capital) of a Society (R. S. Sharma et al, 2008) came up to explain economically useful social relations and dynamics between technology and social usage (knowledge application), as an “integral process” of application of technological progress and of the scientific method to the social context – with knowledge creation and learning capabilities at the core of further research.

Contribution of Knowledge to Development“The missing link is knowledge or learning“ … learning through the division of labor or division of knowledge is key to economic development” (Smith, 1930, Hayek, 1937, Boulding 1966) and “the economy is a system for generating and using knowledge through division of labor” (Loasby 1999); Ricardo recognized “total output as a function of the application of land, labor, machinery, and capital”; Marshall (1920) identified knowledge as “our most powerful engine of production”, Marx/Engels understood S+T as the “critical productive forces”, Lewis (1955) identified “accumulation of knowledge as one of the causes of economic growth”; Landes (1980) explained that “acquisition and application of knowledge lies at the heart of development”; North (1990) considers knowledge as crucial for understanding economic performance and “the speed of economic change as a function of the rate of learning” (1994); Kuznets (1966), Rosenberg (2000), Solow (1994) and North (1981) saw the necessity for a “theory of knowledge”, Malchup (1980) worked on a “theory of knowledge production” and Prescott (1998) called for a “theory of total factor productivity” including social factor as highlighted by Mokyr (1990) and Drucker (1994) for systemic work on “productivity of knowledge” and a economic theory “in which knowledge has become the key economic resource and the dominant, if not the only, source of comparative advantage”. Concluding: “The notion that the accumulation of knowledge is central to production and economic growth has long been recognized…Realizing and admitting our fundamental ignorance about the growth [and I add: critical contribution] of knowledge is a painfully humiliating, but necessary, step toward a better understanding of economic growth’ (see: S. Tang 2005).

Development as a Function of Knowledge!With both ”economic” and “non‐economic” factors being brought into the production function and the accumulation of knowledge being recognized as the central force behind economic growth a Theory of Development can only be systemic and evolutionary.I therefore conclude that growth and development considered adequately as a function of knowledge is unlimited and expressions of simultaneous application of different levels of knowledge are manifested in divergences of factor productivities or technology usage (Dreves 1993). “We will propose an even more far‐reaching hypothesis stating that thereis no alternative way to become permanently better off besides the one putting learning and knowledge‐reaction at the center of the [development/growth] strategy” (Lam/Lundvall 2007).Remains to be further captured:1. How does People and Societies behave under [recognition of] 

imperfect knowledge?2. What determines the speed of learning?3. What facilitates and enables creativity and innovation?

Development – stages and curves• Development Stages W.W. Rostow

→ curve of social evolutionism  

• Development Stages M.E. Porter→  curve of business economics  

• Development as a multi‐dimensional human learning process→ Measurement of “critical” aspects of Development through indicators, learning curve, path of high performers, innovation windows, 

• Limited Growth and Development?→  Unlimited Development with KN as key factor for Total‐Factor‐Productivity

Unlimited Development based on Knowledgenot exponential, not logarithmic, but staedy

Development is unlimited as well as is Knowledge. Development rather depends on the adequate application of respective relevant knowledge. Evolution does not favorite particular factor endowment, but effectiveness of situational factor combination - the “right” conditions: application of the relevant knowledge according to the given environment – at all levels.

Intl. trend: Focus on Learning and Capacity Building“Knowledge is a “global public good” that is most effective when shared without distribution inequities” (J. Stiglitz, 2001)“…what is at stake is more than information: it is knowledge, which implies cognitive capacity, learning, cultural patterns and understanding – in a single word: people” (M.J. Rodrigues, 2003, European Policies for a KN Economy).“There is a growing understanding that knowledge is at the core of economic development. We define the present stage as a “learning economy”. In the learning economy, individuals, firms and even national economies will create wealth and get access to wealth in proportion to their capability to learn”. (Lam / Lundvall (2007, European Commission 2004) One of the most effective strategies for human capital development is through processes

