4th presentation of the CentraLab Mid-Term Conference held in Budapest on 2 October 2012.

1. The Role of Open Innovation in
the Hungarian Innovation System
Vilmos Németh
National Innovation Office
Smart Specialization for Central Europe
and Living Lab Opportunities in the Light of the Danube
Strategy
Budapest, 2 October, 2012

2. European Network of Living Labs
(ENoLL)
European Network of Living Labs (ENoLL) Launch Event for the
5th Wave of Living Labs
16 May 2011, Budapest, Hungary

3. The structure of the Hungarian
R&D&I system
Governmental Committee of National
Development
11 October 2012 www.nih.gov.hu 3

4. Main pillars of the NIH activities
Intermediatory,
coordination tasks
Public administrationNIH Services, agency
tasks tasks
Supporting
R&D&I evidence-
Innovation International
strategy based policy R&D&I
management
and making cooperation
and services
evaluation (S&T
Observatory)
Effective organisation
11 October 2012 www.nih.gov.hu 4

5. National Innovation Office (NIH)
• Main tasks:
• Research and Technological Innovation Fund (KTIA) is
managed by the National Development Agency (NFÜ)
• Knowledge base in innovation (Science and Technology
Observatory), monitoring and evaluation
• Planning of national R&D&I strategies and innovation
programmes
• International cooperation in R&D&I (EU, bilateral)
• Innovation management and services

6. National Reform Programme – R&D&I
Objectives
Main goal: Hungary’s innovation performance should reach
the EU average by the end of the decade.
Specific objectives:
• Increasing the expenditure on research and
development 1.8 % of GDP (1.15 % in 2009)
• Renewal and implementation of the R&D&I strategy
• Introduction of indirect supports: tax allowance,
pre-commercial procurement, YIC
• Operation of a unified R&D&I monitoring and
evaluation system
• Establishment of Science and Technology Observatory

7. Priorities of the New Széchenyi Plan
..
Enhancing New Széchenyi Plan Objective:
competitiveness
Breakthrough in
employment
The Development Policy Programme of Recovery and Rise
1 million new jobs
in 10 years
Breakout points and Programmes of the
Sectoral breakout Horizontal
New Széchenyi Plan
points breakout points
Health industry Green economy Network Knowledge Home-creation Labour-economy Transit economy
economy economy
Medicinal Renewable Enterprise Knowledge, Home-creation Employment Transit economy
Hungary Hungary development and innovation and and housing
business Growth programme
Health industry Renewable environment
energy and improvement
green economy
Main elements for enhancing competitiveness Principles
Tax reduction
Reduction of the number of taxes
Halving of administrative costs and burdens of enterprises Integration Global or Development High added
Simplifying access to domestic and EU subsidy funds European creating new value
Elimination of imbalances distorting competition competitiveness markets
Radical reduction of corruption
Restoring legal certainty for the benefit of the economy

8. Challenges in the national
innovation system
• Low level of academia-industry cooperation
• Few innovative products and companies that are
succesful globally
• Low innovation intensity of companies (especially SMEs)
GERD/GDP 1,15% (2010) and ratio of companies R&D
expenditure inside this value was 48 %
• Small number of legally protected intellectual property
(patents)
• Low number of professionals in the field engineering and
natural sciences (1/3 of EU average)
• Missing culture for exploitation of research results

9. Summary Innovation Index (SII) and
the Hungarian position
Lag behind Leaders
countries Catching-up countries Average
Source: Innovation Union Scoreboard 2010

10. Innovation indices of Hungary vs. EU-
27 (2010)

11. Multinational companies in Hungary
Bosch Power Tool
Source:HITA
Audi AFT
Magna Steyr
General Electric Michelin
ZF Hungária
Philips Flextronics
W.E.T. Samsung Electrolux
Nokia Samsung
Draixlmaier
Philips Samsung Ericsson
Continental Temic
GM-Opel IBM
Denso Zeuna Starker Sysdata
Visteon General Electric
General Electric Philips Knorr-Bremse Nokia
Flextronics Cisco
Zenon
SAP
TATA Consulting
Sanofi-Aventis
Continental Teves
Valeo Auto-Electric Elcoteq

12. Looking for new innovation
approaches
Multinational
companies
SMEs
Start-ups
How to boost innovation in a small, open economy
with some big multinational companies and with a
high number of SMEs, but with low innovation
activity?

13. Collaborative innovation environments
To reach faster innovation and to exploit the R&D results more
Efficiently, we need open collaborative environments where the
stakeholders do research and innovation for their mutual
interests. New innovation models in Hungary:
• Cooperative Research Centers (KKK) – University-
Industry R&D cooperation with focus on business
opportunities
• University Knowledge Centers (RET) – Scientific Center of
Excellence with industrial collaboration
• National Technology Platforms (NTP) - Cooperation in
developing long-term, joint R&D&I strategy
• Innovation Clusters – Networked cooperation of
institutions and companies based on common business
interest in a particular industry or area.

14. Open innovation & Living Labs
Living Labs – User driven open innovation ecosystem where the
users are involved in the innovation process from research to
product development via testing of prototypes.
(Concept coined by Henry W. Chesbrough)

15. European Network of Living Labs
(ENoLL)
Source: ENoLL

16. Living Labs in Hungary
• Well-being Living Lab Nagykovácsi
• Innovative Learning Solutions (Flexilab)
• Green Living Lab
• Győr Automotive Living Lab
• Homokháti Ruaral Living Lab
• Creative Knowledge Center (CKC) Living Lab
• DEMOLA-Budapest

17. DEMOLA-Budapest
DEMOLA-Budapest:
• is a modern, open innovation environment at the Budapest
University of Technology & Economics (BME), where student-
teams create new solutions to real problems
• a platform, where students, professionals of project partners
and the university can collaborate in R&D&I
• an incubator site that connects creative students’ skills with
identified need and demands from the market, with support of
the industry
• an opportunity for students to contribute real-life innovations
with end-users
• an opportunity for organizations (e.g. companies) to run agile
development projects exploring novel technology-based
products and services.

18. Why do we need to expand the LL
Network in Hungary?
• Few innovative SMEs
– LLs can be a source of start-ups and spin-offs
• Low number of high-tech products and services
– LLs accelerate the prototyping and trials of innovative products and
services
• Weak academia-industry cooperation
– LLs provide „melting pots” for researchers and industrial professionals
• Low intensity of IPR activity
– LLs nurture innovative ideas that can be patented
• Gap between local SMEs and multinational companies
– LLs attract large companies to do precompetitive research on new
products and services
• Weak exploitation and commercialisation of R&D results
– LLs help to transfer the research results and ideas to the market
• Small amount of VC investment in start-ups
– LLs create lots of start-ups that are worth VC investment

19. Thank you for your attention!
Vilmos NÉMETH
National Innovation Office
H-1061 Budapest, Andrássy út 12.,
Hungary
E-mail: vilmos.nemeth@nih.gov.hu
October 11, 2012 www.nih.gov.hu 19