Knowledge Society and Innovation. Strategies towards Knowledge Society. Jumping the s-curve? Knowledge as critical production factor. Is capatalism over? Capability to be decisive for growth and development.

1. Conference Paper:
“Abductive Innovation Strategy:
Shortcut to the Top?”
International Interdisciplinary
Research Conference
Botho College – Botswana
Gaborone, 18./19.10.2012
Dr. R. J. Dreves @ T.E.C.

2. Introduction ‐ Abstract
• Innovation Strategies have become the most prominent highest level policy tool to steer national and
regional competitiveness and development – worldwide.
• The need for strategic intervention at state level thereby recognizing market failures and information
asymmetries, while the focus on innovation reflecting the decisive role of socio-economic relevant
application of knowledge creation as the catalytic agent for further growth and development. Knowledge
and explicitly not only its scientific expression in technological and process improvements reflected in
productivity increase but also its accumulation and contribution as social capital to national development
and national total factor productivity demonstrates the importance of national learning and innovation
capabilities.
• Innovation strategies have to depart from recognized given situations, aiming at most relevant needs to
improve and focus on differentiation as an advantage, which calls the attention to culture, diversity and
institutional environment. Development and growth understood as a multi-dimensional human process
and as a function of knowledge explains the nature and composition of most appreciated, instrumented
and policy guiding indicators to compare respective international ranking.
• Not surprisingly, most internationally recognized development indicators focus on similar, most
constituent respective impact factors which are in resume: (1) Knowledge imbedded in The People:
Human, Intellectual and Social Capital / Education -Learning/ National Capabilities, (2) National Assets:
Knowledge supportive Infrastructure, esp. ICT and R&D, related (3) Rules & Believes: Institutional and
cultural environment, (4) National Productive Capability: entrepreneurship and economic
competitiveness.
• This calls for leadership at all levels (political, organizational, entrepreneurial) and strategic positioning in
the global context. Would an “Abductive Innovation Strategy” offer a “Shortcut to the Top?” Theoretic
conclusions lead to the option of unlimited growth with development as a function of knowledge.
• The presentation demonstrates most relevant international innovation strategies and respective initiatives
worldwide , as well as in Africa and at regional and national level; raising in the context of the conference
the question of respective national preparedness and related policy issues to support the identified most
relevant impact factors for successful further national development: Education & Research (Knowledge
dissemination and creation) ,ICT, conducive environment / culture change and productive capabilities.

3. Objective:
To highlight the utmost importance
of an overarching strategic focus on
the Creation of Innovation Capability
for the successful Transformation
into a Knowledge driven Society as
part of the globalization process.

4. Overview:
I. “Development as a function of Knowledge”: KNS
concept, New Economic Thinking, Growth and
Development Theories, Learning and Innovation
II. Need for a Strategic Approach to Development
III. Selected international innovation strategies:
EU, USA, China, LA: Col‐Bra, Africa, SADC, BWA
IV. Selected Indicators as a tool for a situational
analysis of BW in the international and regional
context: HDI, KEI, GCI, ICI, GEDI – NIS concepts.
V. Implications for Botswana National Development
Strategy and Priorities for Success.

5. Paradigm Change in Social Science
What characterizes Society? Network of Social Relations , Individual Preferences and
Competences, Legal Regulations – Market conditions - Institutions, Cultural environment;
K. Marx: social classes, “method of production” - structure of society characterized by the
dominating production factor → from Capital to Knowledge; from “traditional” over
“industrial” to “knowledge society”; KN = key resource. Productivity of KN key issue,
Application of specialized KN based on Scientific Methods in organizational context / teams
key driver of performance. Paradigm change!
“Knowledge has become the key resource …. Knowledge as the key resource is
fundamentally different from the traditional key resources – land, labor, and even capital ….
The newly emerging dominant group is “knowledge worker”… knowledge worker will give
the emerging knowledge society its character, its leadership, its social profile … its leading
class. … How well an individual, an organization, an industry, a country, does in acquiring
and applying knowledge will become the key competitive factor. There will be no “poor”
countries. There will be only ignorant countries. And the same will be true for companies,
industries, and organizations of all kinds. It will be true for individual too. I fact, the
acquisition and distribution of formal knowledge may come to occupy the place in the
politics of the knowledge society which the acquisition of property and income have
occupied in our politics over the two or three centuries we have come to call the Age of
Capitalism. … This is far more than a social change. It is a change in the human condition.
What it means – what are the values, the commitments, the problems, of the new society -
we don not know. But we do know that much will be different. ”
Peter Drucker, 1994: “The Age of Social Transformation”

6. Paradigm loss in Economic Science
Limits of Economic Knowability (2009), Imperfect Knowledge of
Economics and respective impossibilities of predictions; Financial
assessments on capital not on knowledge, mobility of KN, market
“failures” as information asymmetries. Paradigm lost!
Creation of Institute for New Economic Thinking (INET) in Copenhagen
(2009/10), Board with 6 Nobel Prize Winners in Economics:
“The main reason why “one” confronts inherent limits to knowability is
due to permanent changes in capitalist economies, which cannot be
adequately represented in advance with mechanical rules and
procedures. In modern economies, individuals, and companies engage
in “innovative” activities, discovering novel ways to use existing
physical and human capital and new technologies. The institutional and
broader social contexts within which these activities take place also
change in novel ways.” Roman Frydman 2010;
INET Annual Conference April 2012 in Berlin: New economic thinking
for a new paradigm! “The old paradigm of neoclassical economics is
broken. But what comes next isn’t as clear. “New thinking requires
massive and systemic changes. … Abductive interference is pragmatic
but looking only at outcomes, guessing at the rule and identifying the
cause.” Andrew Sheng: 2012,

