Gauteng Innovation Strategy

20 April 2010

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Normal Person

Scientist

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Table of Contents

INTRODUCTION

OUR UNDERSTANDING OF INNOVATION

STRATEGIC AND POLICY OBJECTIVES

INTERVENTION MECHANISMS

WAY FORWARD

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Table of Contents

INTRODUCTION

OUR UNDERSTANDING OF INNOVATION

STRATEGIC AND POLICY OBJECTIVES

INTERVENTION MECHANISMS

WAY FORWARD

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Innovation is the means by which we are able to do more, with

less

A useful metaphor in an economy is in the kitchen. To create valuable final products, we

mix inexpensive ingredients together according to a recipe. The cooking one can do is

limited by the supply of ingredients, and most cooking in the economy produces

undesirable side-effects.

If economic growth could be achieved only by doing more and more of the same kind of

cooking, we would eventually run out of raw materials and suffer from unacceptable levels

of pollution and nuisance.

Human history teaches us, however, that economic growth springs from better recipes, not

just from more cooking. Paul Romer

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Table of Contents

INTRODUCTION

OUR UNDERSTANDING OF INNOVATION

STRATEGIC AND POLICY OBJECTIVES

INTERVENTION MECHANISMS

WAY FORWARD

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Innovation must be thought of as wider than just technology and science

Social Innovation

Public Innovation

Economic Innovations are “traditional” innovations; they revolve around product, process and marketing of goods and services. Economic innovation address the needs of the market, satisfies the demands of consumers.

Social Innovations solve “non-market” problems such as employment, safety and security, delivery of healthcare – basically all of those “social goods” which the market generally does not get involved in; they satisfy the demands of citizens

Public sector innovation addresses the needs of government; this is different from the needs of the citizen. It also faces unique challenges because of the fiduciary responsibility of government in spending public funds on inherently risky projects

Economic Innovation

TOTAL INNOVATION

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Open Innovation brings together each member of society to

create commonly owned solutions

ScientistsTechniciansResearchersLaboratories

FEEDBACK GROUP

SOCIETY

Closed Open

Small group of experts and little collaboration

Massive community involvement

Restricted access to IP

Free flow of information and knowledge

Slow development process

Very fast evolution

Assumes the ‘experts’ know what is needed

The community itself defines what it wants

Challenges

SOCIETY

INNOVATORS

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INTRODUCTION

OUR UNDERSTANDING OF INNOVATION

STRATEGIC AND POLICY OBJECTIVES

INTERVENTION MECHANISMS

WAY FORWARD

Table of Contents

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What are the challenges that we need to address?

Innovation ≠ Science The concept – and support – of innovation must also include social and public innovations

Society is not a passive recipient The active contribution of society towards innovation must be supported and nurtured

Community innovation builds partnerships and consensus Dialogue with society about what their needs are, and involving them in the development of solutions,

builds ownership and personal responsibility

Innovation supports and accelerates other government objectives By strategically integrating innovation with other strategies, government policies and objectives can

be achieved more efficiently and effectively

Building an Innovative Society Removing the barriers of innovation, and creating a more conducive environment

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The Strategic objective of catalysing innovation towards particular

outcomes is supported through three broad policy objectives

To accelerate innovation in all its forms, in order to bolster and support the broader strategic objectives of employment creation, and sustainable social and economic development.

THE STRATEGIC OBJECTIVE FOR INNOVATION

POLICY OBJECTIVE 1:

Effortless Communication and Access to information

POLICY OBJECTIVE 2:

Promoting strategic industries and sectors

POLICY OBJECTIVE 3:

Driving Social and Public Innovation

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INTRODUCTION

OUR UNDERSTANDING OF INNOVATION

STRATEGIC AND POLICY OBJECTIVES

INTERVENTION MECHANISMS

WAY FORWARD

Table of Contents

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There are 5 initial interventions and projects that can support the

strategy

Innovation Development

Office

Collaboration Network

Innovation Incentivisation

Cluster and Precinct

ManagementSmart City Support

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Innovation happens because of the interaction of people, in

finding new solutions to their challenges

GOVERNMENT COMMUNITY

PRIVATE SECTORACADEMIA

COLLABORATION NETWORKS INNOVATION

An electronic networking platform that provides additional functionality to enhance and support activities that are represented within the face-to-face networks, such as:

