Category Archives: Business Models

National And Regional Innovation Systems Affect…..

By   November 17, 2015

Originally Published on Triple Helix

Abstract:

Understanding how prevailing regional and national innovation systems affect university contribution and transformation towards becoming more entrepreneurial is paramount, given greater emphasis has been placed at governmental level to increase university contribution to innovation systems. Findings presented here are from a study exploring which actors, mechanisms, organisational barriers, and enablers, are present within the selected systems that ultimately affect university contribution, and how universities are transforming in response to interactions within the innovation system.

Background:

The European Commission has argued that while European research institutions are good at producing academic research outputs, they are not successful in transferring these outputs to the economy – the so called ‘European Paradox’ (European Commission, 2007). Recognition exists that policies for the knowledge triangle are insufficiently joined-up, an example being the relatively minor role that the education and training dimension of higher education receives in policies for the European Research and Innovation Area (FarHorizon, 2010). There are various underlying structural problems concerning technology-transfer existing in Europe. A lack of coordination of policy instruments for research and innovation is causing problems within the enabling environment, which suggests that research must be carried out in order to measure the factors at play (Conti and Gaulé, 2009).

However, further research is required to explore the internal organisation dynamics and external innovation ecosystem (IKTIMED, 2013), given university technology-transfer is underutilised in many National Innovation Systems. A number of scholars have called for detailed studies which analyse the differences in strategic orientation, incentive arrangements, and support structures (TTO), in order to determine the entrepreneurial practices deployed in universities (eg. Debackere and Veugelers, 2005; Rothaermel et al, 2007). Van Looy et al (2011), for instance, identified a gap in the documentation and analysis of the impact of (national or regional) innovation system characteristics in which universities are embedded, as an important complementary research endeavour. They contend that consid-erable opportunities for growth in the European Research Area is possible, on the basis that future research confirms the crucial role of national innovation system characteristics on the entrepreneurial performance of universities. In addition, during the course of their study, they noted a number of strong differences between European countries on the level of the entrepreneurial performance of universities, signifying the importance of further analysing these anomalies transnationally. This is particularly interesting given Gunasekara (2006) highlighted the importance of understanding policy perspectives for university engagement at regional level, regarding the sustainable operation of universities. He suggests that there may well be heightened interest in how university engagement at a regional level can provide a basis for the sustainable operation of universities themselves. This suggests that there is a gap in knowledge regarding university transformation in relation to the regional system in which it functions.

The study presented here addresses this research gap by investigating how prevailing regional and national innovation systems affect university contribution, and transformation towards universities becoming more entrepreneurial. The focus lies at the interface between universities and the innovation system. This should highlight the impact changes at regional and national level within innovation systems has on university contribution and transformation, thus pinpointing successes and challenges within the system; and secondly, determine similarities and differences through comparatively analysing these findings at regional level. The main research question is: How do prevailing National and Regional Innovation Systems affect university contribution, and transformation towards building an Entrepreneurial University? In particular, we are interested in the actors, mechanisms, organisational barriers, and organisational enablers that are impacting the entrepreneurial transformation of universities.

Table 1:

Analytical Framework:

Conceptual Elements

Identified Target Groups (Interviewees)

 

Government

Funding Agency Industry
Representative
Bridging
Organisation

University

Actors

Mechanisms

Organisational Barriers and Enablers

Strengthened Steering Core

Expanded Development Periphery

Stimulated Academic Heartland

Integrated Entrepreneurial Culture

Source: Own depiction

Study Design:

This qualitative study has been designed as a comparative case study, in order to explore two bounded systems (the regions of Vienna and Stockholm). Predominantly qualitative primary and secondary data has been utilised, since the study is heavily context based. Given the unique focal point of the study, elements from three concepts has been utilised to design the analytical framework and data analysis: as such, Lundvall’s (1992) and Cooke’s et al (1997) National and Regional Innovation Systems approach, Etzkowitz and Leydesdorff (2000) Triple Helix, and Clark’s (1998) Elements of Entrepreneurial University Transformation have been adopted. The research question has been framed by considering how the university fits within the National Innovation System focusing on the interface between university and the external innovation system. The actors, relations, and mechanisms have been considered based upon Triple Helix principles. Three main dimensions from Clark (1998) (Strengthened Steering Core; Diversified Funding Base; and Entrepreneurial Development Periphery) have been adopted specifically to design questions which probe university transformation in relation to prevailing innovation systems. The Analytical Framework is shown in Table 1.

Unique case sampling was the favoured method in order to select specific universities involved in the life sciences sector, to maintain a narrow focus. In this instance, four universities (BOKU University of Natural Resources and Life Sciences, Vienna; The Medical University of Vienna; KTH Royal Institute of Technology, Stockholm; Karolinska Institutet, Stockholm) and eight innovation system actors have been selected from two regions identified as areas where the Life Science sector is of economic importance. In total seventeen interviews were conducted representing different actors within universities (ie. management, technology-transfer office, and researchers), and different actors from the broader innovation system. Secondary data sources were identified to gather information relating to the national and regional innovation system.

Results:

The results from the case studies in Vienna and Stockholm are presented next focusing on the role and contribution of actors, mechanisms, and organisational factors.

Actors:

In the case of both countries, government (or its associated agencies in the Swedish case) appear to have a fundamental impact on how universities are transforming. This can be attributed to policy changes (in the Austrian case), whereby further autonomy has been granted to universities as a means to enable them to professionalise and secure diversified sources of funding from elsewhere in the innovation system. It can also be attributed to various short-, mid-, and long-term funding projects (in both country cases), whereby universities are being steered towards priority thematic areas, and to collaborate with other actors in the innovation system, given the rules and regulations of acquiring such funding. Nevertheless, the disciplinary focus and traditional orientation of each university case reflected its level of entrepreneurial activities and transformation.

Both BOKU and KTH Royal Institute of Technology have had close links with industry for several decades, and this reflected in the structural and organisational transformation that has taken place over time, and the generally positive attitudes of academics towards contributing to the innovation system. Therefore, although bridging organisations are vital to connect actors, and industry are incredibly important in collaborating with universities, it seems government plays a pivotal role in creating the appropriate entrepreneurial innovation environment whereby universities have enough autonomy and resources to contribute efficiently, whilst also maintaining their core missions.

