Category: Promoting Innovation Systems

Posts in this category are about ways to promote, describe and improve innovation systems

Exploring the gaps between universities and industries

When working on technological change and the improvement of innovation systems, the topic of the different gaps between universities and industries often comes up. This is true for South Africa, but also for my work in Europe and Asia. The gaps are described differently by development projects, academics and business people, and my job is to usually figure out where the opportunity to close these gaps lies.

In my experience of trying to close some of these gaps, it is important to be as specific as possible about nature and maybe even the effects of these gaps. It is important to go to businesses and to find out what they expect from universities, while also going to academics and researchers and finding out what they expect from the industry. Often, the expectations expressed by these two groups are unreasonable and hard to reconcile. Sometimes people are simply wrong about what they think is needed or should be done.

However, these different expectations are not the biggest obstacle to closing the gap. Often the bigger obstacle is a lack of imagination of what is even possible in terms of cooperation, interaction and information flow. This is made worse by low levels of trust by one side of the other side. Also, stakeholders often have little insight into how others value certain interactions and information flows.

Over the last 14 years I have worked occasionally with a Faculty of Engineering at a University of Technology. In the image below, I share some of the different interaction patterns that we have observed over the years of closing gaps between selected departments or technology centres and industries. I am grateful to Dr SJ Jacobs who agreed that I can share this illustration.

The possible different relations between universities and industries

Of course, some relationships are more important than others. Also, not everybody agrees with the direction of the arrows that I have used in the diagram. I also know that some academics find it hard to believe that they can learn from industry. At the same time, many business people are surprised when they realise that their own companies have learned through the personal relations of their employees with their alma mater.

Even if a certain relationship adds little value in the bigger scheme of things, for the people directly involved it could mean a lot. For instance, for an engineering student to find an industry project that they could work on as a research project is a big deal, even if this may not be so important for a company or even for the academic department involved. In many post-graduate degrees, students are required to work on a real-life project, which often requires a company to give a student access to their facilities, data, senior management or other resources.

To reflect on the relations between a university and a community or a region would require another picture, but I will do that in a next project.

To be transparent, for many years I have used a simpler version of this map that was developed by the late Jorg Meyer-Stamer in the early 2000s. I include the original map below. I think many of my readers might have seen this map in RALIS (Rapid Appraisal of Local Innovation Systems) training course material or RALIS diagnostic processes.

The original map developed by Jorg Meyer-Stamer

While this original map is still useful to explain the different kinds of interactions between the private sector and a university, I found that we need a more detailed diagram if we want to improve relationships, design new services or improve the performance of programmes.

What do you use to map the relations?

What are some of the common myths or gaps that you come across often when you work on this topic?

Different kinds of technology dissemination

In many of the projects where I work, we face the challenge of gaining access to publicly funded resources that the private sector finds hard to reach. These technological resources could be in the form of scarce equipment, specialists or even in the form of codified or tacit knowledge. Often, the private sector is not even aware of the technological resources in their location or country.

I often describe three kinds of technology dissemination:

  • Technology development, which is usually project based and involves the development of very specific technological solutions
  • Technology transfer, which is usually based on a contract between the provider and the recipient that specifies pre-conditions, conditions and which equipment, processes and in some cases expertise will be transferred to the recipient
  • Technology extension, which is usually more interactive in nature. A knowledge holder, like a university department, research lab or enterprise support centre, extends their resources to private enterprises in a complementary way.

In my experience of working on the gap between public technological infrastructure and the needs of the enterprises, each of the three forms of technological dissemination works in some contexts and fall short in others.

  • Policymakers and public funders often prefer technology development because it leverages other scientific infrastructure investments at research organisations and universities. From a demand perspective, it is usually only those companies that have sufficient in-house expertise to develop a specification or that can afford to commission a research or development project with a research organisation that can benefit from this approach. I have only come across a handfull of small companies that have been able to commision technology development projects like this. In most cases, the founders of these enterprises had deep expertise in the technological domain, their internal processes, materials and the markets. I am thinking of one case where a small engineering company specilasing in advanced optics commissioned a research project to develop a new control interface for an aircraft.
  • Public bureaucrats often like technology transfer because it leverages research outputs at universities and research labs. Technology transfer requires that careful attention is paid to intellectual property and that recipients are able to absorb and leverage the technology they are gaining access to. I typically try to avoid this kind of work because I have often found that there are huge gaps between how public researchers and private investors value intelectual property. But I also know of many instances where a technology was developed in a university and then transferred to private enterprises. In my experience, there is a huge gap between what researchers in universities and public research organisations work on, and what small enterprises trying to carve out a niche in a smaller domestic market needs.

In my opinion, the importance of both technology development and technology transfer programmes is often over-rated in developing countries.

At the same time, the value of technology extension is often under-rated. Out of concerns that valuable intellectual property might leak out, many researchers, academics or other officials cannot provide assistance or advice to the private sector. While I understand this concern, in my experience, many enterprises are actually searching for somebody to point them in the right direction – they are not always asking for specific technical solutions that would infringe on intellectual property regulations.

Technology extension involves services like:

  • Demonstrating how certain (scarce) technologies work, or showing how scientific and engineering principles can be appled to real world problems
  • Advising companies on how they can improve or optimise their current processes
  • Providing technical problem solving, analytical or diagnostic services
  • Providing access to scarce equipment, software (like design or modelling software) and access to scarce expertise.

What makes technology extension more difficult is that the advice provided must fit the enterprise’s context and capability. For instance, while companies can pay to get their products tested or certified, very few companies have access to a lab or technology centre where they can get design feedback to make their product more compliant or more economical to produce. At the same time, many universities and public research organisations can provide a basic analysis and design feedback service.