A database of member activities; archived information; active networking components; links and connections to relevant information

Electronic Network

Face-to-face networking structures which will host regular events to exchange knowledge and innovations. The networks will be composed of all agents involved, including:

Communities; Private Sector; Academia; Government Organisations; International Representatives

Physical Network

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Government Procurement can be used to drive innovation

through competitions, focussed on public service innovation

• Green Energy Technologies (including wave power, gas turbines, energy efficiency)

• Social Housing

• Health care provision

• Defence and Military Applications

• Low-emission vehicles

• Advanced Materials technology

1. Open competition approved by IDO

2. Open competition driven by strategic objectives

3. Applications received from companies and processed

4. Most Interesting Ideas selected

5. Phase 1 demonstration of feasibility – lasting 6 months and worth R500k to R1m

6. Assessment of projects for Phase 2 Funding

7. Phase 2 – Prototype development lasting multiple years, R1 – 10m

8. Leads to competitive procurement by department and product to market

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Government Procurement can be used to drive innovation

through competitions, focussed on public service innovation

Stimulate technological innovation

Utilize small businesses as a mechanism to meet government research and development needs

Fostering and encouraging participation by socially and economically disadvantaged small business concerns and women-owned business concerns

Mitigating risk through phased project delivery

Enabling departments to appeal for a wide range of ideas and evaluate these through short-term simplified contracts

Reducing administrative obligations

Facilitating engagement with entities that the government would not usually do business

Creating novel solutions to existing or emerging issues

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Innovation Vouchers can help foster innovation, and improve

access to new ideas

The Innovation Voucher allows you to concentrate on running your business while knowledge providers come up with a solution

IDEA KNOWLEDGE PROVIDERSFinances

TimeExpertiseNetworks

INNOVATION VOUCHERS

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Innovation Vouchers allow organisations to ‘purchase’ research

for their own ideas

Certain entities are registered as Knowledge Providers, including amongst others:– Private organisations– Universities and academic institutes– Private individuals

Companies or individuals may then purchase “Innovation Vouchers” from the IDO for a certain amount, say R50k. This can then be redeemed at one of these Knowledge Providers for research equivalent to R100k

Companies could purchase Innovation Vouchers, and provide them as CSI to start up companies, NGOs, Charities, etc.

Caution needs to be taken to ensure that the voucher system is not abused

Similar systems have proven exceptionally successfully elsewhere in the world – the challenge is to develop a system that is appropriate for Gauteng

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Incentivising innovation towards the strategic objectives of

government allows us to fulfil our mandate more effectively

Individual Incentivisation Existing incentives only focus on organisations and companies –

but people are also driven by a “profit motive” – i.e. Higher salaries. It may be possible to identify mechanisms by which individuals are persuaded to move into, or remain within, an “innovation-oriented” career, by linking them with form of income-related grant, tax rebate, or refund

Social Innovation Incentivisation Because only scientific and technological innovation is

incentivised, less effort is spent on developing solutions to social challenges. Creating an appropriate CSI mechanism for social innovation may quickly stimulate this area

Across all three areas, it is noted that Provincial government has no fiscal authority of tax rebates or incentives.

At the same time, cognisance is taken of the responsibility which government must take in spending public funds – i.e. In a responsible and effective manner.

Although these must be understood, there are sufficient examples worldwide to show that they can be dealt with and addressed, while still supporting the final strategic goals.

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The development of innovation spaces will help drive sector

focused innovation – with the low-carbon economy first

CLUSTER

Clustering Effect

Knowledge Spillover

Network EffectEconomies of Agglomeration

Economies of Scale

Impact of Sector Cluster dependent on Size

Number of agents available to interact

Ability of agents to interact with each other

Optimised usage of specialised resources, including:

Facilities

Labour

Attraction of ancillary services at sufficient density

Ability to induce similar buyers and sellers to the Cluster

Creation of a network of innovation clusters throughout the province, focusing on relevant research areas and aligned to the development of the strategic industries and sectors.

These clusters will be able to innovate faster, because of the benefits arising from clustering.