Mechanisms:

In particular, the University Act 2002 and uni:invent programme have played pivotal roles in the Austrian system for the entrepreneurial transformation of universities. Although Swedish universities feel restricted in their autonomy, they have also benefited from targeted funding for the development of Innovation Offices. This particular infrastructural development has been positive for bridging university commercialisation activities within the innovation system. Competence Centres have been highlighted in both cases as being pivotal, considering the unique innovation environment and platform it provides. Its long-term orientation enables trust building, which has been noted as a fundamental element in university collaboration processes. In addition, government funding programmes in both country cases has been noted as being particularly important in order to increase funding allocations to universities. Nevertheless, government needs to provide more risk capital to bridge the gap created by the low number of venture capitalists, given current institutional frameworks and prevailing cultures are still in their infancy in this regard in both country cases.

Overall, the development of incubators, clusters, and bridging organisations seems strong in Sweden, although Austria is making good progress, with various Centres of Excellence and bridging organisations such as LISA Vienna easing collaboration processes. From the university perspective, having support from university management, and inclusion of entrepreneurial activities within strategy documents and development plans of a university, seems to promote successful transformation, given entrepreneurialism permeates throughout the system as a result. Other important mechanisms such as IP policies and the Teacher’s Exemption have highlighted that elements from these mechanisms could potentially be adopted into systems to ensure transparent collaboration, and also incentivise academics to collaborate.

Organisational Barriers:

A number of barriers were highlighted which were common to both innovation systems under analysis. A lack of funding was the main barrier, highlighting that targeted funding could reduce current bottlenecks in the system. Areas requiring attention include the need for higher levels of basic university funding from government, in order for universities to be able to match fund industry projects and maintain their independence in such collaborations. Higher allocations of risk capital is also missing within the system, requiring government to bridge the current ‘Valley of Death’. In addition, further funding is required to improve and increase infrastructure within universities, and enable the recruitment of further human resources for TTOs, given the current situation is limiting its collaboration volume potential, thus capping its income potential. This reflects Koryakina, Teixeira, and Sarrico (2012) who noted that there is a need for appropriate infrastructure to support emerging third mission activities. From a structural and organisational perspective, external innovation actors noted difficulties relating to the variety of university structures present, thus requiring varying individual approaches. The traditional orientation and structure of universities varies greatly, which slows the process of collaboration due to bureaucracy, difficulties in identifying the right people to contact, and a lack of visibility regarding how business negotiations should take place with universities.

Funding through various mechanisms has seen the implementation of TTOs which has enhanced the interface between universities and the innovation system. However, more needs to be done to enhance the business models of universities in order to further professionalise university operations, particularly with regard to management of collaborations, so that universities are able to operate more entrepreneurially, and thus enhance and extend the third mission activities in which they are involved. This includes the need for further infrastructure and human resources, which have the potential to increase commercialisation activities. In addition, bottlenecks exist regarding knowledge transfer internally within universities, and what is made available externally to innovation actors. However, it seems tensions exist within universities between operating a professional business model and performing the core traditional functions of the university, which stems from limitations on time, funding, and in some cases, academic cultures present within universities, and their subsequent resulting engagement in commercialisation activities. For successful implementation of university transformation, it seems embedding entrepreneurialism within the mission and strategy of the university is imperative.

In addition, strong leadership, and development of trust within the system is needed to get academics on board. Pressures to service the core missions of the university, as well as third mission activities, is facing major limitations due to available time and funding. Care must be taken to overcome this hurdle, given conflict between academics and administrators within universities can inhibit transformation and development (Martinelli, Meyer, and von Tunzelmann, 2008). Both country case representatives noted that the academic emphasis on producing publications, rather than number of commercialisations, has a great impact on output, reflecting similar tensions found by Martinelli, Meyer, and von Tunzelmann (2008). This can be attributed to the traditional tenure system in place, which impacts the mobility of researchers between industry and academia, particularly later in their careers. Therefore, this requires attention at system level, in order to create balance and overcome issues between public and private knowledge.

Organisational Enablers:

A number of enablers were recognised in both country cases, with Competence Centres identified as an excellent long-term initiative, providing a much needed platform where trust building could take place. In addition, expanding the development periphery of universities through the addition of TTOs has also been hailed as a successful development for easing the collaboration and contribution processes of universities within the innovation system. This is likely due to the professionalisation of the system, and the increased visibility of this interface, whereby external actors can interact and collaborate more easily. However, it should be noted that the presence of the TTO alone is not enough, and requires a commitment from leadership, and appropriate processes, functions, and IP policies in order for it to be successful. Elements of the Teacher’s Exemption, a highly debated issue within the study, could potentially yield good results if adopted carefully within a university system. Pressures on academics and their general orientation towards the core missions of teaching and research tend to reduce the efforts directed towards commercialisation. It appears that all actors play a role in easing university contribution to the innovation system, however, government plays an elevated role due to developments in national and EU strategy documents, their allocation of funding through various mechanisms, and changes made to legislation (eg. the University Act 2002 in Austria). Targeted funding towards the development of TTOs in both cases has enabled universities to professionalise their organisation and functions in response to the innovation system. The most successful transformation cases included those where entrepreneurial activities were embedded within the mission and the strategy of the university, and considered as day-to-day activities. Therefore, this incorporates the same importance placed on the other core missions of the university, echoing the University of Waterloo’s approach towards promoting entrepreneurialism throughout its vision and mission statements, as a means to serve as an institutional enabler of entrepreneurial culture within their institution (Bramwell and Wolfe, 2008).

Nevertheless, the traditional orientation of the university plays a strong bearing on how well it can interact and contribute to the innovation system, with the Life Sciences area considered a strength in this respect. It was noted that the formation of broader schools within universities went some way towards creating conducive environments for collaborative activity. Nevertheless, the creation of unstructured platforms through internal clustering seemed to be a successful addition in the aim towards creating cross-disciplinary environments – an area many respondents felt was underdeveloped and underutilised. However, due to the lack of funding available within the system, universities have to take strategic decisions regarding which IP is pursued and, as such, identification of niche markets has been a pivotal strategy to deal with lack of funding, but place a focus on key strengths of the universities.