7. Development as a growth residual?
Development & Growth Theories: House divided between mathematical
and historical strains: “Because economic growth is determined by
production, the mathematical strain of growth takes it self-evident that to
understand economic growth is to understand the accumulation of
production factors and model growth by writing production factors into the
aggregate production function. … When the accumulation of physical
capital can only account for a small fraction of the growth (12.5% to be
exact) however, most of the growth has to be attributed to “total factor
productivity (TFP)” or “the Solow Residual”. S. Tang, 2005 in: Knowledge
as Production Factor. Chinese Academy of Social Science. Robert Solow
himself considered “technical change” as accountable for seven-eight of
the total growth (1957 in: Technical Change and the Aggregate
Production Function)
Although neo-classical growth models consider the “residual” as
technological progress, it is not “a measure of the advance of applied
knowledge (= improved technological process) alone, it is a “grab-bag” or
“some sort of measure of ignorance” (Moses Abramovitz, 1993, in: The
Search for the Sources of Growth: Areas of Ignorance, Old and New.

8. Contribution of Organizational Learning
Growth measurements focusing not only on the direct impact of the
technological progress (adoption, learning-by-doing) but also on its impact on
Human Capital accumulation (education, on-the-job-learning) and respective
improvements in “managerial and organizational knowledge” ( see: Edward
Denison, 1985 in: Trends in American Economic Growth) can then at best
“account for 44% of the growth” (M. Abramovitz, 1993) and shifted the focus to
“the learning organization” and “competence building” at the level of the firm.
The knowledge of the firm is considered as either epistemological (explicit /
tacit) or ontological (individual/ collective) and classified as embrained,
encoded, embodied and embedded and organizations are respectively typed
(standardization / knowledge agent) to differentiate competence building
systems and their dynamics for learning.
“What is really new is the high rate of change … and what constitutes success
in the current market economy for individuals, firms, regions and national
economies is rapid learning … In this new context the learning capability of
firms becomes a major concern for national governments”. (EC 2007).
Combining normative “Theories on Learning Organization” (focus on:
Knowledge Management) and “Theories of the Firm” (focus on: Functions,
Performance) to a “Learning based Theory” shows that limits to growth are
(apparently) set only by “… the organizational ability to learn”. But, “the relative
dominance of different knowledge types, and the ability of an organization to
mobilize tacit knowledge as a source of learning are powerfully influenced by
the wider societal and institutional factors …. There is a process of mutual
adaption between knowledge types, organizations and institutions”.
(Lam/Lundvall 2007, EC 2004: How Europe’s Economies Learn)

9. Social Capital - Social Sector Capability
“still leaving a large chunk [56% to be precise] of growth unaccounted”
(Abramovitz) …. “singles out social knowledge as embodied in institutions
and culture to be crucial factors for understanding why the potential
provided by technological knowledge may or may not be realized in a
society” (S. Tang 2005). – so, several additional social and organizational
concepts as well as non-economic factors revealed by economic historians
contributed for understanding economic growth: “Cultural Capital” (W.A.
Lewis, 1955), “Social Capability” (M. Abramovitz, 1986) “Social Capital”
(J.S.Coleman, 1988), and most recently the introduction of the “non-profit
Social Sector” (P. Drucker ,1994), the concept of “Social Co-Production”
(S. Jasanoff, 2006), “Societal Models” (different linkages between the
education and the labor market based on a given institutional logic /
environment, EC 2007) and “Intellectual Capital” (∑: Structural + Relational
+ Human Capital) of a Society (R. S. Sharma et al, 2008) came up to
explain economically useful social relations and dynamics between
technology and social usage (knowledge application), as an “integral
process” of application of technological progress and of the scientific
method to the social context – with knowledge creation and learning
capabilities at the core of further research.

10. Contribution of Knowledge to Development
“The missing link is knowledge or learning“ … learning through the division of labor or
division of knowledge is key to economic development” (Smith, 1930, Hayek, 1937,
Boulding 1966) and “the economy is a system for generating and using knowledge
through division of labor” (Loasby 1999); Ricardo recognized “total output as a function of
the application of land, labor, machinery, and capital”; Marshall (1920) identified
knowledge as “our most powerful engine of production”, Marx/Engels understood S+T as
the “critical productive forces”, Lewis (1955) identified “accumulation of knowledge as one
of the causes of economic growth”; Landes (1980) explained that “acquisition and
application of knowledge lies at the heart of development”; North (1990) considers
knowledge as crucial for understanding economic performance and “the speed of
economic change as a function of the rate of learning” (1994); Kuznets (1966),
Rosenberg (2000), Solow (1994) and North (1981) saw the necessity for a “theory of
knowledge”, Malchup (1980) worked on a “theory of knowledge production” and Prescott
(1998) called for a “theory of total factor productivity” including social factor as highlighted
by Mokyr (1990) and Drucker (1994) for systemic work on “productivity of knowledge”
and a economic theory “in which knowledge has become the key economic resource and
the dominant, if not the only, source of comparative advantage”. Concluding: “The notion
that the accumulation of knowledge is central to production and economic growth has
long been recognized…Realizing and admitting our fundamental ignorance about the
growth [and I add: critical contribution] of knowledge is a painfully humiliating, but
necessary, step toward a better understanding of economic growth’ (see: S. Tang 2005).

