Managing Innovation_innovation system

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Session 5 innovation system

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Managing Innovation_innovation system

  1. 1. Session 5: Innovation System Prof. Dr. Bernhard Katzy Winter 2011www.CeTIM.orgProf. Dr. Bernhard R. Katzy
  2. 2. Innovation Management Innovation System Organization of Innovation innovation Governance Innovation Transformation and entrepreneurship Basic innovation concepts Introduction based on life cases Innovation Theory Innovation Practice Dominant theory, Main issues High tech entrepreneurship… and developments of innovation researchwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 1
  3. 3. Session 5: an overview AGENDA - Mini-Test - National innovation system and basic concepts - Regional innovation system (what can we learn from Silicon Valley) - Innovation cluster (the case of Galileo and SatNav) - Summarywww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 2
  4. 4. Session 5 :reading engagement MINI-TESTwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 3
  5. 5. National innovation system National Innovation system: " the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies" <Freeman, C. 1995> "that set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provides the framework within which governments form and implement policies to influence the innovation process. As such it is a system of interconnected institutions to create, store and transfer knowledge, skills and artefacts which define new technologies." <Metcalfe,J.S, 1995>www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 4
  6. 6. National innovation system ORIGIN OF NATIONAL INNOVATION SYSTEM THINKING Friedrich List s conception of "the national system of political economy" (1841) - The role of intellectual capital accumulation in national economic development - The interdependence of tangible and intangible investment has a decidedly modern ring. Industry should be linked to the formal institutions of science and of education - The independence of the import of foreign technology and domestic technical developmentwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 5
  7. 7. National innovation system WHAT SET PRUSSIA ON THE ROAD TO OVERTAKING BRITAIN IN THE LATTER HALF OF 19TH CENTURY - German developed one of the best technical education and training systems in the world - The Prussian government set up TechnicalTraining Institute (Gewerbeinstitut), made sure that they received imported British machine tools for reverse engineering and for training German craftsmen, who then disseminated the technology in German industry - British craftsmen were also attracted to Prussia, as much of technology depended on tacit knowledge - The german machine tool industry and machine-building proved capable of designing and manufacturing the machinery necessary to make steam locamotive in the 1840s and1850swww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 6
  8. 8. National innovation system THE RISE OF RESEARCH AND DEVELOPMENT - The main factor in establishing the German chemical industrys leading position before and after the first World war. - The major institutional innovation of the in-house industrial R&D department was firstly introduced in 1870 - As a result, Hoechst, Bayer and BASF have continued and strengthened this tradition down to the present day. - After the second world war, the prestige of organized, professional R&D was very high, it was spread to other countries. - It was a linear model of science and technology "push". - The case of Atom bomb project Basic physics - large-scale development in big labs- applications and innovations (whether military or civil )www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 7
  9. 9. National innovation system Increasing in R&D investment occurred in all industrial countries in the 1950s and 1960s, and even in the Third World Countries Estimated gross expenditure on research and development as a fraction of GNP, 1934-1983 1934 1967 1983 1983 Civil R&D only USA 0.6 3.1 2.7 2.0 EC* 0.2 1.2 2.1 1.8 Japan 0.1 1.0 2.7 2.7 USSR 0.3 3.2 3.6 1.0 *Estimated weighted average of 12 EC countries. Source: Freeman,Chris’ estimates based on Bernal (1939) adapted to “Frascati” definition (1963), OECD statistics, and adjustments to Soviet statistics based on Freeman and Young, (1965)www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 8
