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!!!!!!!Options!for!Developing!a!!National!Innovation!Body!for!Wales!!Report!to!the!Innovation!Advisory!Council!for!Wales!!!!!!!September!2015!!!

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Table&of&Contents&

OVERVIEW& 1!

NATIONAL&INNOVATION&BODIES:&AN&INTRODUCTION& 1!

THE&PURPOSE&OF&NIBS& 7!

JIC,&SOUTH&MORAVIA& 8!

SPRI,&BASQUE&COUNTRY& 10!

OPERATIONAL&MODELS& 12!

SCOPE& 12!SERVICES&AND&INSTRUMENTS& 12!

GOVERNANCE&ARRANGEMENTS& 16!

RELATIONSHIP&WITH&GOVERNMENT& 16!FUNDING& 17!MONITORING&AND&EVALUATION& 18!

A&WELSH&INNOVATION&BODY:&RELATIONSHIP&TO&OTHER&AGENCIES& 20!

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Options&for&Developing&a&&National&Innovation&Body&for&Wales&

&&Overview&&The!purpose!of!this!paper!is!to!draw!together!information!on!the!theory!and!practice!of!innovation!bodies,!and!in!doing!so!to!present!options!for!the!scope,!services!and!governance!arrangements!of!a!national!innovation!body!for!Wales.!!It!begins!with!an!introduction!on!the!nature!of!innovation,!and!the!implications!of!this!for!the!role!of!government!in!innovation!processes.!As!the!subsequent!overview!of!selected!national!innovation!bodies!(pages!4@6)!demonstrates,!there!is!considerable!variation!in!innovation!bodies’!form!and!function.!However,!there!remains!a!shared!underlying!logic!for!their!formation,!which!is!summarised!on!page!7.!!!Two!case!studies!of!regional!innovation!bodies!are!then!presented!in!some!detail!(pages!8@11).!South!Moravia’s!JIC!and!the!Basque!Country’s!SPRI!demonstrate!the!significant!potential!that!can!be!realised!by!a!small!innovation!body!with!a!limited!budget.!Each!is!held!in!the!highest!peer!esteem,!having!been!independently!recognised!for!its!professional!competence!and!efficacy!in!programme!design!and!delivery!by!EURADA,!the!premier!network!for!regional!development!agencies,!and!ERRIN,!the!European!platform!for!innovation!organisations.!!On!page!12!we!turn!to!the!range!of!operational!models!currently!in!evidence,!focusing!in!turn!on!the!scope!of,!and!the!services!and!instruments!employed!by,!innovation!bodies!worldwide.!We!then!discuss!potential!governance!arrangements,!with!particular!attention!to!the!relationship!with!government!(page!16),!funding!arrangements!(page!17),!and!monitoring!and!evaluation!(page!18).!!The!paper!concludes!with!a!discussion!of!the!context!in!which!a!Welsh!innovation!body!would!operate,!and!sets!out!how!such!a!body!might!relate!to!the!existing!policy!landscape!and!its!associated!agencies.!!!National&Innovation&Bodies:&an&introduction&!Innovation!is,!most!simply!stated,!the!introduction!of!a!new!phenomenon.!It!entails!doing!new!things,!or!doing!old!things!in!new!ways.!!!A!focus!on!the!contribution!of!technical!and!scientific!developments!to!the!innovation!process!has!led!to!a!tendency!to!equate!innovation!with!new!products!or!methods!of!production.!Yet!an!organisation’s!opportunities!for!innovation!also!exist!upstream!of!it!(through!identification!of!new!sources!of!

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supply),!downstream!(in!the!exploitation!of!new!markets),!and!in!the!very!ways!in!which!business!is!organised.1!!At!its!most!progressive,!regionalist!thinking!has!moved!us!towards!a!still!broader!conception!of!what%constitutes!regional!development,!and!who%can!contribute!to!it.!It!is!within!this!sphere!that!the!concept!of!social!innovation!is!gaining!particular!traction.2!!!Implied!in!an!innovation@based!approach!is!a!shift!from!competition!on!cost!grounds!to!quality!competition.!And!central!to!its!realisation!is!an!effective!learning!process.!Innovation!has!been!described!as!a!“collective!achievement”,!in!which!the!success!of!pioneering!entrepreneurs*!opens!the!doors!to!further!entrepreneurship,!and!the!ensuing!clustering!facilitates!even!more!innovation.3!!A!strong!spatial!dimension!to!this!collective!endeavour!having!been!recognised,!regional!policy!has!progressively!developed!to!support!it.!Innovation!bodies!have!emerged!both!as!an!evolution!of!and!as!an!alternative!to!existing!regional!development!agency!models.!!Two!principal!justifications!for!government!involvement!in!innovation!processes!at!the!regional!level!have!been!identified.4!The!first,!underinvestment!in!R&D!resulting!from!market!failure,!is!recognisable!as!a!driving!force!behind!the!work!of!many!national!and!regional!development!agencies.!The!second!draws!on!an!understanding!of!the!systemic!nature!of!innovation,!and!posits!that!low!levels!of!innovation!result!from!systems!failures.!According!to!this!approach,!innovation!performance!is!related!to!the!degree!of!collective!action!taken!in!pursuit!of!it.!This!in!turn!relies!on!the!extent!of!firms’!networks!and!absorptive!capacity,!and!on!a!support!network!of!regional!institutions.5!!!Accordingly,!innovation!bodies!have!turned!attention!to!developing!capacity!within!the!two!‘sides’!of!the!system!–!among!knowledge!producers,!and!in!the!organisations,!often!firms,!where!that!knowledge!will!be!implemented!–!and!to!improving!links!between!them.!Activities!commonly!undertaken!include:6!!

• provision!of!support!to!overcome!organisations’!inertial!resistance!to!innovative!activity;!

• implementation!of!strategies!to!support!organisations!in!becoming!more!adaptable,!and!to!facilitate!interaction!and!learning!between!organisations;!

• financing!of!specific!innovative!activities!and/or!organisational!learning!and!adaptation;!

• coordination!of!activity!among!all!innovation!support!actors,!and!efforts!to!create!better@integrated!innovation!policy.!

* The!entrepreneur!is,!in!a!Schumpeterian!sense,!the!key!architect!of!innovation.!It!is!through!entrepreneurs’!translation!of!new!knowledge!into!practice!that!innovations!are!born.!An!entrepreneur!is!also,!though,!commonly!understood!in!a!wider!sense!as!any!person!who!owns!a!business!and,!in!doing!so,!takes!on!the!associated!risk.!So,!while!all!innovation!relies!on!entrepreneurs,!not!all!entrepreneurs!necessarily!implement!innovations.!

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Effective!innovation!bodies!also!reflect!important!aspects!of!an!innovation!systems!approach!in!their!governance!arrangements.!Particular!shifts!include!those:7!!

• from!government!to!governance!–!in!acknowledgement!that,!as!a!collective!endeavour,!innovation!relies!on!input!from!a!broad!coalition!of!interests;!

• from!structure!to!process!–!focusing!on,!among!other!elements,!the!processes!of!strategic!planning,!conflict!resolution!and!consensus@building;!

• from!coordination!to!collaboration!–!recognising!the!need!for!voluntary!agreement,!not!centralised!control;!

• from!accountability!to!trust!–!again,!stepping!away!from!a!highly!controlled!and!inflexible!approach;!

• from!power!to!empowerment!–!ensuring!that!non@!and!for@profit!organisations!are!involved!in!decision@making!alongside!the!public!sector.!