of social learning; that is, where means are developed to support learning within a population not only through formal institutions such as schools and colleges but also through informal processes such as through non-governmental organizations, friendship groups and informal social groups. (Gurstein 2004)“In an environment of globalization and competition, governments at regional, national, provincial and municipal levels have to turn to knowledge as a strategic asset that drives sustainable economic advantage. The value of knowledge is particularly enhanced when it is created, shared and re-used within a critical mass of society that possesses the requisite absorptive capacity or the ability to understand and apply knowledge. (R.S. Sharma, 2008, Beyond the Digital Divide). “Capacity is understood as the ability of people, organizations and society as a whole to manage their affairs successfully …. Capacity development [learning] is understood whereby people, organizations and the society as a whole unleash, strengthen, create, adapt and maintain capacity over time [ to manage their affairs successfully e.g. national development] (World Bank, 2009, Learning for Development).

Innovation – challenge or chance?“Innovation” should be seen solely within a context of creating the capacitiesand the outputs which allows for successful [global] competition; understood as a social or even community process; very much about [social] context. “The direct link between technology implementations at the local level and broader processes of social learning are only beginning to be identified along with an increased awareness of, and attention to broader community based knowledge creation and knowledge management processes…“… it could be argued that the more serious “divide” is [not digital] but rather between those who have availability to means to “innovate” … and those who have not”. Similarly, creating an atmosphere which enables the development of ideas and imaginative exploration stimulated by technological opportunities, best practices and innovations from elsewhere present a powerful platform for local “innovation” and development…it stimulates attitudes toward technology, and economic and social opportunity which is the pre-condition for a shift in national attitudes and cultural expectations concerning economic and social innovation”; (see Gurstein 2004).“Analysis of how these innovation systems actually function is lacking….more attention should be paid to the social and political institutions of NIS… a hierarchical evolutionary approach considers policy making a continuing process of designing institutional structures” which “should allow for learning to adapt behavior [changes] based on lessons learnt” and changing individual consumer preferences. Groenewegen 2006.

National Capabilities - Systems for Learning & Innovation“National Learning Capability is a System of three dimensions determined by: infrastructure, institution, culture”; like the competitiveness of a firm, an organization also depends upon its learning capability, economic relevant learning of a state as an organization depends in the same way upon the learning capabilities of its citizens, creating thereby social knowledge / capital through social co-production and shaped by the cultural environment. “Social knowledge embodied in Culture and Institutions and Tacit knowledge incorporated [in individuals] …..[shall] all to be put under national “learning system”… (S. Tang, 2005).As the national context (environment) shapes the forms of individual and organizational learning, national systems of innovation have to put “competence building of people and organizations at the center of the analysis” (…….) ; “it is about a systemic approach to innovation, in which the interaction between institutions and organizations is central” (Groenewegen, 2006)Already F. List (1841) considered a “wide set of national institutions, including those engaged in education and training as well as infrastructures such as networks for transportation of people and commodities part of his concept. In the 1990s a national system of Innovation was defined as: “…. A network of institutions dedicated to initiate, import, modify and diffuse new technologies” (Freeman, 1987); … “relationships which interact in the production, diffusion and use of new, and economically useful, knowledge…” (Lundval 1992); ‘.. A set of institutions whose interactions determine the innovative performance …” (Nelson 1993); “…national institutions ... that determine the rate and direction of technological learning (Pantel,Pavitt, 1994); “…that set of institutions which …. contribute to the development and diffusion of new technologies and which provides the framework within which governments form and implement policies to influence the innovation process. …It is a system of interconnected institutions…. (Metcalfe, 1995).Actually NIS is considered to be constituted by 6 dimensions: (1) Innovation and Technological Capabilities, (2) Education System and Human Capital, (3) Infrastructures, (4) Economic Competitiveness, (5) Political-Institutional Factors, and (6) Social Capital and especially used for cross-country analyses (NUPI, WP 783, 2011).