A challenge for the private sector is that public research organisations are often like labyrinths. It is hard to know where the expertise, capabilities, or excellence lies in buildings or behind closed doors. Often you cannot even get into these buildings without an invitation and, in some cases, security clearance. Nevertheless, I love wandering the corridors of these organisations and seeing what technologists are working on. Often there are prototypes, half-dismantled instruments or posters adorning the corridors. The people working there can tell the most amazing stories of how they had to solve a problem, make up for a missing bit, or how they discovered that X could be substituted for Y. When I ask them who in the rest of the world knows what they are doing, I am often met with a shrug, and a “nobody is really interested in this”.

When I ask technologists, scientists and engineers in public research organisations who can most benefit from their genius, I am often told that ex-students, former colleagues and their alumni are often the most valuable customers and sources of inspiration. This seems consistent with the notion that the best form of technology transfer is through the mobility of people. It might imply that I have to introduce “technology transfer through human mobility” as a fourth kind of dissemination.

Image credit: The image at the top of this blog is from an optics lab at the National Metrology Institute of South Africa (NMISA). I took the picture while touring their facilities in March 2020, just a few days before the strict lockdown was announced in South Africa.

Series: Promoting innovation systems praxis in Africa

This year there have been several series of events celebrating the centenary of Christopher Freeman, one of the founding fathers of the study of innovation systems. The different events highlighted many older ideas that are still relevant while pondering how some new ideas might play out into the future.

These events provided the perfect opportunity to read up on many of the essential publications created in the Innovation Systems field in the last 40 years. Many of the ideas developed by these scholars have had a profound impact on my praxis. In the next few posts, I will highlight some of the insights that I have gained from this series of events.

During a recent event, the 3rd “Putting Africa First” panel discussion based on the excellent book by the same name edited by Bengt-Åke Lundvall, Mammo Muchie and Peter Gammeltoft, Prof Mammo Muchie invited me to share some thoughts from the perspective of an innovation systems practitioners.

The remainder of this post expands one of the points I shared during the event about the role of innovation systems practitioners in Africa.

There is too much focus on technological and scientific knowledge and not enough emphasis on learning and innovating in social technologies.”

I am not arguing that we invest less in strengthening scientific research in Africa. Scientific research should continue in areas where Africa face unique or pressing challenges. There are many knowledge domains where learning primarily takes place through scientific research. Examples are healthcare, water management, drought management, etc. that are very important in Africa but are not attractive to international research efforts.

However, we must admit that strengthening scientific research capacity is more exclusive; it involves fewer people, costs more, and takes longer to show results. Moreover, this kind of knowledge accumulation is driven by scientists, engineers, technologists and professional management.

Instead, we have to invest more effort into learning. As practitioners, we must mobilise industries, academics, innovators, and policymakers to learn about problems or opportunities they can explore together in their local or regional context.

In many African Innovation Systems, I believe that this kind of knowledge accumulation through learning-by-doing involves a different set of actors. The attention shifts from universities and supporting organisations towards firms and industries, where most learning-by-doing takes place. Scientists, engineers from academia and other supporting organisations can still play a valuable role here, but the emphasis is different. The mode is also different. Learning-by-doing is a social process. To be effective, it must be inclusive, transparent and accessible to a broader stakeholder network.

Whereas in science management we try to manage risk, in learning-by-doing we try to reduce the risks of trying something new, often involving somebody or knowledge from beyond the organisation.

The role of the innovation systems practitioner is also different. Our function is to enable learning, enable knowledge exchange, joint problem-solving and adaptation of institutional mandates. We often have to overcome coordination failures that constrain investment or reduce the search costs of finding technological expertise or solutions available in the system – irrespective of whether the capability resides in the public or the private sectors. We must often connect decision-makers from different spheres of society, fragmented institutions, divergent knowledge domains, and capabilities around a theme or a topic that matters to an industry.

So, for example, I often take individuals from universities or other supporting organisations to go and visit companies, factories or farms. Or I take entrepreneurs and their staff to go and visit research labs or other technical organisations.

There are two challenges that I have to overcome when I work with technology and education institutions that want to have a more meaningful impact on the innovation system:

  • Firstly, academics, engineers, and policymakers must not see the companies they want to reach as beneficiaries of their wisdom. Nor should they see companies and the technological choices they make as subjects in a research project. I have to help these institutions listen and carefully observe how companies make investment, recruitment or technological decisions.
  • Secondly, technological and educational institutions often have low credibility with or relevance to the private sector. Or worse, institutions like university research centres, research labs, and other specialised organisations may even look down on the private sector.

To get a social learning process going within a firm, or between firms, or even more importantly, between firms and their supporting institutions, I have to find something that different people have in common. In my experience, it seems like it is easier to get companies to work together on problems that are too difficult for individual companies to solve by themselves. Perhaps this is the case because it is easier to quantify the value of a potential solution. It seems much harder to build trust around an opportunity where different stakeholders are worried that others derive more benefits from the process than they are.

I received this image via a Whatsapp message and could not figure out the origins of the photo. The rabbit and the tortoise reminds me of the two modes of learning.

Improving the value proposition of the meso layer to enterprises

Updated and refined, 12 April 2020

When working to improve the performance of any sector or value chain, we are often confronted with a range of meso organisations or programmes designed to support upgrading, skills development and better decision making in small businesses in the targeted sector.

While mapping these organisations is not so difficult, it is much harder to figure out what each organisation is doing, offering or whom they are targeting with their services. If it is hard for me to do, I can only imagine how hard it must be for an overstretched entrepreneur working on a dozen burning issues.

Recently Annelien and I worked together to map the meso landscape in the bio sector in South Africa. We used an expectations matrix format to get more than 40 meso programmes to express what they expected of each other.