11. Development as a Function of Knowledge!
With both ”economic” and “non‐economic” factors being brought into
the production function and the accumulation of knowledge being
recognized as the central force behind economic growth a Theory of
Development can only be systemic and evolutionary.
I therefore conclude that growth and development considered
adequately as a function of knowledge is unlimited and expressions of
simultaneous application of different levels of knowledge are manifested
in divergences of factor productivities or technology usage (Dreves 1993).
“We will propose an even more far‐reaching hypothesis stating that there
is no alternative way to become permanently better off besides the one
putting learning and knowledge‐reaction at the center of the
[development/growth] strategy” (Lam/Lundvall 2007).
Remains to be further captured:
1. How does People and Societies behave under [recognition of]
imperfect knowledge?
2. What determines the speed of learning?
3. What facilitates and enables creativity and innovation?

12. Development – stages and curves
• Development Stages W.W. Rostow
→ curve of social evolutionism
• Development Stages M.E. Porter
→ curve of business economics
• Development as a multi‐dimensional human learning process
→ Measurement of “critical” aspects of Development through indicators, learning curve, path
of high performers, innovation windows,
• Limited Growth and Development?
→ Unlimited Development with KN as key factor for Total‐Factor‐Productivity

17. Unlimited Development based on Knowledge
not exponential, not logarithmic, but staedy
Development is unlimited as well as is Knowledge.
Development rather depends on the adequate
application of respective relevant knowledge. Evolution
does not favorite particular factor endowment, but
effectiveness of situational factor combination - the
“right” conditions: application of the relevant knowledge
according to the given environment – at all levels.

18. Intl. trend: Focus on Learning and Capacity Building
“Knowledge is a “global public good” that is most effective when shared without
distribution inequities” (J. Stiglitz, 2001)
“…what is at stake is more than information: it is knowledge, which implies cognitive
capacity, learning, cultural patterns and understanding – in a single word: people” (M.J.
Rodrigues, 2003, European Policies for a KN Economy).
“There is a growing understanding that knowledge is at the core of economic
development. We define the present stage as a “learning economy”. In the learning
economy, individuals, firms and even national economies will create wealth and get
access to wealth in proportion to their capability to learn”. (Lam / Lundvall (2007,
European Commission 2004)
One of the most effective strategies for human capital development is through processes
of social learning; that is, where means are developed to support learning within a
population not only through formal institutions such as schools and colleges but also
through informal processes such as through non-governmental organizations, friendship
groups and informal social groups. (Gurstein 2004)
“In an environment of globalization and competition, governments at regional, national,
provincial and municipal levels have to turn to knowledge as a strategic asset that drives
sustainable economic advantage. The value of knowledge is particularly enhanced when
it is created, shared and re-used within a critical mass of society that possesses the
requisite absorptive capacity or the ability to understand and apply knowledge. (R.S.
Sharma, 2008, Beyond the Digital Divide).
“Capacity is understood as the ability of people, organizations and society as a whole to
manage their affairs successfully …. Capacity development [learning] is understood
whereby people, organizations and the society as a whole unleash, strengthen, create,
adapt and maintain capacity over time [ to manage their affairs successfully e.g. national
development] (World Bank, 2009, Learning for Development).

19. Innovation – challenge or chance?
“Innovation” should be seen solely within a context of creating the capacities
and the outputs which allows for successful [global] competition; understood as
a social or even community process; very much about [social] context.
“The direct link between technology implementations at the local level and
broader processes of social learning are only beginning to be identified along
with an increased awareness of, and attention to broader community based
knowledge creation and knowledge management processes…
“… it could be argued that the more serious “divide” is [not digital] but rather
between those who have availability to means to “innovate” … and those who
have not”.
Similarly, creating an atmosphere which enables the development of ideas and
imaginative exploration stimulated by technological opportunities, best
practices and innovations from elsewhere present a powerful platform for local
“innovation” and development…it stimulates attitudes toward technology, and
economic and social opportunity which is the pre-condition for a shift in national
attitudes and cultural expectations concerning economic and social innovation”;
(see Gurstein 2004).
“Analysis of how these innovation systems actually function is lacking….more
attention should be paid to the social and political institutions of NIS… a
hierarchical evolutionary approach considers policy making a continuing
process of designing institutional structures” which “should allow for learning to
adapt behavior [changes] based on lessons learnt” and changing individual
consumer preferences. Groenewegen 2006.

20. National Capabilities - Systems for Learning & Innovation
“National Learning Capability is a System of three dimensions determined by:
infrastructure, institution, culture”; like the competitiveness of a firm, an organization also
depends upon its learning capability, economic relevant learning of a state as an
organization depends in the same way upon the learning capabilities of its citizens,
creating thereby social knowledge / capital through social co-production and shaped by the
cultural environment. “Social knowledge embodied in Culture and Institutions and Tacit
knowledge incorporated [in individuals] …..[shall] all to be put under national “learning
system”… (S. Tang, 2005).
As the national context (environment) shapes the forms of individual and organizational
learning, national systems of innovation have to put “competence building of people and
organizations at the center of the analysis” (…….) ; “it is about a systemic approach to
innovation, in which the interaction between institutions and organizations is central”
(Groenewegen, 2006)
Already F. List (1841) considered a “wide set of national institutions, including those
engaged in education and training as well as infrastructures such as networks for
transportation of people and commodities part of his concept. In the 1990s a national
system of Innovation was defined as: “…. A network of institutions dedicated to initiate,
import, modify and diffuse new technologies” (Freeman, 1987); … “relationships which
interact in the production, diffusion and use of new, and economically useful, knowledge…”
(Lundval 1992); ‘.. A set of institutions whose interactions determine the innovative
performance …” (Nelson 1993); “…national institutions ... that determine the rate and
direction of technological learning (Pantel,Pavitt, 1994); “…that set of institutions which ….
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. …It is a system of interconnected institutions…. (Metcalfe, 1995).
Actually NIS is considered to be constituted by 6 dimensions: (1) Innovation and
Technological Capabilities, (2) Education System and Human Capital, (3) Infrastructures,
(4) Economic Competitiveness, (5) Political-Institutional Factors, and (6) Social Capital and
especially used for cross-country analyses (NUPI, WP 783, 2011).

