Improving the Framework. Conditions for R&D. Opening up to an ERA of Innovation. Brussels 22-23 June 2015. Luke Geor
Improving the Framework Conditions for R&D Opening up to an ERA of Innovation Brussels 22-23 June 2015
Luke Georghiou Vice-President for Research & Innovation University of Manchester
C
Regulations & Standards Government
Public Procurement
Fiscal Environment
Sales & service improvements
WEALTH HEALTH WELFARE
INNOVATIONS
Taxes Finance
INNOVATION ECOSYSTEM
Research Funders Finance
Licences Finance Trained people
Universities Finance
Large firms
Knowledge Trained people
Sales
Knowledge
Finance Knowledge
Intellectual property
Venture capital & other finance
Finance Equity
Small firms including start-ups
Finance
Investment Finance Knowledge
Research and Technology Organisations
Source: Luke Georghiou, University of Manchester, cited in House of Commons Select Committee on Science & Technology Report Bridging the Valley of Death: improving the commercialisation of Research, March 2013
Framework conditions • An innovation ecosystem functions through effective flows of – Knowledge – People – Finance
• These flows are moderated by the framework conditions of – – – – –
Institutions Regulations and standards Business environment and entrepreneurship Demand – quantity and quality Infrastructure and services
10th Anniversary of the Aho Group report “Creating an Innovative Europe” • Mandated by Council and Commission • Before crisis warned of long, slow decline without action – Increasingly lagging productivity – Failure to capitalise upon application of ICT – Locked into unmodernised traditional sectors & underinvesting in services R&D – Losing out as firms globalise R&D
Recommended • To create in Europe an innovation-friendly market for businesses, requiring action on: – – – –
Regulation and standards Public procurement Intellectual property conditions A culture that celebrates innovation
• Increased resources for excellent science, industrial R&D & the science-industry nexus • Step change in mobility of people, finance and organisation & knowledge • Strategic initiatives in eHealth, pharmaceuticals, transport and logistics, energy, security, environment & digital content
Gap continues to widen Multifactor Productivity Growth – total economy % change at annual rate 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 -0.50 -1.00 -1.50
FIN
ITA
GBR FRA
1995-2013
ESP DEU JPN USA KOR
2001-2007
2007-2013 Source: OECD
Europe provides less later stage/growth capital than the US because the potential to IPO gives confidence to later stage investor and is more fragile in Europe (Investment by Stage US vs. Europe, Q1 2008 to Q3 2014)
Source: VentureSource with thanks to Anne Glover Amadeus Capital Partners
Stakeholders Survey Strengthening knowledge base
Making it happen
10 9 8 7 6 5 4 3 2 1 0
Leveraging policies externally
Ideas to market
Maximising cohesion
European Innovation Partnerships
Likes and dislikes - symmetry
Like
Dislike
Knowledge base
Horizon 2020
Too many initiatives
Ideas to market
Unitary patent but…
Incomplete Single Market
Cohesion
Conditionality in SSS
Duplication of SSS
EIPs
Strong structuring effect
Lack of coordination
International
Scientific visa
Mobility problems
Making it happen
Policy support facility
Not enough analysis
Some stakeholders’ suggestions • “Do more on Open Science and Open Innovation, including better framework conditions relating to IP, Copyright, data protection, data driven innovation etc…” • “Less regulation is needed and more solutions should be tested despite regulation. We ought to consider an innovation principle” • “ESIF should be used to further public procurement of innovation”
A paradox and a provocation • Evidence is overwhelming for value of investment in research – Rates of return in the range 20-50% – Innovation accounts for 60-70 % of productivity growth
• So why do governments give it lower priority than infrastructural investment – Belief that innovation benefits are long term while route to jobs and growth is shorter – Belief that innovation investment only benefits the leaders
An ecosystem perspective emphasises that knowledge and people flows yield benefits FAR FASTER than linear model approach predicts and that absorptive capacity is necessary for followers as well as leaders
So what should we do? • Need to focus our resources – – – –
RISE proposes Open and Transformative R&I policy Societal challenges were step 1 but now need further step From project/instrument-driven approach to new mission-orientation Delivery needs not only push from excellent R&D but concerted effort to create a pathway of smart demand
• Need for market friendly to disruptive innovation – Research policy belongs to research ministries but innovation policy is a cross-governmental/cross-Commission responsibility
Framework conditions are essential to openness • Open science maximises the flows of knowledge and people • Open innovation is driven by smart investment and regulation and far more suited to creation of European-led ecosystems • Opening to the world brings challenges and opportunities
All need to be driven by a culture that celebrates innovation!