The first step was to get each organisation or programme to express their expectations in every other organisation in the sector. Then, in a public workshop, each organisation had a chance to respond to the expectations expressed in them by all the other organisations in the sector.

In general, it was evident that most organisations did not have a clearly specified service offering that made it explicit who they were trying to help, what had to be in place in the enterprise, what the benefits or value of their service offerings were and what they cost. While many programmes had objectives and indicators for their work in support of the specific sector, it is hard to find clear information, contact persons and engagement processes in marketing or online material.

What can be done to improve the visibility and value addition of the bio trade meso system?

Here are some of the recommendations that we presented to our clients.

  1. Make descriptions of services more explicit. For instance, clearly describe how each service offering addresses user needs. How can each offering be accessed by entrepreneurs? 
  2. What resources or capabilities does each organisation have in place? Is the support aimed at particular links in the value, a specific range of species, or does it provide general support to all business activities?
  3. Clearly state which kind of enterprise and at what level of competence the enterprise must be to benefit from the service. For instance, state explicitly what the preconditions are to use a particular service. Must the enterprise already have a two-year track record? Must they have a particular kind of technology in their operation? Is this service only useful for certain kinds of companies in specific sectors or stages of development?
  4. Which kind of enterprise can not be assisted? For example, can the organisation help all sizes of companies? Can only community projects be helped?

It is helpful to think of the meso landscape in its present state as being very diverse with many organisations, programmes and resources. The challenge is that from the perspective of enterprises and other support programmes, the meso landscape is like a labyrinth. It is hard to navigate and only those with huge tenacity or resources can afford to go door-to-door to find specific support for their challenges. Often the quality or effectiveness of the support available is also hard for entrepreneurs to assess. 

While it will be easy for some meso organisations to improve their visibility and access to their services, others may struggle.

Some organisations may only have to improve their marketing and information material. If they are already clear about who, what and how they support the sector, then all they have to do is to make this more explicit. For other organisations, improving their offering may require designing specific services or making certain resources available. Or perhaps a more specialised programme would have to work closely with other complementary programmes to improve their impact. There could also be organisations that provide specific services to a more general target market, so perhaps they should make their offerings a bit more explicit without making it specific to the bio trade sector.

To summarise my argument, in many developing countries there are many development programmes or targeted support programmes aimed at addressing market failures or performance issues at the level of enterprises. Some are more generic, promoting, for instance, start-up support. Others may be more technical, such as providing export promotion support. The main point is that these organisations often offer products and services that are very vaguely described. This means any enterprise (or other meso programmes) may have to spend a huge amount of time to figure out where to get support. This increases search and discovery costs, it raises coordination costs and it reduces the quality and effectiveness of public goods available to society.

Some of the challenge prospective clients that reach out to me are grappling with

Due to my research, public speaking and writing my favourite topics I regularly receive requests to help somebody that is grappling with an issue either around meso-organisational change or about technological capability, innovation or disruption.

Usually, after a few emails, we schedule a phone call to discuss their context, their intent and my service offering. Thanks to my journal and reflection processes I can track the original requests and the ensuing correspondence or projects. Over the last six months, I have noticed some patterns that are now repeating. Here are some of the most frequently discussed points. While I can help with some of these, with some I cannot help for various reasons.

Because I have always focused on training other consultants and my own clients, I thought it would be a good idea to share these early observations with you.  (Larry, Goran, Bojan, Nik, Albina, Garth, these are for you). To save you all from many emails, I have written 8 blog posts in one!

So here are the emerging patterns of 2019:

  1. I am frequently contacted by organisations or projects that believe that technological change, or preparing for the 4th industrial revolution (4IR) is a project. That there is something that we can do quickly (one of the most popular search terms on this blog site is “formula for 4IR” and “4IR method”. Preparing for technological change, responding to disruptions, or even preparing to disrupt others is a capability that is distributed over companies, public and civil organisations, regions and individuals and over time. It is not a project that ends, it is a capability that must be continuously nurtured. After addressing one threat or challenge and the next two will be on the horizon. While I love training, what these organisations really need are new technology, innovation, change and knowledge management capabilities.
  2. I am asked by development organisations to prepare their target groups or beneficiaries for the 4th industrial revolution by focusing on one threat. For instance by mastering computer-aided design, design thinking, or helping entrepreneur to cope with advances in digitalisation, 3D printing, or master some automation or sensor technologies. However, the reason why so many people lump so many technological advances together under the banner of the 4th industrial revolution is that these technologies are converging, and if they are not yet converging, they are rapidly learning from each other. That means the capabilities are converging or starting to follow similar evolutionary patterns.  That also means that very few economic activities are left untouched by changes in other sectors, technologies and markets. Again, this is not about training. It is about competence, leadership, sense-making and innovation. Perhaps it is mostly about learning, relearning and knowing what you have to master next. People also commonly confuse “digitalisation” with writing software, whilst telecommunication costs, insufficient regulatory frameworks for e-commerce, closed government (as opposed to open government) or very fast connectivity and data security are ignored.
    People that can quickly master a new domain, like machine learning, big data or concurrent design, will have a distinct advantage in the future. People that are specialised in one skill, especially a vocational skill, may be more vulnerable. But my main point here is that splitting up the technologies is not helpful. Again, the broad technical capability must be fostered. However, in addition to point 1, I want to add that the ability to track, master, integrate and leverage multiple specialised domains continuously over time is very important, even if they do not yet appear to have a relation to your industry, business or organisation.
  3. I am asked to help only the private sector in a country, region or sector. Many organisations believe that the private sector is most vulnerable to disruptions. I believe that many competent firms would be OK, but not all. Uncompetitive companies, un-innovative companies and undermanaged companies are going to be more vulnerable unless the state can afford to protect them and in so doing possibly raising the costs to the society. But what we must not lose focus of is that when one public sector organisation, programme or function fails, the effects could be far-reaching. Take for instance what happens when a local municipality in a developing country is undermanaged. It will affect the whole community. The challenge is that in developing countries the “revolution” or the “disruption” will be about social institutions (local government, universities, technical vocation colleges, schools, or whole governments etc.) that will be caught in a weak position – and unable to catch up or get ahead. So supporting the private sector in a place where many public institutions are failing is just naive. You do not address a market failure by focusing mainly on the private sector, just as you do not address government failure by only working with the government. 
  4. This point is an extension of the previous point. Many organisations that approach me want me to help them get the private sector more innovative. But here is the problem. It is not possible to develop a prosperous and successful private sector without the same happening in the public sector and in civil society. Actually, any form of innovation starts with a good basic and often some good higher qualifications. The changes that people can work together in a sophisticated way, without these arrangements being replicated in other sectors are naive. Complex forms of cooperation within an organisation, company, NGO, school or church depends on the ability to work together to solve problems that span over the ability of individuals. This needs trust, and it comes from the broader society and its formal and informal institutions. You cannot develop the private sector in a vacuum. Management teams of companies are not suddenly going to behave in novel arrangements that don’t exist in schools, sports teams, civil organisations, universities or political parties. Maybe it is possible to develop only the private sector in the short term, but for long term economic development, healthy public sector organisations are a pre-condition. The social technologies that enable the private sector to innovate, to combine old and new ideas, to figure out new ways of arranging teams around objectives, problems and opportunities are in most countries developed with the direct or indirect help of the public sector. Often these ideas are first developed around social, political or local problems. The quickest way to instigate innovation is to focus on creativity, better decision-making and increased performance in publicly funded programmes and civil organisations. Do you want to quickly get new forms of dialogue or new technology to spread in a location? Start with the schools, the local theatre, church or community organisation – and watch how fast the private (and hopefully public) sectors will catch on. Often the most adaptive private sector leaders are serving on the boards of the schools, local NGOs, and they take up new ideas very quickly.
  5. I am often asked to assist struggling industries in developing countries to become innovative, competitive or successful. Maybe the companies were successful once, hopefully not too long ago. The challenge with sectoral upgrading is that the prominent companies must either be very competent in market development, or they must have mastery in a technological domain that has a long cycle time still ahead. With one of these two domains mastered product and process innovation is possible, but perhaps not easy. The real challenge is often that in developing countries the business model innovations are the hardest and the cost of failure are also very high. Thus the incentives to try new business arrangements are low. If the companies are not able or willing to rethink or change their business models, then there is very little one can do. The entrepreneurs that will be successful in five years from now have already made decisions to master emerging markets and technologies today, and they have found a way to foster their competence in these domains within their current companies. They have innovated in the business arrangements, enabling them to innovate in products and processes. If there are no companies that are able to do this it is most likely the best idea to rather invest public funds into investment promotion, education, tech transfer and incubation to try and offset the job-losses when the current companies fail.
  6. I am often approached by internationally funded development projects to do something to create employment in a sector or a region in a developing country. The challenge is the sectors, supporting institutions and even the approach (the ideology) is already decided and cannot be changed. Often even a quick analysis and a few phone calls reveal that the development project has read the situation wrong, or they ignored strong messages of resistance because they believe in their ideology. Yet they persist, and now they are not getting the response from the stakeholders. I notice many of TVET and green economy projects that fall in this category. Even if there is great value in what these organisations have to offer, if they are not responding the binding constraints or challenges (the decision points) faced by the entrepreneurs and government officials, their offer will not be taken up. Or it may be taken up but it won’t stick. My approach for the last few years has been to wait for the projects to realise that they will never reach their targets and then to propose that we try some alternatives to see if we can get some impact. Or I simply turn down the request. Development programmes in the education sector are often so stubbornly focused on their own ideas that work in their own context that they are not willing to consider developing country needs.
  7. I am often asked to help manufacturers or development organisations in developing countries to prepare for technological disruption at the technological frontier. That means technologies that are newly emerging. The problem is, most companies in developing countries will not be disrupted by cutting edge technology. They will be disrupted when older technologies reach new levels of efficiency and scale, perhaps in combination with newer technology. That means that an older technology evolves to become available as a utility service or on a pay-per-use basis. That is how the fundamental disruptions occur that completely displaces existing markets and sociotechnical arrangements. An example if PV electricity to homes. In many developing countries a homeowner can now buy panels, inverters, brackets and batteries from hardware retailers (or online). It may be illegal in many countries, but homeowners can take their homes off the grid. If enough homeowners do that, national power utilities may collapse. Perhaps another example is that as developing countries switch to fibre internet connectivity, all the IT companies that used to provide small servers, desktop maintenance, server maintenance, cabling installations, etc are disappearing. They are disappearing because they have not long ago mastered an older technology (shared server-based computing, remote network maintenance) that has recently become a utility-based service.
  8. I am asked by an international development organisation to help with a project aiming to support 25, or 50 women, girls, lecturers, youth or a handful of companies. 25 out of a population of thousands or millions is really depressing. This is not systemic, nor is it sustainable. I cannot get involved in these projects, my conscience will not allow me. If any beneficiary group is so marginalised or excluded that 10, 20, or 50 seems like a good indicator of impact, then we should really be going back to the drawing board about the complexity of the system and our sensitivity to the decision points, the attractors and the boundaries in the system. Most likely we should be targeting changes in mandates, roles and functions of institutions and not be focused on individual beneficiaries. The system must be very dysfunctional (meaning somebody must be benefitting enough to keep it in this state), and focusing on getting a handful of people through the system despite all the resistance or challenges is not systemic. In fact, everybody that is inspired by this handful might suffer severe challenges to follow in their footsteps. In a complex system, fixing a little part and then scaling it up does not change the fundamental working of the system. But let me stop venting now, I am asked frequently enough to talk about the potential of complexity thinking applied to developed. Maybe this deserves a blog post of its own.