Comparative Findings:

From a comparative perspective, the life sciences are a very important sector economically in both the Stockholm and Vienna regions. Governmental strategies in both regions pay attention to this area; however, Sweden has taken a stronger long-term strategic approach to development through directing large public investment towards the sector and its infrastructure. Nevertheless, Austria is not far behind in its approaches, however strategizing and investment is more conservative in this case. The comparative analysis of the case universities highlights that all universities are becoming increasingly professionalised and entrepreneurial, although this is taking place at differing levels and time scales. The medical universities appear to be more traditional in culture and structure, particularly in the Swedish case. However, this is changing, as pockets of academic entrepreneurs are increasingly participating in collaborations and technology-transfer activities. Nevertheless, it was highly noticeable that both KTH Royal Institute of Technology and BOKU are much more entrepreneurial, and have a longer history of development in this respect. Additionally, a culture for entrepreneurial activities was strong in both institutions. This may be attributed to the fact that entrepreneurialism was given greater emphasis within the mission and strategy of these universities in comparison to the medical universities, with buy-in from top management clearly evident in the long-term planning for collaborations, particularly in the case of KTH Royal Institute of Technology. Overall, it appears similar barriers exist for universities in both regions, which suggests that these are national system level anomalies. Therefore, there is a need for structural easing, particularly regarding autonomy in the Swedish system. Additional funds are required, particularly in the Austrian system, in order to give universities more flexibility and power, and bridge current funding gaps.

Comparing national and regional innovation systems, the national system predominates in both country cases; however, some regional differences occur, particularly in Austria, where federal regions appear quite autonomous in their strategies and approaches. In this case, Austria has afforded more autonomy to its university system in comparison to Sweden, which has enabled universities to take more decisions, and professionalise accordingly. This particular move would be beneficial in the Swedish system to increase the scale at which universities can make decisions regarding infrastructure and the financing of technology-transfer activities. Interestingly, the governance structure in Sweden is quite different to that in Austria, with governmental agencies having greater power and autonomy to interpret strategies and distribute funding. Despite disconnections, fragmentation, and disjointed structural problems in each case country, the clarity and focus of innovation strategies appears stronger in Sweden. Nevertheless, both regions, and indeed countries, face similar issues, including the gap in funding known as the “Valley of Death”, which is ultimately causing a gap in innovations within the system. Weak links exist between academia and industry generally, despite some universities having elevated success in this area. It will be interesting to track the progress of the current large targeted financial investment in Sweden; especially given governments there have identified the importance of investing in infrastructure and research in a centralised way in order to get more out of capital expenditure in research and development.

Conclusions:

Like a rubrics cube or complex drainage system, it can be difficult to find a blockage or create conducive alignment. This study has exposed a number of barriers and enablers at the junction of collaboration. After investigation, it appears that prevailing innovation systems and their overarching institutional frameworks affect the level of university contribution. This echoes and extends Hoareau, Ritzen, and Marconi’s (2012) finding that political systems may influence performance of their public policies. Interestingly, the regional dimension of innovation did not have as much impact as the overarching national dimension. This is due to the fact that many mechanisms and policies are rolled out at national level. Nevertheless, it was clear that the regional dimension came into effect concerning actors and small proportions of regional funding which are targeted towards the Life Sciences sector. Yet in the Swedish case, it was clear that the national system prevailed, with only regional competition being highlighted as a detrimental factor to development. However, in the Austrian case, it seemed that regional dynamics played a stronger role, as Federal States seem autonomous in their activities, and very much disconnected. This disconnection also echoed in the governance of the innovation system, with knowledge triangulation policies still quite disconnected in their orientation (European Commission, Erawatch, 2014a). Nevertheless, the Austrian innovation system seems rather hierarchical and disconnected, and could potentially learn from Sweden in this case, given Lundvall et al (2011) pointed out that intra-organisational interaction is necessary, as hierarchical modes of organising can create barriers. As such, the Triple Helix approach prevails in Sweden, which is possibly aided by the flat structure present in the country, as well as the types of funding programmes and various mechanisms in place to stimulate collaboration between different nodes. Therefore, focusing on the system dimension, rather than solely on STI policy, creates greater connections which are contextually relevant to the case country’s economic, political, and cultural traditions (Lundvall, 2005; Ramstad, 2009).

Overall, comparing systems, it is clear that convergence in approaches are taking place, however, it seems a leap is required in order to embrace new ideas and nodes of thinking, thus requiring further flexibility and openness within the system. Availability of funding is the core problem to overcome in this mission. In addition, the culture and ideology to adopt new ways of doing
things is necessary. Interestingly, within the Austrian system adopting mechanisms such as tax incentives and further autonomy are elements that the Swedish system recognises it requires. Nevertheless, the structure and governance of such systems are starkly different, which may begin to shed light on why perhaps Sweden is an Innovation Leader. However, this seems strongly connected to prevailing cultures which tie closely with the institutional framework in place. It is clear that both systems are not without their challenges. Of most significance was the finding that the structure of university systems is perhaps not as important at first glance as actual processes and cultures present. However, upon closer inspection, it seems structure has an important role to play in providing the physical infrastructure to complement an institutional framework upon which such processes can take place. As such, prevailing culture has a major role to play both inside universities, and within the broader innovation system.

To conclude, adoption of the aforementioned suggestions should aid the design of a more flexible system incorporating synergies and mechanisms to encourage collaboration and knowledge transfer, which should ultimately lead to economic growth, and may help to overcome the European Paradox (European Commission, 2007). However, ignoring these structural issues, particularly regarding targeted funding and development of infrastructure, will ultimately stall developments within each given system. This could potentially have lasting consequences on innovation and national competitiveness as a result, if private funding does not increase to meet the shortfall (Hoareau, Ritzen, and Marconi, 2012). This study has highlighted the importance of including all actors and being sensitive to their needs, as well as having a well-functioning and stimulating enabling environment, which has been proven to be heavily influenced by the prevailing institutional framework and innovation system. However, it is important to balance competing objectives within the system and within universities, given the varying missions universities are expected to carry out. Taking account of the lessons learned in this study may go some way to help Austria in its endeavour to become an Innovation Leader, and help Sweden to further elevate its activity. In a globalised world, now is the time to address these challenges in order to remain competitive and ensure these innovation systems and universities continue to develop, considering university technology-transfer is underutilised in many countries within Europe (IKTIMED, 2013).

