Design, policy mix & implementation of the RIS3 in the Czech Republic

1. Design, policy mix & implementationof the RIS3 in the Czech Republic Riga, 25-26 February 2014Jiri Blazek, Veronika Czesana, Gabriela Daniels

2. Main success achieved - overview: • Governance: • formation of a National RIS3 Coordination Board • establishment of regional RIS3 managing structures initiated • Process: • hiring a highly competent facilitation team • creation of a network of 14 regional RIS3 managers • raising awareness about RIS3 among key actors • elaboration of the first draft of RIS3 by December 2013 • organisation of the first meetings of innovation platforms at the national level and in most of the regions

3. Main bottlenecks in RIS3 design& implementation and related Qs • Insufficient guidelines for entrepreneurial discovery process:  Q: Domains of future specialisation should be selected by entrepreneurial/innovation platforms, but who and how selects the platforms?  Q: How many platforms are needed to achieve the envisaged change of sectoral structure? What should be the size of platforms? How should they be managed? • Scepticism about a possibility to select future domains of specialisation (many uncertainties, and also limited willingness to discuss opportunities among the potential competitors) • Conflict between i) requirement for a respect to the critical size and ii) search for a perspective or emerging domains of specialisation (political choice and responsibility) • Stress of RIS3 on selectivity versus a need to involve partners intensively (partners/entrepreneurs should even steer the process)

4. Main bottlenecks in RIS3 development & implementation and related questions • Difficulties with objective selection of priorities (domains of specialisation). • Unclear definition of „priorities“ and their width (should it be „Nanotechnology in paper mill industry“, or „ICT“ or even „productive technology“?) • Difficultieswithsettingmeasurablegoals in verticalpriorities • Q: How to quantify the expected outputs and results in vertical priorities? • Missing practical guidance how to achieve upgrading in GPNs/GVCs. • Rigid and cumebrsomeprogrammingprocessof the EU ESIF versus stress on continuouslearningprocess and flexibility of RIS3. • Difficulties with stimulation of private R&D&I investment • Q: Howto attractprivateinvestments to RIS3 implementation?

5. RIS3 design & implementation: responsible entities • RIS3 ex-ante conditionality being fulfilled at the national level • Regional dimension of RIS3 strategy ensured by14 regional annexes elaborated at the level of each NUTS3 region • annexes will include more specified national priorities in relation to the specifics of the R&D and innovation potential of the region. • Guarantee of the fulfillment of RIS3 ex-ante conditionality in CR: Ministry of Education, Youth and Sports (hereinafter “MEYS”). • Coordination & strategic authority for preparation and implementation of RIS3: National RIS3 Coordination Board • Advisory support in design & implementation kick-off phase: „RIS3 facilitator“ (external highly qualified consultancy)

6. RIS3 aproach (design) • Given the still relatively limited level of development of the innovation system in CR at both national and regional level, CR introduces the following aproach to the RIS3 prioritization: • Horizontal(cross-cutting) = new types of activities supporting the enhancement of the innovation system, e.g.: • introduction of pro-innovation support schemes to strengthen cooperation between research organizations and corporate sector (innovation vouchers, mobility support schemes between the triple-helix spheres, technology transfer) • support of education in technical fields (support of talents), • spin-off, start-up, incubation support, etc. • Vertical= focus on specific competitive, progressive sectoral/subsectoral R&D areas – „domains “ with strong growth potential

7. Regional RIS3 managers • Regional S3 activities are coordinated by 14 (RI)S3 managers(local experts hired in each region by MEYS); functions: • Elaboration of regional annexes (in cooperation with facilitator and reg. government) • Regional partnership building= initiation of establishment ofregional managing & implementation structure for RIS3 • Organization ofinnovation platforms (round tables) - bringing together triple-helix actors (gathering ideas RIS3 design & implementation)

8. Regional RIS3 structures • multi-level structure for management and implementation of RIS3 will (based on joint methodology) secure following functions: • managing(RegionalInnovationCouncil), • executive(implementation entity), • consultation(innovation platforms gathering stakeholders from business and R&D) • coordination (S3 manager) • monitoring/evaluation (external entity). Concretesettingofentities responsibleforindividualfunctions are subject to individualsolution in each region. S3 manager Monitoring &evaluation unit Regionalcouncilforinnovation/ competitiveness (managingfunction) Implementation entity localregionaldevelopmentagency/ innovation centre/ science & technology park/ regionalauthorityoffice, etc. (implementingfunction) Innovationplatform X Innovationplatform II Innovationplatform I