These are just some thoughts about the challenges that some organisations are grappling with when they reach out to me. These are some of the common objections that many clients are challenged by based on my writing, teaching or speaking. Perhaps these are also the reasons why some clients decide to appoint somebody else or to never reach out to me in the first place. But these are also the points that keep me awake at night, the recurring themes that come up even when I am trying to walk the dog.

Let me know if any you’ve also had these conversations, or whether your organisation, funder or clients are stuck on the same issues. If there is sufficient interest in any of these points then we can perhaps think of how to explore these deeper, or perhaps we can even get together to brainstorm these.

Identifying the meso organisations that strengthen technological capability

This article is from the Mesopartner Annual Reflection 2019 (Cunningham, 2019). In this article, I explore how one could go about to discover the network of meso organisations in a country that helps the private and the public sector to strengthen technological capability.

During the past year, Mesopartner has been working with the Trade and Industrial Policy Strategies (TIPS) and the Department of Trade and Industry (the dti) in South Africa to develop a strategy to identify and respond to discontinuous technological change (see Article 11 in this Annual Reflection). As part of this research, we developed an approach to map the technological landscape of meso organisations that can assist South African enterprises and government programmes to adapt to technological change.

First, we developed a framework to identify meso organisations and functions. Various typologies were evaluated that could be used to classify, measure and manage the performance of those organisations involved in technology dissemination or building technological capability. We started with four typologies of public technology diffusion proposed by the OECD (1997) that are based on operational focus:

  • Supply-driven: programmes to transfer and commercialise technology from government research programmes to private enterprise, both high-tech and low-tech. It also involves education, skills development and standards.
  • Demand-driven: these initiatives start with a diagnosis or the perspective of enterprises and aim to respond to the challenges or opportunities faced by private enterprises. These could be aimed at plugging specific performance, technology and capability gaps in the enterprises and are often focused on smaller businesses.
  • Network-based: these are often sub-national or regional, and are aimed at creating or strengthening bridging effects, inter-firm partnerships in promoting information flows, and the diffusion of technology. Examples are cluster promotion, strengthening of industry or business associations, and fostering collaboration around skills development, research and development, or the development of shared infrastructure.
  • Technological capability dialogue, adaptation and socio-technical infrastructure building: these intentional initiatives are aimed at working on a system-wide level to upgrade the technology diffusion capability of the national system of innovation within the context of global and regional economic and technological change and opportunities. This is often in the form of dialogue and reflection about why certain initiatives are not yielding the expected results, or why certain industries are not striving to increase their innovation, use of technology or competitiveness. An example is the effort by several government departments to collaborate in a national digitalisation strategy, or the effort around the mining and ocean economy in South Africa in the past few years.

Some of these organisations are created to enable international trade. An example is the South African National Accreditation System (SANAS) and other organisations involved in South Africa’s technical infrastructure. Other domestic organisations could be created to support a shift in the economy through a supply-side focus, such as the National Cleaner Production Centre, which provides technical support and training to the manufacturing sector. Programmes and functions established through industrial, innovation, education or technology policies should also be assessed as part of the framework.

As we started identifying and mapping the meso organisations, we realised that two critical types of actors were not captured by the typology we created:

  • Private actors that provide public goods or mixed goods, such as technology demonstration, training and the provision of technology modules in open-source formats. For instance, Siemens in South Africa provides demonstration facilities and accredited technical training courses to the public.
  • Intermediaries or facilitators in the system that broker relationships between different meso organisations and other actors. They may do this as part of another mandate, or they may be set up for this purpose. For instance, in South Africa, there is a huge education crises. A range of non-governmental organisations has emerged that provide important services to the marketplace and the public sector. Many of these organisations conduct research, provide lecturer training, develop training content in open-source format, mobilise public and private stakeholders into collaborative projects and provide public information on shortcomings in the education system. These organisations are critical to overcome coordination failures and to strengthen information flows between different actors in different spheres of society. However, in a typical meso mapping exercise these, organisations could be overlooked or ignored because the public sector or development cooperation partners may see them as interfering in functions that should be provided by the public sector.

International organisations, consultancies and programmes should also be considered in this framework. For instance, as part of executing its commission with various clients, Mesopartner often plays an intermediary role connecting various meso organisations, policymakers, researchers and leading firms to strengthen dialogue or joint decision making, or supporting collaboration. Other organisations that advise industries and governments and create publicly accessible advisory content should also be included.

A challenge that many developing countries face is that meso organisations have to work hard at creating capabilities that should have already existed five years ago, while trying to keep abreast of new international and domestic shifts that require new management capabilities, human resources, technologies and strategies. Not only the private sector can be overwhelmed or paralysed by competing technological choices, but public sector management can suffer the same symptoms. This means that in the framework provision should be made to differentiate between basic (or fundamental) offerings and future-oriented or more advanced offerings. This is not an additional kind of organisation, but it could be different functions provided by the same organisations

While some organisations may be more important for improving the productivity and competitiveness of incumbent firms, others may be more relevant for lowering entry barriers to new start-ups and investors. Even if new start-ups lack market access or technological experience, in a dynamic environment their different knowledge and unique technological capability may put them at less of a disadvantage than the incumbents.