References:

Bramwell, A and Wolfe, D: (2008) Universities and regional economic development: the entrepreneurial University of Waterloo. Research Policy, 37, 1175-1187.
Clark, B: (1998) Creating entrepreneurial universities: Organizational Pathways of Transformation. Issues in Higher Education. Oxford; [New York]: Elsevier Science; IAU Press.
ContiI, A and Gaule, P: (2009) Is Europe lagging behind the US in university technology licensing? [online]. Available from: www.voxeu.org/article/why-do-european-universities-lag-licensing-research-output-industry [accessed 05 December 2013].
Cooke, P, Urange, M G and Etxebarria, G: (1997) Regional innovation systems: Institutional and organisational dimensions. Research Policy, 26(4-5), 475-491.
Page 25
Vol 3, Issue 4, December 2014
Debackere, K and Veugelers, R: (2005) The role of academic technology transfer organizations in improving industry science links. Research Policy, 34(4), 321–342.
Etzkowitz, H and Leydesdorff, L: (2000) The Dynamics of Innovation: From National Systems and “Mode 2” to a Triple Helix of University-Industry-Government Relations. Research Policy, 29(21), 109-123.
European Commission: (2007) Improving knowledge transfer between research institutions and industry across Europe: embracing open innovation – Implementing the Lisbon Agenda. Communication to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions.
European Commission, ERAWATCH, 2014a. Austria Policy Mix, Interaction between Knowledge Triangle Policies. [online]. Available from:http://erawatch.jrc.ec.europa.eu/erawatch/opencms/information/country_pages/at/country?section=PolicyMix&subsection=InteractionBetweenKnowledgeTrianglePolicies [accessed 14 April 2014].
FarHorizon: (2010) Innovation at the Core of Europe’s Policies Emerging issues and requirements for institutional change. [online]. Background Paper for FarHorizon Workshop 27/28 May 2010. Available from: https://farhorizon.portals.mbs.ac.uk/Portals/73/docs/innovation_policy_paper.pdf [accessed 14 January 2014].
Gunasekara, C: (2006) Reframing the Role of Universities in the Development of Regional Innovation Systems. Journal of Technology Transfer, 31, 101–113.
Hoareau, C, Ritzen, J and Marconi, G: (2012) The State of University Policy for Progress in Europe. Policy Report December 2012. [online]. Available from: www.merit.unu.edu/publications/uploads/1354635371.pdf [accessed 4 February 2014].
Iktimed: (2013) Summary of the Project. IKTIMED Moving Med Area to Open Innovation. [online] available from: www.iktimed.eu/index.php/the-project [accessed 03 January 2014].
Koryakina, T, Teixeira, P and Sarrico, C: (2012) Income diversification in Portuguese universities: Successes and challenges for institutional governance and management. Paper published as part of the EU Life Long Learning programme project “European Universities Forum for Financial Sustainability” (EUFFINS, no. 2011-3635).
Lundvall, B-Å. (ed): (1992) National Innovation Systems: Towards a Theory of Innovation and Interactive Learning. London: Anthem Press.
Lundvall, B-A: (2005) National Innovation Systems – Analytical Concept and Development Tool. Paper presented at the DRUID Conference in Copenhagen. [online]. Available from: www.druid.dk/conferences/Summer2005/Papers/Lundvall.pdf [accessed 17 January 2014].
Lundvall, B-Å, Gregersen, B, Johnson, B and Lorenz, E: (2011) Innovation Systems and Economic Development. Aalborg: Aalborg University.
Martinelli, A, Meyer, M and Von Tunzelmann, N: (2008) Becoming an entrepreneurial university? A case study of knowledge exchange relationships and faculty attitudes in a medium-sized, research-oriented university. Journal of Technology Transfer, 33(3), 259-283.
Ramstad, E: (2009) Expanding innovation system and policy – an organisational perspective. Policy Studies, 30(5), 533-553.
Rothaermel, F T, Agung, S D and Jiang, L: (2007) University entrepreneurship: A taxonomy of the literature. Industrial and Corporate Change, 16(4), 691–791.
Van Looy, B, Landoni, P, Callaert, J, Van Pottelsberghe, B, Sapsakis, E and Debackere, K: (2011) Entrepreneurial effectiveness of European universities: An empirical assessment of antecedents and trade-offs. Research Policy, 40(4), 53-564.

———————————————————————————————————————————–

Authors:

Karl-Heinz Leitner is a Senior Scientist at the Austrian Institute of Technology. He was Visiting Research Scholar at the Copenhagen Business School, and teaches Innovation Management (venia docendi) at the Technical University of Vienna. His main research interests cover changing R&D processes, technology foresight, research policy, and the valuation of intellectual capital. He has studied national and sectoral innovation systems and dealt particularly with the role of universities and science-industry linkages, amongst others funded by Ministries and the European Commission. His research has been published amongst others in R&D Management, and the International Journal of Innovation Management and Higher Education.

Anne Swanson is a Research and Innovation Consultant at winnovation consulting gmbh in Vienna, Austria, where she focuses on the utilisation of open innovation techniques. She recently graduated with an Erasmus Mundus Master in Research and Innovation in Higher Education (MARIHE). Her degree focused on the managerial aspects of global higher education, which was enriched by studies carried out in Austria, Finland, and China during the programme. Anne chose to specialise in national and regional innovation systems, triple helix theory, and the entrepreneurial transformation of universities during the completion of her Master’s Thesis.

