Smart specialisation as a driver for strategic cluster policies RIS3 ECA Workshop:

1. Smart specialisation as a driver for strategic cluster policies RIS3 ECA Workshop: “Clusters new trends and their challenges for implementing RIS3” 22 June, Brussels Jan Larosse, Department Economy-Science-Innovation, Flemish Government

2. Overview An argument in three steps: • The OECD Project on smart specialisation: a new policy approach • Main features: clusters are keycomponents in S3 • First conclusions • The evolution of cluster policies in Flanders: a new strategy • Recent changes: cluster policy becomescore of new industrial policy • The role of OECD ‘action studies’ in our policy development • Cluster policies in times of structural change: a paradigm shift? • S3 in the context of the financial-economic crisis • New challengesfor cluster policies Cluster policiesand cluster management needtodevelop new strategiccapacitiestoplaytheirrole in the governance of transformation of the present growth model

3. 1. OECD Project: ‘Smart specialisation for innovation-driven growth’ • The OECD started June 2011 the first integrated policy learning project to support design and assessment of strategies for smart specialisation (in cooperation with DG Regio & IPTS)Basic structure: • ‘Base-line’: develop evidence-based strategic intelligence to assess present specialisations and priorities (measurement) • ‘Beyond the base-line’: design discovery driven strategy processes to enable future choices (case-studies) • Objectives • Manageable and consistent policy tool box for policy makers (OECD Innovation Policy Platform) • Policy recommendations to use smart specialisation for leveraging smart growth • Key Concepts • Smart specialisation is largely about the policy process to select and prioritise fields or areas where a cluster of activities should be developed: let entrepreneurs discover the right domains of future specialisations (‘an entrepreneurial discovery process’) • ‘Regionaldevelopment’ holds a centralplace, but takes aninternational viewpoint of discovering comparativeadvantages (= ‘open’ regionalinnovation system) • What is smart? A knowledge-based, interactiveandpro-activestrategydevelopment

4. Structure and Expected results PART 1: What is the Baseline ? PART 2: Beyond the Baseline ? Indicator-based Specialisation Profiles for strategic monitoring of international comparitive advantage (in science, technology, employment, export) Governance Templates for (self)-assessiment of capacities in priority setting, participatory processes, strategic intelligence. Case-studies for comparative policy learning on smart/interactive strategy development as an ‘entrepreneurial discovery process‘ Policy synthesis on the role of smart specialisation as a new policy approach for co-creation of ‘direction’ in the transformation of the economy

5. Participants : 13C – 16 regions -17 CS Austria Regional policy mixes Multi-governance Finland Cross-cutting competences and lead markets Germany Inter-regional innovation strategy Belgium Nano for Health Sustainable Chemistry Poland Low-tech manufacturing sectors The Netherlands Multi-level governance South Korea Photonics Industry Spain Aerospace Regional industrial policy Turkey Automotive sector UK Low Carbon Vehicles Australia Rural research and Development activity Czech Republic Estonia Lead countries (Case-studies + final report) Case-studies Joined later: Slovenia, Tcheque Republic

6. Example of an economic specialisation profile: mature industries in Flanders Even these simple spider graphs can trigger other ‘stories’ and inspire new strategic decion frameworks Source: OECD project Smart specialisation in globalvalue chains (ECOOM)

7. Preliminary findings OECD has a role in setting ‘standards’ to accelerate conceptual and policy development and support policy makers with a ‘toolbox’ of indicators en guidelines: • Smart specialisation is a policy approach forprioritisation of (public) RD&I investments in times of hard budget constraintandstructural change.= 4-Cs • CHOICES • COLLABORATION / CONNECTIVITY / CROSS-FERTILISATION • COMPARATIVE ADVANTAGE, capitalising on COMPLEMENTARITY in valuechains • CHALLENGES • Smart Specialisation Strategies are developed in a multi-actor andmulti-level policy environment= Clusters (as nodes in globalvalue-chains) are the engine • Strategic governance has tobeadaptedto the climate of uncertainty in decentraliseddecision environments= Discovery process, aided by shared strategic intelligence & supporting methodologies for co-creation of shared visions, road maps,

8. S3 are co-created at different decision levels

9. SMART SPECIALISATIONS: where to ‘discover’ them? Smart Specialisation is focussing local competences on gobal challenges

10. SMART SPECIALISATION STRATEGY: focus on lead-clusters …Therefore smart specialisation is embodied by innovation clusters as unique local eco-systems in global value chains.

11. Catalysing role of strategic intelligence • Shared visions • Common Road Maps • Specialisation profilesto help identifycomparativeadvantages(evidence-based) • Promote clusters withuniqueeco-systems thatexploit thepositivesumgame of open innovation • Giving a roletoallregions

12. 2. Recent evolutions in Flanders cluster policies • Flanders has a tradition of strong bottom-up S&T policy: selectiononly on qualitystandards (‘excellence’ and ‘ROI’), but no clearthematic or sectoralpriorities • But history has createdspecialisationpatterns! Ofteninstitutionalised (strong strategic research centres) or evolvedfrom FDI (decidedby multinationals). • Smart specialisation approach cancatalyse change process: recognise the entrenchedpriorities (historicstrengthsthat are notalwaysstrengthsanymore) • It is a process approach, not a mechanismfor top-down choice policy. The bottleneck = strategiccapacity (strategic cluster platforms!) • S3 in Flanders = no strong ex ante choices but a commitment totravel the road of transformationbytargetedinnovation