Some meso organisations may be hard to classify because they offer diverse services to different beneficiaries. For instance, universities often play an essential role in lowering the costs of gaining access to new knowledge, codified knowledge and research. At the same time, a university may offer industry access to scarce equipment on a pay-per-use basis, while a university laboratory may offer certification or analytical services to another research group. Or a research programme based at a university may be a sophisticated client to a private enterprise that specialises in advanced equipment, while the same enterprise may be dependent on post-graduate students from the university. Some of these relationships and interdependencies are impossible to map without deep insight into how knowledge, technological ideas and people flow between organisations in the public and the private sectors. Yet it is possible for the same organisation to show up in different typologies, in different markets served, or in multiple roles.

Next year we will have to try and figure out how to map these organisations without making it overly complicated and difficult to use, maintain and adapt.

Notes:

This article is an output of our Mesopartner research theme on technological change and the changing role of the meso landscape. For more information on this theme or to become involved head over to the Mesopartner Research Theme page.

To stay abreast of my research, please sign up for my personal newsletter here.


Dr Shawn Cunningham

Sources

CUNNINGHAM, S. 2019. Identifying the Meso organisations that strengthen technological capability. Mesopartner Annual Reflection 2019

OECD. 1997. Diffusing technology to industry: government policies and programmes.

Meso Institutions as enablers of Self-Discovery, Increasing Learning and resilience

Updated on 18 April 2020, originally published 15 October 2019

In every economy there are organisations that emerge to address all kinds of market, structural and organisational failures. We call these organisations meso organisations – they perform meso functions aimed at improving the economic performance and prosperity of the micro-level. While some meso functions may be more concerned with creating a regulatory framework and others with education or technological services, in essence all meso functions are about disseminating knowledge between economic actors.

Diversity (or variety) of options is a prerequisite for evolution to work. In natural evolution, variety is created by random mutations in DNA, while variations in the economy are created through an ongoing process of self-discovery at different levels, involving different segments of society (Hausmann and Rodrik, 2003). Rodrik (2000) states that this process can be called a meta-institution. He argues that if it is democratic and participatory, this kind of arrangement typically results in higher-quality growth. This discovery process draws heavily on the ability of groups of organised people in business, government and civil society to conduct a process of combining existing ideas with new ideas in novel designs. It involves both reflecting on the status quo and imagining alternative arrangements.

Nelson (2003:20) stresses that “some of our most difficult problems involve discovering, inventing and developing the social technologies needed to make new physical technologies effective”. The more distributed this kind of search is, the better the variety created and the stronger the resilience of the system becomes.

Businesses that are able to generate or recognise modules that work better and that can be repeated elsewhere by drawing on their past experiences have a huge advantage over businesses that are not able to do so (Dosi and Nelson, 2010; Beinhocker, 2006; Nelson and Winter, 1982). Schumpeter already argued some time ago that innovation consists of “the carrying out of new combinations”, with many of these combinations depending on past knowledge or understanding of physical, social or economic properties (Schumpeter, 1934:65-66). Dosi and Nelson (2010:103) argue that the ability of firms to learn, adapt and innovate is generally highly heterogeneous, idiosyncratic and unevenly spread.

Not all the knowledge needed to conduct ongoing discovery processes is available within a single individual or organisation. Hence social infrastructure, technology, education and business networks are essential in connecting organisations into broader networks of knowledge (Hidalgo, 2015). This is where the diversity, adaptability and resilience of the network of meso organisations and their functions play a critical role.

The factors within firms and beyond firms, including the landscape of meso organisations collectively describe the technological capability of an industry, a country or a sub-national region. The dynamic of how these factors influence each other is the essence of the innovation system of a country, an industry (sector) or a location. The innovation system is not so much concerned with the presence of any given organisations as it is with their ability to network and cooperate in disseminating and adapting knowledge.

Now, to connect this concept of technological capability, it’s back to the meso organisations. Meso organisations and their functions are critical in disseminating technological knowledge in a society, an industry or a region. The process by which these organisations emerge and adjust is unique and depends on the context. I am genuinely intrigued by how these institutions emerge, adapt and change over time to form modern organisations that can respond to, anticipate and adjust to structural change and patterns of economic underperformance in the economy.

Sources

BEINHOCKER, E.D. 2006. The origin of wealth: evolution, complexity, and the radical remaking of economics. Boston, MA: Harvard Business School Press.

DOSI, G. and NELSON, R.R. 2010. Technical change and industrial dynamics as evolutionary processes. In Handbook of the Economics of Innovation. Bronwyn, H.H. and Nathan, R. (Eds.), Amsterdam: North-Holland, pp. 51-127.

HAUSMANN, R. and RODRIK, D. 2003. Economic development as self-discovery. Journal of Development Economics, Vol. 72(2) pp. 603-633.

HIDALGO, C.S.A. 2015. Why information grows: the evolution of order, from atoms to economies. New York: Basic Books.

NELSON, R.R. 2003. Physical and social technologies and their evolution. Piza, Italy: Laboratory of Economics and Management, Sant’Anna School of Advanced Studies.

NELSON, R.R. and WINTER, S.G. 1982. An evolutionary theory of economic change. Cambridge, MA: Belknap Press of Harvard University Press.

RODRIK, D. 2000. Institutions for high-quality growth: What they are and how to acquire them. Studies in Comparative International Development, Vol. 35(3) pp. 3-31.

SCHUMPETER, J. 1934. The theory of economic development. Harvard, MA: Harvard University Press.

Technological change cycles

This is the 3rd post that draws from the research and advisory work I am currently busy with to strengthen South Africa’s technological capability to detect and better respond to discontinuous technological change. The citation information for this post is at the bottom of this post, and a link to the research report that I have copied this from is here.