The Essence of Co- In Innovation Generation: Living Labs in University Environment

By   November 6, 2015

Originally Published on Triple Helix

https://www.triplehelixassociation.org/helice/volume-3-2014/helice-issue-4/essence-co-innovation-generation-living-labs-university-environment

Abstract:

William J Mitchell stated in the 1990s that Living Labs were interesting mechanisms “to study people and their interaction with new technologies in a living environment”. Indeed, what lies behind the Living Lab term is the concept of Open Space for Experimental Learning, that is to say user-driven open laboratories where knowledge spills over by collision among all the individuals involved. On the one hand, universities act as small cities formed by a combination of students, researchers, and staff population that become a Liquid Network. They form part of an open network, where ideas flow in unregulated channels and where the connection is more valued than protection, where individuals are free to move around sharing, and their ideas are colliding with others generating new valuable knowledge. On the other hand, the Science and Technology Park (STP) industry, as part of the Global Innovation Ecosystem, needs to evolve towards new citizen-centred innovation scenarios based on the knowledge economy, where cities become a more active agent in the process of socio-economic wealth generation within a given region, supported by SMEs linked to STPs.

Living Labs are becoming a strong mechanism for the SME to develop competitive products and services, supported by the cooperation of the customer. An SME linked to a Science and Technology Park located in the campus of a University will have an important advantage to get support from the University community to co-create and co-design their output deliverables. This paper aims to define a new STP trend for the next future in which Living Labs will be playing a crucial role for innovation production and, therefore, some new reformulation of knowledge production functions should be taken into consideration.

Living Labs as A Democratic Innovation Streamflow:

 

The concept of the ‘Living Lab’ was first developed by William J Mitchell1 in the 1990s at the MIT Labs in Massachusetts (USA) in order “to study people and their interaction with new technologies in a living environment”. We can, therefore, state that Living Labs are user-driven open innovation ecosystems in real-life environments in which innovation is fully integrated in the co-creative co-design processes for new technologies, products, services, and societal infrastructures. This approach allows the emergence of new spaces for interaction and knowledge exchange that bring about a significant change of paradigm in the collaboration among innovation ecosystem agents (SMEs, society, institutions).

An interesting concept underlies the definition of Living Lab, i.e. that of Open Space for Experimental Learning, which needs some kind of analysis:

Open Space:

The Living Lab should run in open environments from the point of view of user interaction. In other words, we are talking about non-controlled environments in which users are engaged to behave freely in front of an experiment or prototype of a product or service and interact with them.

Experimental Learning:

Given the openness of the interaction, the products and services included in the Living Lab are not final products, but undergo continuous improvement over time due to the involvement of end users.

What can be seen from these concepts is that the user is a fundamental element in open innovation methodologies (user-driven open innovation). In their current shape, Living Labs share the regional dimension of the economic perspective of innovation that is found in clusters or innovative milieus.

Living Labs becomes a philosophy with the aim of improving the socio-economic wealth of the territories, and this only can be done with the full involvement of their citizens.

Benefits of Living Labs:

A set of interesting benefits that the different stakeholders can gain from deploying user-driven open innovation under Living Lab methodologies can be summarized as follows:

– For the users in their role as citizens and community: to be empowered to influence the development of services and products which serve real needs, and to jointly contribute to savings and improved processes through active participation in the R&D and innovation life cycle.

– For the SMEs, including micro-entrepreneurs as providers: developing, validating and integrating new ideas and rapidly scaling up their local services and products to other markets.

– For the larger company: making the innovation process more effective by partnering with other companies as well as end-users, which are rooted in active user experiences, increasing “right the first time”.

– For research actors, the economy and society: stimulating business-citizens-government partnerships as flexible service and technology innovation ecosystems; integrating technological and social innovation in an innovative “beta culture”; increasing returns on investment in ICT R&D and innovation (what we prefer to call ROI2S: “Return on Investment to Society”).

University: A Perfect Liquid Network:

Universities are constituted by a complete ecosystem of different elements: students, researchers, and staff that are constantly interacting. It is a very rich knowledge-based pool thanks to the constant colliding of citizens-thoughts. These collisions provoke knowledge spillovers that will generate new knowledge: hybridizing, by means of synergies or symbiotic processes among them.

Steven Johnson5 points to this sort of environment as a “Liquid Networks” where ideas flow in unregulated channels, and where a connection is more valued than protection, where individuals are free to move around sharing, and their ideas are colliding with other generating new valuable knowledge. Universities are the best example of a “Liquid Network”. Indeed, sometimes new knowledge is not brought up in the classroom, but in common and shared areas such as Campus bars, sports areas, leisure spaces, etc. Nevertheless, the university community is not aware of the potential knowledge that unintentionally flows around the campus. It can be reoriented in order to generate add value to society by interacting with other innovation ecosystem agents such as the SMEs.

Science and Technology Parks: Sme-Driven:

The Science and Technology Park (STP) industry, as part of the Global Innovation Ecosystem, needs to evolve towards new citizen-centred innovation scenarios based on the knowledge economy, where cities become a more active agent in the process of socio-economic wealth generation within a given region. This means that the current STP business model, and in some way that of SMEs too, should be redefined, along with their innovative financing models, in order to make them more sustainable and effective entities.

SMEs are by far the most important category of companies – in the European Community alone there are more than 25 million SMEs. An SME is a highly diverse category, and includes advanced innovative companies that are often working internationally, as well as less innovative suppliers and jobbers for whom the region is their market.

The role of advanced SMEs in the regional and national innovation system as creators of new products, services, and markets, and as partners for larger companies is crucial, as is the strength of the regional innovation ecosystem that supports them. Moreover, due to the globalization of markets, SMEs must take a more open and cross-border approach to business. As a result, they therefore need to constantly enhance their capabilities to innovate and get involved in international knowledge networks in order to survive.

STPs are currently playing a very important role in fostering the growth of SMEs by providing them with tools and an appropriate environment in order to facilitate the consolidation process. However, there are some elements that STPs should pay more attention to, and which are crucial to strengthen the innovation generation process. These include: continuous support for the expansion of networks from a long-term perspective, creating an environment that stimulates the development of the knowledge-base SMEs or increasing the degree of encouragement tenants are provided with in order to establish localized linkage among Higher Educational Institutes. In STPs, SMEs frequently find innovative solutions by interacting among themselves. There is no specific methodology with which to induce the creation of new elements (products or services) by interplay and they mostly come about by serendipity. This sort of process is defined under the aforementioned concept of “Knowledge Spillover” (KS), where knowledge and innovation are generated by proximity between individuals as a result of the exchange of ideas and their continuous interaction.

