Session 5 - Innovate or Imitate?

INNOVATION IMPERATIVES FOR THE CARIBBEAN PRESENTATION TO CARIBBEAN EXPORTERS COLLOQUIUM BARBADOS, NOV 11—12 2014

PROFESSOR GILLIAN MARCELLE HEAD, CESTII HUMAN SCIENCES RESEARCH COUNCIL, SOUTH AFRICA *PRESENTATION

IN INDIVIDUAL CAPACITY AS ACTIVE ACADEMIC AND POLICY RESEARCH SCHOLAR

OUTLINE

• Caribbean realities and prospects • Reimagining innovation • Innovation ecosystems and development • Summary and concluding remarks

REALITIES? Economic scorecard

averaging C

Re-energised CARICOM

stimulating and fostering economic, social, environmental and technological resilience crafting solutions and moving at the speed of the willing

Consensus

Acknowledged need for greater competitiveness and dynamism Export led growth

PROSPECTS? What will lead to an exponential and existential change?

Why will 2024 be different from 1991, 2000, 2004 and 2014?

What is missing from our analysis?

What is needed?

Is the Caribbean working? Are we proud, hopeful, safe and enjoying a high quality of life? Is it becoming more or less equal?

What is distinctive, unique and sought after?

Where will change be nurtured and how can it be sustained?

DEFINING INNOVATION Innovation is an intentional process of generating, acquiring and applying knowledge aimed at producing economic and/or social value. In developing countries, this process typically takes place through the unfolding over time of a wide variety of learning and capability building processes, rather than through the mastery of science and technological knowledge.

Innovation is an investment effort in which, knowledge, financial capital, and other resources including cultural and social capital are deployed over time to create value. Deftly undertaken innovation can lead to the transformation of systems, values and culture as well as the production of new and/or improved products or processes.

DEFINITION AS GENERATIVE CRITIQUE Formal R&D , lab based science and technology Tacit knowledge problem solving and insight

Complex, non-linear, interactive process, full of uncertainty .

Managed through intentional effort and investment

Expanded canvas to explore innovation dynamics, patterns and outcomes.

FOCUS ON KNOWLEDGE FLOWS • Innovation involves bidirectional knowledge flows, ecosystems that involve intense linkages and interactions through which knowledge circulates freely are more effective • Actors in knowledge circulation processes perform more effectively when they have shared meanings, understanding and objectives • There are no simple trade-offs between openness to knowledge sourced outside national borders and the strengthening of domestic technological capabilities (Marcelle 2014, 2004, Bell 2009).

INHERENT (AND COMMON) BIASES • • • • • • • • •

Techno centric conceptions of social and institutional change High technology and science intensive processes are considered to be the goal Focus on novelty Lone inventor hero as a mythical figure ( big influence on the definition and the symbol of success) Outcomes are not automatically produced in STI interventions Reticence about risk and uncertainty and the contrast with the requirement for policy to use committal language De-emphasis on ethical dimensions Mindset and several other cultural, psychological and societal dimensions of innovation do not receive adequate attention Insistence on standard metrics for measuring innovation outcomes and impact

FUNDAMENTALS

• Value and Novelty • Understanding both process and outputs • Focus on time dimension: outcomes and impacts • Admit uncertainty and risk • Acknowledge context specificity • Increase focus on culture and the people dimension

PRIVATE SECTOR: KEY ISSUES • Innovation for profit making enterprises is central to success • Innovation is not = R&D • Innovation requires investment, takes place over time through an uneven process involving risk and uncertainty • Innovation does not guarantee competitive success • Innovative enterprises have people who are confident, free to experiment and have their learning supported.

• Effective innovators have processes for integrating learning across all functions and for aligned learning with overall business strategy.

• The nature of the innovation process is highly influenced by context, therefore large enterprises operating in the formal sector perform innovation routines differently from those in the informal sector • Innovation strategies are key to performance and can be improved over time, requires continuous renewal

EFFECTIVE INNOVATION STRATEGIES • Understand initial conditions and starting points • Examine factors within the firm (internal factors)

• Focus on factors at the boundaries of the firm • Relationships with the policy environment • Regulation • Suppliers • Competitors

Source: Tidd and Bessant

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INNOVATION STRATEGIES •

Firms develop through a series of decision-making and implementation steps that search for resources and apply these in ways that add value and generate advantage over competitors.

