Transcript 111105 kitson

Judge Business School
New Developments in
(date)
Innovation Policy and Practice
(name)
Michael Kitson
University of Cambridge
Judge Business School
Innovation is the successful
exploitation of new ideas.
Innovation: the conventional wisdom
• The importance of R&D especially in high
technology manufacturing
• Importance of corporate laboratories and
protecting IP
• The crucial role of technology transfer from
universities of Universities
• The importance of location: clusters and
agglomerations
• Innovation is an important driver of growth
Things they don’t tell you
about innovation
The importance of R&D is
exaggerated
Innovation: how important is R&D?
‘This country’s success ultimately depends on a strong
skills base and dynamic R&D both driving an
innovative and competitive economy...... The
Government will continue to play its part by
stimulating R&D investment. The recent changes to
the Research and Development Tax Credit, for
example, will bring additional benefits to small,
medium and large companies alike’.
Lord Drayson, former Minister of State for Science
and Innovation, The 2008 R&D Scoreboard, pp. 2-3
Innovation: how important is R&D?
• Argument that R&D drives innovation
• But private sector will under-invest in R&D
because it will not capture all the benefits
because of externalities
• Therefore, the public sector must do R&D or
subsidise private sector R&D
Direct and indirect government funding of
business R&D and tax incentives for R&D, 2007
(% of GDP)
Source: OECD
How important is R&D?
• EU target of increasing research and
development (R&D) to 3 per cent of GDP by
2010
• Illusive or elusive ‘externalities’?
• Frequent failure to distinguish between ‘R’ and
‘D’
• Many innovating firms do little or no R&D
Innovation expenditure per employee in the UK (£)
From: Abreu, Grinevich, Kitson and Savona (2008), Taking
services Seriously, NESTA
Innovation expenditure per employee in the UK (£)
From: Abreu, Grinevich, Kitson and Savona (2008), Taking services Seriously,
NESTA
Most innovation takes
place outside corporate
laboratories
Importance of corporate laboratories
A Closed Innovation System
Science
&
Technology
Base
Research
Investigations
R
The
Market
Development
D&E
Source: Henry Chesbrough (2007)
New Products
& Services
Limitations of Closed Innovation
• Most ideas and technologies are outside the
firm
• Importance of accessing and absorbing
external ideas
• Importance of being open
• Importance of being connected
• Importance of knowledge exchange
Technology transfer is only
one part of the role of
universities in the
innovation system
Innovation: the role of universities
• The ‘laissez faire’ model
• Importance of chance, luck and serendipity
• The narrow model
• Focus on a narrow range of technology transfer
mechanisms
• The wider model
• Focus on a wide range of interactions
• Exchange rather than transfer
The laissez faire model
• Universities focussed on two missions – research and
education
• Example: the ‘Cambridge Phenomenon’ initially
developed when the University took little active
interest in business engagement. In the past:
• University largely ignored IP issue
• Adopted a liberal attitude to what academics did
• Industrial liaison merely acted as ‘window’ on what the
university did – little exchange or dialogue
The standard narrow model
• Narrow focus on Technology Transfer
• Mechanisms: Patents, Licenses, Spin-outs
• Limitations
• Potential financial returns were frequently overestimated
• Metrics distorting behaviour (Goodhart’s Law: any
observed statistical regularity will tend to collapse
once pressure is placed upon it for control
purposes)
• Model is incomplete
Commercialisation Activities of
Academics in the UK
• Patents (7% of academics)
• Licenses (5% of academics)
• Spin- outs (4% of academics)
Patenting by UK Academics in the last 3
years (% of respondents)
All
Engineering, Materials science
Biology, Chemistry, Veterinary science
Health sciences
Physics, Mathematics
Social sciences
Arts and Humanities
Professor
Reader/Senior lecturer/Lecturer
Other position
Male
Female
Basic research
User-inspired basic research
Applied research
0
5
10
15
20
25
Source: Abreu, M., Grinevich, V., Hughes, A. and Kitson, M. (2009), Knowledge Exchange between
Academics and the Business, Public and Third Sectors, Centre for Business Research,
University of Cambridge, Cambridge.
