Innovation Across Boarders - Robert Wells toronto 25.02.11

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  • Point that needs emphasizing is that innovation is more than: new knowledge, more the development or application of new technology.
  • The iPod has been a tremendously successful innovation, but one that relied little on R&D done by Apple but rather on an integration of good ideas from across the globe.
  • Investments in innovation – broadly defined to include R&D,
  • Estimates show that intangible investment accounts for up to 1 percentage point of labour productivity growth in Sweden, and just below that in Denmark, Finland, the United Kingdom and the United States. A new OECD project on "New Sources of Growth: Intangible Assets" will enrich the evidence base on this issue. Second, innovation is also essential for emerging economies as they seek to enhance their competitiveness, diversify their economy and move towards activities with more high value added.
  • Social: -- in many cases market failure is with fundamental, basic R&D which is expensive and risky and thus avoided by firms How to Harness this? Innovation is a powerful engine for development and for addressing social and global challenges. Innovation-led growth can provide the manuverability that will make it easier for governments to address pressing social and global challenges. Moreover, it can do much to help address these challenges at the lowest cost. While not a solution to all the world’s ills, innovation is an important tool that can and should be better utilised.
  • 1970: Invented by Battelle Research Institute in 1970; 1974: Nestle acquired the rights in 1974; 1976 patent; 1982: pilot test in Swiss restaurants flops; decision to go for offices 1986 affliate spun off == physically moved out of Nestleaunch & failure; 1988: new head (Lang) recruited who aims towards direct marketsing to households (avoiding supermarkets) “individualisation” via Nespresso Club 1989: “machine partners” developed (Krups, Philips, Magimiz, Matsushita) Use of word of moth via Nespresso Club instead of media (“fantastic knowledge of customers) (big data) 50% profit margin on the capsules; 3x as expensive as regular expresso coffee 25% AARG since 1988; fastest growth Nestle brand A 1.5b€ revenue stream
  • Breakthroughs tend to come at the seams of different disciplines and through networks of collaboration; Also underscores the growing complexity of research which requires further co-operation
  • The key messages of the IS in the current economic context can be summed up quite neatly. In the aftermath of the economic crisis, potential output growth is expected to decline. Policies for innovation may help lift the rate of multi-factor productivity growth and encourage more productive investments. It will also be important to lift labour productivity growth, in the context of declining populations and forecast labour shortages in many countries.
  • In the aftermath of the economic crisis, potential output growth is expected to decline. Policies for innovation may help lift the rate of multi-factor productivity growth and encourage more productive investments.
  • Innovation Across Boarders - Robert Wells toronto 25.02.11

    1. 1. Robert Wells Head of the Biotechnology Unit OECD Toronto, CA – 25 February 2011 Global Business Innovation by SMEs: The OECD Perspective
    2. 2. What we’ll cover today… <ul><li>What is the OECD and what does it do? </li></ul><ul><li>The OECD Innovation Strategy </li></ul><ul><li>The OECD and SMEs </li></ul><ul><li>Policy Recommendations to Strengthen the SME environment </li></ul>
    3. 3. What is the OECD? <ul><li>Born after World War II to coordinate/implement the “Marshall Plan” for reconstruction of Europe </li></ul><ul><li>Advises governments on economic, social and technological policies (science, innovation, health etc…) and contributes to economic growth and globalisation </li></ul><ul><li>Today the OECD has 34 member countries in North America, Europe, and Asia-Pacific. </li></ul>
    4. 4. OECD Global Outreach
    5. 5. World Population in 2030 Source: Salim Sawaya, based on medium variant of the UN Population Division’s “World Population Prospects: The 2006 Revision Population Database”