!Strictly,!innovation!bodies!undertake!a!narrower!range!of!activities!than!those!embodied!by!development!agencies.!Thus,!for!example,!Sweden’s!VINNOVA!commissions!and!carries!out!research,!implements!programmes!to!stimulate!innovation!and!advises!government!on!innovation!policy,!while!the!national!development!agency,!Tillväxtverket,!focuses!more!broadly!on!entrepreneurship,!competitiveness!and!regional!growth!strategies.8!!!Yet!for!all!that!certain!core!functions!are!held!in!common,!research!is!clear!that!there!is!no!‘ideal!type’!of!regional!innovation!body.!Social,!economic!and!political!antecedents,!as!well!as!current!political!structure!and!economic!makeup,!all!have!a!bearing!on!which!innovation!strategies!are!possible!and!desirable.9!!As!Table!1!makes!plain,!there!is!considerable!variation!in!the!size!and!structure!of!national!innovation!bodies!worldwide.!The!instruments!employed!by!each!also!vary!considerably,!both!in!their!individual!detail!and!in!the!ways!in!which!they!are!combined.!And!while!the!national!bodies!listed!in!Table!1!all!possess!budgets!reaching!into!the!hundreds!of!millions!of!US!dollars,!the!regional!innovation!bodies!of!South!Moravia!and!the!Basque!Country,!profiled!below,!demonstrate!the!significant!potential!that!a!far!smaller!organisation!can!realise.!!Despite!these!inevitable!variations,!the!underlying!logic!for!the!formation!of!innovation!bodies!is!largely!a!shared!one,!so!that!certain!commonalities!of!approach!can!be!observed.!!&

D4D!

Table&1!! An!illustrative!overview!of!selected!national!innovation!bodies!!!

ORGANISATION& GOVERNANCE& MISSION& ACTIVITIES& IMPACT/REACH&

Innovate&UK!!United'Kingdom!!Est:!2007!Staff:!c.325!Budget:!£615!million!(2014/15)![c.!US$965!million]!

Government!agency!(Non@Departmental!Public!Body)!under!the!Department!of!Business,!Innovation!and!Skills!(BIS)!

To!accelerate!economic!growth!by!stimulating!and!supporting!business@led!innovation!

Funding!(grants!only);!business!support!schemes;!government!procurement/R&D!contracts;!institution@building!(Catapult!Centres);!technology/!knowledge!transfer!(KTN/KTPs);!support!for!international!activities!(missions;!access!to!EU!funding)!

Programme!evaluation!data!suggest!that!Innovate!UK’s!activities!have!the!potential!to!directly!contribute!at!least!£7!billion!and!35,000!new!jobs!to!the!economy!

Enterprise&Ireland!!Ireland!!Est:!1998!Staff:!c.730!Budget:!€331!million!(2014)![c.US$378!million]!

Government!agency!under!the!Department!of!Jobs,!Enterprise!and!Innovation,!responsible!for!the!development!and!growth!of!Irish!enterprises!in!world!markets!

To!drive!Irish!enterprise!as!a!powerhouse!of!economic!growth!and!job!creation!

Funding!(grants!for!individual!entrepreneurs!and!companies);!business!support!activities;!technology!transfer!and!spin!out!assistance;!support!for!international!activities!(export!assistance,!missions,!access!to!EU!funding)!

Enterprise!Ireland@supported!companies!created!19,705!new!jobs!in!2014,!and!recorded!total!sales!of!€36.3bn!–!an!increase!of!€2.7bn!or!7.9%!on!2013!total!sales!!

Tekes!!Finland!!Est:!1983!Staff:!c.400!Budget:!€550!million!(2015)![c.US$629!million]!

Funding!agency!for!technology!and!innovation!managed!and!funded!by!the!Ministry!of!Employment!and!Economy!

To!promote!the!development!of!Finnish!industry!and!services!by!means!of!technology!and!innovations!

Funding!(grants!and!loans);!support!for!intermediaries!(VC!funds);!institution@building!(SHOK!Centres);!support!for!international!activities!(as!part!of!Team!Finland)!

In!2014,!completed!projects!generated!1,500!products,!services!or!processes,!and!1,130!patents!or!patent!applications!

VINNOVA!!Sweden!!Est:!2001!Staff:!c.200!Budget:!SEK2.9!billion!(2013)![c.US$350!million]!

Government!agency!managed!by!the!Ministry!of!Enterprise,!!Energy!and!Communications!!

To!promote!sustainable!growth!by!improving!the!conditions!for!innovation,!as!well!as!funding!needs@driven!research!

Primarily!grant!funding;!institution@building!(VINN!Excellence!Centres);!support!for!international!activities!(access!to!EU!funding)!

Since!2001,!VINNOVA!has!supported!1,400!projects!over!11!societal!challenge!strategic!areas,!investing!close!to!£210!million!per!year!in!different!initiatives!

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ORGANISATION& GOVERNANCE& MISSION& ACTIVITIES& IMPACT/REACH&

Commission&for&Technology&and&Innovation&(KTI/CTI)!!Switzerland!!Est:!1996!Staff:!c.35!Budget:!CHF150.8!million!(2014)![c.US$160!million]!

Independent!federal!commission!affiliated!to!the!Federal!Department!of!Economic!Affairs,!Education!and!Research!(EAER)%!

To!develop!and!operate!effective!and!efficient!measures!and!instruments!to!turn!untapped!scientific!potential!into!value!for!the!Swiss!economy!

Non@financial!business!support!for!companies!(mentoring);!innovation!vouchers;!R&D!funding!for!businesses!and!researchers;!capacity!building!for!entrepreneurs!and!start@ups;!

As!of!the!end!of!2014,!216!start@ups!were!enrolled!in!the!CTI’s!coaching!programme.!A!further!3,800!students!took!part!in!entrepreneurship!courses!in!2014!

Austrian&Research&Promotion&Agency&(FFG)!!Austria!!Est:!2004!Staff:!c.275!Budget:!€508!million!(2014)![c.US$580!million]!

National!funding!agency!for!industrial!research!and!development!managed!by!the!Federal!Ministry!for!Transport,!Innovation!and!Technology!(BMVIT)!and!the!Federal!Ministry!of!Science,!Research!and!Economy!(BMWFW)!

To!promote!research,!technology,!development!and!innovation!for!the!benefit!of!Austria!

Funding!(grants!only);!support!for!collaboration!between!research!and!industry!(BRIDGE!programme);!human!resources!development!and!job!exchange;!support!for!international!activities!(access!to!EU!funding)!

Funds!research!projects!(especially!within!EU!Horizon!2020!programme)!across!a!range!of!thematic!areas,!although!there!has!been!little!evaluation!of!impact!to!date!

SPRING&Singapore!!Singapore!!Est:!1996!Staff:!c.370!Budget:!S$153.65!million!(2013)![c.US$114!million]!

Government!agency!and!statutory!board!under!the!Ministry!of!Trade!and!Industry!

To!help!Singapore!enterprises!grow!and!build!trust!in!Singapore!products!and!services!

Grant!funding;!loans!for!SMEs;!business!and!intermediary!support!schemes;!education!and!training!schemes;!accreditation!and!quality!standards!training!schemes!

In!2013,!SPRING!assisted!over!100,000!SMEs,!supporting!more!than!3,000!upgrading!projects!!

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ORGANISATION& GOVERNANCE& MISSION& ACTIVITIES& IMPACT/REACH&

Industrial&Technology&Research&Institute&(ITRI)!!Taiwan!!Est:!1973!Staff:!c.5,575!Budget:!NTD!20,134!million!(2014)![c.US$615!million]!

