El 25 de abril de 2017 organizamos en la Fundación Ramón Areces una mesa redonda sobre 'La empresa y las políticas de innovación transformadoras'. En este foro participaron, entre otros, Totti Konnola, CEO de Insight Foresight Institute; Luis Fernando Álvarez-Gascón Pérez, Director General GMV secure eSolutions; y Francisco Marín, Director General del CDTI. Esta actividad se celebró en colaboración con el Grupo de Investigación en Economía y Política de la Innovación de la Universidad Complutense de Madrid (GRINEI-UCM) y el Foro de Empresas Innovadoras (FEI).

1. Demand, challenges and innovation
Making sense of demand in challenge-based innovation policy
Wouter Boon, Jakob Edler
Scientific workshop on transforming innovation policy
Madrid, April 25 2017
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2.  Observation: Role of State Changing:
 directionality
 innovation policy for societal (and economic) change
 Assumption: Directionality needs – inter alia –
 uptake and diffusion, societal acceptance
 interaction demand and supply, articulation
 appropriate combination of innovation and domain expertise and discourse
 Aim of our paper:
 Conceptualising role of the state to better support directionality and demand
 Re-think “appropriate” governance structures and practices
 New linkages between and combinations of policy approaches
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Starting observations
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

3.  Different types of “directionality” policy developing
1) Challenge / Mission orientation
 all sorts of policies, RDI, framework conditions, concertation, etc.
 no proper attention to market formation and demand conditions
 challenges as accumulations of needs
2) Demand based innovation policy
 tackling “failures” on the demand side, between demand and supply
 link to societal goals often limited
3) Traditional sectoral policies
 often targeting demand to support sectoral goal (diffusion of innovation)
 limited ambition, partial (within the policy domain)
 Governance failures and misconceptions
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Starting observations
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

4.  Role of demand and demand policies in directionality policies
 Coenen et al 2015: “strong bias against demand and demand articulation
policies in the literature”
 system function literature (Hekkert et al, Bergek et al etc.): market
development underdeveloped
 Role of the state not as top-down per se
 Needs – demand – articulation as starting points
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Main idea
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

5. 5
Needs – demands – policy requirements
 Needs (wants) – demand distinction important
 Needs vague, potentially unlimited
 Demand not given
 changes over time (context, innovations, values…), emerging
incrementally(?), latent needs or consumer practices are there
 Demand articulation in marketing (Slater/Narver 1998)
 customer led: suppliers follow existing demand
 suppler led: supplier: identification latent needs, opening up or
defining new needs / wants (car, iPad…)
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

6. 6
Needs – demands – policy requirements
 Role of state differs
a. Nature of demand
 aggregation / articulation of existing needs
 reduce market/system failures
 new articulation, result of socio-political process
 support societal process, translation into political goals, moderating role
b. Existence of innovation
 diffusion (innovation exists)
 generation and diffusion (innovation is to be triggered or is emerging)
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

7. 7
Differentiation needed:
Role of state in different “demand situations”
Innovation existing Innovation to be
developed/emerging
Existing need or
want, poor
articulation
(customer or citizen
led)
demand articulation and
demand instruments to
support uptake of
innovation, standardisation,
regulation, training
as left, plus
user (citizen) - producer
interaction
complementary supply measures,
infrastructure, demonstration
Challenge to be
defined and need to
be mobilised (policy
led)
as above, plus
discourse organisation to
define challenge and link
emerging markets for
innovation to challenge
as above plus
articulation broad to involve all
actors relevant for challenge in
order to define challenge and
identify technologies needed,
support complementary
technologies, infrastructure
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

8. 8
Innovation existing Innovation to be
developed/emerging
Existing need or
want, poor
articulation
(customer or citizen
led)
demand articulation and
demand instruments to
support uptake of
innovation, standardisation,
regulation, training
as left, plus
user (citizen) - producer
interaction,
complementary supply measures,
infrastructure, demonstration
Challenge to be
defined and need to
be mobilised (policy
led)
as above, plus
discourse organisation to
define challenge and link
emerging markets for
innovation to challenge,
Definition of “challenge” as
complex multi stakeholder
process
as above plus broad
articulation to involve all actors
relevant for challenge in order to
define challenge and identify
technologies needed,
support complementary
technologies, infrastructure
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.
Differentiation needed:
Role of state in different “demand situations”