During the 1980s several scholars[1] recognised that technological change follows a cyclical pattern and several models were put forward to explain the phenomena. These models are still in use today and have been found to be active at different levels of technological change. The broad consensus was that a technological change cycle:

  1. Starts with a technological discontinuity or disruption, followed by a period of unstructured and often chaotic innovation when a new idea or concept is made possible (based on preceding developments). This disruption results in a fluid or turbulent development phase during which many ideas are developed, tried and promoted as the next best thing,
  2. That is followed by an era of ferment from which a dominant design emerges; and
  3. This is followed by an era of incremental change during which the dominant design is elaborated.

This can be illustrated with the widely recognised Abernathy and Utterback (1978) model with its three phases of change that are illustrated in Figure 2. The three phases are a fluid phase, a transitional phase, and a specific phase, and is similar to the cyclical pattern described in the bullet list above. Other scholars used slightly different labels, but the characteristics in the different phases are all more or less the same.

Abernathy and Utterback

Figure 2: The Abernathy-Utterback model of technological change

Source: Abernathy and Utterback (1978)

The rate of innovation is highest during the fluid phase, during which a great deal of experimentation with product features and operational characteristics takes place between different competitors[2]. Because of all the changes in the product composition and characteristics, process innovation typically lags. Buyers and users are often confused or overwhelmed during this phase fearing that the benefits are overstated and that the costs of adaptation are uncertain. Only the brave and the innovative engage in finding, adapting and integrating new ideas and concepts.

In the transitional phase, the rate of product innovation slows down and the rate of process innovation increases. At this point, product variety gives way to standard designs that have either proven themselves in the market, or that are shaped by regulations, standards or legal constraints. The pace of innovation of how to produce the product increases. What was done earlier by highly skilled technicians may become automated or developed to a point when low-skilled operators can take over. Or lower-skills jobs are displaced from the production process to other functions like logistics, while the skills intensity on the production line is enhanced. At this point it is easier for bystanders and followers to engage in exploration. The early adopters are already over the horizon, while many early adopters have exited, sold out or moved on.

The final phase, the specific phase, is when the rate of major innovation dwindles for both product and process innovation. In this phase, the focus is on cost, volume, and capacity. Most innovations are very small incremental steps, improvements on what is already known and accepted. Latecomers can now engage with the technology, although it might already be too late.

The description of technological change provided above follows the generic three-step process of technology evolution: a process of variety creation, selection, and then amplification or retention.

  • During the variety creation phase there are many competing designs and no dominant logic. Towards the end of this phase a few dominant designs may emerge, but there is still much competition between ideas. This is not only a technical selection process, there are important social, political and industrial adjustments taking place at the same time.
  • During the selection phase, standards emerge for positively selected ideas, with a few designs dominating. It is a relatively stable process of incremental improvements in features, performance and results. This may be interrupted occasionally by leaps in performance as some designs are substituted by better technologies, or from breakthroughs often coming from other industries or contexts. In general, designs become simpler as a learning process unfolds about how best to design, manufacture, distribute and use a particular technology around dominant designs. This period is characterised by growing interdependence as modules are developed, substituted and standardised. There is a growing exchange and increased competence within and between different communities of practitioners. Often there is industry consolidation during this phase. It is important to note the dominant designs are only visible in retrospect. They reduce variation, and in turn, uncertainty, but within the process it is hard to predict which designs will survive the next set of radical innovations. Once a design becomes an industry standard it becomes hard to dislodge.
  • This leads to an amplification phase, in which the best ideas are not necessarily used as intended, but when technological changes spill over into areas not originally intended. This is a relatively stable process that can continue for long periods, until is it suddenly interrupted by a radically different idea, resulting in the process starting all over again.

Anderson and Tushman (1990) state that, from the perspective of the sociology of technology, technological change can be modelled as evolving through long periods of incremental change punctuated by revolutionary breakthroughs[3]. The innovation activities that take place that lead to these phenomena will be discussed in Chapter 3.

Arthur (2009:163) contends that change within technological domains is a slow process. He explains technology domains do not develop like individual technologies like a jet engine: focused, concentrated and rational. It is rather more like the development of legal codes: slow, organic and cumulative. With technology domains, what comes into being is not a new device or method, but a new vocabulary for expression, similar to a new language for creating and combining new functionalities.

A current example is the “Internet of things”, where the connectivity of physical devices are spreading from the office and smartphone devices to interconnect household appliances, industrial applications and an endless list of technologies enabling data exchange, control and new functionalities . It could be argued that this is not a new technology, digital sensors have been around for a long time, our cars, smartphones and equipment have contained them for a long time. However, the language, standards, distributed nature of processing, and developments in big data visualisation have all contributed to this technology appearing to arise from obscurity into the limelight of the popular media. A similar argument could be made for artificial intelligence, drone technology and others.

Notes:

[1] The work of Tushman and Anderson (1986), Abernathy and Utterback (1978) are still frequently cited today.

[2] Kuhn (1962) noted that in the early stages of research in a given field, the most that scholars typically can do is to report the phenomena they observe, without a unifying theory or framework to help them categorise or make sense of what they see. As a result, this stage of knowledge accumulation is characterised by confusion and contradiction. Theories are put forward but reports of deviating phenomena accumulate.

[3] This is often referred to as punctuated equilibrium by political scientists.

 

Sources

Abernathy, W.J. and Utterback, J.M. 1978.  Patterns of Industrial Innovation. Technology Review, Vol. 80No. 7 (June/July 1978) pp. 40-47.

Anderson, P. and Tushman, M.L. 1990.  Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change. Administrative Science Quarterly, Vol. 35No. 4 (Dec 1990) pp. 604-633.

Arthur, W.B. 2009.  The nature of technology : what it is and how it evolves. New York: Free Press.

