Innovation Strategy Management Lecture 19

Programme Part 1 – The basis of Innovation Part 2 – Innovation and New Product Development Part 3 – Innovation and Technology development Part 4 – Innovation and Intellectual Property Part 5 – EU Green paper of Innovation Part 6 – Innovation policies in different countries

Part 5 EU Green Paper of Innovation

Lecture 19: Green Paper of Innovation Introduction The challenge of innovation The situation in Europe: Diversity and convergence

Introduction The objective of this Green Paper is to identify the factors – positive or negative – on which innovation in Europe depends, and to formulate proposals for measures which will allow the innovation capacity of the Union to be increased.

In the context oh this document, innovation is taken as being a synonym for the successful production, assimilation and exploitation of novelty in the economic and social spheres.

Innovation is: the renewal and enlargement of the range of products and services and the associated markets; the establishment of new methods of production, supply and distribution; the introduction of changes in management, work organization, and the working conditions and skills of the workforce.

The innovative firm thus has a number of characteristic features which can be grouped into two major categories of skills: –strategic skills –organizational skills

In practice, this amounts to four simultaneous innovation in: conception production design distribution Example: Swatch watches

Research, development and the use of new technologies – in a world, the technological factor – are key elements in innovation, but they are not only ones.

The Commission has clearly identified – first in the White Paper on Growth, Competitiveness and Employment, and then in its 1994 communication on An Industrial Competitiveness Policy for the European Union.

This Green Paper makes use of, adds to and extends that work with a view to arriving at a genuine European strategy for the promotion of innovation.

The challenges of innovation 1.The new innovation context 2.The European paradox 3.European industry: improved but fragile competitiveness 4.The macroeconomic conditions conducive to innovation 5.Innovation, growth and employment 6.Innovation and enterprise 7.Innovation and society 8.Innovation and cohesion 9.Effective rules of play

1. The new innovation context The generalization of markets and the increasing importance of strategic alliances, the emergence of new competing countries in the technological field, the growing internationalization of companies and of research and innovation activities.... The capacity of institutions and firms to invest in R&D, in education and training, in information, in cooperation....

2. The European paradox The mobilization is all the more necessary as Europe suffers from a paradox. One of Europes major weaknesses lies in its inferiority in terms of transforming the results of technological research and skills into innovations and competitive advantages.

3. European industry: improved but fragile competitiveness The concept of competitiveness involves of productivity, efficiency and viability. European industry is facing new challenges: an increasingly intense international competition emergence of new technologies new requirements of environmental protection, etc... The Commission is preparing a report on competitiveness, which will strive to identify to what extent industry has in fact adapted itself to this changing situation in terms of international competitiveness.

4. The macroeconomic conditions conducive to innovation The setting-up and development of Economic and Monetary Union appear to be essential elements in a macroeconomic policy conducive to the promotion and dissemination of innovation. The high level of real interest rates is detrimental to investment, especially intangible investment.

5. Innovation, growth and employment The new theories of growth (know as endogenous) stress that development of know-how and technological change. The relationship between innovation and employment is complex: –product; –process.

–Product innovations lead to an increase in effective demand which encourages an increase in investment and employment. –Process innovations, for their part, contribute to an increase in productivity of the factors of production by increasing production and/or lowering costs.

6. Innovation and enterprise Innovation is at the heart of the spirit of enterprise practically all new firms are born from a development which is innovative, at least in comparison to its existing competitors on the market. One of the weaknesses of European innovation systems is the inadequate level of organizational innovation. –Towards innovation management –Innovative but unrecognized sectors –The information society

7. Innovation and society Innovation is not just an economic mechanism or a technical process. It is above all a social phenomenon. Through it, individuals and societies express their creativity, needs and desires. By it purpose, its effects or its methods, innovation is thus intimately involved in the social conditions in which it is produced.

8. Innovation and cohesion Innovation is particularly important for the regions which are lagging behind in development. The effort channeled towards developing innovation as part of the Communitys regional policy needs to be seen as an opportunity for two reasons.

9. Effective rules of play Also concerns legal rules for the protection of intellectual property, a decisive factor in stimulating individuals to innovate which needs to be encouraged and constantly adapted to the changes in technology and society: –Maintaining effective competition –Promotion effective and suit

The situation in Europe: diversity and convergence The situation in Europe is mixed. Performance in terms of innovation varies greatly amongst the countries, regions, firms and sectors. This is why regional or national policies in support of innovation have recently been introduced. The Community is not standing still and is making consistent efforts in favor of innovation. However, it is not enough.

The situation in Europe 1.Great diversity 2.Genuine convergence 3.The increasingly important role of SMEs and the regional level 4.Economic intelligence 5.Europe is not standing still

1. Great diversity The proportion of national R&D carried out by businesses varies from 30% to 70%. The Commissions recently-established INNOVATION programme should contribute to this dissemination of good practice.

2. Genuine convergence A certain convergence of trends within the Member States in innovation policy is beginning to become apparent, albeit with different rythms of development.

3. The increasingly important role of SMEs and the regional level SMEs are a reservoir for the creation of jobs and a source of diversity in the industrial fabric. The movement towards decentralization has strengthened the role of the regions in disseminating information and supporting innovation. (Science parks, demonstration centres, etc.) The support structures vary in number and quality. They frequently involve local partnerships between the private sector and the authorities.

4. Economic intelligence The corollary of the overall approach to innovation adopted throughout this Green Paper is «economic intelligence» as a strategic tool for decision-making against a background of globalised trade and the emergence of the information society. Economic intelligence includes the protection of information regarded as sensitive for the company concerned.

5. Europe is not standing still At Community level ( ) a number of measures have nevertheless been taken to strengthen and supplement the national or regional efforts.