Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Smart specialisation : from academic idea to political instrument Dominique Foray December 14th, 2011 Staff Training Session _ Smart Specialisation European Commission

D.Foray, P.A. David and B.Hall Smart Specialisation: the Concept ra/publication_en.cfm

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 R&D and innovation Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Credo –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) 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 prioritize Smart specialisation suggests another strategy –To let entrepreneurs discovering the right domains of future specialisations Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

The med-tech smart specialisation 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

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Theodor Kocher Nobel Laureate Medicine, 1909 Traditional handcraft skills in mechanical and clock manufacturing First clinic for orthopaedic applications in Orbe, 1780

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

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI The genetic causal moment!

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

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Discovery Entry Clustersformation Structural evolution Pre-history

The centrality of entrepreneurial discovery An essential principle The role of entrepreneurial knowledge Making a clear cut distinction between smart specialisation and the older policies 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 At the regional government, we search and select our smart specialisations

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI At the regional government, we search and select our smart specialisations NO !

How to be pragmatic? By asking where is (who has) the entrepreneurial knowledge? Firms (best case) Universities in the region National research institute with regional agencies Clusters managers 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

Imitative entry/collective emulation Imitative entry is desirable to generate agglomeration externalities (clusters) –Imperfect appropriation raises a well recognized and difficult policy problems What is the logic of the clustering phase? Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Structural changes (taxonomy) The outcome of entrepreneurial discoveries is not simple innovation. It is about structural changes and related diversification Modernisation Transition True diversification Radical foundation 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 Discovery Collective move Clustersformation Policy Transition Modernisation Diversification Foundation Structural evolution

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Collective move Clusters formation Policy Transition Modernisation Diversification Foundation Structural evolution What are the structural conditions and policies which will increase the likelihood of such event? Is the dynamics replicable? Discovery A role for policy

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Discovery Imitative entry Agglomeration externalities Policy Transition Modernisation Diversification Foundation Structural evolution How to assess potentials for smart specialisation and what are the tools to realise this potential?

Centrality of entrepreneurial discovery ….should not result in narrowing the scope of policy intervention What is top down, what is bottom up? Policy programs fostering smart specialisation need to be more sophisticated than thinking within the confines of this dichotomy will allow They call for an iterative process involving three main steps

S upport and possibly channels entrepreneurial discoveries –Supporting entrepreneurial discoveries is like supporting innovation –What is to be done in dark regions?

Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI Collective move Clusters formation Policy Transition Modernisation Diversification Foundation Structural evolution Feedback mechanism from policy insights («what kind of structural changes»?) to the search for the entrepreneurial knowledge that will materialize the vision insights Search for entrepreneurial knowledge Discovery

Monitor and assess the progress… –How to detect entrepreneurial discoveries? –How to assess the potential of a discovery for future specialisation?..and disseminate and guide the formation of a shared strategic vision Fixing coordination failures EU level: managing opportunistic behaviors Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Not only for the best Innovation is multi-dimensional; not only one game in town Basic inventions or development of applications At minimum smart specialisation strategies transform less advanced regions into good followers Are there enough leading technologies to supply opportunities to all regions? Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Smart specialisation, cluster and systems efficiency Not only a value for individual regions but also at system level (the EU, the US, Japan, South Korea, Mexico or Australia) This is why smart specialisation policy is not the same thing as cluster policy Smart specialisation at regional level promotes greater diversity at systems level Collège du Management de la Technologie – CDM Chaire en Economie et Management de l'Innovation – CEMI

Message : A specialisation strategy is smart in two senses This is about knowledge resources and regions need to seek not only the concentration of resources but also to do it in an original and rather unique area of knowledge expertise The policy process is complex and follows an interative logic 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!