1. Characteristics of a National Innovation System
Presented to: AEA Research Technology and Development Technical Interest Group
CES / AEA Evaluation Conference
Presented by: George Teather
October 28, 2005
Tel: (613)
Fax: (613)

2. Presentation Outline
Explore dimensions of the terms “Innovation”, “Innovation Process” and “National Innovation System”
Examine some specific models, their strengths and weaknesses and applicability
Describe the Canadian Innovation System 2

3. Innovation
There are a range of definitions, from the narrow technological version to the broader macrolevel interpretation
Cummins in 1998 defined innovation as “The first successful application of a product or process” (successful implies market acceptance -less costly to achieve same results, improved results, or a new application for which there is an existing market demand or one that can be developed )
OECD defines innovation more broadly as “The process through which new economic and social benefits are extracted from knowledge” (covers complete research to results continuum, includes longer term socio-economic outcomes and impacts resulting from application of knowledge)
Definitions are not in conflict, but are at different locations along the knowledge creation – application – utilization – outcomes continuum 3

4. Innovation Process Models
Many conventional models of the innovation process used in S&T focus on the early stages of the process of going from “Blue Sky“ to applied research, proof of concept to further technical development and commercialization
Process is assumed to be linear and controlled by the organization or organizations involved in the innovation process
Market acceptance / commercialization is presumed to occur because of the improved technology
Minimize the differences between technological success and commercial success or utilization in the marketplace 4

5. Innovation Process Models
There is a tendency to focus attention on the R side and ignore the complexities and many steps required to move from technical success to acceptance and utilization of the new or improved technology
The influence of external factors is usually not considered
Little consideration of the difference in the innovation process among technologies and industrial sectors (IT is quite different from pharmaceutical sector, and mining or manufacturing are different again) 5

6. The Innovation Process (Conventional Technology Development and Application)
Knowledge Creation
Knowledge Application
Technology Development
Prototype Testing
Commercialization / Application

7. The Innovation Process
Production / Market Acceptance
Utilization / Commercialization
Knowledge Creation
Knowledge Application
Technology Development
Prototype Testing
Technology Demonstration

8. National and International Innovation Systems
Examination of an innovation system requires
identification of the actors involved directly and indirectly in the innovation process,
their role,
the interaction between the actors, and
their level of influence on the system 8

9. National and International Innovation Systems External Factors
The factors influencing a national innovation system are complex and different for every country
education system (colleges and universities)
Government laboratories
Government funding (GERD)
Government innovation support programs (R, D, technology transfer, economic development)
Private sector (R&D and purchasing)
Public / private partnerships and networks
Legal system
Regulatory system, codes and standards
Investment policies, environment
Sources and levels of early, intermediate and late stage funding
Taxation system, reward for entrepreneurship 9

10. National Innovation System
Education System
Government Laboratories
National Investment Framework
National Standards
Regulatory Framework
Production / Market Acceptance
Utilization / Commercialization
Knowledge Creation
Knowledge Application
Technology Development
Prototype Testing
Technology Demonstration
Early Stage Funding
Intermediate Stage Funding
Legal Framework
Late Stage Funding

11. Innovation System Models
Laredo considers a variety of actors and influences
education system / scientific and technical capabilities
public policy, infrastructure
political environment
economic system
National competitive advantages (SWOT) 11

12. Innovation System Models
Tassey considers innovation system and pathway from knowledge to commercialization / utilization from perspective of an economist
public policy, role of gov’t
important education system / scientific and technical capabilities
contribution of technical infrastructure (infratechnology)
risk reduction (testing, standards)
economic system
Model implicitly identifies:
actors involved at various stages
rationale, opportunities for intervention, 12

13. National Innovation System (Tassey Model)
Strategic
Production &
Outputs/Market
Value-
Planning
Processes
Development
Added
Innovation -
Economic Development -
Public Health & Safety -
Environmental Protection
Risk
Reduction
Entrepreneurial Activity
Applied
Technologies
Generic
Technologies
Science Base
Economic, Social and Environmental Conditions
G. Tassey, National Institute of Standards and Technology, U.S.A. 1991 *

