Gauteng Innovation Strategy

Gauteng Innovation Strategy 20 April 2010

Normal Person Scientist

Table of Contents • INTRODUCTION • OUR UNDERSTANDING OF INNOVATION • STRATEGIC AND POLICY OBJECTIVES • INTERVENTION MECHANISMS • WAY FORWARD

Innovation is the means by which we are able to do more, with less • A useful metaphor in an economy is in the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side-effects. • If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. • Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. • Paul Romer

Innovation must be thought of as wider than just technology and science Economic Innovations are “traditional” innovations; they revolve around product, process and marketing of goods and services. Economic innovation address the needs of the market, satisfies the demands of consumers. Economic Innovation TOTAL INNOVATION Social Innovation Social Innovations solve “non-market” problems such as employment, safety and security, delivery of healthcare – basically all of those “social goods” which the market generally does not get involved in; they satisfy the demands of citizens Public Innovation Public sector innovation addresses the needs of government; this is different from the needs of the citizen. It also faces unique challenges because of the fiduciary responsibility of government in spending public funds on inherently risky projects

Open Innovation brings together each member of society to create commonly owned solutions Scientists Technicians Researchers Laboratories INNOVATORS Challenges FEEDBACK GROUP SOCIETY SOCIETY

What are the challenges that we need to address? Innovation ≠ Science • The concept – and support – of innovation must also include social and public innovations Society is not a passive recipient • The active contribution of society towards innovation must be supported and nurtured Community innovation builds partnerships and consensus • Dialogue with society about what their needs are, and involving them in the development of solutions, builds ownership and personal responsibility Innovation supports and accelerates other government objectives • By strategically integrating innovation with other strategies, government policies and objectives can be achieved more efficiently and effectively Building an Innovative Society • Removing the barriers of innovation, and creating a more conducive environment

The Strategic objective of catalysing innovation towards particular outcomes is supported through three broad policy objectives THE STRATEGIC OBJECTIVE FOR INNOVATION To accelerate innovation in all its forms, in order to bolster and support the broader strategic objectives of employment creation, and sustainable social and economic development. POLICY OBJECTIVE 2: Promoting strategic industries and sectors POLICY OBJECTIVE 3: Driving Social and Public Innovation POLICY OBJECTIVE 1: Effortless Communication and Access to information

There are 5 initial interventions and projects that can support the strategy Innovation Development Office CollaborationNetwork Innovation Incentivisation Cluster and Precinct Management Smart City Support

Innovation happens because of the interaction of people, in finding new solutions to their challenges Physical Network Face-to-face networking structures which will host regular events to exchange knowledge and innovations. The networks will be composed of all agents involved, including: Communities; Private Sector; Academia; Government Organisations; International Representatives ACADEMIA PRIVATE SECTOR COLLABORATION NETWORKS INNOVATION GOVERNMENT COMMUNITY Electronic Network An electronic networking platform that provides additional functionality to enhance and support activities that are represented within the face-to-face networks, such as: A database of member activities; archived information; active networking components; links and connections to relevant information

Government Procurement can be used to drive innovation through competitions, focussed on public service innovation 1. Open competition approved by IDO 2. Open competition driven by strategic objectives 3.Applications received from companies and processed 6. Assessment of projects for Phase 2 Funding 5.Phase 1 demonstration of feasibility – lasting 6 months and worth R500k to R1m 4.Most Interesting Ideas selected • Green Energy Technologies (including wave power, gas turbines, energy efficiency) • Social Housing • Health care provision • Defence and Military Applications • Low-emission vehicles • Advanced Materials technology 7. Phase 2 – Prototype development lasting multiple years, R1 – 10m 8. Leads to competitive procurement by department and product to market

Government Procurement can be used to drive innovation through competitions, focussed on public service innovation • Stimulate technological innovation • Utilize small businesses as a mechanism to meet government research and development needs • Fostering and encouraging participation by socially and economically disadvantaged small business concerns and women-owned business concerns • Mitigating risk through phased project delivery • Enabling departments to appeal for a wide range of ideas and evaluate these through short-term simplified contracts • Reducing administrative obligations • Facilitating engagement with entities that the government would not usually do business • Creating novel solutions to existing or emerging issues

Innovation Vouchers can help foster innovation, and improve access to new ideas The Innovation Voucher allows you to concentrate on running your business while knowledge providers come up with a solution INNOVATION VOUCHERS Finances Time Expertise Networks KNOWLEDGE PROVIDERS IDEA

