Tag: innovation systems

My activities in the last months

So what have I been up to in the last few months?

At the moment I am working with several industry organizations and development institutions in South Africa on topics that are all interrelated around the topic of upgrading of our manufacturing sector. This involves working both on the softer issues such as facilitation of processes, building trust, identifying patterns, mobilizing stakeholders and lobbying for change to both government and the private sector. Another dimension of this work is to assist meso level organizations created to stimulate upgrading and competitiveness of industries to design better and more relevant programmes, developed organizational plans, and diagnosing industries to find systemic intervention points. I am involved in several cluster development programmes, and I am also working quite a bit with universities to better respond to the (often unarticulated) needs of industries. Lastly, I am assisting several large international and national buyers to develop their South African supply chains. This work is partly fueled by the public sectors increased emphasis on localisation.

For me all of this can be summarized under the heading of upgrading innovation systems, and building new industrial competencies. Sometimes I describe it as modernizing industries, or to stimulate technological upgrading of industries and regions. My customers do not often use these words.I thought it would be interesting to perhaps share with you how some of my current customers describe the work I am doing. I will not share their details due to the sensitivity of the work I am sometimes involved in.

The universities I work with describe my work as :

  • stimulating industry- academia relations around upgrading and regional innovation,
  • facilitating the improvement of technology transfer,
  • developing industry partnerships, research strategies and applied research programmes. This involves improving innovation within the academia
  • improving innovation systems that the university forms part of by designing appropriate support programmes

The industry development organizations I work with describe my work as:

  • facilitating the improved competitiveness of industries,
  • facilitating change processes in industry in order to unlock new markets and improve competitiveness,
  • developing public sector programmes that are responsive to the needs of industries.
  • High level policy advocacy and industry partnerships

For the government officials that I work with my work is:

  • developing industry – government partnerships,
  • supporting the development of local industries,
  • brokering partnerships,
  • shaping policy based on industry insight and
  • developing practical development programmes.

Why do I share this with you? The insight for me is that I am using a limited number of tools (mainly facilitation skills, some insight into manufacturing and technology transfer, insights into innovation systems, organizational development and a fearless approach to engaging with industry leaders) to work with a largely overlapping set of stakeholders.

Although I think that I am basically doing the same kind of work, my customers describes my work in completely different ways, even if ALL my current customers have the same objectives (they all want to improve manufacturing competitiveness and grow the local industries).

This work is all based on process consulting and I am very happy that I have a complementary set of customers that are all eager to work together to achieve our common goals. The work is very intensive and I am also grateful that I have contracts that have sufficient time and sufficient flexibility in so that my work can be supportive and responsive to the people I work with.

 

Note 1: Right at the moment I hardly work for any donors agencies in South Africa, mainly because private sector development and especially innovation system promotion in South Africa is not very high on their agendas. I do however assist with capacity building, coaching and programme design work occasionally.

Note 2: One important contract is with GFA on behalf of GIZ where I am supporting several technology stations at universities to improve their technological services to the industries they work with. This work is included in the descriptions above about the work I do for universities.

Note 3: The work I am currently doing is all possible due to the experience I have gained by working for organizations such as the GIZ (then GTZ) on issues such as innovation systems, university industry relations and local/regional economic development.

Event Announcement: Diagnosing and strengthening local and regional innovation systems

On the 28th of August I will present a practical workshop in South Africa as part of the 5th Innovation Summit. Last year’s summit was one of the highlights of my year and I look forward to contributing to this event.

The workshop I will be presenting will concentrate on how to diagnose an innovation system, and then what to do about improving the innovation system. We will ONLY accept 20 participants, so early bookings are essential. The cost per participant is R3420 all costs included. For more information visit the workshop page here or click on the logo.