9. 9
Conceptual approach
 Core dimensions to justify, develop and implement policy
1. Legitimacy: societal acceptance (even without consensus)
a) Output legitimacy: normative and conceptual underpinning:
 Why this direction (normative)?
 Why in a certain way (intervention theory)?
b) Input legitimacy: discursive underpinning
 Who is involved, how, access and voice?
 Governance of heterogeneity and polyvalence
2. Operational intelligence requirements
 Understanding demand and supply conditions
 Data, analysis and interaction needed to “do something”
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

10. Applying the framework
10Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.
Demand-side
innovation policy
Sectoral policies and
demand side
measures
Mission and challenge
oriented policy
Output legitimacy Market and systemic
failures on demand side;
creation of markets; societal
goals as add-on and further
justification
Innovation and economic
growth not central;
innovation subordinated to
sector-specific goals
Beyond economic
arguments; goals are
inherently political and
normative
Input legitimacy Discourse to determine
direction has innovation and
economic rationale; hardly
inclusive
Stable, well-established
networks determine policy;
risk of exclusion
Articulation problems;
coordination of wide range
of actors also challenging
Operational
intelligence
requirements
Lack of methods to assess
demand policy ex ante
Stable and settled but there
are questions about the
scope, timing and size of
policy support
Intervention rationale as
well as the input, output and
outcome variables are
difficult to determine

11. Applying the framework
11Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.
Demand-side
innovation policy
Sectoral policies and
demand side
measures
Mission and challenge
oriented policy
Output legitimacy Market and systemic
failures on demand side;
creation of markets; societal
goals as add on and further
justification
Innovation and economic
growth not central;
innovation subordinated to
sector-specific goals
Beyond economic
arguments; goals are
inherently political and
normative
Input legitimacy Discourse to determine
direction has innovation and
economic rationale; hardly
inclusive
Stable, well-established
networks determine policy;
risk of exclusion
Articulation problems;
coordination of wide range
of actors also challenging
Operational
intelligence
requirements
Lack of methods to assess
demand policy ex ante
Stable and settled but there
are questions about the
scope, timing and size of
policy support
Intervention rationale as
well as the input, output and
outcome variables are
difficult to determine

12. Applying the framework
12Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.
Demand-side
innovation policy
Sectoral policies and
demand side
measures
Mission and challenge
oriented policy
Output legitimacy Market and systemic
failures on demand side;
creation of markets; societal
goals as add on and further
justification
Innovation and economic
growth not central;
innovation subordinated to
sector-specific goals
Beyond economic
arguments; goals are
inherently political and
normative
Input legitimacy Discourse to determine
direction has innovation and
economic rationale; hardly
inclusive
Stable, well-established
networks determine policy;
risk of exclusion
Articulation problems (on
which level?); coordination
of wide range of actors also
challenging
Operational
intelligence
requirements
Lack of methods to assess
demand policy ex ante
Stable and settled but there
are questions about the
scope, timing and size of
policy support
Operational intelligence is
result of the process of
articulation of a challenge
and of potential solutions

13.  Our concept supports reflection of “appropriate” policy and combinations
 Challenge orientation and focus on demand strongly benefit from
improved understanding and linkages between policy pillars, including re-
organising of organisational responsibilities
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Conclusions for policy development
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

14.  Demand side innovation policies
 Perceive demand as specific rather than generic
 Demand side failure approach as support for sectoral and challenges,
benefitting from target-oriented networks and demand articulation
 Sectoral policies
 Understand contribution of domain to challenges
 Mobilise and overcome existing actor networks (capture)
 Mobilise system bottleneck analysis
 Challenges policies
 Holistic attempt to transform “challenge systems“, supply and demand, as for
demand:
 Broad discourse moderation biggest challenge (input leg.),
 Actively mobilise and combine strengths of sectoral and innovation
policies (content, networks, technical and systems expertise)
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Conclusions for policy development
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

15.  Intelligent combinations of the three pillars needed
 Level of demand articulation (concrete vs. general; local
vs. global; tech specific vs. generic) requires attention
 Tackling challenges and demand articulation requires an
iterative perspective including learning opportunities
 Intelligent demand policies might be able to create spaces
between top-down and bottom-up
 Role of the state:
 coordinating efforts between/combining the three pillars
 both responsive and pushing,
 intelligence gathering, and strategic role
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Conclusions for policy development
Boon / Edler: Need, demand and innovation. Making sense of new trends in innovation policy.

16. Thank you for your attention
Wouter Boon – w.p.c.boon@uu.nl
Jakob Edler – jakob.edler@manchester.ac.uk
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