Innovation Vouchers allow organisations to ‘purchase’ research for their own ideas • Certain entities are registered as Knowledge Providers, including amongst others: • Private organisations • Universities and academic institutes • Private individuals • Companies or individuals may then purchase “Innovation Vouchers” from the IDO for a certain amount, say R50k. This can then be redeemed at one of these Knowledge Providers for research equivalent to R100k • Companies could purchase Innovation Vouchers, and provide them as CSI to start up companies, NGOs, Charities, etc. • Caution needs to be taken to ensure that the voucher system is not abused • Similar systems have proven exceptionally successfully elsewhere in the world – the challenge is to develop a system that is appropriate for Gauteng

Incentivising innovation towards the strategic objectives of government allows us to fulfil our mandate more effectively Individual Incentivisation • Existing incentives only focus on organisations and companies – but people are also driven by a “profit motive” – i.e. Higher salaries. It may be possible to identify mechanisms by which individuals are persuaded to move into, or remain within, an “innovation-oriented” career, by linking them with form of income-related grant, tax rebate, or refund Social Innovation Incentivisation • Because only scientific and technological innovation is incentivised, less effort is spent on developing solutions to social challenges. Creating an appropriate CSI mechanism for social innovation may quickly stimulate this area Across all three areas, it is noted that Provincial government has no fiscal authority of tax rebates or incentives. At the same time, cognisance is taken of the responsibility which government must take in spending public funds – i.e. In a responsible and effective manner. Although these must be understood, there are sufficient examples worldwide to show that they can be dealt with and addressed, while still supporting the final strategic goals.

The development of innovation spaces will help drive sector focused innovation – with the low-carbon economy first Impact of Sector Cluster dependent on Size Creation of a network of innovation clusters throughout the province, focusing on relevant research areas and aligned to the development of the strategic industries and sectors. These clusters will be able to innovate faster, because of the benefits arising from clustering. The first cluster being considered is the Low-Carbon Cluster, developed in parallel with, and guided by, the Green Economy Strategy as well as the Gauteng Industrial Policy • Number of agents available to interact • Ability of agents to interact with each other • Optimised usage of specialised resources, including: • Facilities • Labour • Attraction of ancillary services at sufficient density • Ability to induce similar buyers and sellers to the Cluster

Creating a Smart City-Region will help drive an Innovative City-Region Characteristics of a Smart City • Advanced information and knowledge infrastructure – which allows for easy and fluid communication • An efficient public service system that uses the communications infrastructure in service delivery • Strong levels of communication within, and between, the different members of the community • A safe, secure and environmentally friendly location • An integrated city environment in which the various components of the city (e.g. infrastructure, security, utilities, transport) are interfaced and networked to allow real-time monitoring and rapid response • A strong connection between different “Smart Communities” able to respond to the needs and challenges of the city-region A safe, secure and sustainable city that supports the needs of its citizens, and attracts investment, resources and human capital as a preferred destination

Ways to contribute • Davis Cook – davis.cook@gauteng.gov.za or 082 803 7716 • POLICY FORGE: • An online interactive site developed to provide basic input around the thematic areas of the draft strategy • Currently in a pilot stage www.policyforge.co.za SOUTH AFRICAN INNOVATORS NETWORK • SAINe is an online networking platform that promotes the discussion, sharing and learning of innovation, and innovation related topics • There will exist multiple blogs on the site, providing an opportunity to engage on the document’s contents, and receive feedback on the development process www.saine.co.za

Key Deadlines • 14 May – Feedback process for Strategy Document Ends • End of May – Submission of Strategy document for provincial adoption • End of July / August – finalisation of business cases for interventions

END OF PRESENTATION THANK YOU

The fastest growing countries in the world also appear to have the highest growth in patent production. There is a 1-1 correspondence of the countries that have had the highest per capita GDP growth between 1985 and 2005, to those who have increased most the number of patents per 1000 citizens. Although these figures do not explain the direction of causality, i.e. whether innovation creates economic activity, or the other way around, they do clearly indicate the close relationship between the two variables. Source: World International Patent Office, United Nations Statistics

South Africa’s knowledge generation is slowing in comparison to trading partners and competitor nations. • Both in financial terms, and absolute number of patent production, South Africa is losing ground against both trading partners and other competitor nations such as the BRIC countries. • Even the rate of growth, shown below, is decreasing in comparison, indicating that the difference in future will be even larger.