Non@profit!publicly@!administered!R&D!organisation,!administered!by!the!Ministry!of!Economic!Affairs’!Department!of!Industrial!Technology!(DoIT)!

To!research!and!develop!industrial!technology,!the!results!of!which!are!then!transferred!to!domestic!industries!

Applied!research!and!development!of!new!technologies;!non@financial!support!services!(science!park,!incubation,!acceleration);!consultancy!and!advisory!services;!capacity@building!and!training!in!innovation;!support!for!international!activities!(collaborative!R&D)!

Credited!with!being!a!primary!driver!in!the!seeding!and!successful!development!of!Taiwan’s!semiconductor!industry.!To!date,!it!has!incubated!more!than!260!start@ups!and!spinoffs!and!generated!more!than!22,000!patents!

CORFO!!Chile!!Est:!1939!Staff:!c.175!Budget:!US$343!million!(2015)!

National!state!agency!under!the!Ministry!of!Economy,!Development!and!Tourism!!

To!improve!the!competitiveness!and!productive!diversification!of!the!country!by!encouraging!investment,!innovation!and!entrepreneurship!

Funding!(grants,!loans!and!credit!lines,!VC!and!seed!funding);!technology!and!innovation!capacity@building!(incubation,!training);!network!for!SMEs;!policy!support!and!implementation!

CORFO!played!a!pivotal!role!in!the!creation!of!the!electricity!and!fishing!industries!in!the!post@war!period.!More!recently!its!dizzying!range!of!business!support!initiatives!includes!Start@up!Chile,!which!is!seen!as!a!reference!in!ambitious!start@up!support!programmes!

FINEP!!Brazil!!Est:!1967!Staff:!c.740!Budget:!US$5!billion!(2014)!

Public!company!of!the!Brazilian!federal!government,!under!the!Ministry!of!Science!and!Technology!!

To!promote!Brazilian!economic!and!social!development!through!government!funding!of!science,!technology!and!innovation!

Grant!funding!for!research!organisations!and!businesses;!loans!for!businesses;!investment!in!funds!and!equities!

Associated!with!successful!projects!ranging!from!the!EMBRAER!Tucano!aircraft!to!the!development!of!the!biofuels!industry,!but!it!is!hard!to!isolate!FINEP’s!role.!Some!evaluations!of!sectoral!funds!incentives!show!up!to!$1.5!return!on!investment!in!R&D!for!every!$1!invested!

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The&purpose&of&NIBs&&Within!an!innovation!systems!approach,!innovation!policy!can!largely!be!understood!as!being!designed!to!overcome!one!or!more!of!three!weaknesses:10!!

• Lock,in!within!a!region!can!be!functional!(arising!from!over@dependence!between!customer!and!supplier),!cognitive!(where!close!relationships!between!actors!lead!to!groupthink)!and/or!political!(in!which!the!public!sector!defends!the!status!quo!thanks!to!close!relationships!with!key!private!sector!interests).!It!is!particularly!prevalent!in!old!industrial!regions!where!specialisation!in!a!once!thriving!industry!has!left!a!region!unable!to!adapt!to!a!new!economic!order.!

• Organisational%thinness%refers!to!a!lack!of!clusters,!support!organisations!and/or!knowledge!providers.!This!is!a!particular!challenge!in!peripheral!regions!that!are!dominated!by!SMEs!and!branch!plants,!and!where!innovation!policies!have!been!lacking.!!

• Fragmentation%denotes!a!lack!of!networks!between!elements!of!the!innovation!system,!which!results!in!low!levels!of!interactive!learning.!This!can!include!low!levels!of!interaction!between!firms,!as!well!as!been!the!two!‘sides’!of!the!system!–!knowledge!production!and!application.!

!Seen!as!the!result!of!such!systems!failures,!poor!innovation!becomes!a!matter!not!simply!of!a!physical!capital!deficit,!but!also!of!deficits!in!human!capital!(skills)!and!social!capital!(networks!and!shared!norms).!!!The!focus!of!policy!must!depend!on!the!specific!circumstances!in!the!region!in!question.!These!include!the!extent!to!which!a!region’s!weaknesses!are!identified!as!stemming!from!a!lack!of!firm@level!competencies!(‘capabilities!failure’),!insufficient!incentivisation!of!innovation!due!to!a!weakly!developed!institutional!landscape!(‘institutional!failures’),!strong!but!closed!networks!(‘strong!network!failure’)!and/or!limited!engagement!and!exchange!(‘weak!network!failure’).11!!!Whatever!its!chosen!policy!instruments,!it!should!be!clear!that!a!key!function!of!an!innovation!body!is!to!act!as!a!bridge!between!parts!of!the!innovation!system.!Given!the!complex,!and!often!ingrained,!nature!of!system!weaknesses,!this!role!must!extend!beyond!merely!coordinating!new!and!existing!services!in!the!hope!of!facilitating!ease!of!access!by!would@be!innovators.!Successful!innovation!is!an!ongoing!process.!Critical!roles!that!an!innovation!body!can!play!in!it!include:!!

• Monitoring!of!regional,!national!and!international!opportunities!and!threats.!

• Contribution,!in!collaboration!with!other!public,!private!and!third!sector!actors,!to!elaboration!of!a!strategic!innovation!plan!that!accounts!for!these.!

• Adoption!of!an!experimental,!risk@tolerant!and!adaptable!approach!to!the!design!and!implementation!of!projects!and!programmes.!

• Coordination!with!innovation!policymakers!at!the!supranational!level,!and!learning!from!innovation!activities!in!other!jurisdictions.!!

!!&

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JIC,&South&Moravia&!Context!• Regional!population:!~1.1!million!• Unemployment:!Reduced!from!12%!(2002)!to!7.8%!(2013)!• JIC!established!2003!• Investment!in!R&D!is!currently!3.4%!of!regional!GDP!• JIC!budget:!Increased!from!~£500k/yr!(2003)!to!~£1.5m/yr!(2015)!!Function!• South!Moravia!has!had!a!Regional!Innovation!Strategy!since!2002.!!• JIC!principally!focuses!on!implementation!of!this!strategy.!• It!is!responsible!for!implementing!approximately!20%!of!projects,!with!the!

rest!led!by!partners!including!universities,!the!Chamber!of!Commerce!and!non@profit!organisations.!

• Projects!focus!predominantly!on!research,!rather!than!the!skills!agenda.!!Structure!• JIC!was!established!as!a!joint!legal!entity!between!city,!region!and!local!

universities.!• It!is!one!partner!among!several,!but!also!in!charge!of!steering!direction.!• The!apolitical!agenda!of!JIC’s!director!is!central!to!its!long@term!success.!• There!are!approximately!45!employees,!with!no!intention!to!expand!further.!

! A!small!team!(1!full@time,!4!part@time)!advises!the!regional!government!on!its!Regional!Innovation!Strategy.!

! Working!groups!cover!research,!communication,!innovative!business,!education!and!higher!education.!Chairs!come!from!across!government!and!partner!universities!as!well!as!JIC.!

!Strategies!and!Instruments!• A!firm!focus!on!implementation!is!considered!crucial!to!success.!All!

innovation!policies!are!tied!to!concrete!projects!that!are!budgeted!for!and!assigned!to!a!staff!member.!This!person!is!responsible!for!demonstrating!that!the!programme!is!being!implemented,!with!funding!being!withdrawn!if!no!progress!is!made.!

• Key!instruments!include:!!! Innovation&voucher&scheme!

