Innovation Policy in the era of sustainability

1. Innovation Policy in the era of sustainability Ben Dankbaar Radboud University Nijmegen EAEPE Conference Krakow, October 2012

2. Overview • Innovation policy – why and how? • The challenge of sustainability • New innovation policies • Limits and Criticism • Creating new institutions

3. Innovation policy – why and how? • Government innovation policies aim to improve the innovative performance of companies in order to improve their competitive performance and therefore employment, exports and economic growth of the (national) economy • Underlying assumptions • Innovation takes place in companies / by entrepreneurial action • Without innovation policies, companies would invest less in innovation, because they can only appropriate part of the total benefits of innovation for society • Innovation policies in principle do not prescribe what direction innovations action should take and in that sense they are not selective • Sometimes innovation policies aim at to speed up the diffusion of a specific technology • Science and technology policies frequently are selective in the sense that specific fields of science and technology are receiving more funds than others

4. Innovation policy – why and how? • Innovation policies should be distinguished from policies promoting innovation in public goods, for which government has taken on special responsibility:, e.g. in infrastructure, defense, health • Where innovation policies usually fall within the domain of ministries of economic affairs, policies promoting innovation in public goods are the concern of various functional ministries • Where government is the customer, its purchasing power can be used to promote innovation in a specific direction • In reality, these two kinds of policy overlap and interact • Spending by the Dept. of Defense en the National Institute of Health in the USA have been of very considerable impact on innovation in electronics and biotechnology • Companies producing products for use in the public sector may also use the same or similar technologies for private markets

5. Innovation policy – why and how? • Over time, a large number of instruments have been developed • From indirect, fiscal instruments to support investment in R&D to direct subsidies for individual firms • From programs focusing on specific sectors to programs focusing on specific regions and clusters • Instruments focusing on different stages of the innovation process, from fundamental research to implementation, from vision-building and roadmapping to collaborative development • Instruments focusing on large, R&D performing companies and their suppliers • Instruments focusing on support for startups and spin-offs • The effectiveness of all instruments (and indeed of innovation policies as such) is constantly under discussion • Additionality • Costs and benefits

6. Innovation policy – why and how? • Considerable debate on the optimal mix of policy instruments • General trends • From direct support to fiscal incentives • From central government initiatives to local and regional initiatives • From science-push to demand-pull • From institutional funding to competitive funding • From single actor projects to multi-actor projects • From dedicated support to improvement of framework conditions • Organizational concepts • Open innovation (collaborative or distributed innovation) • University patenting, technology transfer offices and spin-offs • Co-creation with users (democratizing innovation) • Triple helix constructions • Debate inspired by evolutionary theory about the importance of supporting new high-tech starters • As opposed to “backing winners”

7. Innovation policy – why and how? • General outcome currently • policies supporting collaborative efforts in research and development, explicitly encouraging collaboration between large and small/medium-sized companies, frequently with a geographical or cluster component • Policies supporting high tech startups, especially from universities • Policies providing indirect support for R&D • Still considerable differences between countries

8. Direct and indirect support for R&D Source OECD STI Scoreboard 2011

9. The challenge of sustainability • There are numerous definitions of sustainability • Brundtland Report (Our Common Future) "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: the concept ofneeds, in particular the essential needs of the world's poor, to which overriding priority should be given; and the idea oflimitationsimposed by the state of technology and social organization on the environment's ability to meet present and future needs." • The Brundtland report changed the discussion about environmental protection and shortages of raw materials into a discussion about social and organizational issues • The environment no longer an exclusive concern of the Ministries of Environmental affairs • Moving beyond regulation • Moving beyond technology – but not without technology

10. The challenge of sustainability • People, planet, profit • The great social compromise that guaranteed social peace and welfare in most advanced countries in the second half of the 20th century was based on • Mass production and mass consumption • Extensive use of fossil fuels and other raw materials • Destruction of nature • Large-scale, capital intensive technologies • Recognition of the value of nature (planet) and the need to ensure its ‘reproduction’ in the same way as labor and capital need to be reproduced is the first step to the construction of a new social contract • But who is negotiating for nature? • What about the aspirations of the world’s poor? • How to deal with still increasing human population?

11. The challenge of sustainability • Creating new technologies • Creating new values and new institutions • social innovation • Co-evolution of social and technological innovation

12. New innovation policies (1) • Mainstreaming sustainability “… the time has come to move sustainable development (SD) beyond being considered as a separate, ‘green’ issue which is a priority for only a few Government departments. (…) (T)his Government wants to mainstream SD so that it is central to the way we make policy, run our buildings and purchase goods and services. Ministers have agreed an approach for mainstreaming SD which in broad terms consists of providing Ministerial leadership and oversight, leading by example, embedding SD into policy and transparent and independent scrutiny.” “The Big Society puts individuals and groups in the driving seat and Government in an enabling role removing the barriers, where appropriate, which prevent others from taking responsibility. More empowered communities and a society where people are more involved in social action such as volunteering should lead to increased well-being, stronger communities and stronger social ties.” UK Conservative-Liberal Coalition Government 2011

13. New innovation policies (2) • Quadruple helix “Quadruple Helix (QH), with its emphasis on broad cooperation in innovation, represents a shift towards systemic, open and user-centric innovation policy. An era of linear, top-down, expert driven development, production and services is giving way to different forms and levels of coproduction with consumers, customers and citizens.“ ”Quadruple Helix is more of a continuum or space for innovation, rather than one discreet model. Public authorities can develop environments which both support and utilize citizen centred innovation activities. Utilisingits potential calls for a long-term cultural change of all stakeholders.” Arnkil et al. 2010 • Approach inspired by user involvement in innovation • but broadening the idea to include ’civil society’ as a fourth actor next to government, business and science/universities