    6. 6. Long term, it’s the new countries that will impact the OECD more than the OECD will impact them (at least in Biotech) <ul><li>Singapore </li></ul><ul><ul><li>Regulatory redesign with HSA </li></ul></ul><ul><li>India </li></ul><ul><ul><li>Virtual drug development model </li></ul></ul><ul><li>China </li></ul><ul><ul><li>Contributions in industrial biotech </li></ul></ul>
    7. 7. How Countries Make Use of the OECD <ul><li>Think tank / policy development </li></ul><ul><li>Intelligence gathering </li></ul><ul><li>Multi-lateral engagement and build consensus </li></ul><ul><li>Float ideas and “de-politicize” them </li></ul><ul><li>Make international contribution on priority issues </li></ul>
    8. 8. What the OECD Does: Main Bodies of Work <ul><li>Economic and statistical baselines </li></ul><ul><ul><li>Science and Technology Outlook </li></ul></ul><ul><li>Policy analysis </li></ul><ul><ul><li>Pharmacogenetics Report </li></ul></ul><ul><li>Guidelines , recommendations and standards </li></ul><ul><ul><li>Molecular genetic testing </li></ul></ul><ul><ul><li>Licensing of genetic inventions </li></ul></ul><ul><ul><li>Human biobanks and genetic research databases </li></ul></ul>
    9. 9. International Soft Law Development <ul><li>IPRs and management of intellectual assets </li></ul><ul><li>Biosecurity – balancing access and security </li></ul><ul><li>Quality assurance of biological materials & data </li></ul><ul><li>Personalised medicine – QA & proficiency </li></ul><ul><li>Privacy and confidentiality of data </li></ul><ul><li>Towards industrial sustainability standards </li></ul>
    10. 10. Policy Development & Consensus <ul><li>Science and economic outlooks </li></ul><ul><li>Innovation policy review and development </li></ul><ul><li>Knowledge networks and IP markets </li></ul><ul><li>Technology convergence </li></ul><ul><li>New forms of governance </li></ul><ul><li>International cooperation in STI </li></ul><ul><li>Human genetics & personalised medicine </li></ul><ul><li>Biotech & green innovation </li></ul><ul><li>Food security </li></ul><ul><li>Dual use security </li></ul>
    11. 11. THE CHANGING NATURE OF INNOVATION AND THE SME
    12. 12. Innovation is the implementation of a new or significantly improved product , process , new marketing method , or a new organisational method in business practices, workplace organisation or external relations. Defining innovation Source: OECD (2005), Oslo Manual, Paris, 3 rd Edition.
    13. 13. 21 st Century Innovation: the iPod Distribution of the value added <ul><li>299 US$ </li></ul><ul><ul><li>75$ profit to US (Apple) </li></ul></ul><ul><ul><li>73$ whls/retail US (Apple) </li></ul></ul>The Apple iPod = 299$ of Chinese exports to US http://blogs.computerworld.com/node/5724 <ul><li>iTunes Music Store (2003) </li></ul><ul><ul><li>70% digital market share </li></ul></ul><ul><ul><li>Big 5 recording companies </li></ul></ul><ul><ul><li>75$ to Japan (Toshiba) </li></ul></ul><ul><ul><li>60$ 400 parts from Asia </li></ul></ul><ul><ul><li>15$ 16 parts from the US </li></ul></ul><ul><ul><li>2$ assembly by China </li></ul></ul>
    14. 14. Economies are driven by innovation: It is a fundamental economic investment... Investment in fixed and intangible assets as a share of GDP, 2006 Source: Data on intangible investment are based on COINVEST [www.coinvest.org.uk] and research papers, 2009.
    15. 15. … with increasing importance... Investment in intangible assets as a percentage of GDP Source: COINVEST [www.coinvest.org.uk] and research papers, 2009.
    16. 16. ...and a driver of productivity... Contributions to labour productivity growth, 1995-2006 Source: COINVEST [www.coinvest.org.uk] and research papers, 2009.
    17. 17. … that can help address global social challenges neglected by markets.
    18. 18. Innovation is not only about R&D... New to market product innovators with and without R&D, 2004-06 (or latest) As a percentage of innovative firms by R&D status Source: OECD (2010), Measuring Innovation: A New Perspective , OECD, Paris.
    19. 19. ...it includes design & marketing... Source: IMD (2000) Innovation and Rennovation: The Nespresso Story, IMD046, 03/2003
    20. 20. ...and is multidisciplinary. Scientific publications cited by “green” patents Source: OECD (2010), Measuring Innovation: A New Perspective , OECD, Paris.
    21. 21. How innovation is conducted has become more collaborative and “open”.