Vouchers!support!cooperation!between!Brno@based!researchers!and!businesses.!In!2013,!42!vouchers!–!with!a!total!value!of!CZK4!million!(~£100k)!–!were!distributed.!Over!six!rounds,!1100!applicants!have!sought!funding,!and!260!vouchers!have!been!issued.!

! Starcube&JIC!Starcube!is!a!startup!accelerator!providing!intensive!support!for!fledgling!businesses.!Access!to!seminars,!mentoring,!specialist!equipment!and!venture!funders!over!a!3!month!period!assists!entrepreneurs!in!business!plan!and!product!development,!building!contacts!and!finding!venture!funding.!

D9D!

! JIC&Master&Technology!companies!that!provide!an!innovative!product!or!service,!and!which!are!<3!years!old!and!with!turnover!under!CZK10!million!(~£270k),!are!eligible!to!apply!for!the!6!month!programme.!Benefits!include!2!hours!of!consultation!every!14!days,!and!up!to!40!hours!of!free!consultation!with!external!experts.!The!focus!is!on!improving!business!processes,!with!particular!attention!to!expansion!into!foreign!markets.!

! Platinn&programme&Technology!companies!aged!3+!can!apply!to!be!paired!with!a!mentor.!The!programme!focuses!on!achieving!growth,!whether!through!optimisation!of!internal!processes!or!identification!of!external!opportunities.!

! Brokerage&&South!Moravian!companies!and!research!institutes!are!aided!in!the!identification!of,!and!application!process!for,!grants!from!international!sources,!including!the!EU.!

!Governance!• Success!relies!on!a!low!level!of!regional!government!interference.!• JIC!experts!are!trusted!to!propose!and!implement!approaches.!!• The!regional!government!has!some!input!into!strategy!development,!but!

Brno!city!and!the!universities!tend!not!to!get!involved!in!direction@setting.!• The!regional!government!accepts!that!risk!is!an!inherent!part!of!initiating!

new!innovation!strategies.!!• A!significant!part!of!the!director’s!role!is!simply!talking!to!people!–!building!

networks,!establishing!trust!in!JIC,!and!developing!the!innovation!body’s!understanding!of!critical!issues.!

• Metrics!were!not!a!part!of!the!original!approach.!They!have!only!recently!been!adopted,!and!then!as!part!of!a!bottom@up,!not!imposed,!process.!

• European!funds!are!used!highly!selectively.!Administrative!burdens!can!make!implementation!costly.!!

!Challenges!• Mission&overload&

There!is!a!real!risk!that,!as!a!success,!JIC!will!be!given!an!additional!agenda!beyond!its!core!mission,!so!putting!core!activities!in!jeopardy.!

• Confusion&between&national/regional&initiatives&National!attempts!to!replicate!successful!JIC!programmes!put!the!latter’s!reputation!at!risk.!Funding!of!poor!projects!and!inadequate!attention!to!programme!details!damage!opinion!of!the!programmes!and!of!innovation.!

• Lack&of&buySin&Not!everyone!can!be!an!enthusiast,!and!JIC!must!carry!on!regardless.!

• Attempted&politicisation&Powerful!interests!with!political!connections!have!challenged!JIC’s!status!and!role,!in!an!attempt!to!colonise!the!same!ground.!

!

D10D!

SPRI,&Basque&Country& Context!• Regional!population:!~2!million!• Investment!in!R&D:!2.2%!of!GDP!(2012)!• Annual!budget!for!R&D!and!technological!innovation!in!SPRI!is!€2!million.!

Additional!funding!is!available!for!non@technological!innovation!under!the!Innobideak!strategy.!

• SPRI!support!for!technological!innovation!began!in!~1990,!and!for!non@technological!innovation!in!~2005.!

!Function!• SPRI!has!two!main!functions:!!

! Advising!government!on!the!definition!of!policies!and!strategies.!! Managing!the!instruments!employed!for!policy!implementation.!

• SPRI’s!strength!lies!in!its!ability!to!use!knowledge!gained!from!implementation!to!inform!effective!policy/strategy!recommendations.!

!Structure!• SPRI!is!a!public!body.!• Although!the!regional!government!makes!the!final!funding!decisions!for!

most!programmes,!as!programme!manager!SPRI!evaluates!proposals!and!makes!funding!recommendations.!

• SPRI’s!director!general!is!a!politician,!and!so!is!subject!to!replacement!every!4!years.!While!internal!structure!mirrors!that!of!the!Department!of!Industry,!however,!functional!directors!(covering!areas!such!as!innovation!and!internationalisation)!are!outside!the!political!system.!

!Strategies!and!Instruments!• Innovation!strategies!build!on!a!science,!technology!and!innovation!

ecosystem!developed!over!several!decades.!• It!is!seen!as!important!that!SPRI!proposals!align!with!company!attitudes.!

Nevertheless,!a!smart!specialisation!approach!inevitably!excludes!certain!company!activities.!

• One!key!strategy!has!been!to!support!all&companies!to!access!European!funding!streams!for!support.!In!this!way!SPRI!positions!itself!as!a!facilitator,!not!a!direct!funder.!

• Key!innovation!instruments!fall!under!the!Innobideak!innovation!strategy:!! InnobideakSLehiabide&

Product/service/market!diversification.!! InnobideakSKudeabide&and&SPrestakuntza&

Providing!training!in!advanced!management!techniques.!! InnobideakSPertsonak&

Facilitating!workers’!participation!in!the!running!of!their!companies,!to!capitalise!on!their!knowledge,!build!stability!into!the!labour!force,!and!hence!increase!competitiveness.!

!

D11D!

Governance!• SPRI!and!the!regional!government!work!closely,!with!daily!contact.!• The!relationship!of!the!regional!government!to!SPRI!is!that!of!(sole)!client.!• It!is!important!that!SPRI!remains!a!non@political!organisation.!• The!regional!government!has!committed!to!consistency!of!funding!for!SPRI’s!

programmes,!recognising!that!it!takes!a!minimum!of!10@15!years!to!see!the!results!of!new!strategies.!

• While!all!parties!acknowledge!that!risk!is!inherent!in!the!innovation!support!process,!it!is!to!some!degree!mitigated!by!all!policy/strategy!proposals!submitted!to!the!regional!government!first!being!assessed!as!technically!sound.!It!is!for!this!reason!that!SPRI’s!role!in!implementation!is!vital.!

• Given!interaction!with!the!political!system,!it!is!sometimes!necessary!for!SPRI!to!hold!ideas!for!new!initiatives!over!until!a!new!administration!is!in!place.!

!Challenges!• Selecting&priorities&

Priority!selection!under!the!smart!specialisation!strategy!has!been!difficult.!The!small!size!of!the!region!and!the!presence!of!powerful!companies!has!complicated!selection.!To!accommodate!as!many!companies!as!possible,!one!of!the!three!priority!domains!was!chosen!for!its!horizontal!applicability.!

• Effective&communication&Companies!and!government!departments!need!to!be!convinced!that!the!selected!domains!are!not!the!same!as!sectors,!and!that!it!is!therefore!possible!to!conduct!work!covered!under!a!priority!domain!from!within!many!different!sectors.!

• Aligning&government&activities&&Not!all!departments!are!yet!aligned!behind!smart!specialisation.!Achieving!alignment!is!complicated!because!relevant!departments!operate!outside!SPRI’s!areas!of!activity.!

• Balancing&independence&with&close&relationships&An!effective!innovation!body!needs!to!have!sufficient!power/independence,!but!also!to!maintain!close!working!relationships!with!government.!