  10. 10. National innovation system MORE FACTORS? Evidence accumulated that the rate of technical change and of economic growth depended more on efficient diffusion than on being first in the world with radical innovation as much on social innovations as on technical innovations. Japan USSR - Integration of R&D, - Separate research institute within the academy production, and system (for fundamental research), for each industry technology imports at sector ( for applied research and development) and firm level for the design of plant and import of technology. - Strong user-producer - Weak links between these different institutions and linkages enterprise-level R&D remained rather weak - “Kairetsu” Model - The user-producer linkages were very weak or almost non-existent in some areas of the Soviet Union. Source: Summarized from Freeman’s idea (1995)www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 9
  11. 11. National innovation system THE CONTINUING IMPORTANCE OF THE HOME MARKET Firm strategy, structure and rivalry Factor conditions Demand conditions Related and supporting industries [M. Porter 1990]www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 10
  12. 12. National innovation system SAXENIANS IDEAS - Innovation system dynamism is based on the organization of its firms or their relationships to one another or local institutions. - Organization precedes technology. It is precisely the openness, multiplicity and diversity of interconnections in Silicon Valley that allows economic actors to continually scan the environment for new opportunities and to invest in novel technologies, markets and applications with unprecedented speed. - Regional advantage lies in an institutional environment that supports continuous innovation and collective learning – one that by its very nature undermines technological trajectories or path dependency.www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 11
  13. 13. Regional innovation system REGIONAL INNOVATION SYSTEM “The institutional infrastructure supporting innovation within the production structure of a region" (Asheim and Coenen 2005) - Silicon Valley - Living lab and innovation system Cluster association Business angle University Venture capitalists Technology Big Research transfer centre companies institutes SMEs Technology test NIVR New centre ventures Vocational ESA training centre Incubator [Katzy and Crownston 2008, Competency rallying for technical innovation – the case of the Virtuelle Fabrik] [Schuh, Katzy, Eisen 1997, Wie virtuelle Unternehmen funktionieren: Der Praxistest ist bestanden]www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 12
  14. 14. Regional innovation system- what can we learn from Silicon ValleyWHAT IS SILICON VALLEY?? http://www.lucafiligheddu.com/wp-content/uploads/2008/09/siliconvalley.jpgwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 13
  15. 15. Regional innovation system- what can we learn from Silicon Valley SILICON VALLEY IS NOT - a place you can point to on a map - a planned phenomenon - characterized by silicon or chipswww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 14
  16. 16. Regional innovation system- what can we learn from Silicon Valley SO WHAT IS SILICON VALLEY? - 1,500 square miles - 35 Cities, 4 counties - 2.4 million people, 41 percent foreign born - 1.2 million workers - 81 percent high school diploma - 40 percent college degree - 25 percent of workforce in high-skill occupations - Income average 60 percent higher than US - 6 percent US GNP, 11 percent of US patents Source: Silicon Valley index 2008 www.jointventure.orgwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 15
  17. 17. Regional innovation system- what can we learn from Silicon Valley MORE ABOUT SILICON VALLEY Source: www.jointventure.orgwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 16
  18. 18. Regional innovation system- what can we learn from Silicon Valley WHERE THE VALLEYS EDGE STEMS FROM - Market of Ideas? - Market of Capital? - Market of Talent? - Or anything else?www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 17
  19. 19. Regional innovation system- what can we learn from Silicon Valley DIAMOND MODEL OF SILICON VALLEY Factor Conditions - 26% Bachelors Degree and 18% Graduate or professional degree (Adult educational attainment) - The areas universities are an important magnet for and source of highly skilled talent. - Venture capital 2007 Q1-Q3: $5.9billion, the region receives almost 30% of the nations total venture capital funding. - the regions cities now account for 11 of the top 20 U.S. cities for patent registrations Infrastructure - The region is lagging other global regions in broadband speed and penetration Bay area 51%200kb/bits; Japan 65%256kb/bits; South Korea 94% 256kb/bits.www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 18
  20. 20. Regional innovation system- what can we learn from Silicon Valley DIAMOND MODEL OF SILICON VALLEY Firm strategy, structure and rivalry - Open business environment - Decentralized organizational forms even as it grew Business environment - Social health - Quality of education - Affordability of its housing - The upward mobility of its people - Quality of lifewww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 19