Kuhn, T.S. 1962.  The Structure of Scientific Revolutions. Chicago & London: University of Chicago Press.

Tushman, M.L. and Anderson, P. 1986.  Technological Discontinuities and Organizational Environments. Administrative Science Quarterly, Vol. 31No. 3 pp. 439-465.

 

Citation for this text:

(TIPS, 2018:12-13)

TIPS. 2018. Framing the concepts that underpin discontinuous technological change, technological capability and absorptive capacity. Eds, Levin, Saul and Cunningham, Shawn.  1/4, Pretoria: Trade and Industry Policy Strategy (TIPS) and behalf of the Department of Trade and Industry, South Africa.   www.tips.org.za DOWNLOAD

 

 

Is the Fourth Industrial Revolution a paradigm shift?

I am excited that the Helvetas Eastern European team asked me to write a blog post for their Mosaic newsletter about the Fourth Industrial Revolution. The blog article and many others can be found here.

Regular readers will know that I am not so convinced of one big revolution; rather that there are many smaller disruptions. In this article, I argue that it is hard to imagine what a paradigm shift would look like. I make six arguments of why there are rather several smaller disruptions taking place. The credit for coming up with the image in the article goes to Zenebe Uraguchi from Helvetas. He is also the person that convinced me to write this article, and who guided me when I felt stuck. Thank you, Zenebe! Take a look at some of Zenebe’s posts on the Inclusive Systems blog of Helvetas.

The second half of the article I wrote is about figuring out which social technologies to develop that are needed to make certain technologies usable or beneficial to societies. Many of these social technologies are cultural or organisational, but there are also many public institutions and public goods that are lacking in developing countries.

To me, it feels that we are still just scratching the surface when it comes to helping the meso organisations of developing countries cope with technological change.

However, it is exciting that my research into discontinuous technological change and the necessary social and technological institutions that are required in developing countries is of interest to development organisations and governments.

I am looking forward to your comments, questions, contradictions and ideas!

Best wishes,

Shawn

Identifying firms to work with to induce upgrading of industries

This is a revised edition of a blog post I wrote back in 2011.

When working on the improvement of innovation systems in developing countries, we have to work with firms. These firms have several roles, and there are three units of analysis:

  1. The firm is an important unit of analysis of innovative practices (product, process, business model).
  2. The firm is also a unit of analysis in terms of cooperation and collaboration, thus its ability to cooperate with rivals is an important consideration when we design interventions.
  3. Working with the right firms also provides an important source of technology and knowledge spillovers. This is where the challenge comes in for development practitioners.

Generally, firms that are able to lead the way, or could be good role models, are difficult to involve in development programmes for a variety of reasons. I won’t discuss that right now. What is important to remember is that most firms not only absorb or use technology and knowledge, they are also the main sources of knowledge and technology. This is both from a supply perspective (equipment suppliers, technical or specialist sources of knowledge, etc.) and from a demand perspective (demanding customers, sophisticated demand). Whether firms are aware of their role as disseminators of knowledge of technology is another story!

I will rather focus on how to identify the firms that we can work with to improve innovation and competence in all three units of analysis discussed above. Remember, our objective is to find ways to improve the dynamic in innovation systems that will result in the modernisation and technological upgrading of industries and regions.

More than 25 years ago Bo Carlsson and Gunnar Eliasson described a concept called “economic competence”. At the time they defined economic competence as “the ability to identify, expand and exploit business opportunities” (Carlsson and Eliasson, 1991). This is a useful definition as we have to remember that we cannot innovate on behalf of a broader industry. Somehow we must work with those firms that are able to innovate, imitate, adapt and integrate new knowledge and ideas.

According to Carlsson and Eliasson, economic or business competence has four main components:

  1. Selective (strategic) capability: the ability to make innovative choices of markets, products, technologies and overall organisational structure; to engage in entrepreneurial activity; and especially to select key personnel and acquire key resources, including new competence. This aspect has been amply illustrated in recent years as many companies have struggled to define their corporate identities and strategies as distinct from their competitive strategies in each individual business unit (Porter, 1991).
  2. Organisational (integrative, coordinating) capability: the ability to organise the business units in such a way that there is greater value in the corporate entity as a whole than in the sum of the individual parts.
  3. Technical (functional) ability: this relates to the various functions within the firm, such as production, marketing, engineering, research and development, as well as product-specific capabilities. These are the areas of activity in which firms can compare themselves to their peers or leading competitors.
  4. Learning ability, or the shaping of a corporate culture which encourages continual change in response to changes in the environment.

Economic competence must be present in sufficient quantity and quality on the part of all relevant economic agents, users as well as suppliers, government agents, etc. in order for the technological system to function well. This is both true at a local or regional level, our a national or sectoral level.

If the buyers are not competent to demand or use new technology – or alternatively, if the suppliers are not able or willing to supply it – even a major technical breakthrough has no practical value or may even have negative value if competitors are quicker to take advantage of it.

I think that this business approach of choosing the entrepreneurs that we work with is very relevant to finding the people who can absorb new ideas and make them work in a developing country context. I would also go so far as to state that I do not believe that it is feasible to select “change agents” according to social criteria such as gender, age, etc. – but that we recognise that change within economic systems happens because of the economic competencies of the people who are recognised in the system (regardless of their demographic data). The reality is that you cannot be competent on behalf of other people!

I challenge you to review the firms that you are working with to see if they are economically competent!

Sources:

Carlsson, B. and Eliasson, G. (1991). The nature and importance of economic competence. Working Paper No. 294, The Industrial Institute for Economic and Social Research (IUI).

Porter, M.E. (1991). “Towards a dynamic theory of strategy“, Strategic Management Journal, 12 (Winter Special Issue), pp. 95-117.