Science and Technology Park + University with Living Lab Philosophy = Area of Innovation Trinomial:

At this point in time, Living Labs emerge as a keystone for highly value-added joint ventures between STPs and University environments that will enrich the capacity of a STP to act as an Innovation Engine for creating smart regions, and will be the cornerstone of the competitiveness strengthening in the regions. STPs and Living Labs are becoming the perfect combination and complementary as innovation entities providers. The STPs act as an ideal resource provider (innovation hub) to create the appropriate “good-luck” conditions for the Living Labs in order to successfully host any project. On the other hand, Living Labs are becoming an excellent Service to be provided to SMEs linked to the STP.

Some of the elements that we should consider inalienable and inherent to the STP are the companies (start-up, spin-off, spin-out, and consolidated) which need some support to be successful in the innovation market with new products or services. In general terms, companies develop their products or services and, just a few of them, lean on final users for test-bed processes in order to understand potential problems. However, at that point the product has already been developed and only allows, due to budget restrictions, a few small modifications.

When the Living Lab approach is included to the innovation generation equation, a change of perspective is required, for which a new vision of the collaboration between the companies as product or service provider, and the final user (or even co-opetiton9, a term re-coined several times since 1913 that describes the cooperative competition):

The co-opetition reached by all the agents involved in the innovation environment will produce a significative effect: “Symbiotic Synergy”, that is to say collaboration in the development of new innovative products and services (Synergy), where the final result will benefit all participates (Symbiotic). In addition to this, a particular derivative will be produced: the hybridization, that will spark extremely innovative and creative solutions with much more energy by means of the participation of agents from a different skills set. Moreover, when the university community it is considered as a LivingLab itself, the strength to generate new innovations is unquestionable.

Indeed, Living Labs are considered convoy projects10 focused on two effects produced by the interaction between all the innovation eco-system agents (bearing in mind its MIMO –‘Multi-Input, Multi-Output’ – nature):
– Cross-pollination among the agents and entities involved is inherited from the Porter’s cluster model.
– Social capital generation11, as a consequence of the exchange of knowledge and information among all the participants in the project. Espaitec, as a connector with the global system of innovation and a transducer between academia and business, reinforces its mission by providing an ideal environment in the province of Castellon called the e’LivingLab, an instrument that will strengthen, whenever possible, the cooperative development of innovation across all the socioeconomic agents in Castellon. Living Labs are, per se, drivers of innovation that ensure the companies related to this initiative have a highly successful impact on the market through the end-user involvement at all stages of product development, i.e. co-design, co-creation and co-testing. A Proof of Concept phase will extrapolate the methodology and several of the projects in the Living Lab to towns in the province of Castellon. Thus, Smart Cities and a Smart Province will be constituted through deployments such as Rural Labs initiatives, which are extensions of the Living Lab but implemented in rural areas, where there are already many success stories throughout Spain.

Espaitec is now directing the implementation of the e’LivingLab on the campus of the Universitat Jaume I in Castellon. This involves transforming the current campus into a so-called Smart Campus, in which products and advanced technology will be made available to the university community to improve the quality of life in the area. It will also get university members involved in the development of innovative products through their participation and feedback as end users (democratization of innovation). This is what might be called “Symbiotic Crowd-sourcing”, because all participants will benefit from the results and it is the results will be the consequence of the participation of the Campus citizens.
The most important capability of our LL (e’LivingLab) is the fact that it is created by an STP to foster hybridization among all the LL participants, and not only the interaction between companies and customers or users; this is the characteristic that makes our LL special. The creation of an environment where different companies and R&D groups (from the University and from companies) are designing and developing products with co-creation user support, sparks interaction among them to generate more extreme innovation at the time when new synergies are created.

Conclusion:

A brief snapshot of the current landscape in innovation milieus has been taken, and three main active agents are identified: Science and Technology Parks, as high value-added service providers, Living Labs as the Customer Experience promoters to generate innovative products and services, and Universities to generate new valuable knowledge thanks to the interaction of its citizens. We have clarified the main issues that the tandem STP + University Living Labs will face, however, it is clear that the combination of STP + Living Lab will be able to foster the economy in any region and its development will be citizen-centred, that is to say the citizen will return to their original position in the centre of the Global Innovation Eco-system. From our point of view, it is necessary to establish the correspondent innovation bridges among all the Parks and Living Labs in order to create a value-added framework for the SME to link to the Parks in order to improve their internationalization market penetration.

—————————————————————————————————————————————————

Author:

JUAN A BERTOLIN
Chief Innovation and Project Officer
espaitec – Science and Technology Park in Castellón Spain
juan.bertolin@espaitec.uji.es

Entrepreneurship, From Silicon Valley to Lahore

By   October 2, 2015

1

The key to  inter-dependency  is based on building a relationship and winning the trust of business stakeholders. The word Entrepreneur is rooted in French word entreprende which means someone who takes the charge or responsibility, in this case running a business. Entrepreneurship comes with a vision and a drive to make a difference. The future changes would not happen as quickly without investors – Without investors and entrepreneurs and we would have a lower standard of living. “Education, innovation and trickle down investment creates new jobs. A durable economy is built from the middle class up, not from the upper class down”. Ibn Khaldun in 14th century also suggested that trade is about promoting mutual understanding and cooperation, fulfilling consumer’s needs, creating wealth and influence, and curbing growth of industrial cities, since unplanned and overpopulated metropolitan growth, in most cases, brings down quality of life – So true. According to Geniza papers, found in an old Jewish synagogue in Egypt, favorable social and political forces helped create rational capitalism during Muslim Middle Ages and  those social and political conditions are responsible for rise and fall of the civilizations. Starting a new business brings excitement to entrepreneurs but it can be extremely stressful if you don’t understand the risks. You can make honest mistakes and be forgiven, but there is no room for repetitive errors in business. A seasoned business person can’t be bitten twice from the same hole .

