Lars.Coenen@circle.lu.se PhD

1. Lars.Coenen@circle.lu.se PhD Introduction to Innovation Management Innovation Systems

2. Overview • Introduction to innovation systems • National Innovation Systems • Regional Innovation Systems • Questions • Discussion

3. What is Innovation? • Innovation is more than Invention • Creating new or improved products, processes and services • Knowledge and learning

4. Innovation processes 1st gener. Techology push 50-60’s 6th generation (late 90’s) knowledge and learning 2nd gener. Demand pull 60-70’s 3rd gener. Interactive model Mid 80’s 4th gener. Integrated model Late 80’s 5th gener. Systems integration 90’s

5. Factors affecting innovation strategy Internal environment Corporate Organisational Strategy context Innovation Integrative mechanisms Generative mechanisms Strategy Technology National , evolution Regional & Industry context External environment

6. Innovation Systems Fundamentals • Innovation: not solitary, not linear, but interactive learning • Innovation is carried out through a network of actors within an institutional framework • Firms: customers, suppliers & competitors • Other actors: Universities, Research Institutes, Government, Labour Unions, Industry Associations, etc. • Institutions: ’the rules of the game’: legislation, standards, norms, values

7. Institutions • Douglas North (1990, p.3): ”Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction. In consequence they structure incentives in human exchange, whether political, social, or economic.” • Examples: • The time horizon of economic agents • The role of trust in the economy • The rationality of economic agents • The role of authority

8. System of Innovation University Technology Bridging Institutes Institutions Suppliers Users Company Financial markets Government Lars Coenen & Cristina Chaminade 2007

9. National Innovation Systems

10. Investment in knowledge in 2001 (OECD, 2005)

11. R&D personnel per thousand employment (OECD, 2005)

12. Patent families per million population in 2001 (OECD, 2005)

13. Share of technology industries in manufacturing exports (OECD, 2005)

14. Institutions: Varieties of Capitalism

15. The Institutions in the Swedish Innovation System

16. Institutions and culture • What is culture? • Collective norms, values and beliefs shared by a number of individuals (firm, nation, etc). • “Software of the mind” • How is culture measured? • Hofstede’s 4 dimensions • Power distance • Masculinity • Individualism • Uncertainty avoidance

17. Institutions and culture • How can we expect culture to affect innovation? • Power distance: hierarchy, communication flows • Individualism: entrepreneurship, personal achievements • Masculinity: short term goals (focus on finance). Feminine focus on creativity • Uncertainty avoidance: risk aversion, rules, heavy institutional framework

18. Regional Innovation Systems • Often conditions for innovation are not only influenced by the country in which a firm operates but also by the region • Some regions are particularly specialized in certain industries and highly innovative • Silicon Valley • The Italian industrial districts (e.g. fashion, automobile) • Bangalore • Boston

19. Regions and clusters

20. Innovation and proximity • Industries are often clustered / concentrated in certain regions. Especially relevant for small and medium sized enterprises • Reduction of transaction costs • Flexible specialization • Proximite relations benefit innovation • Access to tacit knowledge • importance of localized trust • personal networks • local culture • specialized labour markets

21. Medicon Valley

22. Medicon Valley Actors • Firms • Universities • Research Institutes & Health Care Institutions • Venture Capital • Medicon Valley Academy and other network organizations

23. Process and Production Support Research & Discovery Discovery & Clinical Development Clinical Development & Registration Laboratory & Research suppliers The Medicon Valley cluster

24. DBFs Pharma Academia Drug Development Knowledge Chain

25. MVs large pharma firms • 1. Novo Nordisk A/S 9000 DK • 2. H. Lundbeck A/S 2100 DK • 3. Coloplast A/S 1990 DK • 4. Novozymes A/S 1669 DK • 5. Leo Pharmaceutical 1270 DK • 6. Unomedical A/S 1200 DK • 7. AstraZeneca R/D Lund 957 SE • 8. Pfizer Health AB 850 SE • 9. Radiometer A/S 847 DK • 10. Chr. Hansen A/S 725 DK

26. MVs core firms: Dedicated Biotech Firms • Young SMEs • High Growth (in employment) • Innovation based business model • Origin as a spin-off (from uni or pharma) • Dependant on its knowledge environment • Dependant on external capital (venture capital) • Low profitability (so far)

27. Global Bioregions

28. Venture Capital • 41 VC companies • 60% in the region (50% in CPH, 10% in M/L) • Public and Private • Different phases • Pre-seed • Seed • Start-up • Initial Growth • Expansion • Restructuring

29. Science parks and Incubators • Science parks: location and residence services • Incubator: science park + eship services • Management • Financial • Technical • Commercial

30. Science Parks

32. Knowledge collaboration - local nodes, global networks

33. Two cases of biotech innovation Drug development: Aim: Development of antibody based drugs Started as: Basic research. An academic project by researchers at Lund University Today owned by: BioInvent (a DBF in Lund) Functional food: Aim: Development of dairy and fruit drinks with added bacteria Started as: Product development. A medical project by researchers at Lund University and Lund University Hospital Today owned by: Skånemejerier (a Swedish dairy firm)

34. Innovation StrategyBioinvent Corporate strategy IPR & new product development Core competences Antibody science Technology Trajectory Competing designs / new technological paradigm Boom or bust / blockbuster Innovation System Good collaboration with university Venture capital finance Searching for alliances with big pharma Dependant on regulatory framework

35. Innovation path for drug development time

36. Innovation StrategySkånemejerier Corporate strategy From food commodities to welness provider Core competences Food engineering (process and product) Technology Trajectory Mature technology (food processing) meets emergent technology (biotechnology) Innovation System Competition primarily based on costs Traditionally little R&D Increased public attention for healthy food

37. Innovation path for functional food time

38. Question?

39. Discussion