Policy recommendations on ICT and innovation - final draft recommendations

The discussion resulted in the need for creating a comprehensive and unified system at the European level, connecting all the actors, enhancing the access to expertise, strengthening networking and activating mutual learning. In practical terms, this could take the form of:

* Supporting the networking facilitation activities at EU level : networking should be recognized as a key component of a well-functioning ecosystem, and a specific role for government in case of market failure, by both online and offline means. This intermediary role should focus both on reducing transaction costs and friction in the ecosystem, and in creating the necessary critical mass towards other players (e.g. distribution chains, research networks)

* However, networking and ecosystem building can’t be centred around platforms, but a common strategic purpose. It should be pursued not by creating new platforms, initiatives and events, because there is already an excess of such initiatives. Networking should be created by the identification of a common strategic agenda, acting as a central hub that attracts and gathers a critical mass of stakeholders.. The network should include actors coming from different domains and representing different interests (Universities and schools, investors, mentors, policy makers, entrepreneurs), which will exchange experiences, network and learn from each other. There is a risk of redundancies and fragmentation of networking initiatives. There could be more than multiple network, but connectivity between the different initiatives should be maintained through shared agendas, by engaging with existing local initiatives, such as incubators, accelerators, mentoring programs, investors in each country. The connection with local programmes will facilitate the access to the initiatives and resources, which already exist at the local level and in your own business community.

* Ensure long-term planning combined with open evaluation and acceptance of failure: ecosystems grow organically over time. 4/5 year is the minimum timespan needed to see results. Evaluation is necessary, but results can’t be expected before 4/5 years and key performance indicators should be designed at the strategic level. Failure should be “normal” at the project level, indeed a low rate of project failure could be seen not as a success but as a failure indicator of the programme, because it could reveal the lack of truly innovative projects. Funders should also be evaluated by the recipients, through a sort of “rateyourfunders.com” approach, where different criteria should be applied (speed of response, burocratic load, flexibility in the system, value added offered by the programme in terms of connection…). In other words, greater autonomy and freedom is needed for innovation managers in terms of enabling the necessary timeframe for impact to be visible; at the same time, greater accountability by opening up the results of research and innovation policy to greater scrutiny and real evaluation (as opposed to self-assessment). It’s necessary to adopt a long-term strategic approach that includes adequate investment in research and long-term funding.

* Creating communication and awareness about successful ecosystem activities, by sharing successes and failures of ecosystem building. There’s a need to greater understanding across stakeholders on the importance of ecosystems and platforms, and how to successfully stimulate them. The communication should be aimed at supporting the awareness on opportunities, but it should be also contribute to the creation of an innovation culture, by presenting inspiration and concrete guides to ecosystem-building.

* Lead by example: avoid the situation where innovation policies, rather than overcoming it, replicate the fragmentation across silos, institutional level, business sector, geographical areas. While it is reasonable that the geographical focus should remain in the geographical competence of the organisation, openness to European and global players should be a deliberate focus.

* Focus on people: ecosystem are typically characterized as networks of organisations. Network-building activities are designed and targeted around companies. Yet disruptive innovative ideas come from contacts and interaction between the individuals, who meet by personal knowledge. Networking initiatives should take into better account the personal factor, by providing matchmaking opportunities for individual initiatives and ideas, rather than for companies only.

Lessons learnt from case: The Penrose programme adopts a global approach, in partnership with Taiwanese organisations, and enables access to world-class services in the domain of 3d printing for multinational and SMEs alike.

The Makers Faire initiative showcases inspiring initiatives using 3D printing providing the opportunity for people and SMEs to get concrete, hands-on knowledge of the technology and facilitating personal face to face meetings.

Startups.be promotes an inspirational culture of failure acceptance through its conference Failing Forward (http://failingforward2013.wordpress.com), where celebrated entrepreneurs come to share their experience and lessons learnt from failure.

* Foster the direct dialogue between public officials and entrepreneurs or SMEs Participants suggest that public administrations and governments should have more dialogue with entrepreneurs, companies, research organizations and stakeholders for the design and implementation of their policies. Governments and public administrations should contact not only intermediaries (chamber of commerce, industry representatives etc.) but they should establish direct contact with them especially when they are designing incentives and funding programs for innovation. However, public officers should also be protected in order to establish this dialogue so that they cannot be accused later on to favour some actors. Most times public officers are worried about discussing with private organizations. In this sense, online open interaction has the advantage of being visible to all, thereby avoiding the risk of unbalanced information. Officials should be encouraged (with appropriate clear guidelines) to interact as much as possible openly online with stakeholders. Mutual respect should be ensured: public officers should not consider themselves superior, and neither entrepreneur. The regional and local level is particularly suitable to promote this exchange because of the more direct link between government and entrepreneurs.

Lesson learnt from case: Kublai project promoted constant online interaction between officials and potential beneficiaries as a new standard of communication. However this is too often left to the individual good will of civil servants, while it should become integral part of the job description. All regional initiative have created a local pool of networked individuals that continuously interact on different projects. Agencies are ideally placed to ensure this cultural shift because of their agility in recruiting people from different backgrounds.