    22. 22. There is more collaboration among scientists... Trends in co-authorship in scientific publications Source: OECD (2009), OECD Science, Technology and Industry Scoreboard 2009.
    23. 23. ...and between firms. Firms with national/international collaboration on innovation, 2004-06 As a percentage of innovative firms Source: OECD (2010), Measuring Innovation: A New Perspective , OECD, Paris based on OECD, Innovation microdata project.
    24. 24. Where innovation occurs has changed becoming more global.
    25. 25. Science is increasingly international…. 1998 2008 Source: OECD (2010) Measuring Innovation: A New Perspective
    26. 26. UK The alignment of innovation has shifted.
    27. 27. Innovation is key to growth... Contributions to labour productivity growth, 1995-2006, in % * Investment in intangibles and multi-factor productivity growth account for between two-thirds and three-quarters of labour productivity growth.
    28. 28. <ul><li>… accounts for most of the difference between developed and emerging economies… </li></ul>Decomposition of cross-country differences in GDP per capita into their determinants, 2005 (United States = 100 ) GDP PPP per capita TFP Human capital Physical capital Employment United States 100.0 100.0 100.0 100.0 100.0 Canada 83.5 72.0 103.3 105.8 106.0 Japan 72.6 52.6 100.4 130.7 105.1 China 9.8 13.6 57.3 105.2 119.5 India 5.2 12.7 47.7 98.3 87.1 Brazil 20.5 29.3 70.1 103.1 96.8 Russian Federation 28.6 31.5 84.9 97.4 99.3 EU27 + EFTA 64.7 67.8 91.2 114.1 91.3 Total World 22.8 27.9 642 104.2 95.8 Source: OECD .
    29. 29. Innovation can help address global challenges such as climate change Potential technological contributions to CO 2 emission reductions Note: WEO refers to the IEA’s 2007 World Energy Outlook. Source: International Energy Agency, Energy Technology Perspectives 2008: Scenarios and Strategies to 2050.
    30. 30. Biotech reliance on Science… Reliance of patents on science citations (biochemistry papers cited by pharmaceutical patents)
    31. 31. New global players have emerged … Contributions to growth in global R&D, 1996-2001 and 2001-2006 (in billion constant US PPP and %) Note: (1) Australia, Canada, Iceland, Korea, Mexico, New Zealand, Norway and Turkey (2) Argentina, Brazil, India, Israel, Russian Federation, Singapore, South Africa, Chinese Taipei Source: OECD.
    32. 32. … . demand for graduates is unabated Doctoral graduates as a percentage of total OECD new graduates at doctorate level Source: OECD (2009), Education at a Glance 2009: OECD Indicators , Paris
    33. 33. … with mobility playing an important role. International students, 2007 As a percentage of all tertiary enrolment <ul><li>Source: OECD, Education at a Glance 2009. </li></ul>
    34. 34. <ul><ul><li>... and innovation increasingly happens across borders </li></ul></ul><ul><ul><li>(institutions, countries, disciplines). </li></ul></ul>Source: OECD Patent Database.