22. Learning & Innovation in LDCs
“It is notable that most of the discussions on Innovation and Development have been concerned
with already developed economies. However, it is possible that the real opportunity for innovation
and for having major impacts as a result of an innovation strategy is in enabling Lass Developed
Countries to leap-frog directly into a KN based Economy from amore economic base” M.
Gurstein, 2004.
“An economy based on the sharing and diffusion of knowledge provides an opportunity for
emerging nations to increase the well-being of their populations” (K. Matsuura (UNESCO
Director, 2006)
“In the learning economy, individuals, firms and even national economies will create wealth and
get access to wealth in proportion to their capability to learn. This will be true regardless of their
present level of development and competence. …. As a matter of fact, learning taking place in
traditional low-tech sectors may be more important for economic development than learning
taking place in a small number of insulated high-tech firms. The learning potential may differ ….
But there will be niches where the potential for learning is high” (Lam,Lundvall 2007); The
possibility of this type of “leap-frogging” is greatly increased … in [the] case [of] the introduction
of state of the art ICT infrastructure [which] presents to national economies opportunities for the
development of a national innovative capacity parallel in this respect at least with that which
exists in its much more advanced competitors (Gurstein, 2004)
“Knowledge rather than resource endowment is critical to development“ Amartya Sen, (1998)
identified capability as a expression of freedom and poverty as a consequence of the deprivation
of basic capabilities. Similarly, underdevelopment is a reflection of a nation’s deprivation of basic
capabilities (see: The Namibian, 2011).
Recently: shift “towards the study of innovation systems within the context of developing
economies” and discussions about Innovation systems and development (Lundvall, 2009).

23. Integration of Innovation into long-term development plan and
strategy is key for developing countries (WB Institute 2010)
1. Innovation in the developing world means “something new” at that location and for that society: methods
new applied or a new sector established (textile, cars, flowers, computer, tourism);
2. Entrepreneur as key actor interacts with Universities, public laboratories, banks, customer Asoc. forming
an Innovation System
3. Conducive environment: macroeconomic stability, infrastructure development, quality of governance
4. Important details: Support Agency, solid network / technical infrastructure (Metrology, Standards, QA-
Control), pro-poor technology programs / public procurement, special economic zones, innovation friendly
techno cities = being pragmatic!
5.Upgrading local knowledge base and adapting adequate new knowledge is critical; change happens only
gradually from limited local success of specific industries or areas and with much needed institutional
creativity from policy makers to build critical mass for broader reforms and a general climate of trust
6. Innovation policy not a linear & mechanistic process of promoting ideas and projects from research to
market, a holistic (systemic) and “biological “ approach is more appropriate; Gov. responsible for positive
climate through (a) incentives + facilities, (b) removing bureaucratic obstacles, (c) improve tech. education +
R&D structures; Regional and spontaneous initiatives can play critical role; creation of innovation climate
(not a full culture) takes at least 10 years!
7. But most important key success factor is “to integrate a vision for innovation in long-term development
strategy”, which “requires an explicit government-wide approach”; failure is mostly due to “not sufficient
authority”, the lack of “strong political leadership, collective will, and clear commitments”; therefore:
8. “innovation policy can be a key component of 21st century development strategies, even in poor countries
with constraining economic environments. But to succeed innovators must be supported by high-level
central and local government policy makers who have the vision, pragmatism, and the ability to work
creatively in institutional contexts. → CHINA: = world factory; MALAYSIA:= IS world leader; TUNISIA; FINNLAND,
KENYA, ….

24. KNS – System Drivers
Growth & Development relevant areas of special attention
• Societal Learning attitudes – organizational / TE / societal KNM - capabilities
→ life-long Human Capital preparation for contribution to growth: Learning curve and
learning methods: Formal learning – non-formal (on-the-job) – informal learning
(social)
• ICT – Internet and other KN support infrastructure and procedures
→ UN-GeSCI : IT as KN depository and CT as dissemination tool; opening unique
options
• International Competitiveness: Entrepreneurs - private sector & network
→ Competitiveness – cluster - trade - strategic Initiatives – opportunities and risks
• Conducive Environment – culture & creative politics / Leadership
→ support : infrastructure , agencies, openness, diversity, facilitating relations,
mobility, closeness – clusters, incentives, public procurement, priority projects, local
development
• Innovation Capability: doing things different, improved satisfaction of users
S+T, R&D-KN creation → “improved” Products and Processes → customer
satisfaction (KNM+QM)