Learning & Innovation in LDCs“It is notable that most of the discussions on Innovation and Development have been concerned with already developed economies. However, it is possible that the real opportunity for innovation and for having major impacts as a result of an innovation strategy is in enabling Lass Developed Countries to leap-frog directly into a KN based Economy from amore economic base” M. Gurstein, 2004. “An economy based on the sharing and diffusion of knowledge provides an opportunity for emerging nations to increase the well-being of their populations” (K. Matsuura (UNESCO Director, 2006)“In the learning economy, individuals, firms and even national economies will create wealth and get access to wealth in proportion to their capability to learn. This will be true regardless of their present level of development and competence. …. As a matter of fact, learning taking place in traditional low-tech sectors may be more important for economic development than learning taking place in a small number of insulated high-tech firms. The learning potential may differ …. But there will be niches where the potential for learning is high” (Lam,Lundvall 2007); The possibility of this type of “leap-frogging” is greatly increased … in [the] case [of] the introduction of state of the art ICT infrastructure [which] presents to national economies opportunities for the development of a national innovative capacity parallel in this respect at least with that which exists in its much more advanced competitors (Gurstein, 2004)“Knowledge rather than resource endowment is critical to development“ Amartya Sen, (1998) identified capability as a expression of freedom and poverty as a consequence of the deprivation of basic capabilities. Similarly, underdevelopment is a reflection of a nation’s deprivation of basic capabilities (see: The Namibian, 2011).Recently: shift “towards the study of innovation systems within the context of developing economies” and discussions about Innovation systems and development (Lundvall, 2009).

Integration of Innovation into long-term development plan and strategy is key for developing countries (WB Institute 2010)

1. Innovation in the developing world means “something new” at that location and for that society: methods new applied or a new sector established (textile, cars, flowers, computer, tourism); 2. Entrepreneur as key actor interacts with Universities, public laboratories, banks, customer Asoc. forming an Innovation System3. Conducive environment: macroeconomic stability, infrastructure development, quality of governance4. Important details: Support Agency, solid network / technical infrastructure (Metrology, Standards, QA-Control), pro-poor technology programs / public procurement, special economic zones, innovation friendly techno cities = being pragmatic!5.Upgrading local knowledge base and adapting adequate new knowledge is critical; change happens only gradually from limited local success of specific industries or areas and with much needed institutional creativity from policy makers to build critical mass for broader reforms and a general climate of trust6. Innovation policy not a linear & mechanistic process of promoting ideas and projects from research to market, a holistic (systemic) and “biological “ approach is more appropriate; Gov. responsible for positive climate through (a) incentives + facilities, (b) removing bureaucratic obstacles, (c) improve tech. education + R&D structures; Regional and spontaneous initiatives can play critical role; creation of innovation climate (not a full culture) takes at least 10 years!7. But most important key success factor is “to integrate a vision for innovation in long-term development strategy”, which “requires an explicit government-wide approach”; failure is mostly due to “not sufficient authority”, the lack of “strong political leadership, collective will, and clear commitments”; therefore:8. “innovation policy can be a key component of 21st century development strategies, even in poor countries with constraining economic environments. But to succeed innovators must be supported by high-level central and local government policy makers who have the vision, pragmatism, and the ability to work creatively in institutional contexts. →  CHINA: = world factory; MALAYSIA:= IS world leader; TUNISIA; FINNLAND, KENYA, …. 

KNS – System Drivers Growth & Development relevant  areas  of special attention

• Societal Learning attitudes – organizational / TE / societal KNM - capabilities→ life-long Human Capital preparation for contribution to growth: Learning curve and learning methods: Formal learning – non-formal (on-the-job) – informal learning (social)

• ICT – Internet and other KN support infrastructure and procedures→ UN-GeSCI : IT as KN depository and CT as dissemination tool; opening unique options

• International Competitiveness: Entrepreneurs - private sector & network → Competitiveness – cluster - trade - strategic Initiatives – opportunities and risks

• Conducive Environment – culture & creative politics / Leadership→ support : infrastructure , agencies, openness, diversity, facilitating relations, mobility, closeness – clusters, incentives, public procurement, priority projects, local development

• Innovation Capability: doing things different, improved satisfaction of usersS+T, R&D-KN creation → “improved” Products and Processes → customer satisfaction (KNM+QM)

Need for a Strategic Approach to InnovationStrategic Approach = A Scientific KNM Approach: PDCA – QMS – KNM – continuous pragmatic strive

Strategic management is the art, science, and craft of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives (performance). It is the process of specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs using score cards. Strategic management seeks to coordinate and integratethe activities of the various functional areas in order to achieve long-term organizational objectives/targets. Strategic management is the highest level of managerial activity and provides overall direction. (→Leadership) According to Arieu (2007), "there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context.“ (Wikipedia) → PM, MbP, KNM 