Innovation:

2

US is leading in number of billion dollar IT startups, and second comes  China. It’s interesting to see Israel with a population of merely 2 million, has more billion dollar IT startups than India. A true innovator is the one who has a passion to create something that most of the people believe cannot be done. “Steve Job was so bright, so visionary that I had to fire him” Arthur Rock, Investor of Intel & Apple Innovation requires laser-like focus because single invention may lead to several competing value propositions. Picking the right value requires skills, discipline and plenty of luck. And don’t forget your competition. “Innovation includes not only technologies but also new methods or ways of doing things that sometimes appears quite mundane. Innovation can be manifested in a new product design, new production process, a new approach to marketing or a new way of training and organizing. It can involve virtually any activity in the value chain” says Michael Porter, Harvard Business School.

Silicon Valley was founded on the American system of innovation and the free market. For outsiders, it looks fragmented and decentralized but in reality it’s a tightly knit ecosystem of Entrepreneurs, Money, Government, Academia, Mentors and Support Groups. In Silicon Valley, the ecosystem has transformed into “Rainforest”. There, the entrepreneurship is a profession and startups are an industry.  It’s an industrial district of innovation, a term used by Alfred Marshall in 1890 with an idea that local technological spillover causes companies in the same line of work to cluster. We have seen such clusters of traditional watchmakers in Switzerland, machine tool makers in Germany, call centers of Bangalore, India, filmmakers in Hollywood and auto industry in Detroit, USA. Unique model, availability of capital, company structure, management, and global connections make Silicon Valley keep re-inventing itself. Other places don’t have the network and commercialization know-how as people of the Silicon Valley have. “The Prevailing business philosophy of Silicon Valley is to promote openness, learning, sharing information, co-evolution of ideas, flexibility, mutual feedback, and fast response to opportunities and challenges” The Silicon Valley edge: a habitat for innovation and entrepreneurship, by Chon-Moon Lee. Putting a group of entrepreneurs into the same physical space is important for the growth of the business culture. Smaller clusters could transform into bigger clusters, but sometimes they break too.

The key to success is that cluster of pieces that makes an ecosystem, has to grow. When Fairchild bypassed Bob Noyce for company’s CEO position, he left the company and joined an East Coast investor, Arthur, to start Intel Corporation with Gordon Moore. Founders had no business plan. They wrote a one page double spaced document that became a start of a multi-billion dollar Intel Corporation. “It was not a profound document but rather a cute document” Gordon Moore, Founder & CEO, Intel Corporation. Some investors look for a good team and a unique idea, other sense passion of the founders, ahead of experience and credibility. When we were screening Maro Tandoor (bread-maker) venture at LUMS Center for Entrepreneurship in Pakistan during 2014, we did not see a good fit between an Elite University incubator and a low tech bread maker.

However, the young startup team was so passionate about their idea, the judges and director of an incubator, Khurram Zafar had no choice but to accept them. Maro Tandoor became profitable within a month of its operation. Today, you could see long lines of people outside their first shop in Model Town, Lahore, waiting for fresh Naans with choices of 18 different fillings from meat, veggies, cheese to chocolate. Investors like entrepreneurs with a vision and a product that has a huge market impact. “I am not interested in an entrepreneur who does it our way, who has certain dress codes, I am interested in an entrepreneur who has vision, has something that is consequential and big”  Don Valentine, Sequoia Capital.

Knowledge Sharing:

3There is this old saying that wisdom is a lost property of a wise person when he finds it, he owns it. In Silicon Valley, the flow of knowledge from one company into its “Rainforest” or ecosystem is constant. What people are up to, is there anything new happening? If the knowledge is channeled well, it helps build the region. There is a heavy traffic bridge of expert relationship between industry and academia. Ed MacCracken, former CEO of Silicon Graphics said, some secrets are more valuable when shared. This is the idea behind the success of open-source application such as Android operating system. The successful ecosystem of Silicon Valley provides a rich material for sociology departments of the universities. Spreading of knowledge is easy but spreading of practice behind knowledge is not. It takes a critical mass of people with special skills, motivation, and strong will. Gilbert Ryle (1949) argued that actionable knowledge has two components, Know-how and know that. Know how will tell you how to do something. Know that is just an abstract. Without Know how, Know  has a limited usefulness.

Investment Risk Takers:

4Venture means to proceed despite the risk of danger. Some see investment as a risk; investors see this as an opportunity. A typical investor takes calculated risk and does not hesitate. In VC world, you look at 200 companies, select 10 that are great and you make it to hall of fame through one. That’s your lifetime achievement. Some will have modest returns, some will fail, some will be living dead; they don’t succeed, they don’t fail, they just waste your time. More troubling than a shortage of talent is what critics call the American Midwest mentality: an alleged attitude among local tech entrepreneurs and investors to play it safe. If local entrepreneurs are too careful, not taking enough risks, they can’t disrupt the market with mass market consumer products. Even Chicago veterans concede there’s some truth to it. “There are, in general, fewer risks taken on speculation about mass-market consumer products here,” admits Yagan, who has worked in New York, Boston, and Palo Alto. “What is our Google or Facebook or Twitter? I can’t think of any.”

University Labs:

5Educational institutions can play a key role too—for example, by following Stanford’s 60-year lead in establishing and supporting research institutes and technology parks. Over the years, Chicago-area schools haven’t made that enough of a priority. According to the Association of University Technology Managers, 461 patents were issued to researchers at California universities in 2010 (the most recent year for which data is available); only 142 were issued to those at Illinois universities. However, the relationship between industry and innovation labs of the universities is a two-way street. R&D provides the raw material of ideas turned into reality by businesses. But it takes leadership and people with special skills to successfully bring a prototype to the marketplace. Cluster of book-smart talents in universities must match with cluster of street-smart talents in the industry What Stanford has been doing for a startup is not magic – It offers practical steps and lots of encouragement to the startups.

