Session04 innovation system

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Session04 innovation system

  1. 1. Session 4: Innovation System <br />Prof. Dr. Bernhard Katzy<br />Winter 2011<br />
  2. 2. Innovation Management<br />Prof. Dr. Bernhard Katzy<br />1<br />11/01/11<br />Innovation System<br />Innovation<br />Innovation Governance <br />Organization of innovation<br />Transformation and entrepreneurship <br />Basic innovation concepts<br />Introduction based on life cases<br />Innovation Theory<br />Dominant theory, Main issues and developments of innovation research<br />Innovation Practice<br />High tech entrepreneurship…<br />
  3. 3. Session 4: an overview<br /><ul><li>Mini-Test
  4. 4. National innovation system and basic concepts
  5. 5. Regional innovation system (what can we learn from Silicon Valley)
  6. 6. Innovation cluster(the case of Galileo and SatNav)
  7. 7. Summary </li></ul>Prof. Dr. Bernhard Katzy<br />2<br />11/01/11<br />Agenda<br />
  8. 8. Session 4 :reading engagement<br />Prof. Dr. Bernhard Katzy<br />3<br />11/01/11<br />Mini-Test<br />
  9. 9. National innovation system<br />National Innovation system:<br /> " the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies" <Freeman, C. 1995><br /> "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><br />Prof. Dr. Bernhard Katzy<br />4<br />11/01/11<br />
  10. 10. National innovation system<br />Friedrich List 's conception of "the national system of political economy" (1841)<br />Prof. Dr. Bernhard Katzy<br />5<br />11/01/11<br />Origin of National innovation system thinking<br /><ul><li>The role of intellectual capital accumulation in national economicdevelopment
  11. 11. 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
  12. 12. The independence of the import of foreign technology and domestic technical development</li></li></ul><li>National innovation system<br /><ul><li>German developed one of the best technical education and training systems in the world
  13. 13. 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
  14. 14. British craftsmen were also attracted to Prussia, as much of technology depended on tacit knowledge
  15. 15. The german machine tool industry and machine-building proved capable of designing and manufacturing the machinery necessary to make steam locamotive in the 1840s and1850s</li></ul>Prof. Dr. Bernhard Katzy<br />6<br />11/01/11<br />What set prussia on the road to overtaking britain<br />in the latter half of 19th century<br />
  16. 16. National innovation system<br />- The main factor in establishing the German chemical industry's leading position before and after the first World war.<br />- The major institutional innovation of the in-house industrial R&D department was firstly introduced in 1870<br /><ul><li>As a result, Hoechst, Bayer and BASF have continued and strengthened this tradition down to the present day.
  17. 17. After the second world war, the prestige of organized, professional R&D was very high, it was spread to other countries.
  18. 18. It was a linear model of science and technology "push".
  19. 19. The case of Atom bomb project</li></ul>Basic physics - large-scale development in big labs- applications and innovations (whether military or civil )<br />Prof. Dr. Bernhard Katzy<br />7<br />11/01/11<br />The rise of research and development<br />
  20. 20. National innovation system<br />Increasing in R&D investment occurred in all industrial countries in the 1950s and 1960s, and even in the Third World Countries <br />Estimated gross expenditure on research and development as a fraction of GNP, 1934-1983<br />Prof. Dr. Bernhard Katzy<br />8<br />11/01/11<br />*Estimated weighted average of 12 EC countries.<br />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)<br />
  21. 21. National innovation system<br />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. <br />Prof. Dr. Bernhard Katzy<br />9<br />11/01/11<br />More factors?<br />Source: Summarized from Freeman’s idea (1995)<br />
  22. 22. National innovation system<br />Prof. Dr. Bernhard Katzy<br />10<br />11/01/11<br />The continuing importance of the home market <br />Firm strategy, <br />structure and rivalry<br />Factor conditions<br />Demand conditions<br />Related and <br />supporting industries<br />[M. Porter 1990]<br />
  23. 23. National innovation system<br /><ul><li>Innovation system dynamism is based on the organization of it's firms or their relationships to one another or local institutions.
  24. 24. 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.