30
The wider model: multiple knowledge
exchange mechanisms
• Problem solving through multiple mechanisms
• Role of many disciplines (not just science and engineering)
• Interactions with public and third (not for profit) sectors
as well as with business
• Public space functions (Universities do not move)
• Relatively neglected, but distinctive
• Includes networking, social interaction,
meetings, informal advice etc
• Exchange not simply ‘transfer’
Academic Interactions with External Organisations
Commercialisation
activities
5
Licensed
research
7
Patenting
4
Spun-out
company
14
Formed/run
consultancy
Format adapted from Ulrichsen (2009)
Source: Abreu, M., Grinevich, V., Hughes, A. and Kitson, M. (2009), Knowledge Exchange between Academics and
the Business, Public and Third Sectors, Centre for Business Research, University of Cambridge, Cambridge.
Academic Interactions with External Organisations
People-based activities
65
87
Standard-setting
forums
Giving invited
lectures
Participating
in networks
38
6
Enterprise
education
31
Sitting on
advisory
boards
Attending
conferences
33
Student
placements
Communitybased
activities
38
33
67
28
Commercialisation
activities
35
Public
exhibitions
Research
consortia
57
7
Informal
advice
Patenting
10
Prototyping
and testing
15
30
Schools
project
Problem-solving activities
5
Licensed
research
Lectures for
the community
4
3
Community-based
sports
Employee
training
Curriculum
development
Spun-out
company
49
Hosting
personnel
Joint
research
43
27
Consultancy
services
10
External
secondment
37
14
Formed/run
consultancy
46
Joint
Publications
Contract
research
9
Setting of
physical
facilities
Format adapted from Ulrichsen (2009)
Source: Abreu, M., Grinevich, V., Hughes, A. and Kitson, M. (2009), Knowledge Exchange between Academics and
the Business, Public and Third Sectors, Centre for Business Research, University of Cambridge, Cambridge.
Constraints
Constraints on interactions with external
organisations (% of respondents – All and
Engineering)
Lack of time
Bureaucracy /inflexibility of univ admin
Insufficient rewards
Insufficient resources
Unwillingness in external org to meet full cost
Lack of interaction resources in external organisation
Identifying partners
Differences in timescale
Lack of external interest
Lack of experience in external organisation
Poor marketing/technical/negotiation skills in univ
Reaching agreement on terms (incl IP)
Cultural differences
Other
0
All
20
40
60
80
Engineering, Materials Science
Source: Cambridge Centre for Business Research Survey of Knowledge Exchange Activity by UK Academics (Hughes,
A., Kitson, M., Abreu, M., Grinevich, V., Bullock, A. and Milner, I.) UK Data Archive Study Number 6462.
Source: Cambridge Centre for Business Research Survey of Knowledge Exchange Activity by UK Academics (Hughes, A.,
Kitson, M., Abreu, M., Grinevich, V., Bullock, A. and Milner, I.) UK Data Archive Study Number 6462
Academic and business perceptions of constraints on
interactions
Bureaucracy /inflexibility of
univ admin
Insufficient rewards
Insufficient resources internally
Identifying partners
Cultural differences
45
40
35
30
25
20
15
10
5
0
Reaching agreement on terms
(incl IP)
Lack of experience in dealing
with academics
Academics
Business
Lack of external interest
Differences in timescale
Source:
Hughes,
A. and
Kitson,
M.M.
(2010),
Connecting
Tower:The
TheBusiness
Business
Source:
Hughes,
A. and
Kitson,
(2011),
Connectingwith
withthe
the Ivory
Ivory Tower:
Perspective on
Perspective on Knowledge Exchange in the UK, Centre for Business Research, University of
Knowledge
Exchange in the UK, Centre for Business Research, University of Cambridge, Cambridge
Cambridge,
Cambridge.
.
THE ACADEMIC
IVORY TOWER
IS A MYTH
Geography: clusters are
very different
Innovation and location:
collaboration and clusters
According to Porter (1998) clusters are
‘geographic concentrations of interconnected
companies, specialised suppliers, service
providers, firms in related industries, and
associated institutions (for example universities,
standards agencies, and trade associations) in
particular fields that compete but also cooperate.’