    35. 35. Technological and non-technological innovation unevenly distributed Patents and trademarks per capita, 2005-07 Average number per million population, OECD and G20 countries
    36. 36. Multi-faceted and Interdisciplinary nature of Green Technology
    37. 37. (indexed on 1980=1.0, Annex 1 ratification countries) Policy can induce greater innovation Patenting in climate mitigation technologies relative to all sectors
    38. 38. Innovation and SMEs <ul><li>SMEs are ESSENTIAL </li></ul><ul><li>In the OECD, SMEs represent major share of all firms (99%), all employment (two-thirds) and value added (over one-half) </li></ul><ul><li>Importance of SMEs to innovation has increased </li></ul><ul><li>Significant burdens are on SMEs (financing and skills) </li></ul><ul><li>New firms and SMEs do not innovate alone but in collaboration with others </li></ul>
    39. 39. Some Historical Perspective on Innovation <ul><li>Schumpeter Mark I: “creative destruction” in the early 20 th century </li></ul><ul><li>Schumpeter Mark II or “Managed Economy”: 1040s to 1970s </li></ul><ul><li>Entrepreneurial Economy: role of new and small firms on the rise again. </li></ul><ul><ul><li>The importance multiple market niches, increased efficiency of SMEs, ICTs, reduction in transaction costs </li></ul></ul><ul><ul><li>“ flexible specialisation” </li></ul></ul>
    40. 40. Policy Implications <ul><li>Entrepreneurship culture </li></ul><ul><li>SME and entrepreneurship framework conditions </li></ul><ul><li>Firm dynamics </li></ul><ul><li>Access to finance </li></ul><ul><li>High-employment-growth firms </li></ul><ul><li>Innovation in the bulk of SMEs </li></ul><ul><li>Knowledge transfer </li></ul>
    41. 41. Policy Implications (cont’d) <ul><li>Workforce skills in SMEs </li></ul><ul><li>Entrepreneurship skills </li></ul><ul><li>Social entrepreneurship and social innovation </li></ul>
    42. 42. Policy Recommendations: Strengthen Innovation through SMEs and Entrepreneurship <ul><li>Promote conducive entrepreneurship cultures and framework conditions </li></ul><ul><li>Embed new firms and SMEs in knowledge flows </li></ul><ul><li>Strengthen entrepreneurial human capital </li></ul><ul><li>Improve the environment for social entrepreneurship and social innovations </li></ul>
    43. 43. 1. Promote Conducive Entrepreneurship Cultures and Framework Conditions <ul><li>Foster positive attitudes in society toward business start-up and growth through education and the media </li></ul><ul><li>Ensure that regulatory and governance frameworks take into account the needs of SMEs </li></ul><ul><li>Facilitate the interlinked process of firm life cycles: entry, growth, decline and exit </li></ul><ul><li>Tackle finance gaps affecting new and small firms </li></ul>
    44. 44. 2. Embed New Firms and SMEs in Knowledge Flows <ul><li>Strengthen knowledge-based entrepreneurship by providing advice and training to entrepreneurs with strong technical knowledge and develop programs for corporate spin-offs, incl. proof-of-concept, pre-competitive research and seed funding support. </li></ul><ul><li>Promote partnerships and collaboration activities within innovation systems and provide the infrastructure for these collaborations </li></ul>
    45. 45. 2. Embed New Firms and SMEs in Knowledge Flows (cont’d) <ul><li>Promote knowledge spillovers among “related variety” industries with related competencies and knowledge bases to facilitate cross-sectoral combination of products, services and technologies with growth potential. </li></ul><ul><li>Encourage openness of innovation systems and their SMEs to global sources of knowledge by facilitating cross-border strategic alliances such as marketing and technology partnerships, securing better linkages between SMEs and foreign direct investment and attracting highly skilled labour from abroad </li></ul>
    46. 46. 3. Strengthen Entrepreneurial Human Capital <ul><li>Build up entrepreneurship education in universities and higher education by shifting the emphasis from business management to growth-oriented entrepreneurship </li></ul><ul><li>Strengthen vocational education and training programs for business founders, SME and SME workforces by changing the nature of vocational training to better meet the needs of the SME environment </li></ul><ul><li>Embed teaching of the entrepreneurial mindset in schools through changes in curricula and teacher training </li></ul><ul><li>Reinforce training in SME relevant skills through in-company projects and in cooperation with labour and management, apprenticeships, etc. </li></ul>
    47. 47. 4. Improve the Environment for Social Entrepreneurship and Social Innovation <ul><li>Build supportive financial, fiscal, legal and regulatory environments </li></ul><ul><li>More and better research into social entrepreneurship/innovation in order to better understand and support them </li></ul><ul><li>Evaluate the impacts of social entrepreneurship and social innovation policies </li></ul><ul><li>Introduce social clauses into public procurement contracts </li></ul><ul><li>Establish social innovation funds in specific fields </li></ul><ul><li>Create incubators for social enterprises and intermediaries for social innovation </li></ul>
    48. 48. <ul><li>Contacts: www.oecd.org/sti/innovation </li></ul><ul><li>www.oecd.org/biotechnology </li></ul><ul><li>[email_address] </li></ul>

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