• Managing&relationships&The!creation!of!InnoBasque,!a!private!organisation!for!the!promotion!of!innovation!established!on!the!president’s!initiative,!has!created!a!new!challenge.!Potential!exists!for!InnoBasque!and!SPRI!to!fulfil!complementary!roles,!since!each!operates!in!a!different!sphere.!However,!there!is!also!potential!for!conflict!over!the!territory!that!each!should!occupy.

D12D!

Operational&Models&&

Scope&Innovation!bodies!can!focus!their!attentions!on!innovation!policy!and!strategy,!or!on!the!actions!that!set!those!policies!in!train.!In!some!cases!one!activity!is!undertaken!in!isolation!from!the!other!–!with!action!the!more!likely!focus.!In!others,!as!in!the!Basque!Country’s!SPRI,!the!two!are!regarded!as!necessarily!complementary.!!Where!action!is!pursued,!the!scope!of!active!engagement!with!the!national!or!regional!economy!ranges!from!total!structural!overhaul,!introducing!new!growth!sectors!into!the!economy,!to!increasing!innovation!levels!through!upgrading!of!existing!industries.!!In!all!cases,!the!well@established!triumvirate!of!government,!business!and!higher!education!accounts!for!much!of!the!innovation!bodies’!attention.!Examples!exist,!however,!of!a!more!expansive!view.!Switzerland’s!CTI!has!a!mandate!that!encompasses!provision!of!support!to!civil!society.!VINNOVA!is!committed!to!supporting!public!sector!innovation.!And!InnovateUK!envisages!a!role!for!government!extending!beyond!that!of!support!service!provider,!to!one!in!which!government!needs!are!translated!into!business!opportunities.!!While!a!strong!sector!policy!has!been!a!feature!of!past!strategies!(as,!for!example!at!Tekes!during!the!1980s,!when!a!concerted!effort!was!made!to!expand!the!Finnish!ICT!sector),!in!many!cases!this!has!given!way!to!cross@cutting!thematic!priorities.!Cross@sector!(‘horizontal’)!strategies!now!account!for!60%!of!Tekes’!work,!and!are!also!a!feature!of!innovation!bodies!from!Chile!to!Singapore.!Nevertheless,!industry@specific!(‘vertical’)!strategies!continue!to!be!applied!alongside!this!new!thematic!focus.!!!Services&and&Instruments&The!services!offered!by!innovation!bodies!can!be!understood!as!responding!to!market!failures!or!system!failures.!In!the!first!instance,!the!goal!is!to!directly!influence!achievement!of!particular!innovative%outcomes.!Certain!infrastructure!projects,!as!well!as!innovation!bodies’!direct!involvement!in!research!and!development,!aim!at!this!goal.!In!the!second!case,!instruments!are!designed!to!improve!the!innovation%processes%in!operation.!These!include!advisory,!training!and!networking!activities.!!Services!are!targeted!at!knowledge!producers,!including!universities!and!research!institutes,!at!firms!and!other!organisations!with!innovation!capacity!or!potential,!or!at!bridging!gaps!between!the!two.!!While!the!specifics!of!the!instruments!employed!by!innovation!bodies!are!unique!to!each,!they!can!be!generalised!as!follows:12!!&&

D13D!

1.&Networking&Networking!activities!include!a!focus!on:!• providing!access!to!expert!networks&• building!networks!among!SMEs&• brokerage!and!strategic!matchmaking,!both!between!companies!and!

venture!capitalists,!and!between!potential!partners!on!specific!funding!calls&• hosting!conferences!and!events!aimed!at!sharing!knowledge!and!

establishing!contacts&• building!longer!term!university@business!relationships!by!improving!

mobility!between!organisations!and!facilitating!international!academic!exchange&

&2.&Advisory&services&Services!offered!by!innovation!bodies!include:!• advice!on!developing!business!plans!• access!to!piloting!and!scale@up!facilities!• support!for!feasibility!studies!• provision!of!online!open@access!resources!on!business!development!• tailored!support!that!connects!SMEs!with!appropriate!mentors,!advisors!

and!consultants!!Advisory!services!are!regularly!provided!as!part!of!a!package!along!with!project!funding,!and!are!incorporated!into!longer@term!programmes!such!as!Start@Up!Chile!and!JIC’s!business!growth!programmes.!!3.&Skills&and&training&• Short@term!programmes!and!training!events,!many!tailor@made!for!

individuals!or!firms,!are!a!common!offering.!• Innovation!bodies’!websites!can!act!as!a!portal!to!online!training!resources.!• Longer!training!courses,!like!those!offered!by!JIC!(see!above)!and!Start@Up!

Chile,!incorporate!access!to!office!space!and!social!and!finance!networks!with!mentoring!over!a!prolonged!period!(24!weeks!in!Chile!and!up!to!6!months!for!JIC’s!longest!programme).!In!the!Chilean!case,!the!government!also!makes!temporary!one@year!visas!available!to!foreign!nationals,!in!an!attempt!to!attract!the!widest!possible!pool!of!entrepreneurs.!!

• The!training!offered!can!be!wide@ranging!or!highly!targeted.!Whereas!JIC!and!CORFO!aim!to!encourage!broad@based!innovation,!making!demonstration!of!growth!potential!their!principal!course!entry!requirement,!Taiwan’s!ITRI!incorporates!training!within!a!more!centrally@directed!framework.!!

!4.&Finance&In!their!funding!of!the!private!sector,!innovation!bodies!make!funding!available!both!for!development!of!specific!innovations!and!for!innovation!capacity@building!activities.!Alongside!this,!many!provide!direct!funding!for!research!centres!and!universities!(discussed!under!Infrastructure%projects,!below).!Where!this!funding!comes!with!a!requirement!of!researcher!collaboration!with!a!private!

D14D!

sector!partner,!it!can!also!function!to!bridge!gaps!between!knowledge!producers!and!entrepreneurs.!!Grants'and'vouchers'are!regularly!distributed!by!the!bodies!reviewed!here.!Particular!strands!of!support!focus!on:!!• start@ups!• capability!development!• commercialisation!• business!leadership!• SME!growth!

!Match0funding!from!the!recipient!is!a!common!requirement!(see!Governance%Arrangements:%Funding,!below).!The!most!commonly!used!options!for!allocating!funding!are:!responsive@mode,!and!sometimes!open@window,!calls;!and!calls!under!one!of!a!small!number!of!thematic!priorities.!

!Although!loans!and!venture!capital!are!marginally!less!common,!InnovateUK!is!one!body!that!has!expressed!an!interest!in!exploring!them!as!an!alternative.!!

!Tekes!(Finland)!and!CORFO!(Chile)!both!provide!venture'capital'funding!to!companies!with!innovation!potential.!Tekes!is!a!contributor!to!a!state@owned!intermediary!organisation!through!which!VC!funds!are!distributed.!CORFO!is!also!a!provider!of!co@funded!seed'capital'for!innovative!firms!with!growth!potential.!!Tekes!provides!low0interest'loans'for!development!and!piloting!of!new!products,!services,!production!methods!and!business!models.!The!loan!period!is!generally!seven!or!ten!years,!and!in!some!instances!if!expected!results!are!not!achieved!then!the!loan!becomes!non@repayable.!!For!some!innovation!bodies,!financial!packages!form!the!principal!support!mechanism!offered.!Taiwan’s!ITRI!is!a!rare!case!in!providing!no!direct!financial!support,!instead!focusing!its!efforts!on!in@house!R&D!and!knowledge!transfer!to!indigenous!companies.!