National strategies for sustainable development seek to harmonize the various policies and plans that are operating in a country. This involves coordination and integration of relevant policies and actions in multiple sectors, as well as adequate monitoring and review mechanisms, with the participation of government actors, civil society and the private sector. UN-DESA (Department for Economic and Social Affairs)

Local economic development should be pursued cooperatively across the local labor market; economic development programs should consider the quality of jobs created; high unemployment areas should be more aggressive than low unemployment areas in promoting job growth. (Bartik 95, for USA)

Innovation Strategies for Development: adaption of relevant measures for desired change

Plan - Do / Implement - Check / M&E – Adjust / Correct to improve a process or product. The concept of PDCA is based on the scientific method, which can be written as “Hypothesis” – “Experiment” – ”Evaluation”; a fundamental principle of the scientific method is ITERATION: once a hypothesis is evaluated, executing the circle again will extend the knowledge further. The approach is based on the belief that knowledge and skills are limited, but improving; especially at the start of a project, key information may not be known, the scientific PDCA method provides feedback (through progress reports) to justify “guesses” and increase knowledge.

PDCA=QMS+KNM: Do things right – first time; “right” is determined by what is “known”, “qualitatively” and socially, culturally accepted (standards, information knowledge stock) but might still be “improved” through learning–by–doing=knowledge creation / production; or innovation; which also might mean change. Applied to strategic aligned project management this refers to baseline, measures, indicators and progress reports.

“Abduction” is a form of logical inference that goes from data description of something to a hypothesis that accounts for the reliable data and seeks to explain relevant evidence (most economical ex-post explanations, often used for ex-ante predictions, projections); abduction is an instance of the scientific method; its application inclines to favor a single explanation (or few) in the hope to be better oriented; abduction is the use of a known rule to explain an observation, commonly used in social science and artificial intelligence; abduction is “guessing” but the success of the guess far exceeds that of random luck. “Abduction guesses a new or outside idea so as to account in a plausible, instinctive (tacit), economical way for a surprising or very complicated phenomenon. That is its proximate aim” (Pierce,C.S. 1908 :“A Neglected Argument for the Reality of God”). → problem solving by system  thinking, parts are best understood in their relationship of the whole.

Local experiences design through inclusion of social and cultural relevant elements in a M&E system to check implementation of a strategic plan new insights about successful processes and / or products; without M&E no harvesting of local experiences / innovative ideas as result of positive abduction. → relevance theory.

Strategic Approach ‐ tools• PM‐PDCA  ‐ guided actions for achievements, scientific 

method, iteration, feedback for “guesses” and knowledge creation

• QMS – Permanent Process / Skills Improvement: “do things right – first time” ‐ Standards

• KNM – capture with focus on Learning + KN creation

• Strategic Mgmt.: Plans, Score Cards + M&E to achieve the vision through timely performance → consistency with expectations

Systemic: Parts are best understood in their relationship of the whole.

Systems thinking is a practical approach for dealing with the “big picture.” In systems thinking, the focus lies on understanding the whole by examining cause-and-effect relationships among its components. Systems thinking is used to identify high leverage actions, changes and interventions. Systems Thinking can be helpful in virtually all aspects of life, on the job and off.

Systemic Approach

artofthefurture.com

Abductive Strategic Approach 

• Abductive Strategy: “Abduction guesses a new ideaso as to account in a plausible, instinctive (tacit), economical way for a surprising or complicated phenomenon” (Pierce, C.S. 1908); is a form of logical inference to explain relevant evidence. (“new combination of systemic correlation of facts”)

• Pro‐poor Strategy: PRS, MDGs – social inclusion –redistribution – local needs

• Pro‐global Strategy: local strengths‐ global markets, international opportunities, networking.

