The Innovation Communication - an analysis
The starting gun has been fired, and the race is now on for Member States of the European Union, with 'economic gold' as the prize. For the first time ever, the Member States of the EU are being compared, side-by side against each other, by means of an innovation 'scoreboard' as they compete for economic success. Preparations for the race have been going on for some years, beginning with the 1995 Green Paper on Innovation. This started a concerted process of thinking among the Member States as to what were the key elements in an innovation economy and what forms of encouragement and support would build those elements. As a result, all Members States now have an innovation policy. Case Study : Finland - A tradition of active innovation policy The Finish Science and Technology Policy Council is appointed for a three-year term and chaired by the Prime Minister. Council members are, among others, the Minister of Education, the Minister of Trade and Industry, the Minister of Finance and ten non-governmental members such as representatives of the Academy of Finland, industry, employers' and employees' organisations. The Council directs science, technology and education policy and issues every three years a status report and key policy document, the latest being the 'Review 2000: The Challenge of Knowledge and Know-how'. Much had been theorized about economic effects from innovation, but now the time had come to decide on actions. Clearly these actions should be co-ordinated and should represent proven 'best practice', and so the Innovation Action Plan was born in 1996 as an initiative of DG Enterprise. This Action Plan identified the main areas where efforts were needed at both European and Member State level; in both public and private sectors. Much has happened since the launch of the Innovation Action Plan. So much so that the Commission has recently compiled an official 'Communication' to the Council and the European Parliament in order to report on what has been achieved and to re-assess the way forward. One of the most major achievements, given the complexity of the subject is the reform of European Patents. This has progressed on both a legal and administrative front, as well as on other practical measures such as information and assistance services which are now freely available on the Web. The Holy Grail of a unified Community Patent is now in sight for the end of 2001. Other areas have been disappointing. For example, the administrative and regulatory environment is still too complex which means that start-up and innovative companies find life much harder than their counterparts in the US who will be their key competitors. The Communication renews the call for Member States to reduce such burdens and has set up a task force called BEST which is charged with drawing up concrete proposals in this area. While Member States may be slow to cut 'red tape', the financial industry has definitely woken up to the value of innovation. Total funds raised by the European private equity industry soared by 25 per cent in 1999, with total investments up a staggering 74 per cent. Progress is also notable at regional level where there are a rapidly growing number of schemes designed to provide incubation for start-up companies and clustering into 'technology valleys' as well as schemes aimed specifically at forming enterprises from spin-off ideas of university research, both at graduate and senior level. Case Study : Portugal - A new deal for innovation Cohesion countries invest growing amounts into overcoming their structural weaknesses in innovation. Large multi-year umbrella programmes under the Structural Funds play still an important role, but the programme approach is increasingly complemented by tax subventions for business R&D. Portugal is typical in this respect. Three new programmes launched with the support of Structural Funds will rearrange the national framework for science, technology and innovation policies for the years to come. All programmes put major emphasis on innovation. The Operational Intervention Science, Technology, Innovation, in particular, is to promote scientific and technological culture and the co-operation between firms and R&D organisations. It will be developed along three subprograms: training and qualifying human resources in S&T activities; developing S&T and innovation systems; and evaluating, observing, planning and following up the activities of the various elements of the system. In reviewing the way ahead, the new Communication proposes five priority objectives:- Coherence of innovation policies The Union should capitalise on measures and schemes at regional and national levels through coordination for the benchmarking of national policies and for spreading good practice. A regulatory framework conducive to innovation Regulation is necessary, but over-regulation hinders the development of enterprises, innovative enterprises in particular. There is increasing awareness of the benefits of lowering the costs of doing business and reducing red tape. Encourage the creation and growth of innovative enterprises Europe needs an improved environment for high technology start-ups and for starting up and developing innovative businesses in general. Such firms invigorate the economy by being the 'first movers' who introduce new ideas, and from their number will emerge the expanding