Northern Ireland:
Towards a RIS3 strategy
2012
Michael Lilley
Smart Specialisation Coordinator
Michael.lilley@detini.gov.uk 1
Presentation Structure
1
2
3
4
5
6
7
8
9
10
Expectations
Regional Context
Place Based dimension of the RIS3
Looking beyond Regional boundaries
Entrepreneurial dynamics
Governance
Critical Mass and Priorities
Implementation and budgets
Measuring the Process
Future Innovation Policy
2
2. Regional Context
•1.8 million inhabitants
•Smallest of UK regions
•Devolved Government
•Large public sector
•Large service sector
•SME dominated
•480 companies out of
80,000 involved in R&D
•Low in EU Innovation
Scoreboard
3
Regional Strengths
Historical Global Specialisations in;
•Shipbuilding
•Linen/ Textiles
•Light Engineering
•Agriculture
•Aeronautics
4
2. Regional Context
Parliament buildings, Stormont
Northern Ireland Science Park
(NISP)
Titanic Signature Building
5
2. Regional Context
•
•
•
•
•
Devolved Administration 2007
108 members in N.I. assembly
All main parties represented in Government
Mandatory Coalition
Innovation, Research, Development and Creativity
high on the political agenda
6
2. Regional Context
Programme For Government
Economic StrategyStrategic Framework
Innovation Strategy
(In preparation)
7
2. Regional Context
8
2. Regional Context
Economic Strategy for Northern Ireland 2012
Focus on;
• Innovation
• Export Led Growth
• Regional Strengths
“An economy characterised by a
sustainable and growing private
sector, where a greater number
of firms compete in global
markets and there is growing
employment and prosperity”
9
9
2. Regional Context
Public Sector dominated Economy
- Public sector expenditure 63% of GDP
10
2. Regional Context
Jobs by Sector
Northern Ireland Economy Structure (GVA)
11
2. Regional Context
Manufacturing exports by sector
Gross Domestic Expenditure on R&D- 2009
12
2. Regional Context
% of BERD financed by Government
BERD as % of GDP
13
2. Regional Context
Northern Ireland in Europe
NI Ranking (relative
to other EU regions)
Indicator
NI
EU27
Top quartile
-
-
-
Second quartile
Knowledge-based services employment
36.5%
31.9%
Third quartile
GDP per capita
94
100
66.9%
66.3%
96
100
Patent activity
12.6
48.5
Business expenditure on R&D
0.6%
0.9%
Innovation scoreboard
0.41
0.45
Population
1.8m
496m
Employees
0.7m
169m
High-tech employment
3.3%
5.7%
Employment rate
Labour productivity
Bottom quartile
14
2. Regional Context
Northern Ireland In-House R&D expenditure 2010
Large Companies
SME’S
Total%
Manufacturing R&D
80.6%
19.4%
73.4%
Service R&D
14.75%
85.15%
26.6%
All Industries R&D
63%
37%
100%
Northern Ireland Research and Development Statistics 2010
15
2. Regional Context- Challenges in NI
Public
Sector
• Public Sector dominated economy (63% GDP)
Labour
Market
• Service Sector Dominated (Lower value)
Brain Drain
SME
Dominated
• High reliance on Government support for B.E.R.D.
• High number not in employment (High Economic inactivity)
• One-third of students leave to study elsewhere
• Less than half of these (44%) return when degree is complete
• 80% of NI private sector employment is in SMEs (under 60% for UK)
• Only 22% of turnover is in large firms compared with 51% in UK
Innovation • Lagging behind top EU performers in R&D spend
and R&D • 480 out of 80,000 involved in R&D
• Low in Innovation Scoreboard
16
3. Place- Based Dimension of the RIS3
17
3. Place- Based Dimension of the RIS3
Analysis
Porter’s Diamond
Cluster Analysis
Analysis of Technology
specialisations
FDI analysis
Foresight
18
3. Place- Based Dimension of the RIS3
Porter’s Diamond- Strengths
Firm Structure/ Rivalry
•SME Dominated Economy
•SME make largest contribution in the UK
•Companies beginning to be export orientated
•Large increase in BERD in 2010
Factor Conditions
Demand Conditions
•Proximity to Europe, North America & India
•Small region with devolved Government
•Younger population that UK & EU average
•Skills system founded on industry needs
•Outperforms UK & EU in secondary education
•Literacy levels similar to OECD average
•Good Region for pilot projects
•World class Telecommunication infrastructure
•Demand traditionally linked to UK &
Republic of Ireland
•Access to Global Markets
•A resilient Agri-food sector
•Competitive Science & Technology sector
•Good recent record in FDI
•Clusters in Aerospace, Science & Technology,
business services, Financial Services, Tourism
•Collaborative Networks
•Competence Centres
•Innovation Centres
•MATRIX (Science & Technology Panel)
•NISP clustering across technology sectors
Supporting Industries (Clusters)
19
3. Place- Based Dimension of the RIS3
Porter’s Diamond- Weaknesses
Firm Structure/ Rivalry
Factor Conditions
•Over-reliance on public sector – Fiscal “Subvention”
•Small private sector
•Low levels of entrepreneurship
•Low Innovation, Patients and absorptive capacity
•Brain Drain’ and workforce migration
•‘BMW’ Syndrome
•Reliance on a few large firms
Demand Conditions
•Reliance on UK and Republic of Ireland
Market
•Fiscal subvention affects demand
conditions
•Weak Skill profile compared to world leading
economies
•High proportion of workforce with no
qualifications
•Low living standards, productivity & wages
compared to leading economies
•Over reliance on a small number of firms for R&D
•Large amount of FDI in low value sectors
•Small private sector with over reliance on public
sector
•Very few cluster organisations
Supporting Industries (Clusters)
20
3. Place- Based Dimension of the RIS3
Analysis of Technology Specialisations
“Cross sectoral market opportunities”
21
3. Place- Based Dimension of the RIS3
Analysis of Technology Specialisations
•
•
•
•
•
• 13 members (9 from industry)
• Focus on strategic markets not sectors
• ‘Now sight’ then Foresight
• Involving 100 companies
• R&D and science and technology issues
Emerging relevant technology priorities
Promotion of innovation, R&D, and creativity
Promotion of Collaboration
Overcome the perceived disadvantage of SME dominated economy
Reports build on regional strengths and skills capabilities
22
3. Place- Based Dimension of the RIS3
“First Identified Strategic Markets
(Cross Sectoral)” by MATRIX
23
3. Place- Based Dimension of the RIS3
Based on Key Enabling Technologies (KETS)
Northern Ireland Strategic Markets MATRIX Foresight
Key Enabling
Technologies
Advanced
Manufacturing
Advanced
Materials
Life &
Health
Sciences