Innovation Strategies for Development: OverviewSelected Innovation Strategies: EU-USA-China-LA-ARAPKE-SSA/SADC-BWA:

EU: Innovation is overarching policy objective, steered at highest level with massive investments in Knowledge creation and conducive environmentUSA: Catalyze breakthroughs for National Priorities, Promote Competitive Markets that Spur Productive Entrepreneurship, Invest in the Building Blocks of American InnovationsChina: Promotion of domestic Innovation: “Indigenous Innovation Strategy”LAC - Colombia/Brazil: Demand-driven vs. Strategy-driven Approach,IDB,(2006) conditions for strategic approachARAPKE: KNS Pillars: Education – ICT – Innovation – S+T; focus on: ICT and Leadership → (AICIT); strategic approach recommended, system wide + system deep)SADC: RISDP (2006): systemic strategic “support”, SAIS (2011): Support Program; SARUA (2012): absence of a clear strategic vision recognizedBotswana: draft RSTI Policy and implem. Plan → MIST, 2011: at pre-implementation stage, current ad hoc approach unsatisfactory, strong political commitment and leadership required (p.42).

Source: Background Information for the European Council, 4 February 2011

The NEED for a STRATEGIC APPROACH in EUROPE

Our key partners and emerging economies follow a strategic approach to innovation and implement it.

A strategic approach to innovation =

Innovation is the overarching policy objective driving all other policies (education, labor markets, skills, ICT/infrastructure, tax policy, etc.)

Innovation policy is steered and monitored at the highest level

Massive investments in skills, research and innovation

The example of the USPresident Obama’s Strategy for American Innovation:

increasing significantly the budget for three key basic‐research agencies from $12.6 billion in 2010 to $19.5 Billion in 2016 (increase by 54%)

reaching 3% target for R&Dintensity

focusing on key priorities and “grand challenges”

Source: Background Information for the European Council, 4 February 2011

The example of ChinaChina « Indigenous Innovation Strategy »

Promote the development of technological innovation in domestic firms, leading to ownership of own core IP rights

Explore potential markets through in-house R&D activities and external knowledge acquisition

Be among the top-5 worldwide by 2020 for patents granted for domestic inventions and citations of international scientific papers

Implement the “Medium- to Long-Term Plan for the Development of Science and Technology until 2020”

- min. 60% of GDP growth- max. 30% foreign technologies, IPR, standards

1000 Talent program – to get the 1000 best Chinese researchers back from the US

Source: Background Information for the European Council, 4 February 2011

IDB: Strategic Approach in LAC still in the “back seat”IDB hypothesis combining political economy determinants and institutional factors:“For a strategy-driven approach to become dominant in a country, the confluence of at least TWO of the following THREE factors is required:1. A sufficiently strong technical and social-scientific intelligentsia2. Government institutions where this technical intelligentsia can exercise its intellectual

influence3. A nucleus of private entrepreneurs capable of going beyond a short-term corporatist

stance and of interacting with the technical intelligentsia to generate a long-run strategic perspective for productive development policies.

In the LA experience the technical and social-scientific intelligentsia sees itself as representing both the standpoint of the country’s future and the interests of technical rationality. But:(i) if this social segment is weak; (ii) if it is not sufficiently represented in the state bureaucracy; (iii) if the specialized agencies through which its views and technical interests are weak or non-existent; and (iv) if it does not have an ally in (at least a segment of) the entrepreneurial class, it cannot become a dominant factor influencing public policy, and there is thus NO possibility of developing a strategy-driven approach in a particular country.Concluding, “that in the absence of a strong technical intelligentsia expressing itself through strong, capable institutions (and allied with at least a part of the business class with long-term view) strategic considerations take “a back-seat”. (IDB 2006)

ARAPKE: African Regional Action Plan for Knowledge Economy, ALICT, GeSCI / UN (2011)

KNS initiative = Focus on: Education + ICT + Innovation + Science & TechnologyGeSCI: Focus ICT = enabler of Education, Innovation and DevelopmentALICT: Focus Leadership, ALICT: African Leadership Capacity Building Program

Recommendations from Needs assessment 2011: (a) Education and Innovation to be viewed as interrelated drivers for socio-

economic development(b) A comprehensive (strategic) approach to Science, Technology and Innovation

should be developed(c) Leadership Capacity should be developed to address “system wide” and

“system deep” change for coordination and extension of policies into sustainable implementation and development across all system levels.