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Among these resources are knowledge assets and a range of complementary assets that enable the firm to use knowledge effectively.

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Strategy therefore becomes a process of building complementary assets, referred to as capabilities and deploying them in directions that add value.

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Strategy making is inherently risky and initial conditions or starting points significantly influence the outcome of the process.

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Successful firms are those that have a deep stock of resources, built over time and the capabilities including decision making processes to effectively deploy these over time. Firms improve their abilities to search for, acquire and deploy resources over time and this process has been termed organisational learning.

Resources and assets used by firms are varied and including financial, physical, natural, intellectual, human, and social capital.

LEARNING IS CENTRAL •

Firms often start off with low levels or even the absence of innovation capabilities. These firms typically are initially imitative and are frequently dislocated from markets and sources of technology.

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For developing country firms, the process of innovation management often involves the firms first becoming familiar with various ways of acquiring knowledge even before they are able to apply this knowledge for production and then to innovation.

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Developing country firms are also embedded in “increasingly pervasive international networks of potential sources of technology”

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Integration of internal learning and external learning becomes a key success factor

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Often not captured in theorising, and innovation surveys and conventional mental models of innovation

INNOVATION MANAGEMENT WITHIN FIRMS • Invest in technological hardware, technical personnel, training, skills development and other learning routines.

• Implement specific management routines to support technological learning.

 Create specialist roles for innovation management  Supportive Culture  Execute Formal Scan and Search

• Manage boundary relationships Marcelle, G M Technological Learning Edward Elgar (2004)

INTERACTION AND LINKAGES • As economies become more sophisticated and specialised, the nature of interaction among a variety of agents becomes differentiated • Segmentation and division of labour among innovation funders and innovation performers increases over time • Developing countries are learning how to manage and optimise linkages

SOCIAL CAPITAL AND INNOVATION •

Structural social capital (business network assets, information network assets, research network assets, participation assets and relational assets)

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Cognitive social capital

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Some of these are more amenable to policy intervention, while others are features of social and cultural systems and deeply encoded.

FUNDING REMAINS A CHALLENGE • • • •

Late stage funding predominates Venture capital markets underdeveloped Risk averse traditional sources of finance Crowding-in trends

VARIETY AND SPECIALIZATION Intermediaries are knowledge and resource brokers that influence the interaction between entrepreneurs and opportunities

Main role of entrepreneur changes viz: inventor, experimenter, founder and manager; and the nature of the opportunity also changes.

Stages of the innovation and venture lifecycle: idea discovery, venture creation and management process.

Direct effects fosters the interaction between the individual and the opportunity .

Indirect effects occur when intermediaries facilitate movements between stages of an opportunity lifecycle.

INTERMEDIATION Types of Intermediaries Incubators, Accelerators, Investors, Banks, Business development support agencies , R&D centers, Research councils, universities, technical colleges

Opportunity discovery •Entrepreneur as an inventor

Opportunity validation •Entrepreneur as an experimentor

Opportunity exploitation •Entrepreneur as a founder

Opportunity growth •Entrepreneur as a manager

INNOVATION ECOSYSTEMS ARE KEY Overall health, evolution and vibrancy of an entrepreneurial & innovation ecosystem can be assessed by the extent to which intermediaries provide adequate high quality resources during the four stages: discovery, validation, exploitation through venture creation and growth.

Marcelle, 2004

Stiglitz and Greenwald (2014 )

INNOVATION FOR WHAT?

Based on Princeton political scientist Stokes 1997

Innovation is a mindset

CALL TO ACTION A N A LY S I S

ACTION

• Reimagine innovation on a broader canvas and with a more nuanced focus • Tackle the challenges in Caribbean policy culture • Build from strengths and involve community • Ignite the power of knowledge and learning • Acknowledge unintended consequences

• Research including comparative analysis and empirical studies • Evaluation of previous projects • Training and education • Advocacy and engagement • More policy dialogues of various types –sector groups, performers, financiers, senior public officials, entrepreneurs, community groups