14. Development/ co-operation platform • Firms • Develop commercial • products and services from • citizens’ innovations • Support citizens innovation • activities • Universities, • polytechnics • Support citizens’ innovation • activities • Support firms and • public authorities in • the utilization of • citizen innovations • Citizens • Create citizen relevant • innovations • Decide which innovations • are needed/developed • Public authorities • Support the development • of citizen innovations • Provide tools & skills • Offer dialogue • forums to citizens and • forums to participate in • decision making Citizen-centred Living Lab-models Source: Arnkil et al 2010

15. New innovation policies • Civil society and local government… • Cities • Hodson (2010) Can cities shape socio-technical transitions and how would we know if they were? • ‘Energy regions’ • Späth (2010) ‘Energy-regions’. The transformative power of regional discourses on socio-technical futures • Citizen initiatives in the field of energy • Cooperatives for production of wind and solar energy for collective use • Building (local) smart grids

16. New innovation policies (3) • Transition management (TM) and strategic niche management (SNM), notions developed by mainly Dutch scholars • Both notions contribute an important role to 'transition experiments', i.e. innovation projects in which actors in society learn about social challenges. • In TM, experimenting is one of four activity clusters. Each cluster represents a distinctive set of activities that together form a cyclical and iterative process. These activity clusters are 1) structuring the problem in question and establishing and organizing a multi-actor network; 2) developing a sustainability vision, a transition agenda and deriving the necessary transition paths; 3) mobilizing actors and establishing and executing transition experiments; and 4) monitoring, evaluating and learning. Experiments are thus explicitly part of a wider set of TM instruments. • SNM attributes a more central role to experiments and elaborates upon setting up niches through 'smart experimentation. (…) Another difference is that TM is positioned as a tool for social transitions, while the entry point of SNM is often technical. (cf. Raven et al 2010)

17. New innovation policies (3) • The literature on TM and SNM often makes use of the multi-level perspective • Niche • Regime • Landscape • An element TM and SNM have in common with the Quadruple Helix is the idea that changes at the lowest (niche) level may affect the regime level • “(T)ransitions only occur through the fruitful coupling of developments at all three levels.” (Geels & Raven 2006)

18. From local projects to a new trajectory

19. Criticism of the new innovation policies • The UK government’s ‘mainstreaming’ of sustainable development has been criticized for not making it a responsibility of the Prime Minister himself and for abolishing the independent watchdog commission appointed by the previous government • The ‘Big Society’ idea has been criticized as "aspirational waffle designed to conceal a deeply damaging withdrawal of the state from its responsibilities to the most vulnerable.“ (Archbishop of Canterbury Rowan Williams) • Transition policies in the Netherlands, inspired by TM theorizing, have encountered problems and have shown limitations, which are to a large extent inherent to all policy making, but were also caused by underestimating the ‘powers that be’ in the energy sector.

20. Criticism of the new innovation policies • The idea that transition management could be added to existing policies (adding a long-term vision and carrying out experiments), without (from the start) impacting on those policies, may have led to lack of debate and communication with those responsible for current policies. • Whereas SNM was always focusing on changes in technology and therefore maybe had an excuse to neglect politics, TM was explicitly focusing on social change and learning, but with little attention for the politics involved. • “Recent debates on how to ‘manage’ policy transitions to sustainability have been curiously silent on democratic matters, despite their potential implications for democracy.” Hendriks (2009)

21. Creating new institutions • The literature on new innovation policies is questioning some of the underlying assumptions of innovation policies today • Innovation is not just taking place in companies • Innovation and technological change will not automatically move in the desired direction and with the desired speed, if the institutional environment is not appropriate • Therefore, innovation policies in the era of sustainability will have to enable other actors (users, civil society, citizens) to contribute to and participate in innovation programs • The creation of a new institutional environment, however, will not always be a matter of simple regulation • Visions of the future may be helpful in organizing experiments, but they may also be leading in the wrong direction • It is easier to block certain futures (like nuclear energy) than to envision the relative importance of upcoming new technologies (like various sources of alterative energy)

22. Creating new institutions • If ‘experiments’, ‘niche projects’, and ‘local learning’ have to lead to new higher level institutions, new ‘regimes’, possibly even new values, they will have to become part of political processes, which may be less than manageable • New social institutions are seldom rationally designed, but rather the outcome of sometimes long-lasting and complex processes of debate and negotiation • The literature on new innovation policies is paying considerable attention to governments, but very little attention to parliaments • Logical if you think in terms of policy making, but less logical if you think of transformations in society

23. Creating new institutions • The various forms of new innovation policy have some ‘evolutionary’ elements in common, in the sense that they call for experiments and local, bottom-up action, i.e. on the introduction of more ‘variety’ into the system • They are less clear on the ‘selection environment’ i.e. on the ways in which experiments and local initiatives are to be evaluated and how the ‘best’ can subsequently be ‘institutionalized’ at the level of society as a whole • The selection environment will probably always be political and messy • The idea of including ‘civil society’ in innovation programs is helpful, but not necessarily democratic, because it also encourages various special interest groups to engage in innovation experiments

24. Creating new institutions • Compared to the present-day ‘consensus’ combining indirect support for R&D with triple helix type programs and support for high-tech startups, the idea of (somehow) including citizens in innovation programs is an important step towards the creation of new institutions • But it cannot be assumed that citizens are always more open for change than vested interest groups • Mechanisms for the translation of local learning into political programs will need to be developed – but can they be part of government innovation policies? • There are good arguments to limit innovation programs (as opposed to indirect support) to sectors in which some proven strength is already present (backing winners) • But there is no guarantee that the winners of past decades will come up with the winning technologies of future decades