During the workshop we will cover the following content:

  • Main theoretical principles of innovation systems
  • distinguishing between national, local and regional and sector innovation systems
  • understanding the difference between innovation within firms, and innovation systems
  • The relationship between the region and innovative performance of industries
  • 4 lines of inquiry to diagnose the factors that affects the performance of a specific innovation system
  • Different analytical instruments that can be applied to understand elements of the innovation system
  • aligning public and private supporting institutions to the innovation needs of an industry
  • facilitating a process of incremental change within an innovation system

If you have already attended my workshop before, then take a look at some of the other great speakers that will be presenting pre-summit workshops before the Innovation Summit:

  • * Claire Janisch will take delegates through Biomimicry which is a totally new and different way to look for innovative solutions based on nature’s problem solving capabilities. Claire is back after feedback on her workshop was outstanding and “we want more”.
    * Dan Buchner from the Centre for Creative Leadership is coming from the US to share his knowledge and insight on innovative leadership skills – leading innovation teams and how to create a culture for innovation to thrive.
    * Prof Deon de Beer will have his very innovative Idea to Product Lab set up and fully functional. You will learn about the basics of design right through to producing your physical prototype during the workshop. If you have an invention waiting to be made into a physical product, this is the workshop for you.
    * Klaus Schnurr from the UK will take delegates through a process where he will teach you how to synthesis transferable best practice methods, tools and techniques and will explain the key steps that companies in Africa can use to explore trends and generate scenarios to identify innovation platforms for future growth.
    * Vasintha Pather’s workshop is ideal for anyone who facilitates thinking, workshops and sessions as a full time job or within an organisation. Using graphic facilitation methods enhances the learning and take aways for everyone

During the main event of the Innovation Summit I will present a paper about the importance of moving from business model to business model innovation.

I will also launch my book titled “The fundamentals of innovation system promotion for development practitioners” during the Innovation Summit.

Identifying firms to work with to induce upgrading of industries

This post was revised in February 2018.

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.

Starting the innovation system series

The next few posts will be focused on my work in the last 18 months. I have dedicated a large part of my work into diagnosing and improving innovation systems in South Africa.

My perspective is quite unique, as I did not conduct these studies to develop national policy, but rather to assist intermediary organizations to take steps to improve the innovation systems that we diagnosed. What further differentiates my view is that we start our diagnosis with the private sector, and then work our way back to universities, technology intermediaries and other public sector organizations.

When I went down this road I thought that I had parted with my previous work on local economic development (which has been ruined in South Africa due to petty politics and misguided local government interventions). Little did I know that my previous experience in mobilising local stakeholders, trying to access national public sector programmes, and begging for a more responsive national stakeholders would remain so relevant in this exercise.

Many people ask me why I switched into a topic like Innovation Systems. It sounds so IT’ish. Well, it is far from that. My concern is with finding ways to build manufacturing industries and their supporting sectors from the bottom up (can we panic about the de-industrialisation in Africa, please?). My obsession is to figure out what can be done to get whole parts of an economy to upgrade technologically, without industry expecting governments to pay for everything. So basically, I am trying stimulate reflection and adjustment in  the manufacturing sector which includes their public and private supporters in the system around them. Also important is to equip the stakeholders in the system to reflect on the patterns around them, and to understand how they can change their own behaviour and how to actively shape the supporting environment around them.

I will close by saying that diagnosing a system around an industry is never a once off exercise. This is perhaps why so many development interventions don’t set change processes in motion that is re-inforcing and ongoing. Our biggest challenge is not to convince industries that they have to change, but to assist them to frequently reflect on their patterns of behaviour (even after we have left). We have to help industries to develop new habits of interaction (that adds value and this makes business sense), we have to strengthen local institutions to assist with strengthening signals of change and improvement (so that firms know that if they stop trying to improve they will fall behind). In the end it does not help that we understand their system, but that they understand their own systems.

The best part is that I get to work with real entrepreneurs, real scientists, real social change agents, and often really committed public officials. Real change without logframes and impact chains. Unfortunately we often also have to achieve this change with small budgets.

Announcing a series of 1 day training events in South Africa

At last, what so many of you have asked for….