!It!is!not!uncommon!to!see!funder@recipient!relationships!stretching!over!a!number!of!years.!While!CORFO!regularly!commits!to!funding!over!2@3!years,!Sweden’s!VINNOVA!funds!a!company’s!innovation!trajectory!in!three!phases:!ideas!and!feasibility;!development;!implementation.!Release!of!monies!for!later!stages!is!dependent!on!successful!completion!of!the!previous!one.!!!5.&Infrastructure&projects&The!three!most!frequently!realised!infrastructure!projects!are:!• Incubator!facilities!!

Arrangements!include!co@funding!of!centres,!outsourcing!provision!to!an!intermediary!organisation,!and!funding!independent!facilities.!

• One@stop!centres!for!SMEs!!Centres!provide!office!and!lab!space,!together!with!consultancy!and!training!services.!

D15D!

• Thematic!R&D!centres!Recently!developed!models!include:!the!UK’s!Catapult!network,!which!uses!public!and!private!income!to!fund!physical!centres!dedicated!to!late@stage!R&D;!and!Finland’s!Strategic!Centres!for!Science,!Tehnology!and!Innovation!(SHOK),!which!undertake!industry@led!pre@competitive!research!in!pursuit!of!breakthrough!innovations.!!

6.&Policy&advice&and&design&The!relationship!between!policy!and!delivery!functions!varies!significantly!between!innovation!bodies:!• The!delivery!function!of!some!bodies!has!evolved!out!of!an!original!

government!advisory!role!(e.g.!CTI,!InnovateUK)!• In!other!cases!the!integration!of!delivery!and!policy!roles!is!regarded!as!

fundamental!to!the!body’s!effective!operation!(e.g.!SPRI)!• A!third!set!of!bodies!functions!principally!in!an!implementation!mode!(e.g.!

SPRING)!!As!described!below!in!Governance%Arrangements:%Relationships%with%Government,!there!are!varying!degrees!of!formality!to!the!process!of!NIB!feedback!into!government.!!7.&Marketing!Where!bodies!have!an!international!division!or!overseas!offices,!these!have!focused!on:!!• promoting!inward!investment!!• encouraging!R&D!partnerships!with!domestic!firms!• facilitating!development!of!firms’!international!strategy!as!a!means!to!

growth!–!through,!for!example,!trade!missions!• learning!from!innovation!and!R&D!practices!in!other!countries!–!in!Europe!

this!includes!involvement!with!the!TAFTIE!network!of!innovation!agencies!!Not!all!innovation!bodies!undertake!projects!targeted!internationally,!or!have!an!international!presence:!• In!Singapore,!international!initiatives!are!undertaken!by!SPRING’s!sister!

agency.!• Switzerland’s!CTI!works!with!a!network!of!science!and!technology!advisors!

based!in!Swiss!embassies.!!In!certain!cases,!expansion!into!international!offices!has!only!occurred!as!part!of!a!growth!strategy!once!the!innovation!body!has!become!more!established.!Since!its!establishment!in!2007,!InnovateUK!has!shifted!from!largely!domestic!concerns!towards!more!engagement!with!international!engagement.!Its!Brussels!office!opened!in!2014.!!8.&Direct&involvement&in&research&The!degree!to!which!an!innovation!body!seeks!to!influence!the!specific!form!of!innovation!varies.!Systems!range:!!• from!the!highly!centrally!directed!(e.g.!Taiwan,!where!ITRI!undertakes!

significant!amounts!of!R&D!and!provides!no!direct!funding!to!industry);!

D16D!

• to!those!which!marry!responsive@mode!funding!with!an!element!of!targeting,!through!the!use!of!thematic!priorities!or!funding!of!certain!need@driven!research!projects!(e.g.!Sweden).!

!!9.&Coordination&and&outsourcing&Where!density!of!innovation!support!organisations!is!greatest,!innovation!bodies!can!take!on!a!coordinating!role.!The!outsourcing!of!delivery!functions!to!other!existing!agencies!can!allow!the!new!body!to!remain!smaller,!and!the!region!or!nation!to!develop!a!rich!ecosystem!of!innovation!organisations.!With!approximately!45!employees,!JIC!would!not!wish!to!grow!larger.!In!Chile,!CORFO!is!focusing!not!on!growing!itself,!but!on!expanding!its!partner!network.!As!VINNOVA!and!SPRI!have!found,!however,!tensions!can!arise!when!multiple!organisations!operate!in!the!same!innovation!field.!!!Governance&Arrangements&&

Relationship&with&Government&&The!most!common!governance&model&for!existing!innovation!bodies!is!that!of!arm’s@length!government!agency.!JIC’s!foundation!as!a!joint!legal!entity!between!city,!region!and!local!universities,!and!ITRI’s!as!a!non@profit!R&D!organisation,!set!them!apart!as!more!unusual!organisational!forms.!Regardless!of!their!particular!legal!form,!some!degree!of!independence!from!government!is!central!to!the!innovation!bodies!discussed!here.!Budgetary!control!and!operational!autonomy!allow!them!freedom!to!experiment!with!new!programmes,!and!enable!them!to!act!as!a!source!of!independent,!trusted!advice!for!both!government!and!other!innovation!actors.!!However,!within!this!model,!the!degree!of!government!involvement!in!their!operations!varies!considerably:!!

• Organisations!such!as!Tekes!and!JIC!retain!significant!autonomy!from!their!sponsoring!government!departments,!and!possess!the!powers!to!design!programmes!and!assign!budget!within!a!broadly!defined!strategic!direction.!

• VINNOVA!is!subject!to!somewhat!greater!government!oversight.!New!programmes!and!initiatives!must!be!presented,!with!budget,!for!approval.!Periodically!–!as!in!2008/9!during!a!crisis!in!the!Swedish!automotive!sector!–!the!government!further!directs!the!focus!of!VINNOVA’s!activities.!

• ITRI’s!board!includes!government!representatives!who!directly!influence!the!body’s!agenda.!Around!60%!of!the!body’s!budget!is!earmarked!for!specific!programmes,!with!the!remainder!free!for!ITRI!to!allocate.!SPRING’s!17@member!board!similarly!shapes!both!strategic!direction!and!key!initiatives.!

!The!course!of!influence!is!by!no!means!one@directional.!In!some!cases!(such!as!InnovateUK!and!Tekes)!co0location&of!a!subset!of!innovation!body!staff!and!civil!servants!within!the!offices!of!the!sponsoring!department!aids!close!working!relationships.!At!SPRI,!daily!contact!with!the!Basque!regional!government!is!maintained.!This!is!aided!by!an!organisational!structure!which!mirrors!that!in!

D17D!

the!Department!of!Economic!Development!and!Competitiveness,!and!which!sees!SPRI’s!functional!directors!reporting!to!government!rather!than!SPRI!managers.!!Four!factors!in!the!innovation!body@government!relationship!appear!to!have!proved!particularly!conducive!to!success!over!the!longer!term:!!

• High0level'political'buy0in'and'support%aided!the!establishment!of!bodies!such!as!SPRI!and!JIC,!giving!them!a!mandate!and!clear!remit.!!

• There!has!also!been!acceptance'of'the'long'timescales'often!needed!to!achieve!change!in!the!innovation!system.!In!the!Basque!Country!there!is!explicit!recognition!that!the!results!of!innovation!programmes!can!take!10@15!years!to!emerge.!