businesses of the future. But the obstacles to their creation and growth continue to be more severe in Europe than in Europe's competitors. Case Study : Austria - Boosting Innovation Finance Innovation financing is the traditional strongpoint of Austrian Innovation Policy. Three related programmes exist: the Seed-Financing Programme and Technologiemarketing Austria - TecMa, both in close co-operation, and the Young Entrepreneur's Programme by Bürges. While the seed-Financing Programme and Bürges concentrate on financing, TecMa provides consultation in connection with the commercial exploitation of research results and inventions. Financing of start-ups is also closely related to other innovation financing schemes such as the FFF general programme and the ERP SME Technology Programme. Equity capital guarantees by the FGG and the 'I squared' programme are also interesting for technology-orientated start-ups. Improving key interfaces in the innovation system Every business sector, whether in manufacturing or in services, in traditional or 'new economy' sectors, should aim to benefit from innovation. For this to happen, enterprises need access to knowledge, skills, financial backing, sources of advice, and market information. While not losing sight of the 'system' view of innovation, the operation of some of the interfaces between enterprises and other innovation players needs to be improved by action targeted at these interfaces. The Lisbon conclusions specifically draw attention to the interfaces between companies and financial markets, R&D and training institutions, advisory services and technological markets. This objective focuses on the effective operation of these interfaces so that innovation may permeate the entire economic and social fabric. Case Study : UK - The Teaching Company Scheme The Teaching Company Scheme (TCS) aims at improving the level of interchange between the higher education sector and business and industry. It enables firms to take advantage of the scientific, engineering, technological and business management skills and knowledge available in universities. Highly qualified recent graduates work in a company for two years on a project central to the company's needs, under the joint supervision of academics and company staff. The scheme targets universities and companies whose R&D skills and needs complement each other. SMEs make up 90 per cent of the company participants. Financial support is in the form of a government grant to the university partner. The company contributes to the direct costs: a first-time SME participant generally pays about 30 per cent of the direct costs, amount to around UKL 1,000 per graduate per year, while a larger company will normally contribute at least 60 per cent. It is estimated that each UKL one million of government support for TCS generates 47 new jobs and UKL 1.3 million of investment in plant and machinery. A society open to innovation Innovation is a human activity. Each citizen is a potential creator, implementer and user of innovation. The preceding objectives will not be fully achieved without an open attitude to innovation, based on an awareness of the nature of the opportunities, and the risks. This can only be brought about by a free dialogue between research, enterprise, government, interest groups and the general public. Case Study : Ireland - STI Awareness Programme This ongoing initiative, originally undertaken in 1996 in response to the report of the Science, Technology and Innovation Advisory Council and the subsequent White Paper and initially intended to last for three years, aims to increase awareness, understanding and support for science, technology and innovation among the business and academic communities as well as the general public. It focuses on awards, competitions and other promotional activities, including a National Science Week involving a large number and variety of events country-wide. It now has a budget of IRL 350, 000 per annum. The five objectives reflect current priorities for enhancing innovation in Europe, and are in line with the consensus on broad policy orientations arrived at by the Lisbon European Council. The Lisbon summit also called for an Innovation Scoreboard - a regularly updated scoreboard showing the performance of each member State across several factors, and comparing them to the aggregate EU level as well as the US and Japan. The intention is that the scoreboard will draw attention to progress made towards the goal of improving innovation performance. It will also highlight the innovation divide which presents a very real danger for Europe as some States begin to lag behind others in the innovation race. If this gap is allowed to develop, it could put the poor performers in a position where they cannot hope to catch up with the leaders. By publishing the scoreboard as a kind of race progress analysis, each Member State can see where they stand and in what areas they have to work harder. While DG Enterprise can claim a central role in innovation awareness and co-ordination of action, other factors are also putting pressure on Member States to encourage innovation. Global competition and the emergence of the knowledge-driven economy have underlined the need to compete through innovation and change. Through its Innovation-SME Programme DG Enterprise intends to continue to reinforce the message that there remains much to be done.