* Mobility programs for entrepreneurs and public officials In order to better understand both mind-sets and promote a real dialogue between public officials and entrepreneurs, participants suggest to design a mobility programs in order to hire entrepreneurs in European Commission for a short period with clear goals and remuneration; and for officers at European Commission to go out, work for a company or set up their business and then come back to European Commission. Economic incentives for both, officers and entrepreneurs should be clear.

Lesson learnt from case: Corporacion Tecnologica de Andalusia is a public-private partnership fully managed by the private sector, in order to ensure trust and outreach capacity between the agency and SMEs.

* Mobilize multiple, public and private, funding sources (such as EIF, business angels…). The lack of early stage funding should be addressed with an integrated perspective across the different funding instruments. The European Investment Fund should establish dedicated funding for technology startups, which have unique needs as compared to traditional business sectors. Public funding should extend beyond research to business development and market uptake. On the business side, these activities includes also to attract international investors, to mobilise Business Angel Network, to foster strong local early-stage funds. Appropriate tax regulation for incentivizing risk capital should be defined.

* Use this multiplicity to lower risks for funders, by sharing risk assessment by the funders, by educating them about technology assessment, by creating “rating” services for new companies and products, by using crowdfunding as an early signal of potential market uptake. One of the task of innovation programs should be to reduce the information asymmetries and bottlenecks between funders and fund recipients, under a common EU framework. This would not necessarily correspond to a single “reputation mechanism” but to a federated information network with common standards and information sharing. Innovation agencies have a huge set of own data about companies activity (such as project assessment results) that could prove useful if put in the adequate information context and could kickstart better information sharing between agencies.

* Upscale crowdfunding: regulatory bottlenecks to crowdfunding should be removed, in order to grasp the opportunities to democratize investment and mobilize the resources of a large number of investors. Crowdfunding could help reducing the early-stage funding gap in Europe, but once again European legislation replicates the delays of the European investors – it was the US, which first legislated to simplify crowdfunding for business through the recent JOBS act.

* Reserve funding for SMEs. Many stakeholders invited the EC to provide quotas for funding and procurement to SMEs. At the same time, other stakeholders emphasize the need to improve the overall funding mechanisms (as in the next set of recommendations) so that they are genuinely open to SMEs.

Lesson learnt from case: Wim de Waele (iMinds) mentioned the UK seed enterprise investment scheme as one measure that can really have an impact and make a difference in the availability of risk funding.

Foundum.com provides rating systems for funders and entrepreneurs in order to facilitate networking and collaboration.

* Provide value added services on top of funding. Funding, from both public and private funders, should be perceived as an intelligence tool to establish a profitable relationship with innovators. Funding should be perceived as the first step to greater collaboration. Government agencies should “by default” provide value added services on top of the funding, based on the huge amount of knowledge accumulated by managing funds. At EU level, it would be useful to have guidelines and cases of knowledge-intensive funding organizations, as well as the adoption of a similar approach in the context of Horizon 2020. Evidence should be made available about value added and hands-on management of funding schemes. Agencies should learn how to leverage and possibly share their “big data” repositories on innovation funding.

* Clear time periods for call for proposals: not only the time for resolution of a call proposal is very long especially taking into account short term planning that companies are used to, but also it is not clear for SMEs when they are expected to start the project. There should be open evaluation and benchmarking tools for all research funders in Europe, as well as for private investors.

* More flexible participation mechanisms: Ideas include joining a project for one-year only; smaller funding and shorter funding cycle to increase opportunities for funding; hands-on relational approach to funding with in-depth following of the proposals to increase probability of funding. Many SMEs don’t participate because of the remote opportunities for funding don’t justify the learning process on the complex rule: this cost-benefit ration should be reversed

* Enhance demand-side measures such as prizes and private and public procurement: Inducement prizes are a modality of funding of innovation that proved to be successful to reach out and engaged to real innovators. Across all funding instrument, a part of research and innovation funding should be distributed as inducement prize, while taking into account that significant critical mass is needed for inducement prizes to work. Procurement is also a largely unexploited tool with high potential, since it covers 16% of EU GDP. Innovative public procurement, in particular towards SMEs, could help reducing the early stage funding gap and help bridging the valley of death. Most importantly, grants, prizes and procurement should be used in an integrated way, covering different phases of the innovation cycle (multi-stage approach). For instance, often public procurement is used to purchase solutions, which emerged from inducement prizes. Finally, stimulate private demand, not only public demand of new technologies: large companies can equally benefit from uptake of new research results and should be included in this “demand driven” approach.

Lessons learnt from case: the Security Challenge links inducement prizes with risk capital, grants and public procurement. Many finalists receive capital investment, as members of the jury are also VCs. The challenge itself is used alongside the more traditional grant system and covers about 1% of the budget.

iMinds and CTA provide a multistage and relational approach (rather than transactional) with SMEs in order to reduce the failure rate of proposals. Experts work together with SMEs to improve the project proposal and make it more likely to be funded. This delivers results on several levels: - short-term, by reducing the failure rate - medium-term, by enabling actual improvement of the innovation performance of the company based on the feedback received - long-term, by creating trusted relationships with SME

Conectus (FR) has developed a demand-driven co-conception programme which involves companies as beneficiaries of Technology Transfer initiatives. Companies have to simply guarantee an engagement in terms of human effort to work on the project, and they will benefit from access to proof-of-concept developments of technologies.