  25. 25. Regional advantage lies in an institutional environment that supports continuous innovation and collective learning – one that by it's very nature undermines technological trajectories or path dependency.</li></ul>Prof. Dr. Bernhard Katzy<br />11<br />11/01/11<br />Saxenian's Ideas<br />
  26. 26. Regional innovation system<br />“The institutional infrastructure supporting innovation within the production structure of a region" (Asheim and Coenen 2005)<br /><ul><li> Silicon Valley
  27. 27. Living lab and innovation system</li></ul>Prof. Dr. Bernhard Katzy<br />12<br />11/01/11<br />Cluster association<br />Regional innovation system<br />Business angle<br />Venture capitalists<br />University<br />Technology transfer centre<br />Research institutes<br />Big companies <br />SMEs <br />Technology test centre<br />NIVR<br />New ventures <br />Vocational training centre<br />ESA<br />Incubator<br />[Katzy and Crownston 2008, Competency rallying for technical innovation – the case of the VirtuelleFabrik]<br />[Schuh, Katzy, Eisen 1997, WievirtuelleUnternehmenfunktionieren: Der Praxistestistbestanden]<br />
  28. 28. Regional innovation system- what can we learn from Silicon Valley<br />Prof. Dr. Bernhard Katzy<br />13<br />11/01/11<br />What is silicon<br /> valley??<br />http://www.lucafiligheddu.com/wp-content/uploads/2008/09/siliconvalley.jpg<br />
  29. 29. Regional innovation system- what can we learn from Silicon Valley<br /><ul><li>a place you can point to on a map
  30. 30. a planned phenomenon
  31. 31. characterized by silicon or chips</li></ul>Prof. Dr. Bernhard Katzy<br />14<br />11/01/11<br />Silicon valley is not<br />
  32. 32. Regional innovation system- what can we learn from Silicon Valley<br />- 1,500 square miles<br />- 35 Cities, 4 counties<br />- 2.4 million people, 41 percent foreign born<br />- 1.2 million workers<br />- 81 percent high school diploma<br /><ul><li>40 percent college degree</li></ul>- 25 percent of workforce in high-skill occupations<br /><ul><li>Income average 60 percent </li></ul>higher than US<br />- 6 percent US GNP, 11 percent of US patents<br />Prof. Dr. Bernhard Katzy<br />15<br />11/01/11<br />So what is silicon valley?<br />Source: Silicon Valley index 2008 www.jointventure.org<br />
  33. 33. Regional innovation system- what can we learn from Silicon Valley<br />Prof. Dr. Bernhard Katzy<br />16<br />11/01/11<br />More about silicon valley<br />Source: www.jointventure.org<br />
  34. 34. Regional innovation system- what can we learn from Silicon Valley<br /><ul><li>Market of Ideas?
  35. 35. Market of Capital?
  36. 36. Market of Talent?</li></ul>- Or anything else?<br />Prof. Dr. Bernhard Katzy<br />17<br />11/01/11<br />Where the Valley's edge stems from<br />
  37. 37. Regional innovation system- what can we learn from Silicon Valley<br /><ul><li>26% Bachelor's Degree and 18% Graduate or professional degree (Adult educational attainment)
  38. 38. The area's universities are an important magnet for and source of highly skilled talent.
  39. 39. Venture capital 2007 Q1-Q3: $5.9billion, the region receives almost 30% of the nation's total venture capital funding.
  40. 40. the region's cities now account for 11 of the top 20 U.S. cities for patent registrations</li></ul>Prof. Dr. Bernhard Katzy<br />18<br />11/01/11<br />Diamond model of silicon valley<br />Factor Conditions<br />Infrastructure<br /><ul><li>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.</li></li></ul><li>Regional innovation system- what can we learn from Silicon Valley<br />Prof. Dr. Bernhard Katzy<br />19<br />11/01/11<br />Diamond model of silicon valley<br />Firm strategy, structure and rivalry<br /><ul><li> Open business environment
  41. 41. Decentralized organizational forms even as it grew</li></ul>Business environment<br /><ul><li> Social health
  42. 42. Quality of education
  43. 43. Affordability of its housing
  44. 44. The upward mobility of its people
  45. 45. Quality of life</li></li></ul><li>Regional innovation system- what can we learn from Silicon Valley<br />Network and relationships!!!<br />Prof. Dr. Bernhard Katzy<br />20<br />11/01/11<br />More secret ingredient?<br />
  46. 46. Regional innovation system- what can we learn from Silicon Valley<br />Prof. Dr. Bernhard Katzy<br />21<br />11/01/11<br />Apollo and sun<br />Apollo Computer<br /><ul><li>Commited 30% of R&D budget to RISC