• While!examples!exist!of!consistency!of!approach!resulting!from!prolonged!periods!of!political!stability,!continuity'can!also!be!achieved!in!the!absence!of!such!stability.!VINNOVA’s!four@year!funding!cycles,!for!example,!introduce!a!degree!of!cushioning!from!day@to@day!interference!and!give!sufficient!independence!to!allow!new!instruments!to!be!designed!and!tested.!

• At!the!same!time,!the!most!successful!bodies!are!those!that!achieve!a!balance!between!close!working!relationships!and!autonomy.!!

!&Funding&While!budgets!can!easily!reach!into!the!hundreds!of!millions!of!US!dollars,!notable!successes!have!been!achieved!with!far!smaller!amounts.!Indeed,!in!the!case!of!South!Moravia’s!JIC,!the!organisation!has!credited!the!modest!scale!of!its!investments!with!its!innovation!success.!Larger!programmes!have!been!found!to!carry!a!greater!administrative!burden,!to!elicit!wasteful!resource!allocation,!and!to!risk!giving!innovation!activity!a!bad!name,!so!stifling!its!further!development.!!Common!to!many!of!the!innovation!bodies!studied,!and!a!factor!that!can!enable!public!investment!to!be!capped!at!a!relatively!lower!level,!is!a!requirement!for!some!degree!of!co@funding:!!

• Funding!for!innovation!projects!is!frequently!made!available!on!a!match@funded!basis:!! InnovateUK!and!VINNOVA!both!regularly!require!recipients!to!match!

their!financial!input.!!! Chile’s!CORFO!provides!seed!capital!for!innovative!and!high@growth@

potential!firms!using!a!co@funding!model.!! In!Singapore,!SPRING!caps!its!financial!contributions!at!50@70%!of!

qualifying!costs!or!expenses.!!

• Research!and!innovation!institutes!have!also!been!developed!using!co@funding:!! CORFO!co@funds!its!Centres!of!International!Excellence!together!with!

national!research!institutes.!!! In!Finland,!Tekes’!financial!commitment!to!the!Strategic!Centres!for!

Science,!Tehnology!and!Innovation!(SHOK)!amounts!to!no!more!than!

D18D!

60%!of!their!total!cost.!The!remainder!is!provided!by!companies!and!research!organisations.!

!In!addition!to!enabling!an!innovation!body!to!minimise!its!costs,!co@funding!serves!to!underpin!an!ethos!of!co@production!of!knowledge.!It!can!therefore!have!value!as!a!means!of!promoting!a!collaborative!approach!to!innovation.!!!Monitoring&and&Evaluation&In!designing!its!approach!to!monitoring!and!evaluation,!there!are!several!questions!that!should!be!of!particular!concern!to!an!innovation!body:!!1.&What&is&being&evaluated?&Evaluations!can!be!of!innovation!programmes,!or!of!the!individual!projects!funded!by!them.!Their!purpose!can!be!to!determine!what!activities!have!taken!place,!or!to!identify!the!outcomes!and!impacts!of!those!activities.!Where!progress!against!targets!is!assessed,!measurement!can!be!used!not!only!to!evaluate,!but!to!incentivise.!Different!purposes!require!different!evaluation!tools.!Clarity!over!the!purpose!of!the!evaluation!is!therefore!essential!for!its!effective!design.!!2.&When&is&evaluation&to&be&undertaken?&Post!hoc!analyses!serve!the!important!function!of!determining!programme!or!project!success.!Although!their!findings!can!inform!future!programme!design,!unlike!monitoring!undertaken!while!a!programme!is!in!train!they!cannot!contribute!to!the!adaptation!–!or,!where!necessary,!cancellation!–!of!the!current!programme.!!The!effects!of!policy!interventions!are!only!visible!over!the!long!term13!and!so,!as!Basque!Country!officials!have!accepted,!it!might!be!necessary!to!allow!10@15!years!before!a!judgement!can!be!made!on!their!success.!Inevitably!given!the!pressures!of!shorter!political!terms,!this!can!lead!to!tension.!What!strategy!might!best!overcome!it?!!3.&What&arrangements&can&be&made&to&ensure&accountability?&Ongoing!monitoring!at!JIC!has!been!coupled!with!requirements!for!programmes!to!be!designed!in!detail!and!budgeted!prior!to!initiation,!and!to!be!placed!under!the!responsibility!of!a!named!staff!member.!Coupled!with!JIC’s!powers!to!cancel!programmes!that!are!proving!ineffective,!clear!lines!of!accountability!have!been!created!and!can!be!enforced.!!4.&What&form&will&the&evaluation&take?&The!form!that!key!performance!indicators!should!take!might!be!anticipated!as!a!key!concern.!However,!a!more!fundamental!question!first!presents!itself:!should!KPIs!be!adopted!at!all?!!!Certainly!the!norm!is!to!identify!metrics!against!which!performance!can!be!measured.!JIC,!however,!has!taken!a!quite!different!line.!Only!in!the!past!four!years!has!it!introduced!metrics!as!part!of!its!evaluations,!and!these!only!following!a!collaborative!design!process.!Prior!to!this,!JIC’s!success!was!seen!as!a!

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function!of!its!ability!to!complete!a!set!of!activities!that!the!government!minister!in!charge!had!defined.!There!are!several!strengths!to!this!approach:!!

• If!programmes!are!to!be!allowed!to!be!experimental,!pre@determining!the!outcomes!against!which!success!will!be!measured!is!potentially!counterproductive.!

• Innovation!need!not!be!R&D@based,14!and!its!outcomes!are!broadly!societal,!not!narrowly!economic.!As!Tekes!is!currently!aware,!current!measures!do!not!account!for!these!broader!effects.!Indeed,!it!is!doubtful!whether!any!metrics!can!fully!capture!such!richness.!

• While!certain!direct!effects!can!be!readily!captured,!indirect!effects!of!policy!interventions!–!good!or!bad!–!are!far!harder!to!measure.!A!system!that!relies!on!a!narrow!set!of!indicators!risks!overlooking!these!effects.!!

• As!effort!is!channelled!into!those!activities!that!are!measured,!equally!beneficial!activities!that!are!not!risk!falling!by!the!way.!

&5.&Who&will&carry&out&the&evaluation?&Will!evaluations!be!contracted!out!to!external!bodies,!will!capacity!be!made!available!to!allow!in@house!evaluation,!or!will!the!different!requirements!of!the!various!forms!of!monitoring!and!evaluation!lead!to!a!combination!of!both!approaches?!!!

• At!InnovateUK,!in@house!capacity!has!been!created!following!a!period!in!which!programmes!were!evaluated!by!external!consultants.!This!has!allowed!for!improved!monitoring!of!ongoing!programmes.!

• A!quite!different!model!has!been!adopted!by!Taiwan’s!ITRI,!where!annual!evaluations!are!conducted!by!a!committee!comprising!30!industry!and!academic!members.!

!6.&Should&evaluations&be&directly&tied&to&funding?&Programme!and!project!evaluations!can!both!be!used!to!determine!future!funding!allocations.!!

• ITRI!receives!an!annual!budget!that!is!directly!reliant!on!the!previous!year’s!performance.!If!all!targets!have!been!met,!it!receives!90%!of!the!following!year’s!budget.!Only!if!targets!are!exceeded!does!it!unlock!the!remaining!10%.!

• Stage@by@stage!evaluations!are!a!vital!tool!for!VINNOVA!in!its!relationship!with!the!organisations!it!funds.!Only!by!successfully!meeting!the!targets!set!in!earlier!phases!can!an!organisation!unlock!further!funding.!

• For!many!innovation!bodies,!however,!no!such!direct!link!exists!from!evaluation!to!funding.!

