Local Innovation Policy from an Evolutionary Perspective Is Self-Renewal Capacity a Key? Markku Sotarauta

Local Innovation Policy from an Evolutionary Perspective

Is Self-Renewal Capacity a Key?

Markku Sotarauta

Markku SotarautaUniversity of Tampere

Research Unit for Urban and Regional Development Studies

www.sotarauta.info

Panic? The early 21st century seems to be dominated by an

almost compulsive need to find new pathways to the future

All over the world policy-makers have been chasing new buzz-words in their endeavours to show how dynamic their city-regions are

In ten, fifteen years we have witnessed a rapid flow of

key ideas • clusters, networks, knowledge, innovation, learning,

creativity, regional innovation system, triple helix, etc.

• Learning cities, creative cities, entertainment cities, consumer cities, intelligent cities…



www.sotarauta.info

Desperate cities?



www.sotarauta.info

Strategic adaptation

The basic puzzle that policy-makers are faced with is how to adapt to changing environment, not like driftwood in a stream but with purpose.

"It is not the strongest of the species that survive, nor the most intelligent, but the one most

responsive to change." (Charles Darwin)



www.sotarauta.info

Self-renewal capacity

Self-renewal capacity refers to system’s overall capacity to master changes in its strategies, operations and knowledge (Ståhle 1998)

• Self-renewal capacity as the set of capabilities targeted at renewing oneself in a continuous process.

• Self-renewal capacity is based on the system’s overall ability to deal with information, knowledge and innovation.

• What are the key processes and where in an ecosystem they are located and how they are integrated to other functions?



www.sotarauta.info

Evolutionary approach

The emergence of new basic variety is quite hard to predict • History has shown over and over again that new development

paths cannot be planned and foreseen, they emerge quite spontaneously and unexpectedly in space (Boschma & Lambooy 1999)

• The ability of policy-makers to influence and direct the evolution of economies is strongly limited (Moreau 2004)

• Policy-makers are adapters rather than optimizers (Metcalfe 1994), and they often pursue policy of trial-and-error or imitation (= best practice)

• Sensitivity to recognise the potential of emergent developments and possible routes to the future is crucial



www.sotarauta.info

Evolutionary approach

Policy often aims to eliminate uncertainty and ambiguity

• However, various organizations engaged in economic development are full of people who do not always know what it is that they do not know, and therefore they do not know how they will react when they will know it (Allen 1990)

• In reality, uncertainty and ambiguity are sources of innovation, development and new strategies (Sotarauta 1996; Lester & Piore 2004)

• Harmony and disharmony (Cornford this morning)



www.sotarauta.info

Emergence

An overall system behaviour that comes out of the interaction of many participants.

It cannot be predicted or even envisioned from knowledge of what each component of a system does in isolation (Holland 1998; McKelvey 1999)

Emergent systems, as a whole, develop organically and without any predestined goals even though their elements,

organizations and individuals have explicit goals to pursue.



www.sotarauta.info

Rather than looking for universal optimal policy models, we need to develop a better understanding of how policy

intentionality and emergent developments coevolve in time (Sotarauta & Srinivas 2006)



www.sotarauta.info

Time pressure is among the worst enemies in developing something new, usually even more than funding

• Time for sound futures oriented conversations is needed

• In a city with a strong self-renewal capacity, there are explorative spaces within which interpretive conversations can develop

spaces where fears of the risk of private appropriation of information and/or short-term pressures do not disrupt the conversation

• Space and ’gently’ support for bottom-up activities and initiatives are needed side by side with top-down institutional initiatives



www.sotarauta.info

Innovation for self-renewal

Innovation is nowadays more systematic and interactive process than earlier

• STILL inventions can happen in unexpected places, at unexpected times, and through chance interactions (Lester & Piore 2004)

• Cities need spaces for intended and unexpected to encounter; they need explorative spaces

• BUT there are signs that economies are losing the spaces where unexpected happen

• If explorative spaces disappear, and rational and clear-cut short-term problem-solving processes are overly emphasized, it does not only endanger invention and innovation processes but also more generally economic and societal futures oriented development processes (Lester & Piore 2004)



www.sotarauta.info

A city with well developed self-renewal capacity enables surprising developments

QuickTime™ and aYUV420 codec decompressor

are needed to see this picture.

QuickTime™ and aYUV420 codec decompressor

are needed to see this picture.



www.sotarauta.info



www.sotarauta.info

Cross-sectoral policy-platforms

Platforms where knowledge is created, shared, and exploited in knowledge creation process (cf. Nonaka’s and Takeuchi’s concept of BA)

• Physical, social, cognitive and ’cyber’ dimensions

Towards cross-sectoral policy platforms - political and social consensus seeking platforms (Asheim 2006)

• Array of instruments including and integrating key components from several policy, corporate and research domains

• Open, multi-voice, multi-vision, multi-agent, communicative – a way to deal with ambiguity and uncertainty in a collaborative process?

• Leadership, interaction, autonomous actors both exploiting and exploring



www.sotarauta.info

Self-renewal capacity and innovation platform

Experimentation

ICT in Finland

Finland is one of the leading countries in the world in terms of users, manufactures and exporters on ICT

ICT holds 10 % share of Finland’s GDP and 12 % share of labor force (biggest within all countries)

between 1994-2001 ICT was the fastest growing field of business -> the amount of ICT workers increased by 79 % and overall turnover by 300 %

Helsinki region (Uusimaa) has roughly 50 % of the overall amount of ICT-workers and 70 % of overall turnover

Sources: Innofocus (2008), Kauppakamareiden ICT-barometri (2007)



www.sotarauta.info

Helsinki region

Character of the region• Concentration of Finnish political, academic and

corporate power• 41,7 % of the Finnish R&D expenditure in 2006 (total

~5.76 milliard euro). Especially strong in ICT, digital media, bio-

technology Main development strategies

• proactive and collective development efforts have started

to emerge slowly in the early 2000’s • HUT + HSE + UIAH = Aalto University• Forum Virium Helsinki



www.sotarauta.info

Forum Virium Helsinki• Constructed cluster, or a testbed, or an innovation platform, for

the development of new customer-driven digital services and contents

• The anchor companies of the cluster are Digita, Elisa, Nokia, TeliaSonera, Finnish Road Enterprise, TietoEnator, Veikkaus (National Lottery), WM-data, YIT Group and Finnish Broadcasting Company.

• The public sector is represented by the City of Helsinki, SITRA (The Finnish National Fund for Research and Development), TEKES (National Technology Agency of Finland), and VTT (Technical Research Centre of Finland)

Few observations from the first interviews Companies have realized that traditional R&D is too slow in

today’s economy Users and developers are brought together to accelerate

innovation process “Real environment” experiments in the spirit of open innovation

• quick feedback

• avoidance of mistakes made in traditional R&D

• projects are both open and closed

• the ideas of pure open innovation processes are not there yet, but the tendency is towards them



www.sotarauta.info

In evolutionary innovation policy, focus is... • on harnessing and directing emergence (not suppressing it) or

giving birth to it• on upgrading local environment, i.e. capabilities, interpretations

and institutions• on responding to local bottlenecks • on enhancing organisational and institutional flexibility and • on strengthening connectivity between actors both internal and

external to respective region.

• All this calls for better leadership!

Documents

Local Innovation Policy from an Evolutionary Perspective Is Self-Renewal Capacity a Key? Markku Sotarauta