26. Need for a Strategic Approach to Innovation
Strategic Approach = A Scientific KNM Approach: PDCA – QMS – KNM – continuous pragmatic strive
Strategic management is the art, science, and craft of formulating, implementing and
evaluating cross-functional decisions that will enable an organization to achieve its long-
term objectives (performance). It is the process of specifying the organization's mission,
vision and objectives, developing policies and plans, often in terms of projects and
programs using score cards. Strategic management seeks to coordinate and integrate
the activities of the various functional areas in order to achieve long-term organizational
objectives/targets. Strategic management is the highest level of managerial activity and
provides overall direction. (→Leadership) According to Arieu (2007), "there is strategic
consistency when the actions of an organization are consistent with the expectations of
management, and these in turn are with the market and the context.“ (Wikipedia) → PM,
MbP, KNM
National strategies for sustainable development seek to harmonize the various policies
and plans that are operating in a country. This involves coordination and integration of
relevant policies and actions in multiple sectors, as well as adequate monitoring and
review mechanisms, with the participation of government actors, civil society and the
private sector. UN-DESA (Department for Economic and Social Affairs)
Local economic development should be pursued cooperatively across the local labor
market; economic development programs should consider the quality of jobs created;
high unemployment areas should be more aggressive than low unemployment areas in
promoting job growth. (Bartik 95, for USA)

27. Innovation Strategies for Development:
adaption of relevant measures for desired change
Plan - Do / Implement - Check / M&E – Adjust / Correct to improve a process or product. The concept of
PDCA is based on the scientific method, which can be written as “Hypothesis” – “Experiment” – ”Evaluation”;
a fundamental principle of the scientific method is ITERATION: once a hypothesis is evaluated, executing the
circle again will extend the knowledge further. The approach is based on the belief that knowledge and skills
are limited, but improving; especially at the start of a project, key information may not be known, the scientific
PDCA method provides feedback (through progress reports) to justify “guesses” and increase knowledge.
PDCA=QMS+KNM: Do things right – first time; “right” is determined by what is “known”, “qualitatively” and
socially, culturally accepted (standards, information knowledge stock) but might still be “improved” through
learning–by–doing=knowledge creation / production; or innovation; which also might mean change. Applied
to strategic aligned project management this refers to baseline, measures, indicators and progress reports.
“Abduction” is a form of logical inference that goes from data description of something to a hypothesis that
accounts for the reliable data and seeks to explain relevant evidence (most economical ex-post explanations,
often used for ex-ante predictions, projections); abduction is an instance of the scientific method; its
application inclines to favor a single explanation (or few) in the hope to be better oriented; abduction is the
use of a known rule to explain an observation, commonly used in social science and artificial intelligence;
abduction is “guessing” but the success of the guess far exceeds that of random luck. “Abduction guesses a
new or outside idea so as to account in a plausible, instinctive (tacit), economical way for a surprising or very
complicated phenomenon. That is its proximate aim” (Pierce,C.S. 1908 :“A Neglected Argument for the
Reality of God”). → problem solving by system thinking, parts are best understood in their relationship of the whole.
Local experiences design through inclusion of social and cultural relevant elements in a M&E system to
check implementation of a strategic plan new insights about successful processes and / or products; without
M&E no harvesting of local experiences / innovative ideas as result of positive abduction. → relevance theory.

28. Strategic Approach ‐ tools
• PM‐PDCA ‐ guided actions for achievements, scientific
method, iteration, feedback for “guesses” and knowledge
creation
• QMS – Permanent Process / Skills Improvement: “do things
right – first time” ‐ Standards
• KNM – capture with focus on Learning + KN creation
• Strategic Mgmt.: Plans, Score Cards + M&E to achieve the
vision through timely performance → consistency with
expectations

29. Systemic Approach
Systemic: Parts are best understood in their relationship of the whole.
Systems thinking is a practical approach for dealing with the “big picture.” In
systems thinking, the focus lies on understanding the whole by examining
cause-and-effect relationships among its components. Systems thinking is
used to identify high leverage actions, changes and interventions. Systems
Thinking can be helpful in virtually all aspects of life, on the job and off.
artofthefurture.com

30. Abductive Strategic Approach
• Abductive Strategy: “Abduction guesses a new idea
so as to account in a plausible, instinctive (tacit),
economical way for a surprising or complicated
phenomenon” (Pierce, C.S. 1908); is a form of logical
inference to explain relevant evidence. (“new
combination of systemic correlation of facts”)
• Pro‐poor Strategy: PRS, MDGs – social inclusion –
redistribution – local needs
• Pro‐global Strategy: local strengths‐ global markets,
international opportunities, networking.

31. Innovation Strategies for Development: Overview
Selected Innovation Strategies: EU-USA-China-LA-ARAPKE-SSA/SADC-BWA:
EU: Innovation is overarching policy objective, steered at highest level with
massive investments in Knowledge creation and conducive environment
USA: Catalyze breakthroughs for National Priorities, Promote Competitive
Markets that Spur Productive Entrepreneurship, Invest in the Building
Blocks of American Innovations
China: Promotion of domestic Innovation: “Indigenous Innovation Strategy”
LAC - Colombia/Brazil: Demand-driven vs. Strategy-driven Approach,
IDB,(2006) conditions for strategic approach
ARAPKE: KNS Pillars: Education – ICT – Innovation – S+T; focus on: ICT
and Leadership → (AICIT); strategic approach recommended, system wide
+ system deep)
SADC: RISDP (2006): systemic strategic “support”, SAIS (2011): Support
Program; SARUA (2012): absence of a clear strategic vision recognized
Botswana: draft RSTI Policy and implem. Plan → MIST, 2011: at pre-
implementation stage, current ad hoc approach unsatisfactory, strong
political commitment and leadership required (p.42).

