Osimo eurocpr

“Light and fast” funding for innovation: Making EU innovation policies fit for the webDavid.osimo@tech4i2.com@osimod 1

Background• Europe’s lagging behind in web competitiveness• FP7 projects fail to generate substantial market impacts• Most innovative web companies don’t participate in FP7• Horizon2020 and Digital Agenda for Europe mention the need for “light and fast funding instruments”, but concrete measures focus on administrative simplification only 2

Questions• Is it necessary that future EU innovation policy include light and fast funding instruments, and why?• Is it feasible to adopt these instruments in the government context?• How could they be designed? 3

An Impact Assessment Approach 4

The problem• ““there are major barriers to involve the most innovative and growth oriented SMEs” (Aho 2008)• “Framework Programme contains limited countervailing activity that would stimulate disequilibrating, disruptive technologies and innovations that can unseat the established players and unleash the development of new industries” (Arnold 2011) 5

The reasons: aninnovation policy designed for capital-intensive R&I(cfr. IBBT Ghent Manifesto 2009) 6

The objective of “Light and Fast”, and its objections• Light and fast instruments are not allowed by financial regulations• They are much more labour intensive for the funding agency• They lack a critical mass to generate disruptive innovation on the market• They lack rationale for EU-level intervention since they are most effective at regional/local level 7

3 cases of light and fast instruments• The Principi Attivi initiative of the Puglia Region (IT)• The Global Security Challenge (UK)• US government Challenge.gov service (US) 8

Principi Attivi• the Puglia Region Government launched and managed in-house a €10MLN call for proposals for micro-projects (up to €25.000)• strong “licence to experiment” by its management . Not funded by SF because of legal limitations• Restricted to informal groups of young people could participate• Very open, non prescriptive definition of the priorities• Simple application process (max. 13 pages form)• Open, peer-to-peer helpdesk that enabled the horizontal networking of participants• 420 projects (involving 1279 young people) were funded out of 1500 proposals. Only 5% of proposals did not reach their goals but more than half changed their objectives throughout the process• 80% of the projects are still active three years after the call has ended 9

Global Security Challenge• The TSWG co-funds the Global Security Challenge, organised by OmniCompete. Now in its 6th year.• prizes are a minor part of the total funding of the agency. In the case of the Security Challenge, about 1% of the budget is devoted to it• Open, non prescriptive participation, simple application form (1/2 hour)• Any security-related innovative product can be submitted, global participation• Prize grants totalling $500,000 USD are available to the winners.• Top contenders from previous competitions have subsequently raised over $80 million in new capital. Several products have then been bought by the final customers 10

Challenge.gov• Following a revision of legislation, any gov agency can organise inducement prizes and a dedicated platform is set up• Government agencies can post “challenges” that can be met by any citizens• The proposer of the best solution receives the prize money, typically around 50.000 Euros• Not only apps contests: e.g. NASA competition for writing “algorithm to fly three small SPHERES satellites around the cabin of the International Space Station”.• All federal agencies but two have used the platform to launch prizes• So far 38 million dollars in prizes have been distributed, including a 18 million dollars prize for Solid State Lighting• Growing interest: new COECI created at NASA 11

Answering the objections• Objection 1: they are not allowed by financial regulationsUnproven, but in any case regulations can be adapted (e.g. America Competes Act). “Light and fast” instruments call for regulatory intervention or at least regulatory clarifications and guidelines that help convincing administrators of the legitimacy of the acts. 12

• Objection 2: they are much more labour intensive for the funding agencyAll project officers confirmed the need for continuous, in depth interaction with project managers in order to fine-tune the ideas, but also underlined how this additional cost was highly beneficial for both the research team and the funding agency (similar to VC approach)Innovative peer-to-peer solutions can also be used to reduce the workload 13

• Objections n. 3: they lack a sufficient critical mass to generate disruptive innovation on the marketUntrue. Web-based innovation do not require strong initial investment. The GSC has attracted world-class participation and generated innovation with relatively small funding. Key is using “light and fast” as only the first step. 14

• Objections n.4: small funding lacks a rationale for EU-level intervention since they are most effective at regional or local levelUntrue. Inducement prizes such as Challenge.gov show that global and federal (in the US sense) geographical coverage is meaningful and effective also for relatively small amounts of funding. The wide geographical scope is needed to raise the quality of the proposals, their visibility and the knowledge flows, not only because of the size of the investment. 15

Answering the initial questions• WHY? Current funding instruments are “ineffective by design” in delivering web innovation• IS IT FEASIBLE? light and fast funding instruments are applicable in the government context, not only in the private and non- profit sectors. There are examples that show this feasibility 16

HOW to do it?• Integrate (not substitute) existing funding with: Small funding, short project time, simple application process, open themes, multi-stage funding• Institutional change / clarification necessary• Management change: “license to experiment”, move to ex-post evaluation of results 17

Final recommendations1. the integration of inducement prizes in Horizons 2020, with a 1% funding for each applied research priority to be distributed as prize2. the institution of a small projects assignment for each funding priorities, with maximum funding of 25000 Euros, small partnership, also for informal groups and simplified submission and evaluation mechanisms.3. the re-orientation of application-oriented research work programmes into open and challenge-driven funding model, not rigidly divided between priorities and disciplines4. the launch of a peer-to-peer support network for project proposals to be used also in the monitoring and evaluation of on-going projects5. The move towards a stronger ex-post evaluation of projects and of administrators, even after 5 years of the finish, with results of the evaluation being publicly available and being used to future evaluation of both project officers and project proposals. 18

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