9. National RIS3 - current state & next steps • National RIS3 strategy: elaborated in 1stdraft (by 12/2013) • RIS3 is built upon (and in line with)currentstrategicdocuments (NationalInnovationStrategy, Strategyof International Competitiveness, National R&D&I Policy, PrioritiesofOrientedR&D&I Until 2030) • 01-05/2014: negotiated ina series of national round tables (innovation platforms) • First „round table“ held in 01/2014 – gatheringmainlyrepresentativesof business sphere (directorsof a largenumberofkeyinnovativecompaniesinvolved). Feedback: positive • More to come: innovationplatformsshallbeestablishedgathering triple-helix stakeholders to helprefine (focus) the priorities - bothhorizontal and vertical • Innovationplatforms design: builtaround the strongestidentifieddomainsofpossible (vertical) specialization: • Meanwhile: the same proces in each region ( regional innovation platforms refining identified horizontal and verticalpriorities)

10. Regional RIS3 - current state of affairs • Regionalannexes: elaborated in 1st draft (by 12/2013) • However, level ofadvancementdifferesamongregions (approx. ½ more advanced, ½ lessadvanced) • The samewithlocalpartnerships/structuresand theirreadiness to manage & implement RIS3 interventions) • Differencescaused by: differentinstitutionalsituation(includinglevelofpolitic support) and differenthistoric levelofexperiencewith R&D&I support For many regions: RIS3 = major change in perspective regarding regional development and competitiveness support • However, with expert guidance, now: RIS3 annexeselaborated in first draft – consistingofanalytical part (covering: reviewofalreadyexistingtoolsforinnovation enterpreneurship support, identification of regional stakeholders, problem analysis, SWOT analysis, stakeholder analysis and proposal of management and implementation structure for RIS3) + strategic part • regionalannexes serve as oneof the informationinputsfornational RIS3

11. Next steps

12. Main problems of the innovation system in the Czech Republic - starting point of the national RIS3: • Weak endogenous business sector and low level of entrepreneurship • Economic development of CR highly dependent on the activities of foreign companies • Unfriendly regulatory conditions for business • Insufficient quality of public research • Mismatch between R&D focus of public R&D institutions and business & weak collaboration • Weak management and administration of R&D • Insufficient quality of education system • Disfunctional system for identification of talents and work with them

13. Current draft of horizontal S3 priorities = key „ areas of change “ Strengthening competitiveness of CR based on innovation and knowledge use Specialization of firms leading to new products and markets Diversification of Czech economy through the creation of new companies and the arrival of investors carryingout activities with higher added value Growth of performance, size and number of innovative businesses using the opportunity on the global markets - Human Resources – greaterrangeof human resources in the number and quality for innovative business, R&D - ICT/Digital agenda - development of eGovernment and eBusiness - Social Innovations - strengthening of multi-level partnerships in the areas of employment, economic development and social inclusion - R&D - improve the quality of public research - R&D- increase the economic benefits of public research Business and Innovation– higher innovation performance of firms and growth of entrepreneurship eGovernment eBusiness and ICT in the business Infrastructure Increase the demand for innovation in companies; Increase the rate of business& new start-ups; Increase the internationalisation of SMEs Improve the quality and problem orientation of research in knowledge domains relevant for smart specialization Increase the relevance of research Improve the quality of graduates; Identify and use talents Increase the quality of R&D workers Strengthen the culture of multilevel governance in the area of employment, economic development and social inclusion Regulatory and institutional changes in the national innovation system Improving the quality of education and efficiency of the education system

14. National S3 priorities & regional specificities Regional priorities are -with rare exceptions- focusing (refining) national priorities

15. Overall S3 self-assessment

16. Towards a strategic governance to support S3 priorities • Relevantactorsfrom triple-helix spheresinvolved in: • innovationcouncil (coordinating and strategic policy-making function) • On regionallevel: beingdesigned and built (somewherealreadyfunctional) • On nationallevel: National RIS3 Coordinationboard • innovationplatforms(enterpreneurial discovery driven process) - on national as well as regionallevel - formed around both horizontal and vertical priorities (domains) • In regions with weak innovation system, mainly horizontal platforms prevail in initial stage (vertical platforms might arise later) • Identificationofactors (platformmembers) atregionallevelalready done (someplatformsalreadyfunctional), atnationallevelstill to come • Innovation platformsshouldremainengagedthroughout the whole policy cycle (design, implementation, assessment) • Coordination mechanisms • On nationallevel: MEYS, National RIS3 coordination board& national S3 manager(to beengaged in 03/2014) • On regionallevel: regional S3 managers (alreadyfunctional)

17. Towards a strategic policy mix for implementation of S3 • Given the nature of RIS3 (focus on RDI), policy-mix should be as flexible as possible: • no prescription of specific instruments in RIS3, but examples of instruments for each priority are provided; • wide space for bottom-up initiatives is envisaged • Key (but not the only ones) RIS3 implementation tools are relevant operational programmes2014+ namely OP Research, Development and Education (MEYS), OP Enterpreneurshipand Innovation for Competitiveness (MIT) and OP Prague • Policy instruments: • Identification of proper policy instruments is considered an important component of entrepreneurial discovery process, which should follow the selection of priorities. • Proposed instruments: bothhorizontal (cross-cutting) and vertical instruments are foreseen, on both national and regional levels (majority with help of ESIF OPs) • S3 is on-going learning process, but given the current state of R&D&I in CR, it is necessary to put the initial emphasis upon the horizontal measuresin order to: • fix at least the major bottlenecks within the innovation system • form a basis for mutual understanding by finding common problems and joint solutions.