!& &

D20D!

A&Welsh&Innovation&Body:&relationship&to&other&agencies&!A!new!era!of!open!innovation!is!emerging.!Regions!that!will!succeed!will!be!those!that!can!mobilise!regional!networks!in!pursuit!of!innovation.!A!national!innovation!body!is!increasingly!seen!as!part!of!the!good!practice!toolkit!to!design!and!deliver!on!these!networks.!!Where!regional!policy!and!politics!are!not!aligned!to!practice,!however,!even!well!laid!plans!will!go!astray.!Context!is!king.!Innovation!body!design!must!start!from!a!clear!understanding!of!the!political,!economic!and!institutional!makeup!of!the!region,!and!of!the!granularity!of!its!innovation!system.!A!Welsh!innovation!body!will!be!no!exception.!!Wales!is!already!exhibiting!clear!evidence!of!good!practice!in!its!approach!to!innovation.!Welsh!innovation!projects!have!been!shortlisted!in!the!EU’s!RegioStars!Awards!for!three!consecutive!years,!with!a!number!of!awards!won.!Wales’!membership!of!the!smart!specialisation!platform!has!seen!its!outline!strategy!positively!peer!reviewed.!And,!in!the!design!of!that!strategy,!expert!views!were!incorporated!from!a!stakeholder!committee!drawn!not!just!from!government!but!from!the!business!and!academic!communities.!The!open!and!collaborative!design!of!science!and!innovation!strategies!constitutes!state@of@the@art!good!practice.!!That!said,!the!Welsh!Government!cannot!afford!to!ignore!the!necessity!of!a!still!more!networked!approach!to!innovation.!While!positive!things!are!happening,!there!is!a!sense!from!stakeholders!that!much!of!the!innovation!offer!remains!ad!hoc,!and!could!be!far!better!synchronised.!!!From!the!seven!Enterprise!Zones!to!the!City!Region!Boards,!and!from!the!programmes!of!the!CBI!and!FSB!to!local!authority!offers,!a!bewildering!array!of!institutions!and!offers!forms!an!often!impenetrable!innovation!jungle.!Improved!coordination!could!only!serve!to!improve!the!profile!of,!and!access!to,!innovation!resources.!!The!imperative!for!a!more!networked!approach!and!for!the!better!coordination!of!resources!together!make!a!strong!and!credible!case!for!the!establishment!of!a!national!innovation!body!for!Wales.!Its!value!will!lie!in!its!ability!to!!to!identify!good!practice,!to!encourage!its!application,!and!to!mobilise!action!in!support.! ! !

D21D!

! References&!1!Schumpeter,&J.A.&(1983),!The%Theory%of%Economic%Development,!Transaction!Books.!!2!Healy,&A.&and&Morgan,&K.,!‘Spaces!of!Innovation:!Learning,!Proximity!and!the!Ecological!Turn’,!Regional%Studies%46(8):!1041@53.!Also:!Moulaert,&F.,&MacCallum,&D.,&Mehmood,&A.&and&Hamdouch,&A.&(2013),!The%International%Handbook%on%Social%Innovation,!Edward!Elgar.!!3!Fagerberg,&J.,!‘Innovation:!a!guide!to!the!literature’,!in:!J.!Fagerberg,!D.C.!Mowery!and!R.R.!Nelson!(2005),!The%Oxford%Handbook%of%Innovation,!OUP.!Also:!Schumpeter,&J.A.!(1983),!The%Theory%of%Economic%Development,!Transaction!Books;!Porter,&M.,!‘Clusters!and!the!new!economics!of!competition’,!Harvard%Business%Review%76(6):!77@90.!!4!Fiore,&A.,&Grisorio,&M.J.&and&Prota,&F.,!‘Regional!innovation!systems:!which!role!for!public!policies!and!innovation!agencies?!Some!insights!from!the!experience!of!an!Italian!region’,!European%Planning%Studies%19(8):!1399@1422.!!5!Jacob,&M.,!‘Utilization!of!social!science!knowledge!in!science!policy:!Systems!of!Innovation,!Triple!Helix!and!VINNOVA’,!Social%Science%Information%45(3):!431@62;!Tödtling,&F.&and&Trippl,&M.,!‘One!size!fits!all?!Towards!a!differentiated!regional!innovation!policy!approach’,!Research%Policy%34:!1203@19.!!6!Prota,&F.,&Fiore,&A.&and&Grisorio,&M.J.,!‘The!regional!innovation!agencies!in!Europe:!a!comparative!analysis’,!in:!N.!Bellini,!M.!Danson!and!H.!Halkier!(2014),!Regional%Development%Agencies:%The%Next%Generation?,!Routledge.!!7!Johnsen!et%al.,!referenced!in!Estensoro,&M.&and&Larrea,&M.,!‘The!evolution!of!local!development!agencies!from!service!providers!to!facilitators!in!knowledge!networks!in!the!Basque!Country:!the!role!of!academic!expertise!in!the!change!process’,!in:!N.!Bellini,!M.!Danson!and!H.!Halkier!(2014),!Regional%Development%Agencies:%The%Next%Generation?,!Routledge.! 8!Jacob,&M.,!‘Utilization!of!social!science!knowledge!in!science!policy:!Systems!of!Innovation,!Triple!Helix!and!VINNOVA’,!Social%Science%Information%45(3):!431@62.!Also:!www.tillvaxtverket.se/!!9!Tödtling,&F.&and&Trippl,&M.,!‘One!size!fits!all?!Towards!a!differentiated!regional!innovation!policy!approach’,!Research%Policy%34:!1203@19;!Broberg,&J.C.,&McKelvie,&A.,&Short,&J.C.,&Ketchen&Jr.,&D.J.&and&Wan,&W.P.,!‘Political!institutional!structure!influences!on!innovative!activity’,!Journal%of%Business%Research%66:!2574@80;!Jacob,&M.,!‘Utilization!of!social!science!knowledge!in!science!policy:!Systems!of!Innovation,!Triple!Helix!and!VINNOVA’,!Social%Science%Information%45(3):!431@62.!!

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10!Tödtling,&F.&and&Trippl,&M.,!‘One!size!fits!all?!Towards!a!differentiated!regional!innovation!policy!approach’,!Research%Policy%34:!1203@19.!Also:!Grabher,&G.,!‘The!weakness!of!strong!ties’,!in!G.!Grabher!(1993),!The%Embedded%Firm.%On%the%socioeconomics%of%industrial%networks,!Routledge.!!11!Coenen,&L.,&Moodysson,&J.&and&Martin,&H.,!‘Path!renewal!in!old!industrial!regions:!possibilities!and!limitations!for!regional!innovation!policy’,!Regional%Studies%49(5):!850@65.!!12!This!categorisation!draws!on!Cardiff!University’s!research!on!European!innovation!bodies,!and!on!evidence!gathered!for!Nesta’s!ongoing!study!of!cases!worldwide.!It!also!accords!with!data!from!62!European!innovation!bodies,!as!described!in![6]!Prota,&Fiore&and&Grisorio.!!13!Huggins,&R.&and&Williams,&N.,&‘Entrepreneurship!and!regional!competitiveness:!the!role!and!progression!of!policy’,!Entrepreneurship%and%Regional%Development!23(9@10):!907@32.!!14!Lee,&YSN.,!‘Evaluating!and!extending!innovation!indicators!for!innovation!policy’,!Research%Evaluation,!Advance!Access!July!30,!2015,!doi:10.1093/reseval/rvv017.!!!