13. ‘Innovation Crossroads’: challenge driven innovation policy ‘Innovation Centre Flanders’, concept noteadoptedbyFlemishGovernment on May 27th 2011 • Societalchallengesrecognised as driver of a new innovationstrategy • Departurefrom a purely bottom-up research andinnovation policy • Six ‘innovationcrossroads’ are identifiedfor the development of specificinnovationstrategies • Eco-innovation • Green energy • Sustainablemobbilityandlogistics • Innovation in care • SocialInnovation • Industrial transformation (specifiedforcore sectors) • ‘Innovationcrossroads’ are a spacewhereinterdisciplinary research and open innovationcancontributetosocietalandeconomicvaluecreation. • ‘InnovationDirectionGroups’ are assignedby the Minister toadvise on suchstrategies (ongoing)

14. Transformation processes: core of New Industrial Policy ‘White Paper New Industrial Policy’, adoptedbyFlemishGovernment on May 27th 2011: • Action Plan with 50 Actions in economy-innovation-work policy for a ‘new productivityoffensive’, ‘Factory of the Future’ and ‘system innovation’ • Round Tables are organised to elaborate a ‘Strategic Action Plan’ for transformation in (ready) sectors. • ‘Transformation strategies’ are based on value chains, clustersand grand projects (cross-sectoral) • New arrangements for policy coordination are gradually put in place • A targeted cluster policy willbedeveloped (advisedbyanIndustry Council). ‘Smart specialisation’ is adopted as a reference.This is a ‘discoveryprocess’! Strong bottom-up drive. • Frontrunner: FISCH (Flanders Initiative for Sustainable Chemistry) From2007 onwards the sector federationdeveloped a transformation strategy, supported by a broad mobilisation (more than 700 participants), in 3 parts: a strategic research programme on renewable materials and process intensification; open innovation infrastructures; new business models (e.g. chemical leasing) and sustainability criteria. Recent establishment of Transformation and Innovation Platform as cluster organisation (€5mln/y) that elaborates the road maps further.

15. A three steps entrepreneurial discovery process • Visioning: with focus on societal challenges (transition management / starting experiments) in Transition Arenas / Flanders in Action • Strategy development: with focus on transformation by innovation (strategies within the 6 innovation hubs)in Innovation Direction Groups • Action plan: with focus on investment projects in consortia driven by frontrunners(promoted in Round Tables and Transformation and Innovation Platforms)

16. Smart Specialistion case-studies Flanders(OECD-TIP project on smart specialisation in global value chains) Action Learning= simultanious policy learning and policy development Two transformation cases that benefit from a smart specialisation approach: Case 1: Sustainable Chemistry • Largest petro-chemical cluster in Europe in Flanders; strong links with food, building e.o. sectors; cross-border links with NL and DE • Transition towards bio-based economy, but incomplete science base! • How to become a world-class cluster in sustainable chemistry? • Focus on strategic road mapping for a transition (also cross-border!) Case 2: Nano-for-Health • IMEC: largest independent nano-electronics research institute in Europe; technology platform for open innovation, but weak industrial cluster. • Health: transition towards ‘personalised therapy’ • How to leverage this technology platform for these new application areas? • Focus on the management of an emerging eco-system (cross-border!)

17. 3. Conclusions for cluster policy • Clusters are changeagents! • No lobby organisationsor disguised sector organisations • Locus forchoiceprocesseslinkedwithinnovation & entrepreneurship!= smart specialisation • Pitfalls of ‘steady-state’ cluster policies • Lock-in! / The ‘average’ member as a reference • Dispersion: small-scale; fragmentationandduplication • Focus on cooperation between cluster organisations is notenough • Transitiontowards a strategic approach towardsregionalstrengths • Frontrunners in the drivers’ seatfor a pro-active & interactivestrategy • New methodsandpersonnel in cluster management (roadmapping) • Needforcompetition in cluster models (Spitzen cluster competition?) Smart specialisation is a policy approach for a new generation of cluster policies

18. Three stage cluster development GENERIC CLUSTER POLICIES TARGETED CLUSTER POLICIES ‘Two-stage gate keeping’ policies for cluster development?

19. Impact of S3 on cluster management • Take smart specialisation as an opportunity toenhancechange management in cluster strategies. • Transformationpressure is not the sameforall. Different smart specialisationstrategies: modernisation, diversification, transition, radical foundation. Considerwhat is the appropriategovernance. • Smart specialisationintroduces the international positioning as a selective environment forownpriorities, tochallenge present distribution of priorities. Outwardlookingstrategy • Align these strategieswith common roadmapsat EU-level. • Usecross-borderlinkagesto complete/complement the regional clusters andgaincriticalmass. Focus on lead-clusters. • Network clusters in GVC and in European knowledge base forcommon challenges(see Nano for Health network) S3 = ‘specialisation’ (focus on strengths), enhancedbystrategiccapacityand intelligence tofacilitatefuturechoices in cluster organisations

20. Further questions? Please contact me!Thank you Department of Economy, Science and Innovation (EWI)Koning Albert II-laan 35 box 10, 1030 Brussels www.ewi-vlaanderen.be | info@ewi.vlaanderen.be Jan.larosse@ewi.vlaanderen.be / tel 32-2-5535993