  47. 47. Poduska was replaced
  48. 48. Started in 1980 with pioneered workstation
  49. 49. Poduska and his team from Prime computer
  50. 50. Adopted proprietary standards
  51. 51. Vertical integration</li></ul>- Sold to HP<br /><ul><li>Fell behind</li></ul>Sun Microsystems<br /><ul><li>Founded in 1982
  52. 52. Management team with a mix of experiences
  53. 53. Adopted open system (UNIX)
  54. 54. Limited specialization
  55. 55. Cheaper, nonproprietary and half price than that of Apollo
  56. 56. SurpassedApollo</li></li></ul><li>What can we learn from Silicon Valley<br /><ul><li>High level of research capability
  57. 57. Abundance of high-qualified manpower
  58. 58. A pleasant business climate (business environment)
  59. 59. The retention of enough funds (VCs)
  60. 60. Diffusion of S&T and innovation culture is important in addition to having an open business climate (cooperation culture)
  61. 61. Inducement of multinational companies or research institutes (anchor company's role)
  62. 62. Networking and Entrepreneurship</li></ul>Prof. Dr. Bernhard Katzy<br />22<br />11/01/11<br />Key successful factors are identified<br />
  63. 63. Innovation Cluster the case of GALILEO and SatNav<br />Prof. Dr. Bernhard Katzy<br />23<br />11/01/11<br />GALILEO<br />– The first satellite positioning and navigation system specifically designed for civil purposes<br /><ul><li>Some EUR 3.4 billion to be invested
  64. 64. 30 satellites to be launched and numerous ground equipment to be installed </li></li></ul><li>Innovation Cluster the case of GALILEO and SatNav<br />Prof. Dr. Bernhard Katzy<br />24<br />11/01/11<br />galileo<br /><ul><li>A market for equipment and services worth some EUR 200 billion per annum by 2013
  65. 65. More than 100 000 new jobs in transportation, energy, environmental management, recreation …… are expected
  66. 66. But how??? </li></li></ul><li>Innovation Cluster the case of GALILEO and SatNav<br />The findings we got so far<br />All the clusters show a weakness in market orientation-Demand creation<br />Different demand creation mechanisms were identified (ESNC, Innovation Voucher, Galileo Road Show……)<br />There is no “one-size-fit-all” demand creation mechanism<br />Require stakeholder’s involvement<br />Prof. Dr. Bernhard Katzy<br />25<br />11/01/11<br />Innofit<br />
  67. 67. Innovation Cluster the case of GALILEO and SatNav<br />Prof. Dr. Bernhard Katzy<br />26<br />11/01/11<br />The story in Netherlands<br />Key actors<br />?<br /><ul><li> NIVR</li></ul>ESNC<br />Ideas<br />Innovation<br /> voucher<br />Technical/ Scientific Knowledge<br />Products/ Services<br />Demand<br /><ul><li> TOMTOM
  68. 68. Dutch space
  69. 69. Logica
  70. 70. Other SMEs, and start ups
  71. 71. ESA- ESTEC
  72. 72. TUD
  73. 73. TNO
  74. 74. ……</li></li></ul><li>Innovation Cluster the case of GALILEO and SatNav<br />Prof. Dr. Bernhard Katzy<br />27<br />11/01/11<br />Cluster association<br />Business angle<br />Venture capitalists<br />University<br />Research institutes<br />Big companies <br />Technology transfer centre<br />SMEs <br />Technology test centre<br />NIVR<br />New ventures <br />Vocational training centre<br />Living lab<br />ESA<br />Incubator<br />[Katzy and Crowston 2008, Competency rallying for technical innovation – the case of the VirtuelleFabrik]<br />[Schuh, Katzy, Eisen 1997, WievirtuelleUnternehmenfunktionieren: Der Praxistestistbestanden]<br />
  75. 75. Innovation Cluster the case of GALILEO and SatNav<br /><ul><li>Strengthen Anchor company's role
  76. 76. Sub-clustering developed but different groups within don't know each other well.
  77. 77. Positive innovation voucher, IPC
  78. 78. Better integration between venture capital and early stage financing </li></ul>Prof. Dr. Bernhard Katzy<br />28<br />11/01/11<br />The status quo of satnav in holland<br />
  79. 79. Summary<br />Prof. Dr. Bernhard Katzy<br />29<br />11/01/11<br />NIS, SIS AND INNOVATION CLUSTER<br />Source: www.unescap.org/tid/publication/indpub2507_chap3.pdf<br />
  80. 80. Readings for session 5: Governance of Innovation<br />King/Gurbaxani/Kraemer/McFarlan/Raman/Yap (1994): Institutional factors in information technology innovation. In: Information Systems Research 5, 2: 139-169.<br />Prof. Dr. Bernhard Katzy<br />30<br />11/01/11<br />

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