32. Source: Background Information for the European Council, 4 February 2011
The NEED for a STRATEGIC APPROACH in EUROPE
Our key partners and emerging economies follow a
strategic approach to innovation and implement it.
A strategic approach to innovation =
 Innovation is the overarching policy objective driving all
other policies (education, labor markets, skills,
ICT/infrastructure, tax policy, etc.)
 Innovation policy is steered and monitored at the
highest level
 Massive investments in skills, research and innovation

33. Source: Background Information for the European Council, 4 February 2011
The example of the US
President Obama’s
Strategy for American
Innovation:
 increasing significantly the
budget for three key basic‐
research agencies from $12.6
billion in 2010 to $19.5 Billion in
2016 (increase by 54%)
 reaching 3% target for R&D
intensity
 focusing on key priorities and
“grand challenges”

34. Source: Background Information for the European Council, 4 February 2011
The example of China
China « Indigenous Innovation Strategy »
 Promote the development of technological innovation in domestic firms,
leading to ownership of own core IP rights
 Explore potential markets through in-house R&D activities and external
knowledge acquisition
 Be among the top-5 worldwide by 2020 for patents granted for domestic
inventions and citations of international scientific papers
 Implement the “Medium- to Long-Term Plan for the Development of Science
and Technology until 2020”
- min. 60% of GDP growth
- max. 30% foreign technologies, IPR, standards
 1000 Talent program – to get the 1000 best Chinese researchers back from
the US

35. IDB: Strategic Approach in LAC still in the “back seat”
IDB hypothesis combining political economy determinants and institutional factors:
“For a strategy-driven approach to become dominant in a country, the confluence of at
least TWO of the following THREE factors is required:
1. A sufficiently strong technical and social-scientific intelligentsia
2. Government institutions where this technical intelligentsia can exercise its intellectual
influence
3. A nucleus of private entrepreneurs capable of going beyond a short-term corporatist
stance and of interacting with the technical intelligentsia to generate a long-run
strategic perspective for productive development policies.
In the LA experience the technical and social-scientific intelligentsia sees itself as
representing both the standpoint of the country’s future and the interests of technical
rationality. But:
(i) if this social segment is weak;
(ii) if it is not sufficiently represented in the state bureaucracy;
(iii) if the specialized agencies through which its views and technical interests are weak
or non-existent; and
(iv) if it does not have an ally in (at least a segment of) the entrepreneurial class, it
cannot become a dominant factor influencing public policy, and there is thus NO
possibility of developing a strategy-driven approach in a particular country.
Concluding, “that in the absence of a strong technical intelligentsia expressing itself
through strong, capable institutions (and allied with at least a part of the business class
with long-term view) strategic considerations take “a back-seat”. (IDB 2006)

36. ARAPKE: African Regional Action Plan for
Knowledge Economy, ALICT, GeSCI / UN (2011)
KNS initiative = Focus on: Education + ICT + Innovation + Science & Technology
GeSCI: Focus ICT = enabler of Education, Innovation and Development
ALICT: Focus Leadership, ALICT: African Leadership Capacity Building Program
Recommendations from Needs assessment 2011:
(a) Education and Innovation to be viewed as interrelated drivers for socio-
economic development
(b) A comprehensive (strategic) approach to Science, Technology and Innovation
should be developed
(c) Leadership Capacity should be developed to address “system wide” and
“system deep” change for coordination and extension of policies into
sustainable implementation and development across all system levels.
Conclusions Country ( Mauritius, South Africa, Tanzania, Zambia) Assessment:
“There is a need for implementing and coordinating the four pillar initiatives
towards KNS development; there is a clear gap in systems / mechanisms /
structures for overseeing, coordinating, monitoring and evaluating initiatives.” =
lack of Strategic Approach!

37. SADC: not yet ready, testing for future regional
strategic intent in 4 pilot countries:
BWA – MOZ – NAM - ZAM
2006: SADC countries identified in their Regional Indicative Strategic
Development Plan (RISDP) the need to enhance their systems of
innovation, and to create mutual benefits by extending this to regional
–co‐operation and regional innovation systems. Systemic strategic and
operational innovation support is recognized as an integral ingredient
in economic growth and poverty alleviation aspirations.
2010: Draft SADC Strategic Plan on STI with 7 objectives, SARUA based
2011: SAIS‐Southern Africa Innovation Support Program launched to
pilot regional strategic intent based on (1) human and (2) institutional
capacity, (3) regional networking and (4) co‐operation from April 2011
– March 2015 in 4 countries: BWA, MOZ, NAM, ZAM.
2012: SARUA: Strategic Agenda for Development in SADC 2025 : “the
absence of a clear strategic vision has been recognized by SADC
ministers as a key limitation. … It is clear that HE leaders require a
strategic approach…”

38. BWA : Revised National Policy on Research,
Science, Technology and Innovation approved &
Implementation Plan: Ready to do it right?
1. Revised National Policy on RSTI, 09.2011/ 08.2012: Revision
intended to broadly align with MDGs + Botswana Vision; strategic
priorities intended to be related to the goals set in NDP 10 and
Vision 2016; but ”currently between the stages of formulation and
implementation”.
2. Revised National Policy on RSTI, “draft Implementation Plan”
11.2011; “agree on the need to prioritize collaboration and
coordination … in order to attain broad national development
goals; .. and with “focus on a set of strategic priorities
3. Role of BNRDICC: the “New Vision” Council?
4. “The effective implementation of the draft RSTI policy requires
strong political commitment and leadership” (p 42); “ current ad
hoc, uncoordinated approach … has proved to have slow and
limited impact…” ; funding to rise from 2011: 0.5% to 2% of GDP
in 2016; (GDP to be 156,418 Mio Cur. BWP).