Innovation must be thought of as wider than just technology and science Open Innovation Economic Innovation Economic Innovations are “traditional” innovations; they revolve around product, process and marketing of goods and services. Economic innovation address the needs of the market, satisfies the demands of consumers. Community Innovation Public-Private Innovation Partnership Social Innovation Social Innovations solve “non-market” problems such as employment, safety and security, delivery of healthcare – basically all of those “social goods” which the market generally does not get involved in; they satisfy the demands of citizens Public Sector Innovation Public sector innovation addresses the needs of government; this is different from the needs of the citizen. It also faces unique challenges because of the fiduciary responsibility of government in spending public funds on inherently risky projects B A Ownership Open innovation processes are revolutionary, in that they include the community in the innovation process. While ‘traditional’ innovations may be successful in the market through “closed” innovation, social and public innovation can only be successful through collaboration and community participation D C Public Innovation Transferability

An Innovation System is the set of institutions that support and nurture the innovative process Government-driven with no inclusion of market or social forces Community and Citizens are passive recipients of innovation Focus on science and technology No strategic use of innovation in driving provincial government mandate The South African National System of Innovation, NACI, 2006

In order to address these challenges of the National System, an adjusted Regional Innovation System (RIS) is proposed 1: Civil Society and Consumers have needs for innovative solutions in all areas – economic, public and social 2: Innovation is not a pipeline – it is an integrated process with involvement of all members of the community: dialogue is essential RIS: The entire system of innovating agents and entities, along with their end-users, which together are responsible for the development, production, and use of new knowledge which is both socially and economically useful.

Each set of agents have their own responsibilities, and roles to play within the Regional Innovation System Academia One of the traditional areas for ‘innovators’, this remains a core component of the innovation system. Academic institutions are largely responsible for basic research and development in virtually every sphere of knowledge, they provide education and skills development that supports innovation, and act as attractors for people with ideas Private Sector Referring not only to large corporations with significant R&D budgets, but more importantly to the SMME sector. Small companies are able to rapidly respond to disruptive innovations by adapting their business models, services and goods. SMMEs can also collaborate easier and faster with each other due to their flexibility Public Sector It is a national priority for ‘business un-usual’; that we do more, with less. This is the core principle behind innovation, and the public sector is able to play a role not only in the development of new public service models and social goods, but also in using their own power and influence to direct innovation towards public goods and services Community Largely ignored by traditional innovation strategies, the community itself is a powerful role-player in the innovation process, as well as community members themselves. Examples include the Open Source software movement, the entire mountain biking industry, hip-hop / kwaito, automotive manufacturing, Small-scale manufacturing

The impact of a Science and Technology Park can be measured simply by an industry comparison STP Tenants Industry Average Interventions result in increased business activity Increased Economic Activity leads to knock-on effects • Business Development • Marketing and Branding • Networking • GDP Growth • Employment • Export Activity • Sector Composition • Increase in Knowledge Base • Value Added • Management Support • Interactivity

The UK’s Small Business Research Initiative helps small, high-tech companies innovate through procurement • Green Energy Technologies (including wave power, gas turbines, energy efficiency) • Social Housing • Health care provision • Defence and Military Applications • Low-emission vehicles • Advanced Materials technology

Proposed Advisory Panel • Dr Neville Comins • Independent Consultant • Valerie D’Costa • infoDev Programme Director, The World Bank • Dr Paolo von Schirach • Independent Consultant • Prof David Everatt • Executive Director, Gauteng City Region Observatory • Amanda Nair • CEO, BlueIQ Investment Holdings • Matthew Heim • CEO, NineSigma Open Innovation • Rhoda Khadalia • Executive Director, Impemelelo Foundation • Prof Robin Moore • Vice-rector, University of Witwatersand • Prof Michael Pepper • Director, University of Pretoria

Stakeholders engaged, and opportunities arising from this engagements • Inclusion of Innovation Strategy into OECD Territorial Review • Engagement between MEC and Executive Council of Uni. Of Witwatersrand • Collaboration with World Bank on the development of a Green Technology Industry Cluster and Plan • Involvement of NineSigma Open Innovation Platform in driving social and public innovation • Adoption of Gauteng strategy concepts in multiple SA Provincial strategies • Innov8 community engagement 20 April 2010 • Gauteng City Region Observatory (David Evaratt) • The Innovation Hub (Haresh Haricharun) • Human Sciences Research Council (Julien Rumbelow) • University of the Witwatersrand (Robin Moore) • Western Cape Provincial Government (Rahima Loghdey) • COFISA (Neville Comins) • The World Bank (Valerie D’Costa, infoDev Programme Director) • Other international consultants (Paolo von Schirach - Independent)

Gauteng Innovation Strategy