Governance Aspects of Smart Specialisation

1. Governance Aspects of Smart Specialisation How can regions develop the capacity to support the development of smart specialisation strategies? Professor John Goddard Emeritus Professor of Regional Development Studies Newcastle University, UK

2. The ‘entrepreneurial discovery’ process and public governance(1) • When linked to economic development ‘entrepreneurial discovery’ is not just an individual endeavour or confined to the private sector • It is a combinatorial process – science, technology + market potential + competitors + supporting regional infrastructure and services • Not just technological innovation but organisational and societal innovation(e.g. the region as a ‘living lab’) • It requires a synthesis and integration of dispersed and fragmented global and local knowledge ( technological, business and societal) to inform S3 choices • Breaking down barriers between knowledge producers and users

3. The entrepreneurial discovery process and public governance (2) • The S3 discovery process must therefore foster wide stakeholder involvement within the region (lateral) and across levels of public (central + local/regional and private sector governance (e.g. MNCs) (vertical) • The how as well as the what of strategy design and implementation • Incorporating the demand side perspective from civil society – the quadruple helix not just the triple helix • S3 requires evidence based choices and related risks. Hence the importance of robust governance structures. • These structures should ensure inclusive, open prioritisation and avoid capture by vested public sector and industrial interests

4. Which organisations should be involved? Source: EURADA

5. Why should such a range of organisations be involved? • To ensure that regional innovation is considered as a holistic (systemic) process • To ensure that public intervention in R&D is in tune with business needs and capacity and societal need • To ensure that strategies are underpinned by sound analysis of all regional assets • To avoid the temptation of developing strategies based on ‘picking winners’ and/or imitating strategies deemed to be successful elsewhere

6. Universities, RTD organisations and the ‘entrepreneurial discovery’ process • Who has the knowledge needed? In some regions (esp. those with small/weak private sectors) it might be universities/research organisations • These tend to be plugged into national/international networks and may be better placed to make judgements on the relative strength of regional activities • Unlike RTD organisations universities through teaching can build capacity on the demand side – new business formation, student enterprise, graduate placements etc – establishing the social relations which underpin the regional innovation system • In summary the ‘entrepreneur’ in the context of smart specialisation needs to be understood much more broadly

7. Calibrating demand and supply sides • It is essential that new demand-side perspectives are given prominence, otherwise the RIS3 exercise runs the risk of being captured by public sector lobbies (including research interests not linked to regional potential) • This is of greater concern in the Less Favoured Regions where enterprise associations and other demand-side bodies tend to be weaker. • Less Favoured Regions may have strong universities that can generate world class knowledge, but the universities also need to build capacity in SMEs to absorb and apply this knowledge.

8. The Importance of ‘Boundary Spanning’ • Boundary spanners help to overcome the sectoral and disciplinary silos that reproduce old habits and routines, locking regional economies into their traditional paths of development. • Boundary spanning skills tend to emerge from activities that straddle sectors, disciplines and professions and they are invariably fashioned in action learning environments where there is a high degree of novelty associated with the activity. • Examples of such activities include technology transfer , venture funding, knowledge intensive business services, and management consultancy, all of which can contribute to an overview of the regional economy. • Within the boundary spanning skill set it is possible to distinguish between horizontal and vertical boundary spanning perspectives, the former attuned to inter-organisational relationships within the region, the latter oriented to relationships between the region and its national and international interlocutors.

9. The Importance Collaborative Leadership • Leaders set the tone and vision of the whole process, they therefore need to be people who command respect and credibility in the region. • Although their reputations will be partly based on their past achievements, they also need to champion new vocations for their regions. • Leadership assumes many forms. • political leadership (the people who are chosen by the electorate to represent us and to lead our governments); • managerial leadership (the people who manage the “enterprise function” in the public, private and third sectors); and • intellectual leadership (the people who play a leading role in connecting the knowledge base in universities to the worlds in and beyond their regions).