39. Development Evidence – relative Status:
Overview – selected Indicators
• HDI:118/187‐ (3) Health, KN + Education, Income
• KEI: 85/146‐(4) Regimes, Education + Learning, NIS, ICT
• GCI: 79/144 ‐ (12) Institutions, Infrastructure, Macro‐econ.,
Health, TE, market efficiency 1, market efficiency 2, market
development 3, Market size, Technological readiness/internet,
Business sophistication, Innovation
• ICI: 69/131‐(5+) Institution, HC‐inclusion, Business, R&D, ICT
• GEDI:61/79 ‐(3+)country disposition towards E, E
response to opportunities, innovative capabilities
• NIS: (6)Econ. Competitiveness, Education System/HC,
Infrastructures, Political and Institutional System, Social
Capital, Innovation / Technological Capabilities

40. UNDP‐HDI: is it Education?

41. WB‐KNEI: very weak Innovation

42. KNEI: Internet – TE – R&D

43. WEF‐GCI ‐ weak transition stage:
innovation- infrastructure-technology-market

44. Labor system inefficiencies

45. Education System inefficiencies

46. ICI: R&D – Internet/ICT ‐ Quality

47. …and… Social inclusion / equity

48. First Entrepreneurship calculations
Including individual indicators are based on averages about optimistic behavior
assumptions taken from neighboring countries Angola and South Africa.

49. Cross country NIS comparison

50. Latest NI System understanding

51. Towards Abductive Innovation Strategy
Actual Situation in BWA: Vision statement and Pillars, NDP 10 and respective programs, HRD
Strategy, R&I / S&T Strategy,
What do the “individual” Indicators say on weakness for BWA:
HDI: 118/187: Tertiary Education / Health
KEI: 85/146: Tertiary Education & Innovation (TE-R&D-Internet/ICT)
GCI: 79/144: TE+ R&D, ICT Readiness, Infrastructure, Health, Innovation, market/business
ICI: 69/131: R&D, Education, ICT/Quality of Infrastructure, Equity
GEDI: 0.26 optimistic estimation; TE, Internet, Market, Business strategy, Technology Absorption
NIS-System understanding:
 Education System + Human Capital
 Political + Institutional System
 Infrastructures
 Economic Competitiveness
 Social Capital
 Innovation + Technological Capabilities
international comparisons also showing structural heterogeneity known from productivity analysis

52. Abductive Innovation Strategy
Abduction based on “evidence” / indicators recommends:
don’t follow the S-curve only to catch-up for ever, take
chances strategically and pragmatically on both sides of
the inflection point by taking a short-cut through innovation.
A Pragmatic double-faced development strategy based on
local conditions and global opportunities.
Identify relevant local potentials and prioritize for pragmatic
innovative local development strategies (local needs) and
regional cooperation and networking on innovation
strategies (global system requirements)

53. Double faced abductive innovation strategy
Recognition of Simultaneity of locally different Productivity and Knowledge Levels
I. C – A: pro‐poor
II. A – A’: pro‐global
III. A’‐ B: straight to the top

54. Abductive Innovation Strategy ‐ BWA
Abduction: from existing available Knowledge (data & information) to
new thinking; further development requires strategic knowledge
management, creative policies, innovative entrepreneurs, an open
conducive environment and sustainable funding.
Go for the so far “un-thinkable” outside-the-box options; be different
because you ARE different and do what is good for you – the people.
Development Goal: Transformation of “all” People into Diamonds;
Strategy: Create Innovation Culture and Innovation Capabilities
Priorities:
1. Local Private sector development / Employment creation / labor market
2. TE improvement: access, relevance/quality, public cost efficiency
3. Investment in ICT / Research / Networking / Collaboration - Infrastructure
4. Provision of adequate Funding for Innovation and Support Agency
5. “Loud” Public Communication and support

55. New forms of PPP instead of old fashioned
“Technical Assistance”, “Co-operation” and “Aid”
As already highlighted by P. Drucker (1994), in the “Knowledge Society” or the “Learning
Economy” by B-A. Lundvall (2007), there are NO poor countries, but only IGNORANT
ones and individual “Tacit Knowledge” and societal “Learning Capabilities” constitutes the
most important source for further innovation-based competitiveness and development in
an globalized knowledge-driven economy.
Who can support relevant development requirements of “other” countries and how needs
will be identified and attended to? The extent and content of national “Capability
Development” becomes the only out-singled constitution factor for future development
stages / levels of any country, society, economy or culture. And economically relevant
inter-relations, co-operations and networks are getting more importance due to their
contributions to growth related knowledge dissemination and creation. And only so, if
related to societal needs and individual wants and if applied to effective and efficient
customer satisfaction – worldwide. Which has implications to the mobility (dissemination/
distribution) of Knowledge (tacit and explicit) and Goods as well as to respective Quality
aspects and Diversity recognition.
In a nutshell: its about the capabilities of people in their local environment to satisfy local
needs under conditions of international competition. This requires in the international
context national systems of capabilities which – in the long run - do not require more
external inputs than are also exported in exchange due to external demand – a worldwide
endogen development system with only short-term Assistance needs for stable
Partnerships. National capabilities in this regard have to be built on recognition of
“international standards” and national particular competitiveness. Only international
recognized “understandings” (applied pervious innovation) can be provided by non-
nationals to enhance national competitiveness, not their national adoption.
International “Technical” assistance therefore cannot contribute further than through
specific “capability building” of national “multiplicators” and “innovators” with local cultural
roots. And financial assistance should therefore only focus on either international
knowledge or local needs related infrastructure and capability support issues.