Highly Mobile Labor:

In 2012, Tony Perkins, founder and editor of Alwayson, asked a question to an audience of few hundred people at KPMG. How many of you grew up here (Silicon Valley). Only 3 raised their hands. Then he asked, how many of you want to go back home. None raised his hands. As Intel CEO Craig Barrett said “Every doctorate should have a green card attached to it” 80% of computer science graduates leave BZ University in Multan, Pakistan because there are few good paying local jobs. Chicago has the same problem. “If Chicago doesn’t figure out how to plug in the engineering talent from the region,” Kittlaus said at a Technori event in March, “they’re going to get left behind.” The problem is keeping them here (in Chicago). “If you go down to Champaign and ask computer science graduates, ‘where are you going to go?’ ” Notes Yagan, “most will say New York or San Francisco.” One lure is greater pay. The average tech job pays nearly $105,000 in Silicon Valley versus roughly $84,000 in the Chicago area, according to a 2012 survey by the career site Dice.

Infrastructure and Government Relations:

The role of private sector in developing communities is also worth mentioning. The Silicon Valley has its own index of economic, education, health, and quality of life. There, civic and business leaders work together to improve education, build information infrastructure, reduce traffic congestion and improve government operation. Yes, they help state government run more efficiently. The quality of life includes fewer crimes, good schools, spacious parks, smooth roads and bridges. The role of private sector in developing communities is important. A good example is Bahria Town in Lahore, Pakistan. That is why, some parts of Lahore has a reflection of European and American cities. No kidding.

Support Groups and Community:

6The support group or community such as lawyers, accountants, consultants, EDCs of the cities also play important roles in creating an ecosystem. “The community is so damn collaborative,” says Raman Chadha, a professor of entrepreneurship at DePaul University. “That hadn’t existed ten years ago when it was a bit more competitive, a bit more siloed. Today, when we hear of astartup thinking about leaving, we rally around them to get them to stay. This would never have happened in the past, to do a sort of intervention. Now there’s a civic pride that wasn’t there before.”

Capital:

7

Wealth is money beyond basic need; Capital is used to generate additional wealth. The majority of funding in a startup will be your own or from your friends and family. Then Angel and VC investors, some will come from an investment bank or government and a portion from crowd funding. FUNDING SOURCES (USA 2013) Average Investment (% of investment) $48K Personal (57%), $23K Friends & family (38%), $6m VC (.05%), $75K Angel (1%), $144K Banks (1.4%) $7K Crowd (Top two are Kickstarter and Indiegogo) “We also have lack of Super-Angels and lower-level VCs interest in Kansas City “Almost all the money you raise comes from outside” Jessica Bishop, Kilink mobile Investors in Silicon Valley not only fund the startups, they provide mentoring and coaching to founders who lack specialized skills in management, marketing and finance. If founders can’t develop such skills, they bring in management with needed skill sets. Chicago-based tech companies attracted $488 million in venture capital in 2011, according to Dow Jones Venture Source. That’s scarcely a fifth of what flowed to New York City ($1.8 billion) and a flyspeck compared with what got invested in Silicon Valley ($8.2 billion). “Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community.” Andrew Carnegie

Business Plan:

8

Intel Corporation was founded after investor saw a one-page double space business plan from the founder Gordon Moore. But it does not mean you should have your business plan on one page. Eight pages are normal now a  days simply because investors don’t have time. But always carry a one page executive summary as a starter. “It was not a profound document but rather a cute document” Gordon Moore, Founder, Intel Corporation on his one-page double space business plan “Entrepreneurs should never underestimate themselves. For VCs, the big numbers do matter. You have to abandon the conventional wisdom. The plan has to stand out of the herd mentality” “I don’t know how to write a business plan, I know how to read them” Tom Perkins, Silicon Valley VC pioneer Recently, I wrote two business plans, one with 6 million revenues in 5th year, other with 16 million in the same period. The general rule is that if your current or future revenues are not more than 10 million, VC’s are not interested.

Team:

9

If a startup founder comes to us alone we ask them to bring at least one more founder. Why, because it’s difficult for a founder with technical background to work on a product and take responsibility of marketing and sales at the same time. According to a recent Kauffman Foundation study, highest rate of entrepreneurship and innovation in America is shifting to the 55-64 age brackets while declining amongst those under thirty five. KFC founder started his venture at age 65. You could see white bearded colonel in old KFC logo Another LUMS startup; King Kashmiri packages pink shaded Kashmiri tea in tea bags. The team is made up of son, father, and a woman. The tea that takes over an hour to prepare now takes less than 5 minutes without sacrificing the taste. Again, age and gender diversified team behind a successful venture. It’s important to have a diversity of talented people in your leadership, combining street smart with a book smart, teaming together a veteran with a young executive. Here is a good example. If you look at the American companies that have been successful, they have executives, with and without MBA degrees. In other words, companies with ALL or no MBA degree holders don’t do well. Facebook founder and CEO, Mark Zuckerberg hired 44 year-old COO Sheryl Sandberg with an MBA degree.

Luck:

Whether it’s an investor or a region, there are unknown reasons that bring fortunes to some and not to others. Why information industry never flourished despite the presence of Carnegie Mellon, one of the best Computer Science Departments. How come Cambridge university community, where the first successful digital computer was built, could not become pioneer in technology? Even the most successful investors will tell you that luck played a major role in their success. “You got to be lucky. everybody has to be lucky at some point and … I was lucky earlier” Arthur Rock, Seed investor of Apple Computer and Intel Corporation, a VC from East Coast when Steve Job of Apple computer was working for Noland at Atari computer, he offered Noland 1/3 of Apple computer for $50K. Apple worth in 2010 was $220 Billion. Noland refused. “I could have owned a third of Apple Computer for $50,000. A big mistake” Noland Bushnell, Founder, Atari Game My ex-partner from Silicon Valley went to a friend of mine for funding, whose partner advised him not to invest. So I ended up investing and reaping the benefit when the same company went from single employee to 72 with $17mil in annual revenues. “So much luck goes into this that without it very few of us would have met any success” Don Valentine, Sequoia Capital With $142K from Mike Markkula $57K from Arthur Rock and $150K from Don Valentine in 1976, Apple market value in 2010 was $220 Billion With under 3 million investment, Cisco, in 2010 worth $150 Billion. Today 80% of the world is connected to the internet through Cisco devices.

——————————————————————————————————————————————-

Author: Abid Malik is Managing Director at Indus Venture based in Missouri, USA. He also serves as Foundation Council Member at LUMS Center for Entrepreneurship. | abid@indusventure.com