Conclusions Country ( Mauritius, South Africa, Tanzania, Zambia) Assessment: “There is a need for implementing and coordinating the four pillar initiatives towards KNS development; there is a clear gap in systems / mechanisms / structures for overseeing, coordinating, monitoring and evaluating initiatives.” = lack of Strategic Approach!

SADC: not yet ready, testing for future regional strategic intent in 4 pilot countries:

BWA – MOZ – NAM - ZAM2006: SADC countries identified in their Regional Indicative Strategic Development Plan (RISDP) the need to enhance their systems of innovation, and to create mutual benefits by extending this to regional –co‐operation and regional innovation systems. Systemic strategic and operational innovation support is recognized as an integral ingredient in economic growth and poverty alleviation aspirations.2010: Draft SADC Strategic Plan on STI with 7 objectives, SARUA based2011: SAIS‐Southern Africa Innovation Support Program launched to pilot regional strategic intent based on (1) human and (2) institutional capacity, (3) regional networking and (4) co‐operation from April 2011 – March 2015  in 4 countries: BWA, MOZ, NAM, ZAM.2012:  SARUA: Strategic Agenda for Development in SADC 2025 : “the absence of a clear strategic vision has been recognized by SADC ministers as a key limitation. … It is clear that HE leaders require a strategic approach…”

BWA : Revised National Policy on Research, Science, Technology and Innovation approved &

Implementation Plan: Ready to do it right?

1. Revised National Policy on RSTI, 09.2011/ 08.2012: Revision intended to broadly align with MDGs + Botswana Vision; strategic priorities intended to be related to the goals set in NDP 10 and Vision 2016; but ”currently between the stages of formulation and implementation”.

2. Revised National Policy on RSTI, “draft Implementation Plan” 11.2011; “agree on the need to prioritize collaboration and coordination … in order to attain broad national development goals; .. and with “focus on a set of strategic priorities

3. Role of BNRDICC: the “New Vision” Council?4. “The effective implementation of the draft RSTI policy requires

strong political commitment and leadership” (p 42); “ current ad hoc, uncoordinated approach … has proved to have slow and limited impact…” ; funding to rise from 2011: 0.5% to 2% of GDP in 2016; (GDP to be 156,418 Mio Cur. BWP).

Development Evidence – relative Status: Overview – selected Indicators

• HDI:118/187‐ (3) Health, KN + Education, Income• KEI: 85/146‐(4) Regimes, Education + Learning, NIS, ICT• GCI: 79/144 ‐ (12) Institutions, Infrastructure, Macro‐econ., 

Health, TE, market efficiency 1, market efficiency 2, market development 3, Market size, Technological readiness/internet, Business sophistication, Innovation

• ICI: 69/131‐(5+) Institution, HC‐inclusion, Business, R&D, ICT• GEDI:61/79 ‐(3+)country disposition towards E, E 

response to opportunities, innovative capabilities• NIS: (6)Econ. Competitiveness, Education System/HC, 

Infrastructures, Political and Institutional System, Social Capital, Innovation / Technological Capabilities

UNDP‐HDI: is it Education?

WB‐KNEI: very weak Innovation

KNEI: Internet – TE – R&D

WEF‐GCI ‐ weak transition stage: innovation- infrastructure-technology-market

Labor system inefficiencies

Education System inefficiencies

ICI: R&D – Internet/ICT ‐ Quality

…and…  Social inclusion / equity

First Entrepreneurship  calculations

Including individual indicators are based on averages about optimistic behavior assumptions taken from neighboring countries Angola and South Africa.

Cross country NIS comparison

Latest NI System understanding

Towards Abductive Innovation StrategyActual Situation in BWA: Vision statement and Pillars, NDP 10 and respective programs, HRD Strategy, R&I / S&T Strategy,

What do the “individual” Indicators say on weakness for BWA:

HDI: 118/187: Tertiary Education / Health

KEI: 85/146: Tertiary Education & Innovation (TE-R&D-Internet/ICT)

GCI: 79/144: TE+ R&D, ICT Readiness, Infrastructure, Health, Innovation, market/business

ICI: 69/131: R&D, Education, ICT/Quality of Infrastructure, Equity

GEDI: 0.26 optimistic estimation; TE, Internet, Market, Business strategy, Technology Absorption

NIS-System understanding: Education System + Human Capital Political + Institutional System Infrastructures Economic Competitiveness Social Capital Innovation + Technological Capabilities

international comparisons also showing structural heterogeneity known from productivity analysis

Abductive Innovation Strategy

Abduction based on “evidence” / indicators recommends: don’t follow the S-curve only to catch-up for ever, take chances strategically and pragmatically on both sides of the inflection point by taking a short-cut through innovation.