We will host three separate 1 day training events in Pretoria, focused on the following:

26 August 2010                 Facilitating the diagnosis and improvement of local and regional value chains

Event Brochure in PDF

28 September 2010           Diagnosing local and regional innovation systems

Event brochure in PDF

28 October 2010                Understanding and addressing market failures in local and regional economic development

Event brochure in PDF

The cost involves R 1,850 (200 Euro) excluding Vat per one day event (fee includes materials, coffee breaks and lunch).

To register for an event or the complete series, complete the registration form on page 2 of ‘mesopartner Africa Capacity Building Series’ and send to ac(at)mesopartner.com

I will try my best to make these events fun and interesting for you to participate in! Some pictures of previous events:

 

Prerequisites for markets to function

Connecting innovation systems with local and regional economies

Many of you have asked me how I connect my current focus on innovation systems and technological upgrading with industries with my past experiences of local and regional economic development. I thank you for repeatedly asking this question, and apologise for not providing you with an answer. The reason for my silence was that I was also not exactly sure how to connect these topics. But I think I am now starting to understand how these topics relate to each other.

Let me try to explain this.

Before I continue I need to make sure that you understand that an innovation system is far more than one or two innovative firms.  Freeman (1987:1) defined an innovation system as “the network of institutions in the public and private sectors whose activities and interactions initiate, import and diffuse new technologies.” The emphasis is mainly on the dynamics, process and transformation of knowledge and learning into desired outputs within an adaptive and complex economic system.

So how does innovation systems work within regions or places? Well, it is often affected by issues such as trust, social and informal networks, formal relationships, common customers or common inputs and other factors. You will notice that it sounds very similar to the characteristics of a cluster in its early days. The main characteristic of a local or regional innovation system is that it is mainly focused on a specific geographic space and on the specific knowledge spill-overs that occur around certain firms, industries or institutions unique to that space.

You will immediately notice that innovation thus favours places with more people and more firms. You are right, a close relationship exist between density of interactions between people (provided for by towns and cities, nightlife, and frequent social exchanges) and the innovation system. It does not mean that innovations are limited to these spaces, but simply that they emerge faster or with more success in these spaces. This is largely caused by the increasing importance of knowledge exchange and interaction between firms, knowledge service providers and technological and educational infrastructure. But more about that in a seperate post.

I want to leave you with 3 questions that I have found to be useful to better understand the relationship between places and innovation systems. I use it frequently at the start of an assessment into an innovation system, or to stimulate thinking of public and private leadership.

1) Why are people innovating in this specific location (and not on another space)?

2) How does this space or place support innovation, and more specifically, how does it reduce the costs of innovation?

3) How do innovations in firms affect this space?

Bear in mind that with innovation I mean product, process as well as organisational or business model innovations.

Ask these questions and let me know what you find. I am sure that you will find that many places do not actively support innovation (unless you have some really determined or stubborn innovators there). Nor do they make it cheaper for people to innovate, exchange knowledge or stimulate joint problem solving (or opportunity exploitation). To me it also seems increasingly obvious that the role of cities and towns in Africa are not fully exploited in national economic development as spaces for innovation.

In South Africa, innovation happens mainly in 9 major and about a dozen secondary urban spaces. No amount of public policy will break this pattern until settlement patterns change, or until smaller places start to attract skilled people that can afford to innovate from cities.

So how can we support innovation systems in each and every town? How can we built regional and local institutions that reduce the cost and risk of innovation. Again, I dont mean only product development as an innovation. I mean process and business model innovation as well.

Until we can build our own local technological and educational institutions using local priorities and local resources from the bottom up the trend of urbanisation and migration to the major centres will continue. This is great in terms of reducing the costs of innovation, but it makes us very dependent on national policy, and only a few good local administrations. I would prefer a situation where we can build our local institutions around local issues, this giving firms in for example a mining region a head start in innovating around problems or opportunities related to mining.  For instance, in the Mpumalanga  province (South Africa) we have a lot of coal mining with its associated problems. Why is it so difficult to create a small but focused research institute or technological institute in a town that will focus on applied research and knowledge generation around environmental technology related to coal mining? Could this not be an impulse with environmental solutions as well as innovation as outcomes? I could imagine that such an institute could create positive externalities in a space that would lead to innovation that our both cutting edge and relevant to our society.