Collaboration and clusters
• The stress on ‘geographic concentrations’ of
collaborators can be misleading
• The Porter analysis is based on where firms are, not
what firms do
–Local collaborative behaviour is often not an
important driver of innovation
–National and international collaborations are usually
more important than local collaboration
–Important to distinguish between ‘bridging and’
bonding’ networks – bridging networks that are
outward looking may be more important for
knowledge based activity
• There is no one model of clusters
Developing New Technologies: the tale
of two cities
• Strong biotechnology clusters in the
Cambridges (USA and UK)
• But the development of the industry in the two
cities reflects different trajectories and
different challenges
• Indicates the importance of understanding the
geography and history of place
1 mile
Source: MIT
Entrepreneurship
Centre
8 miles
Collaboration and clusters
• Importance of local economic structure and
local economic history
• Role of important economic anchors
•Universities, Hospitals and key employers
• The character of local clusters will vary
• So policies will need to be shaped to the local
economy
Innovation is not correlated
with economic growth
Innovation and Growth
• Economic growth can be increased by
technology and innovation
• Technological progress can be increased
through appropriate policies
•Technology transfer, support for R&D
Growth: the Role of Innovation
Investors
IDEAS
Entrepreneurs
& Inventors
Team
INNOVATION
Innovation and growth: the (Solow)
paradox
“You can see the computer age
everywhere these days, except in the
productivity statistics". Robert Solow,
1987, (MIT, Nobel Laureate)
Economic growth is not apparently
correlated with innovation
The Innovation (Solow) paradox
Answer?
• Innovation takes time to have a major impact
on economic growth
Why?
• It is the use of technology not the generation of
technology that has the biggest impact on
growth
The innovation (Solow) paradox
US Productivity growth 1995-2000: the
three largest contributors to the
productivity surge were, in order:
• wholesale trade
• retail trade
• security and commodity brokers
(Solow, Cambridge -MIT Summit 2001)
Bentonville AR.
Growth: the Role of Innovation
Investors
IDEAS
Entrepreneurs
& Inventors
Team
Michael Kitson
D
I
F
F
INNOVATION U
S
I
O
N
Innovation and Growth
• Innovation takes time to have a significant
impacts
• Similar with all General Purpose Technologies
(steam, internal combustion engine, electricity,
IT)
• Shows importance of diffusion of innovation
and technology – which can be costly
Innovation: the conventional wisdom
The importance of R&D
• Is overestimated
The importance of corporate laboratories
• But most ideas are not inside the company
The importance of technology transfer from universities
• Is too narrow
Location is important for innovation
• But its character varies according by place
Innovation is an important driver of growth
• But it takes time as diffusion is vital
A new framework for innovation
policy and practice
• Adopt a broad notion of innovation
• Foster connectivity and openness
• Importance of local economic structure
• Importance of key regional economic anchors
• Develop a Triple Helix approach
Adopt a broad notion of innovation
• No simply about high technology
manufacturing
• Importance of process
• Importance of design
• Importance of business practice
• Importance of innovation in services and
‘traditional sectors’
A useful electronic device?
‘It has no camera; no USB port; no
replaceable battery; no obvious
advantage over a laptop, it doesn't
support Flash.’
Who would buy this?
“In all of his products, technology
would be married to great design,
elegance, human touches, and even
romance.”
Isaacson (2011), Steve Jobs.
Move From Closed to Open Innovation
• Importance of Networks
• Importance of Absorptive Capacity
Source: Chesbrough, 2006
Firms with national/international collaboration
on innovation, 2004-06 (% of innovative firms)
The implications of open innovation
• Importance of developing networks and communities
• It is not costless
• Often difficult for individual businesses
• Networks must be outward looking and inward looking
• Develop ‘boundary spanners’ – people who
understand partners and can manage relationships
• Utilise economic anchors – organisations that do not
move
• Universities and Hospitals (‘eds and meds’)
Develop Absorptive Capacity
• Open Innovation models requires firms to have
internal ‘absorptive capacity’ that allows then
to use new ideas and turn them into profitable
products and processes
• This requires skilled labour
• And appropriate business practices
Importance of local economic
structure
• Build on local strengths
• Develop, transform and upgrade local
industries
• More cost effective and a bigger impact then
developing new industries
Sheffield
Cambridge
London
Importance of local economic anchors
• Many economic actors move or can move
• Skilled workers, businesses
• Importance of connecting to local economic
‘anchors’
• Major employers, universities, hospitals
• Creates and embedded networked economy
Develop a Triple Helix approach
• Triple Helix: foster and strengthen connectivity
between business, universities and policy
makers
• Fosters knowledge exchange and wider
innovation
• Strengthens all partners and the local economy
Innovation: some final comments
• Innovation may have a ‘dark side’ (negative
impacts)
• May harm competition
• Cause major disruption
• Reduce individual freedom
“The only useful
banking innovation
was the invention
of the ATM” Paul
Volker
Innovation: the final comment
What is innovation for?
Economic growth
or well- being and the quality of
life?