A Pragmatic double-faced development strategy based on local conditions and global opportunities.

Identify relevant local potentials and prioritize for pragmatic innovative local development strategies (local needs) and regional cooperation and networking on innovation strategies (global system requirements)

Double faced abductive innovation strategyRecognition of Simultaneity of locally different Productivity and Knowledge Levels 

I.  C – A:  pro‐poorII. A – A’:  pro‐globalIII. A’‐ B:  straight to the top 

Abductive Innovation Strategy ‐ BWA

Abduction: from existing available Knowledge (data & information) to new thinking; further development requires strategic knowledge management, creative policies, innovative entrepreneurs, an open conducive environment and sustainable funding.

Go for the so far “un-thinkable” outside-the-box options; be different because you ARE different and do what is good for you – the people.

Development Goal: Transformation of “all” People into Diamonds;Strategy: Create Innovation Culture and Innovation CapabilitiesPriorities:1. Local Private sector development / Employment creation / labor market2. TE improvement: access, relevance/quality, public cost efficiency3. Investment in ICT / Research / Networking / Collaboration - Infrastructure4. Provision of adequate Funding for Innovation and Support Agency 5. “Loud” Public Communication and support

New forms of PPP instead of old fashioned “Technical Assistance”, “Co-operation” and “Aid”

As already highlighted by P. Drucker (1994), in the “Knowledge Society” or the “Learning Economy” by B-A. Lundvall (2007), there are NO poor countries, but only IGNORANT ones and individual “Tacit Knowledge” and societal “Learning Capabilities” constitutes the most important source for further innovation-based competitiveness and development in an globalized knowledge-driven economy. Who can support relevant development requirements of “other” countries and how needs will be identified and attended to? The extent and content of national “Capability Development” becomes the only out-singled constitution factor for future development stages / levels of any country, society, economy or culture. And economically relevant inter-relations, co-operations and networks are getting more importance due to their contributions to growth related knowledge dissemination and creation. And only so, if related to societal needs and individual wants and if applied to effective and efficient customer satisfaction – worldwide. Which has implications to the mobility (dissemination/ distribution) of Knowledge (tacit and explicit) and Goods as well as to respective Quality aspects and Diversity recognition. In a nutshell: its about the capabilities of people in their local environment to satisfy local needs under conditions of international competition. This requires in the international context national systems of capabilities which – in the long run - do not require more external inputs than are also exported in exchange due to external demand – a worldwide endogen development system with only short-term Assistance needs for stable Partnerships. National capabilities in this regard have to be built on recognition of “international standards” and national particular competitiveness. Only international recognized “understandings” (applied pervious innovation) can be provided by non-nationals to enhance national competitiveness, not their national adoption. International “Technical” assistance therefore cannot contribute further than through specific “capability building” of national “multiplicators” and “innovators” with local cultural roots. And financial assistance should therefore only focus on either international knowledge or local needs related infrastructure and capability support issues.

Private-Public-Partnerships for Development

Abductive Strategy Approach, applies to “International Co-operation” as new form of “Partnerships” with exclusive orientation on mutually recognized capability building needs: - Attention to deficits of leadership and infrastructurefor enhanced knowledge dissemination & creation.- Focus on learning system (learning to learn), formal-nonformal-informal / individual–collective (with social inclusion beyond organizations).- Inclusion of conducive environment requirements: change, values, communication, collaboration.

“There’s lot of exciting potential for Africancountries in terms of the knowledge society as aresult of their youth demographic, the diversityof the continent and the fact that it is the onlyuntapped market left.”Robert Hawkins, Senior Education Specialist, WB

…..

