Innovation policy in uncertain times

In a seminar at ESOF 2012, policymakers and analysts from the scientific research community discussed the challenge of encouraging innovation within the context of a precarious economic climate. The session, which was moderated by the President of Dublin City University Professor Brian MacCraith, included speakers from Forfás, the European Commission, the OECD and the Government of Ireland.

The speakers used Ireland as a case in point to illustrate the measures that have been taken to date, and to demonstrate the ambitions of policymakers moving forward. Forfás’s Chief Executive Martin Shanahan began proceedings by considering the advanced stage of innovation at which Ireland and similar nations now find themselves.

"Like other countries, Ireland’s innovation is built on a cornerstone of excellence in science and technology," he said. "However, like others, we have also moved beyond that basic understanding that you invest in research at one and, and through a number of steps, you come out with a product at the other. [We have moved] to a much more sophisticated understanding of innovation policy and its non-linear nature.

"At its broadest level, a crude mapping would suggest that there are approximately three generations of innovation policy. In the first generation, there is a focus on science and technology policy. The focus is on research – especially research in universities and laboratories. Typically, those ministries involved are those responsible for industrial policy and those responsible for education and science. In the second generation, there is a focus on innovation policy. There is a focus on policy measures and institutions targeting the innovative capabilities of firms. Again, the ministries typically involved are those with responsibility for industrial policy, education and science. In Ireland, those two stages happened more or less concurrently, rather than sequentially. In the third generation, we have holistic innovation policy. The focus is on institutions and policy measures that directly or indirectly affect the innovation capability of firms. There is also a focus on ‘market pull’ as well as ‘science push’ strategies. In this generation, we see supply side and demand side interventions across a wide spectrum. We see action being taken at different levels: at the local level, the national level and indeed, the international level.

"Based on what I have outlined, I would suggest that in Ireland’s case, we are moving towards holistic innovation, somewhere between second and third generation innovation policy. More and more government bodies are realising the importance of innovation policies and of working together."

Whilst Shanahan predominantly focused on R&I in Ireland, he did emphasise a pressing challenge that is facing Europe as a whole.

"In innovation policy, the search is on for new ways in which government can effectively prioritise support for research, development and innovation," he explained. "At a European level, this shift in focus is also resulting from the need to match the performance of countries and regions such as North America and rapidly developing economies in Asia, in terms of productivity and growth."

Seán Sherlock is Ireland’s Minister of State for the Departments of Enterprise, Jobs & Innovation and Education & Skills. In his address to the conference, Minister Sherlock outlined how bodies such as the Prioritisation Action Group (PAG) are working to push Irish innovation forward.

"We need targets to be ambitious, but also, realistic," he said. "Prioritisation is already changing behaviour.

"There is, however, work to be done to ensure that more research funders adopt consistent approaches, allowing us to deliver on prioritisation. The PAG includes representatives of key government departments and research funders. We work in plenary, where a lot of work is done between plenary sessions by working groups. It was decided to develop action plans for each priority area as a mechanism to focus the attention of research funders supporting a particular priority area. This provides a holistic approach, and allows us to identify and to address overlaps and gaps in the system."

Despite the onus that has been placed on prioritisation within Ireland’s innovation policy, Minister Sherlock was keen to point out that other channels of funding were available.

"We believe that you can focus your funding on prioritisation, but that it doesn’t exclude policy for research or for knowledge," he said. "I just want this message to go out: that the government is very conscious to ensure that it does fund other areas of research, and that there are other mechanisms. Not all of the science budget is going to be funded through the PAG."

In his speech, Commissioner Máire Geoghegan-Quinn’s Head of Staff Dr John Bell, made no bones about the unprecedented struggle in which Europe is engaged.

"When you live in a globally connected world with these challenges and changes – probably the most systemic set of changes faced by our civilisation since the enlightenment – you can only face matters by setting priorities, by investing in excellence and by modernising and simplifying the systems of governance that are involved. We are all trying to build a ship while we sail, and what we are witnessing is nothing less than the economic reformation of the European economy and its polity.

"In the European Union, everything is connected," continued Dr Bell. "As part of the European economic transformation process, the whole economy – in all its aspects – is now being looked at in a connected way. We no longer look at research or innovation in isolation from the monetary economy. The new sorts of growth that we are going to have to achieve at a European level, a national level and a regional level, have to be approached in the same way.

"How can we work together with our resources to help different countries who are perhaps not as sophisticated as Ireland and her regions? [We need] to work on their smart specialisation because in the knowledge economy that we see, ideas are going to be to the next economy what oil has been to this one. We cannot have a situation across the European Union where you have a golden triangle, and other parts are simply left behind."

Dr Bell went on to describe how initiatives such as Innovation Union will enable the European research community to advance en masse. He also argued that in times of financial uncertainty, it is the responsibility of policymakers and governments to take risks when others might not be willing.

"What are we going to do in terms of creating an environment in which venture capital can move and grow across the European Union?" he asked. "Across the Innovation Union, we have set out 34 priorities, most of which are already done."

European policymakers then, are keen to adapt and react proactively in order to stimulate innovation. However, as Ken Guy, Head of the OECD’s Science and Technology Policy Division, explained, the drivers behind innovation have remained the same for centuries.

"We have to realise that historically, there have been three main drivers of investment in research, and I can track these back to the 17^th Century," he explained. "One driver has always been excellence. This stems from the scientific community itself; the drive to be better and to produce excellent research. The drive for excellence is one of the key drivers for why people invest in research.

"Another is international competitiveness. You only have to read a history of science policy and you find that whichever side of the fence you are on, what drives investment are calls like, ‘The Russians are coming!’

"We are now at the stage where the third driver is also important. This has always been with us; the drive to meet societal challenges. But now, it is more important than ever. Whereas in the past, some of these different drivers have led to tussles and tensions within the scientific community, we can’t afford to do this anymore. We have to establish win-win solutions where we are looking at ways of both gaining excellence, putting industrial competitiveness at the forefront, and resolving societal changes."

As Guy explained, the key to success is for nations to play to their strengths. ‘Smart specialisation’ is more than a term that is in vogue amongst policymakers. It is a strategy that could allow European research to compete on the global stage for years to come.

"I look at today and I have hope," said Guy. "I have hope that things will be different and that some things have changed. There is recognition – and it is recognised in many countries – that we have to focus more and follow the route of smart specialisation. And remember, this is what smart specialisation is. For some countries, it’s smart to specialise in many technology areas because they have strengths in them. In others, concentrating on one or two is most appropriate because they don’t have the resources to do everything."