  21. 21. Regional innovation system- what can we learn from Silicon Valley MORE SECRET INGREDIENT? Network and relationships!!!www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 20
  22. 22. Regional innovation system- what can we learn from Silicon Valley APOLLO AND SUN 1980 1982 1984 1986 1987 1989Apollo Computer - Poduska was - Commited 30% of - Started in 1980 with - Sold to HP replaced R&D budget to pioneered workstation RISC - Poduska and his team - Fell behind from Prime computer - Adopted proprietarySun Microsystems standards - Founded in 1982 - Cheaper, - Vertical integration Management team nonpropriet - Surpassed - Apollo ary and half with a mix of price than experiences that of - Adopted open Apollo system (UNIX) - Limited specializationwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 21
  23. 23. What can we learn from Silicon Valley KEY SUCCESSFUL FACTORS ARE IDENTIFIED - High level of research capability - Abundance of high-qualified manpower - A pleasant business climate (business environment) - The retention of enough funds (VCs) - Diffusion of S&T and innovation culture is important in addition to having an open business climate (cooperation culture) - Inducement of multinational companies or research institutes (anchor companys role) - Networking and Entrepreneurshipwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 22
  24. 24. Innovation Cluster the case of GALILEO and SatNav GALILEO – The first satellite positioning and navigation system specifically designed for civil purposes - Some EUR 3.4 billion to be invested - 30 satellites to be launched and numerous ground equipment to be installedwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 23
  25. 25. Innovation Cluster the case of GALILEO and SatNav GALILEO - A market for equipment and services worth some EUR 200 billion per annum by 2013 - More than 100 000 new jobs in transportation, energy, environmen tal management, recreation …… are expected - But how???www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 24
  26. 26. Innovation Cluster the case of GALILEO and SatNav INNOFIT The findings we got so far 1) All the clusters show a weakness in market orientation-Demand creation 2) Different demand creation mechanisms were identified (ESNC, Innovation Voucher, Galileo Road Show……) 3) There is no “one-size-fit-all” demand creation mechanism 4) Require stakeholder’s involvementwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 25
  27. 27. Innovation Cluster the case of GALILEO and SatNav THE STORY IN NETHERLANDS Key actors ? - NIVR ESNC Ideas Technical/ Innovation Products/ Scientific voucher Demand Services Knowledge - TOMTOM -ESA- ESTEC - Dutch space -TUD - Logica -TNO - Other SMEs, -…… and start upswww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 26
  28. 28. Innovation Cluster the case of GALILEO and SatNav Cluster association Business angle Venture capitalists University Big Research companies institutes Technology SME transfer s centre Living lab Technology NIVR test centre New ventures Vocational training centre ESA Incubator [Katzy and Crowston 2008, Competency rallying for technical innovation – the case of the Virtuelle Fabrik] [Schuh, Katzy, Eisen 1997, Wie virtuelle Unternehmen funktionieren: Der Praxistest ist bestanden]www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 27
  29. 29. Innovation Cluster the case of GALILEO and SatNav THE STATUS QUO OF SATNAV IN HOLLAND - Strengthen Anchor companys role - Sub-clustering developed but different groups within dont know each other well. - Positive innovation voucher, IPC - Better integration between venture capital and early stage financingwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 28
  30. 30. Summary NIS, SIS AND INNOVATION CLUSTER Category National innovation Sub-national Innovation Cluster system innovation system (SIS) Focus - National level innovation - Regional level - Clustering process - Innovation at specific area Major actors - National/local government, - Local government, - Industry, university, university, industry, public local university, local public research institute industry (SME), institute public institute Policy Objective - National competitiveness - Regional - Competitiveness of competitiveness cluster Policy direction - Promoting interaction - Involvement of local - Cluster - S&T culture promotion government establishment - R&D investment and - More local contents development management into S&T policy Source: www.unescap.org/tid/publication/indpub2507_chap3.pdfwww.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 29
  31. 31. Readings for session 6: Governance of Innovation King/Gurbaxani/Kraemer/McFarlan/Raman/Yap (1994): Institutional factors in information technology innovation. In: Information Systems Research 5, 2: 139-169.www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 30

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