Selected Literature / ReferenceAbramovitz, M (1993): “The Search for the Sources of Growth: Areas of Ignorance, Old and New”, Journal of Economic History, Vol.53, No.2 ,Jun, 1993, pp. 217-243.Abramovitz, M. (1995): “The Elements of Social Capability”, in Boo Ho Koo, Perkins, D.H. (eds.): “Social Capability and Long-term EconomicGrowth”, London, St. Martin’s, 1995, pp.19-47.Aubert, J-E. (2010): Innovation Policy for the Developing World, see World Bank , Washington, 2010 and WB Institute, ParisBecker, G.S. (1993): Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education”, Chicago, University Press.Borooah, V.K. (2003): “Market Failure. An Economic Analysis of its Causes and Consequences”, University of UlsterBucar, M, Stare, M. (2002) Macroeconomic policy vs. Innovation policy in the transition countries, Univ. of Ljuljana, Slovenia.Butcvher, N: (2011): ICT, Education, Development, and the Knowledge Society, GeSCI thematic paperCastellacci F, Natera, J.M. (2011): A new panel dataset for cross-country analysis of national systems, growth and development, NUPI WP 783.Coleman, J.S.(1988) : “Social Capital in the Creation of Human Capital”, American Journal of Sociology, Vol. 94, pp.95-120.Commission of EC (2001): Making a European Area of Lifelong Learning Reality.Denison, E.F.(1985) : “Trends in American Growth, 1929-1982Dreves, R (1993): Production Structures in Developing Countries, Divergences of Factor Productivities as Indicator for Underdevelopment, Diss. University of Konstanz, Vol.1.Drucker, Peter (1994):“The Age of Social Transformation”, The Atlantic Monthly., Vol. 274, No 5, pp.53-80.Frydman, R (2012).: Imperfect Knowledge and Economic Science, Launch of INETFrydman / Goldberg (2012): “ Change and Expectations in Macroeconomic Models: Recognizing the Limits to Knowability”, March 2012Goldberg, M. (2012): ‘Why Imperfect Knowledge Economics, INETGurstein (2004): “Building National Innovation Capability from the Bottom Up, New Jersey Institute of TechnologyTang, S. (2005): “Knowledge as Production Factor: Towards a unified theory of economic growth, Chinese Academy of Social Science, Institute of Asia-pacific Studies, Vers. 3.0Hautamaeki, A.(2010): Creative Economy and Culture at the heart of Innovation Policy, Ministry of Education, FinlandJasanoff, S. (2006): “States of knowledge: the co-production of science and social order, Routledge, + Harvard. Klein, J., Eseryel, D. (2005): “The Corporate Learning Environment.”Lewis, W.A. (1955): “The Theory of Economic Growth”Lundvall, B-A. (1996): The Social Dimension of the Learning Economy”Lam, A./Lundvall , B-A (2007): The Learning Organization and National Systems of Competence Building and Innovation, Oxford Univ. Press.Melo, A, Rodriguez-Clare, A.. (2006): Productive development Policies and Supporting Institutions in Latin America and The Caribbean, IADB Working PaperNunes, P, Breene, T.(2011): Jumping the S-Curve: How to reach the top – and stay there.Otoo, S. et al (2009): “The Capacity Development Results Framework” A strategic and results-oriented approach to learning for capacity development”.Sharma, R.S. et al. (2008): Beyond the Digital Divide: Creating Knowledge Societies, Singapore University.Sheng, A. (2012): “A Berlin Consensus? INET Blog , April 30, 2012.Solow, R.M.(1957) :”Technical Change and the Aggregate Production Function”, Review of Economics and Statistics, Vol. 39, pp.312-320Tuomi, I. (2004) “Innovation, Growth and Competitiveness in the Knowledge Society, Foro de la Innovacion, Malaga, Joint Research Centre.UN (2005): Understanding Knowledge SocietiesUNESCO (2003): The Culture of Innovation and the Building of Knowledge Societies.Vaezi, S.K. (2011): Knowledge Societies Implementation and Innovation Policies, Ministry of SR+T, Iran

Comments

Contact Details

Dr. Reinhart J. Dreves

Tertiary Education Council Botswanawww.tec.org.bwrdreves@tec.org.bw

+267– 3646 213