Now if you think about it, then Africa is rich with millions of ideas (also known as opportunities, challenges and obstacles) that could serve as impulses to create, stimulate or grow local innovation systems around relevant issues. Dont get me wrong, I dont mean that the public sector must do the research, and then the private sector must commercialise the research (although a little of this certainly helps). I mean that public funds or public private partnerships could be used to establish local institutions that create positive advantages for firms to innovate within regions through reducing the costs of finding relevant information (about a problem, opportunity or technology) and by highligthing opportunities for application of new ideas (by better articulating demand or applications). But there must be sufficient scale of infrastructure to allow the people with the right knowledge, experience and perhaps financial resources to settle in the region to exploit (or address) the opportunities through innovation.

Let me know what you find when you ask these questions.

PS. I know I will receive hundreds of angry e-mails that I am implying that rural areas are doomed.  Re-read my post before hitting ‘send’.

Where does innovation come from? – part 1

I have been asked to share some of my work on innovation. Below is a short piece from a publication that I am working on dealing with innovation systems.

While product and process innovation is better known and often receives the most attention, competitive advantage often emanates from organisational and business model innovations that emerge within societies. Innovation is a powerful explanatory factor behind differences in performance between firms, regions and countries.

According to Fagerberg et al. (2005:4-5), invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out in practice. Thus invention and innovation could be closely linked, although in most cases it is separated in time (sometimes decades or centuries), place and organisation. However, the fact that innovation typically emerge within a complex system is often overlooked. For instance, Schumpeter explained that the innovator that invented the steam locomotive still had to wait for others to develop the different aspects of the rail system before the locomotive could be commercially viable. The steam engine was initially invented in a completely different context, again illustrating how inventions are dependent on the context in which it arises.

While many innovations can be linked to well-funded research programmes, this is not always the case. Firms usually innovate because they believe there is a commercial benefit to the effort and costs involved, and this process typically starts by reviewing and re-combining existing production factors (Schumpeter, 1964/1911). Sometimes increased competition, changes in market structure or market demand, or changes in technological performance also affect the innovation process. To turn an invention into an innovation, a firm typically needs to combine several different types of knowledge, capabilities, skills and resources from within the organisation and the external environment. The role of this knowledge and learning interaction will be described in the next sub-chapter. The willingness or interest of an individual in tinkering and exploring better solutions is influenced in part by the organizational context of the innovator, but is also influenced by factors such as education or qualifications, meta-level factors such as culture, personal characteristics (such as patience, inquisitiveness or tolerance of failure) and the institutional environment. Other factors, such as competitive pressure, problem pressure, or social and economic incentives also play a role.

Frequently, policy makers, universities and technological supporting institutions erroneously describe innovation in a linear model that assumes that innovation is applied science. It is assumed to be “linear[1]” because it is believed that there are a series of well-defined stages that innovations go through from research (science), followed by development and finally production and marketing. In this linear model scientific research is deemed to be the most important step as it is the first step in the process. Although there are some cases that followed this path, these are the minority. Very often this line of reasoning is brought by people wanting to justify larger research budgets.

Notes

[1] The “linear” innovation process was first criticized by (Kline & Rosenburg, 1986)

Sources

FAGERBERG, J., MOWERY, D.C. & NELSON, R.R. 2005.  The Oxford handbook of innovation. Oxford ; New York: Oxford University Press.

KLINE, S. & ROSENBURG, N. 1986.  An overview of innovation. In The positive sum strategy: harnessing technology for economic growth. Landau, R. & Rosenburg, N. (Eds.), Washington, DC: National Academies Press, pp. 275-305.

SCHUMPETER, J. 1964/1911.  Theorie der wirtschaftlichen Entwicklung. Eine Untersuchung über Unternehmergewinn, Kapital, Kredit, Zins und den Konjunkturzyklus. Berlin: Duncker und Humblot.