56. Private-Public-Partnerships for Development
Abductive Strategy Approach, applies to
“International Co-operation” as new form of
“Partnerships” with exclusive orientation on mutually
recognized capability building needs:
- Attention to deficits of leadership and infrastructure
for enhanced knowledge dissemination & creation.
- Focus on learning system (learning to learn),
formal-nonformal-informal / individual–collective
(with social inclusion beyond organizations).
- Inclusion of conducive environment requirements:
change, values, communication, collaboration.

57. …..
“There’s lot of exciting potential for African
countries in terms of the knowledge society as a
result of their youth demographic, the diversity
of the continent and the fact that it is the only
untapped market left.”
Robert Hawkins, Senior Education Specialist, WB

58. Selected Literature / Reference
Abramovitz, M (1993): “The Search for the Sources of Growth: Areas of Ignorance, Old and New”, Journal of Economic History, Vol.53, No.2 ,Jun,
1993, pp. 217-243.
Abramovitz, M. (1995): “The Elements of Social Capability”, in Boo Ho Koo, Perkins, D.H. (eds.): “Social Capability and Long-term Economic
Growth”, London, St. Martin’s, 1995, pp.19-47.
Aubert, J-E. (2010): Innovation Policy for the Developing World, see World Bank , Washington, 2010 and WB Institute, Paris
Becker, G.S. (1993): Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education”, Chicago, University Press.
Borooah, V.K. (2003): “Market Failure. An Economic Analysis of its Causes and Consequences”, University of Ulster
Bucar, M, Stare, M. (2002) Macroeconomic policy vs. Innovation policy in the transition countries, Univ. of Ljuljana, Slovenia.
Butcvher, N: (2011): ICT, Education, Development, and the Knowledge Society, GeSCI thematic paper
Castellacci F, Natera, J.M. (2011): A new panel dataset for cross-country analysis of national systems, growth and development, NUPI WP 783.
Coleman, J.S.(1988) : “Social Capital in the Creation of Human Capital”, American Journal of Sociology, Vol. 94, pp.95-120.
Commission of EC (2001): Making a European Area of Lifelong Learning Reality.
Denison, E.F.(1985) : “Trends in American Growth, 1929-1982
Dreves, R (1993): Production Structures in Developing Countries, Divergences of Factor Productivities as Indicator for Underdevelopment, Diss.
University of Konstanz, Vol.1.
Drucker, Peter (1994):“The Age of Social Transformation”, The Atlantic Monthly., Vol. 274, No 5, pp.53-80.
Frydman, R (2012).: Imperfect Knowledge and Economic Science, Launch of INET
Frydman / Goldberg (2012): “ Change and Expectations in Macroeconomic Models: Recognizing the Limits to Knowability”, March 2012
Goldberg, M. (2012): ‘Why Imperfect Knowledge Economics, INET
Gurstein (2004): “Building National Innovation Capability from the Bottom Up, New Jersey Institute of Technology
Tang, S. (2005): “Knowledge as Production Factor: Towards a unified theory of economic growth, Chinese Academy of Social Science, Institute of
Asia-pacific Studies, Vers. 3.0
Hautamaeki, A.(2010): Creative Economy and Culture at the heart of Innovation Policy, Ministry of Education, Finland
Jasanoff, S. (2006): “States of knowledge: the co-production of science and social order, Routledge, + Harvard.
Klein, J., Eseryel, D. (2005): “The Corporate Learning Environment.”
Lewis, W.A. (1955): “The Theory of Economic Growth”
Lundvall, B-A. (1996): The Social Dimension of the Learning Economy”
Lam, A./Lundvall , B-A (2007): The Learning Organization and National Systems of Competence Building and Innovation, Oxford Univ. Press.
Melo, A, Rodriguez-Clare, A.. (2006): Productive development Policies and Supporting Institutions in Latin America and The Caribbean, IADB
Working Paper
Nunes, P, Breene, T.(2011): Jumping the S-Curve: How to reach the top – and stay there.
Otoo, S. et al (2009): “The Capacity Development Results Framework” A strategic and results-oriented approach to learning for capacity
development”.
Sharma, R.S. et al. (2008): Beyond the Digital Divide: Creating Knowledge Societies, Singapore University.
Sheng, A. (2012): “A Berlin Consensus? INET Blog , April 30, 2012.
Solow, R.M.(1957) :”Technical Change and the Aggregate Production Function”, Review of Economics and Statistics, Vol. 39, pp.312-320
Tuomi, I. (2004) “Innovation, Growth and Competitiveness in the Knowledge Society, Foro de la Innovacion, Malaga, Joint Research Centre.
UN (2005): Understanding Knowledge Societies
UNESCO (2003): The Culture of Innovation and the Building of Knowledge Societies.
Vaezi, S.K. (2011): Knowledge Societies Implementation and Innovation Policies, Ministry of SR+T, Iran

59. Comments

60. Contact Details
Dr. Reinhart J. Dreves
Tertiary Education Council Botswana
www.tec.org.bw
rdreves@tec.org.bw
+267– 3646 213