10. Dimensions of Leadership

11. An ‘action learning’ leadership development programme to build regional boundary spanning capacity

12. Governance structures – Learning from the RIS Experience • Although the structure of the management body will clearly vary according to local circumstances, it must be supported by robust governance arrangements. • The RIS experience is instructive because it shows that local diversity can exist within a generic governance system. • The governance system of a typical RIS project revolved around three elements • Steering Group • Management Team • Working Groups

13. Involvement of the business community in the process – Lessons from RIS • Communications: a clear communications strategy was deemed to be of enormous importance, especially for the business community. • Management: the Management Team and Steering Group personnel often played a key role in maintaining effective communication, especially where the chair of the Steering Group or the leader of the Management Group was a prominent local business leader or a well-connected local networker. • Sector Champions: Sector champions can help to engage the local business community in traditional sectors as well as in new or emerging sectors, both of which need to embrace innovation. • Local Media: the involvement of local media helped to raise the profile of the RIS exercise in the local business community. • Pilot Projects: To overcome the criticism of the RIS process being no more than a ‘talking shop’, it was found that pilot projects led by local business leaders was an effective way to maintain the active engagement of the business community.

14. The self evaluation and peer review process • The Steering Group should undertake a self evaluation of the innovation potential of the region (regional assets, business and institutional strengths and weaknesses) using a template provided by the S3 Platform • A key dimension of the evaluation should be a the assessment of the connectedness of the regional knowledge system • International peer review team appraisal visit • Peer review report and recommendations and Steering Committee response widely publicised and discussed • Action plan proposed and monitored with updated self evaluation and follow up peer review after 3/4 years

15. The disconnected region PUBLIC SECTOR Lack of coherence between national and regional/local policies Lack of political leadership Lack of a shared voice and vision at the regional/local level PRIVATE SECTOR No coordination or representative voice with which to engage Motivated by narrow self interest and short term goals Dominated by firms with low demand or absorptive capacity for innovation No boundary spanners Focus on supply side, transactional interventions Ineffective or non existent partnership Lack of a shared understanding about the challenges Entrepreneurs ‘locked out’ of regional planning HIGHER EDUCATION SECTOR Seen as ‘in’ the region but not ‘of’ the region Policies and practices discourage engagement Focus on rewards for academic research and teaching

16. The ‘connected’ region – strong partnerships based on shared understanding of the challenges and how to overcome them PUBLIC SECTOR Developing coherent policies that link territorial development to innovation and higher education Analysis of evidence and intelligence for planning Building the infrastructure for growth Evidence based policies that support ‘smart’ innovation and growth Investing in people and ideas that will create growth Generating intellectual and human capital assets for the region Skills development, commercialisation of research HIGHER EDUCATION SECTOR PRIVATE SECTOR

17. Multi-level and cross programme governance (again) • A key objective of S3 is to increase synergy between different funding streams and policies (i.e to make connections) • Regional innovation strategies will therefore have to be aligned with national strategies for research and innovation • This is challenging as in most member countries, including those with devolved governmenst, research and education is an exclusive competence of the nation state • These programmes also align with other non-regional EU policies and programmes (e.g Horizon 2020) • When developing S3 strategies member states and regions will need to take account and be involved in discussion of what types of operational programmes will be presented in the partnership contract

18. Which funds for RIS3? Synergies with Which Funds? Other EU Funds, Ex: Horizon 2020 National Regional ERDF ESF Types of strategies Rural Development Fund Research Education Innovation business market National Competitiveness Programs Regional Programs

19. What is the interaction between national and regional policy making? Impacted by international policies and drivers Impacted by local policies and drivers Nationally driven Locally driven Science and Innovation Higher Education Economic development Employment and skills Transport and infrastructure Planning and regeneration Governance of S3

20. Universities as ‘boundary spanners’ in multi level governance Culture village Hospital ‘Science park Inward investors Academic kudos Environment Innovation Skills ‘Global’ ‘National’ ‘Regional’ TDP S&T HE IND LM (after Arbo and Benneworth)