Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Understanding smart specialisation Dominique Foray KEEN Regions – final conference Brussels – 17th April, 2012

1 - Introduction Into what domain, what activity, a region would benefit from and should specialize in R&D and innovation? –Regions cannot do everything in STI so they need to focus on certain domains –They need to focus by developing distinctive and original areas of specialisation (not by imitating each other) These domains where innovative projects will complement the region’s other productive assets Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Smart specialisation is largely about the policy process to select and prioritize fields or areas where a cluster of activities should be developed Setting priorities, selecting fields always entail risks for policy makers The ‘business as usual’ strategies to minimize risks in setting priorities Smart specialisation suggests another strategy –To let entrepreneurs discovering the right domains of future specialisations –To start a policy at a certain point in the development cycle where a degree of local commitment and development have already occured and achieved Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

D.Foray, P.A. David and B.Hall –Smart Specialisation: the Concept

It is not a planning doctrine that would require a region to specialize in a particular set of industries. It is an approach to policy that considers whether those activities already strong or showing promise for a region can benefit from (more) R&D and innovation Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

2 - Stories Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Publicité en 1910 Lunettes Léon Jeantet

Publicité en 1910 Lunettes Léon Jeantet Entrepreneurial discovery Entry & growth Policy Structural evolution

Med.Tech. in Switzerland ° : location of med-tech manufacturers and suppliers Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI 1’300 companies 45’000 employees Annual turnover of CHF 20.3 billion Share of export:70% Global leaders: Synthes, Straumann A global hub for MNCs R&D

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Theodor Kocher Nobel Laureate Medicine, 1909, transformed the InselSpital (Bern) into a tool factory Traditional handcraft skills in mechanical and clock manufacturing First clinic for orthopaedic applications in Orbe, 1780

Critical episodes Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Martin Allgöwer

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Hansjörg Wyss Martin Allgöwer

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Entrepreneurial discovery!

Patents granted at EPO Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Finnish pulp & paper The Finnish Pulp and Paper (P&P) industry views nanotechnology as promising source of valuable applications innovations, and its firms are taking steps to assess this potentiality. Some of the P&P companies are responding to these opportunities by increasing their overall internal R&D investments. The goal is not only about implementing available technologies but also exploring recent advances in areas of nanotechnology and biotechnology. Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Moving from nails to eye- glasses Inventing medical technologies Discovering the potential of nanotech. in pulp & paper

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Moving from nails to eye- glasses Inventing medical technologies Discovering the potential of nanotech. in pulp & paper Entrepreneurial Discoveries !!

3 - The dynamics of.. Entrepreneurial discovery Entry & growth, agglomeration, clusters –It constitutes the confirmation that others see the discovery as meaningful –‘Entry’ is desirable to generate agglomeration externalities (clusters) and a diversity of innovators (large and small) Structural changes –The outcome of entrepreneurial discoveries is not a simple innovation. It is about structural changes Spaces

Not only for the best Innovation is multi-dimensional; not only one game in town Basic inventions and development of applications –With focus on different sectors, KEEN Regions has greatly used this framework At minimum smart specialisation strategies transform less advanced regions into good followers Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Entries & growth Transition Modernisation Diversification Foundation Structural evolution Discovery 4 - Policy

Entries & growth Transition Modernisation Diversification Foundation Structural evolution What are the structural conditions and policies which will increase the likelihood of such event? Discovery 4 - Policy

Entries & growth Transition Modernisation Diversification Foundation Structural evolution Is the dynamics replicable? Discovery 4 - Policy

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Entries & growth Transition Modernisation Diversification Foundation Structural evolution To be flexible and rigid Discovery 4 - Policy

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Entries & growth Transition Modernisation Diversification Foundation Structural evolution Regions are open Building extra-regional connections is key (Market, Expertise, Neighborhood) Discovery 4 - Policy e e m n e

There are as many special cases as regions in Europe Regularities? Typologies? –Metropolitan KIS –Public knowledge centers –High tech regions –Traditional southern regions –Knowledge absorbing regions –Skilled industrial east European regions –Skilled technological regions Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

RA : rich in entrepreneurial capabilities RB: strong history of industries’development not necessarily associated with strong entrepreneurship RC: poor in entrepreneurial capabilities Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Three steps Supporting the discovery process Detecting discoveries and making sound evaluation of potentials Defining a process which will empower those actors most capable of realising the potential (entries & growth) Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

5 - Three final observations Smart specialisation does not mean uniformisation –Related diversification at regional level –Greater diversity at system level Smart specialisation needs to be based on powerful industry structure –Firm’s diversity –Innovation needs to be not too concentrated (avoid creative myopia) Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Not only a value for individual regions but also at system level (the EU, the US, Japan, South Korea, Mexico or Australia) Smart specialisation at regional level will promote greater diversity at system’s level Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

All these policy challenges…. –Supporting the discovery process –Detecting discoveries and making sound evaluation of potentials –Defining a process which will empower those actors most capable of realising the potential … require unusual observation and analysis capabilities by policy makers and regional agencies Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Thanks!