The first cluster being considered is the Low-Carbon Cluster, developed in parallel with, and guided by, the Green Economy Strategy as well as the Gauteng Industrial Policy

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Creating a Smart City-Region will help drive an Innovative City-

Region

Characteristics of a Smart City Advanced information and knowledge infrastructure – which allows for easy and fluid communication An efficient public service system that uses the communications infrastructure in service delivery Strong levels of communication within, and between, the different members of the community A safe, secure and environmentally friendly location An integrated city environment in which the various components of the city (e.g. infrastructure,

security, utilities, transport) are interfaced and networked to allow real-time monitoring and rapid response

A strong connection between different “Smart Communities” able to respond to the needs and challenges of the city-region

A safe, secure and sustainable city that supports the needs of its citizens, and attracts investment, resources and human capital as a preferred destination

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INTRODUCTION

OUR UNDERSTANDING OF INNOVATION

STRATEGIC AND POLICY OBJECTIVES

INTERVENTION MECHANISMS

WAY FORWARD

Table of Contents

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Ways to contribute

Davis Cook – davis.cook@gauteng.gov.za or 082 803 7716

POLICY FORGE: An online interactive site developed to provide basic input around the thematic areas of the draft

strategy Currently in a pilot stage

www.policyforge.co.za

SOUTH AFRICAN INNOVATORS NETWORK SAINe is an online networking platform that promotes the discussion, sharing and learning of

innovation, and innovation related topics There will exist multiple blogs on the site, providing an opportunity to engage on the document’s

contents, and receive feedback on the development process

www.saine.co.za

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Key Deadlines

14 May – Feedback process for Strategy Document Ends

End of May – Submission of Strategy document for provincial adoption

End of July / August – finalisation of business cases for interventions

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END OF PRESENTATION

THANK YOU

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The fastest growing countries in the world also appear to have

the highest growth in patent production.

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Per Capita GDP (Index normal at 1985)

1979

1981

1983

1985

1987

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1991

1993

1995

1997

1999

2001

2003

2005

0

5

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Patents per 1000 Citizens (Index normal at 1985)

There is a 1-1 correspondence of the countries that have had the highest per capita GDP growth between 1985 and 2005, to those who have increased most the number of patents per 1000 citizens.

Although these figures do not explain the direction of causality, i.e. whether innovation creates economic activity, or the other way around, they do clearly indicate the close relationship between the two variables.

Rank Per Capita GDP Growth

Growth in Patents per 1000

1 China China

2 Rep. of Korea Rep. of Korea

3 Thailand Thailand

4 Singapore Singapore

5 India India

Source: World International Patent Office, United Nations Statistics

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South Africa’s knowledge generation is slowing in comparison to

trading partners and competitor nations.

2003 2004 2005 20060

1020304050607080

Percentage of GERD financed by Business Sector Total OECDRussian FederationSouth AfricaChina

2002 2003 2004 2005 2006

-20%-10%

0%10%20%30%40%50%

Patent Comparison to BRIC CountriesBrazilChinaIndiaRussiaRSA

2002 2003 2004 2005 2006

-10%

-5%

0%

5%

10%

15%

Patent Comparison to Trading Partners AusEPORSAUK

Both in financial terms, and absolute number of patent production, South Africa is losing ground against both trading partners and other competitor nations such as the BRIC countries.

Even the rate of growth, shown below, is decreasing in comparison, indicating that the difference in future will be even larger.

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Innovation must be thought of as wider than just technology and science

Economic Innovation

Social Innovation

Public Sector Innovation

Op

en I

nn

ova

tio

n

Economic Innovations are “traditional” innovations; they revolve around product, process and marketing of goods and services. Economic innovation address the needs of the market, satisfies the demands of consumers.

Social Innovations solve “non-market” problems such as employment, safety and security, delivery of healthcare – basically all of those “social goods” which the market generally does not get involved in; they satisfy the demands of citizens

Public sector innovation addresses the needs of government; this is different from the needs of the citizen. It also faces unique challenges because of the fiduciary responsibility of government in spending public funds on inherently risky projects

Open innovation processes are revolutionary, in that they include the community in the innovation process.

While ‘traditional’ innovations may be successful in the market through “closed” innovation, social and public innovation can only be successful through collaboration and community participation

D

B

C

A

Transferability

Ow

ner

ship

Community Innovation

Public Innovation

Public-Private Innovation Partnership

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An Innovation System is the set of institutions that support and nurture

the innovative process

CONSTITUTION

Minister and Deptof Education

Minister and Deptof Sci & Tech

Other Ministers and Departments

Policies, Governance and Resourcing

Human Capital R&D Innovation

HEIsHEIs, PRIs, Business,

Enterprises, NGOsHEIs, PRIs,

Business etc.