18. RIS3 Implementation scheme draft activity examples priorities programmes project type

19. Towards a strategic policy mix for implementation of S3 • In addition to individual projects and supportive regional schemes funded via OPs (cofinanced by national/regional funding), there is a specialtool: • „smart accelerator“ within OP RDE - will facilitate not only preparation of various regional support schemes/prioritisedindividualprojects, but also the capacity to implement RIS3 strategy at national as well as regionallevel (stronger support to S3 managers, support for implementation structures, monitoring and evaluation, facilitation of enterpreneurial discovery process). • Between the main two OPs (OP RDE and OP EIC) a Memorandum ofCooperation was closedmechanismsfor implementation of RIS3 priorities into the OPs are being designed injoint cooperation

20. Towards a strategic policy mix for implementation of S3 • Financial framework for RIS3: not yet been settled, however: • vast majority of the planned interventions implementing the RIS3 on both national and regional level will be implemented through the structural funds  the RIS3 budget will be to a large extent derived from the financial frameworks of the relevant OPs • Main obstacles in building a coherent and strategic policy mix: • strong tendency of keeping status quo in policy design (not only by the managing authorities, but also by the beneficiaries) • missing/insufficient evaluation of effectiveness and efficiency of existing support schemes (mostly various procedural evaluations) • limited know-how about state-of-the-art approaches in RDI support (devil is in detail)

21. Measuring and assessing RIS3 • Evaluation: bothinternal and externalforseenatnational& regional level • Monitoring indicators - Already indicated in national RIS; 2 differenttypes: 1) Performance indicators (these will monitor efectiveness of tools/interventions/activities = whether RIS3 manages to reachitsgoals and targets) • Monitoring - these will comply with monitoring indicators of relevant OPs • Other-beyond the scopeof monitoring indicators (data collected via special surveys & analyses) 2) Processindicators (these will monitor whether RIS3 functionsasforseen) • Follow up: • National RIS3 (including the budgetaryframework) shouldbeupdatedapprox. after 2-4 years • RegionalRIS3 annexesshouldbe more flexible in thisrespectshouldberegularlyupdated in approx.2-yearperiods

22. Qs for peers Q1: How many platforms are needed to achieve the envisaged change of sectoral structure? What should be the size of platforms? What mechanism should be applied for selection of actors? How should the platforms be managed? • Why: there are insufficient guidelines for entrepreneurial discovery process (rules for innovation platforms) • What has been done: • first platform held in 01/2014 • actors: mainlyrepresentativesofleadinginnovativeenterprises • Whatworked: • attentionand interestof the bussinessspherewasraised • strong participation • Whatdid not work: • academia and public R&D sphere got offended that they were not involved in the event in an equal share as the bussiness sphere

23. Qs for peers Q2: How to quantify the expected outputs and results in vertical priorities? • Why: Difficultieswithsettingmeasurablegoals in verticalpriorities • What has been done: • Currently, there is an ongoing process of priority identification and search for monitoring indicators

24. Qs for peers Q3: To what extent does a change of priorities require a change of OPs endorsed by the EC? • Why: Rigidand cumebersomeprogrammingprocessof the EU ESIF versus stress on continuouslearningprocess and flexibility of RIS3. • What has been done: • currently, the reference to the RIS3 strategy in the OPs is rather vague • What workes: • Current OP text leaves enough space for regular update of the RIS3 (living document and process) while not causing difficulties for the OPs • What does not work: • The EC requires to incorporate the RIS3 in the OPs’ text in a greater detail which might close doors for the OP to be able to reflect on the RIS3 updates

25. Qs for peers Q4: How to attractprivateinvestments to RIS3 implementation? • Why: • There is almost nonexistent history of private investments to support government strategy • What has been done: • Currently, there are private (measurable) investments expected only in the formof: • project cofinancing by private company sources (pushed mainly by the state-aid rules) • financial instruments pay-off (financial instruments introduced scarcely – mainly by MIT)

26. Thank you for your attention • Ministry of Education: veronika.czesana@msmt.cz gabriela.daniels@msmt.cz blazek@natur.cuni.cz • Ministry of Industry and Trade: prihodova@mpo.cz petr.ocko@mpo.cz