14. Government Policy Interventions in the National Innovation System
Strategic
Production &
Outputs/Market
Value-
Planning
Processes
Development
Added
Innovation -
Economic Development -
Public Health & Safety -
Environmental Protection
Joint Industry
Funding and
Government Planning
S&T Education
and Promotion
Technical
Risk
Assistance
Reduction
National
Technology
Intellectual
Research
Entrepreneurial Activity
Standards and
Property
Facilities
National Test
Rights
Facilities
Applied
Technologies
Direct Funding
Generic
for universities,
Technologies
Federal labs,
industry
Improve Research
Science Base
and Production
Efficiency
Economic, Social and Environmental Conditions
Derived from G. Tassey, National Institute of Standards and Technology, U.S.A. 1991 *

15. Innovation Environment in Canada
Federal investment in R&D is seventh out of eight G8 countries (GERD = 1.7%)
Innovation performance overall is low
Scientific Research Tax Deduction (SRED) to firms conducting R&D (Frascati definition) is very high
Data on firm expenditures across innovation spectrum
Graph of relative spending of government and industry across innovation spectrum 15

18. Canadian Innovation System Performers
Basic research - universities, government laboratories, private sector, colleges
Applied research - universities, government laboratories/agencies, private sector
Technology development - government laboratories/agencies, universities, private sector, colleges
Prototype testing - private sector, government laboratories, universities, colleges
Commercialization / utilization – private sector government laboratories / agencies 18

19. Canadian Innovation System Funders
Basic research - Government (Natural Sciences and Engineering Research Council, Gov’t Departments/ Agencies)
Applied research - Government (Natural Sciences and Engineering Research Council, Gov’t Departments, SRED, IRAP), private sector
Technology development - Government (Gov’t Departments, SRED, Technology Partnerships Canada), private sector
Prototype testing - private sector, Government (IRAP, TPC)
Commercialization / utilization – private sector Government (Gov’t departments) 19

20. Canadian Innovation Strategy 2002
Innovation Target
* by 2010
Input
Activity / Output
Outcome / Impact
Top 5 in R&D performance* X
Double federal investments in R&D*
Rank among leaders in % of sales due to new innovations*
Raise venture capital investments per capita to U.S. level*
Increase admissions to M.Sc. & Ph D by 5% a year*
X early 20

21. Canadian Innovation Strategy 2002
Innovation Target
Input
Activity / Output
Outcome / Impact
Increase adults pursuing learning by 1 million* X
Complete reviews of most important stewardship programs*
Develop at least 10 innovation clusters*
Improve innovation performance of communities
Implement guidelines to make effective use of S&T in gov’t decision making by 2004 21

22. Generic Program Logic Model
Program Objective: high level strategic purpose
Resources
Reach
Results
HOW?
WHO / WHERE?
WHAT do we want? WHY?
users / clients / co-deliverers / beneficiaries
activities
outputs
direct outcomes
intermediate outcomes
ultimate impacts
Program / Service Delivery
Client Management
Policy & Issue Management
Financial Management
Human Resources Management
Asset Management
Program deliverables
Policy guidelines, regulations
Communications
plans
- internal communications
- promotion
- info transfer
- consultations
- meetings/events
Funding
Service Outputs
Primary Targets (clients, ultimate beneficiaries)
Co-delivery Agents
Other Stakeholders
Client Service
- addresses needs
- meets / exceeds expectations
- service quality
Behavioral Influence
awareness
understanding
attitude / perception
support
New knowledge
Improved capability
Improved decision making
Target group changes in behaviour / other outcomes
Sector / Industry / Regional Impact
Economic/ Environmental/ Societal Impact
Contribution to organizational objective 22

23. Spheres of Influence* *reference S. Montague, www.pmn.net State
Your environment of indirect influence
e.g., Industrial sectors, government decision makers, other
communities of interest where you do not
make direct contact
Behavioural Change
Your environment of direct influence
e.g.people and groups in direct contact with your programs, staff (i.e. clients, target audience, co-delivery partners
Time
Operational
Your operational environment
You have direct control over the behaviours within this sphere
*reference S. Montague, 23