Public and Private Users

The South African National System of Innovation, NACI, 2006

Government-driven with no inclusion of market or

social forces

Community and Citizens are passive recipients of

innovation

Focus on science and technology

No strategic use of innovation in driving

provincial government mandate

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In order to address these challenges of the National System, an adjusted

Regional Innovation System (RIS) is proposed

RIS: The entire system of innovating agents and entities, along with their end-users, which together are responsible for the development, production, and use of new knowledge which is both socially and economically useful.

Private Sector

Public Sector

Community

Academia CIVIL SOCIETY&

CONSUMERS

HEIs

Incentives

Policy

International Environment

Colleges

Primary Education

Resources

Governance

3

2

1

4

Funding

1: Civil Society and Consumers have needs for innovative

solutions in all areas – economic, public and social

2: Innovation is not a pipeline – it is an integrated process with

involvement of all members of the community: dialogue is essential

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Each set of agents have their own responsibilities, and roles to play

within the Regional Innovation System

Academia

Private Sector

Public Sector

One of the traditional areas for ‘innovators’, this remains a core component of the innovation system. Academic institutions are largely responsible for basic research and development in virtually every sphere of knowledge, they provide education and skills development that supports innovation, and act as attractors for people with ideas

Referring not only to large corporations with significant R&D budgets, but moreimportantly to the SMME sector. Small companies are able to rapidly respond to disruptive innovations by adapting their business models, services and goods. SMMEs can also collaborate easier and faster with each other due to their flexibility

It is a national priority for ‘business un-usual’; that we do more, with less. This is thecore principle behind innovation, and the public sector is able to play a role not only in the development of new public service models and social goods, but also in using their own power and influence to direct innovation towards public goods and services

Community

Largely ignored by traditional innovation strategies, the community itself is apowerful role-player in the innovation process, as well as community members themselves. Examples include the Open Source software movement, the entire mountain biking industry, hip-hop / kwaito, automotive manufacturing, Small-scale manufacturing

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1994 1996 1998 2000 2002 2004 2006 2008-2

0

2

4

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12Comparative Growth - Industry vs. STP

Per

cent

age

Gro

wth

The impact of a Science and Technology Park can be measured

simply by an industry comparison

Interventions result in increased business activity

Business Development

Marketing and Branding

Networking

Value Added

Management Support

Interactivity

STP Tenants

Industry Average

Increased Economic Activity leads to knock-on effects

GDP Growth

Employment

Export Activity

Sector Composition

Increase in Knowledge Base

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The UK’s Small Business Research Initiative helps small, high-

tech companies innovate through procurement

• Green Energy Technologies (including wave power, gas turbines, energy efficiency)

• Social Housing

• Health care provision

• Defence and Military Applications

• Low-emission vehicles

• Advanced Materials technology

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Proposed Advisory Panel

Dr Neville Comins– Independent Consultant

Valerie D’Costa– infoDev Programme Director, The World Bank

Dr Paolo von Schirach– Independent Consultant

Prof David Everatt– Executive Director, Gauteng City Region Observatory

Amanda Nair– CEO, BlueIQ Investment Holdings

Matthew Heim– CEO, NineSigma Open Innovation

Rhoda Khadalia– Executive Director, Impemelelo Foundation

Prof Robin Moore– Vice-rector, University of Witwatersand

Prof Michael Pepper– Director, University of Pretoria

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Stakeholders engaged, and opportunities arising from this

engagements

Gauteng City Region Observatory (David Evaratt)

The Innovation Hub (Haresh Haricharun)

Human Sciences Research Council (Julien Rumbelow)

University of the Witwatersrand (Robin Moore)

Western Cape Provincial Government (Rahima Loghdey)

COFISA (Neville Comins)

The World Bank (Valerie D’Costa, infoDev Programme Director)

Other international consultants (Paolo von Schirach - Independent)

Inclusion of Innovation Strategy into OECD Territorial Review

Engagement between MEC and Executive Council of Uni. Of Witwatersrand

Collaboration with World Bank on the development of a Green Technology Industry Cluster and Plan

Involvement of NineSigma Open Innovation Platform in driving social and public innovation

Adoption of Gauteng strategy concepts in multiple SA Provincial strategies

Innov8 community engagement 20 April 2010