ICT
Electronics &
Photonics

Sustainable
Production &
Consumption

ICT



Micronanoelectronics






Photonics






nanotechnology






Industrial
biotechnology






Advanced Materials






Advanced
Manufacturing






24
3. Place- Based Dimension of the RIS3
Analysis of Technology Specialisations
Technology Capability Study – 2006- Business Identified Priorities
• Strategic Markets (Cross Sectoral)
• Key trends
– Higher education numbers, Private Sector Capability analysis, Public sector
capability analysis, Academic sector analysis
• Benchmarking
– Regional, Technological Scoring, environment, Technology Readiness levels,
Technological Infrastructure
• Framework Conditions
– Degree of Clustering, Business environment, markets, collaborations, skills &
training, Funding, Government support, FDI sectors, Technology transfer
• Conclusions
– Northern Ireland Technology Capability, Technology Capacity, Priorities for
25
Northern Ireland
3. Place- Based Dimension of the RIS3
Analysis of Technology Specialisations
“Then focused on more specific cross-sectoral markets”
•Priorities
•Collaboration
•Timescales
“Exploiting capabilities and
market opportunities”
26
3. Place- Based Dimension of the RIS3
Advanced Manufacturing
Advanced Materials
Life & Health Sciences
Telecoms & ICT
Agri-food
27
3. Place- Based Dimension of the RIS3
Analysis of Technology Specialisations
Overview of Strategic Markets
MATRIX Sectors
SIC 07 Sectors
Key Sectors
Advanced Engineering
7
Engineering
Electronics
Advanced Materials
7
Rubber and Plastics
Scientific R&D
Life Sciences
4
Pharmaceuticals
Technical Testing
ICT
4
Computer Programming
Telecommunications
Agri-food
2
Food Products
Chemicals
28
3. Place- Based Dimension of the RIS3
29
3. Place- Based Dimension of the RIS3
Analysis of Technology Specialisations
External Sales
Exports
Percentage of Total Sales
120%
100%
80%
99%
91%
90%
94%
74%
72%
68%
58%
60%
40%
27%
27%
20%
0%
Adv Man
Adv Mat
Life Sci
ICT
Agrifood
30
3.Place- Based Dimension of the RIS3
Analysis of Technology Specialisations
90%
90%
R&D
93%
93%
Exports
12%
12%
Jobs
0%
20%
40%
60%
80%
100%
Proportion of NI Economy
31
3. Place- Based Dimension of the RIS3
Market
Analysis of Technology Specialisations
Technology
32
3. Place- Based Dimension of the RIS3
Market
Analysis of Technology Specialisations
Technology
33
3. Place- Based Dimension of the RIS3
Foresight
System Scanning
Creates shared understanding of issues
Scenario Planning
Conceptual modelling of market opportunity
scenarios
Analysis & Selection
Prioritisation through negotiations among
stakeholders
Transformation
Establish relationship between future and
present for a change programme
Action Plan
Create structural and behavioural
transformations to exploit markets
34
3. Place- Based Dimension of the RIS3
Foresight
Foresight Reports–2 – 5 – 10 year;
• Sustainable market opportunities
• Exploitation priorities
• Relevant wider global science and
technology innovations
• Early wins and longer term gains
• Synergistic actions required
• Enabling networks required
• Investments required
• Further analytical or horizon scanning
work to be undertaken
35
3.Place- Based Dimension of the RIS3
Next Horizon Studies for MATRIX: 2012-15
• Clean Technology / Sustainable Energy
• IP & Knowledge Transfer in Northern Ireland
• Aerospace
• Construction
• Open Data Opportunities
36
3. Place- Based Dimension of the RIS3
Analysis
Porter’s Diamond
Cluster Analysis
Analysis of Technology
specialisations
FDI analysis
Foresight
37
3. Place- Based Dimension of the RIS3
Cluster Analysis- EU perspective
Northern Ireland star clusters* are:
Aerospace
Stone quarries
Business services
Construction
Financial services
Power generation and transmission
- Representing 79,700 employees (11% of total NI)
*Stars awarded for industries based on:
Size (within top 10% of employees in EU27)
Specialisation (focus is more than twice EU27 average)
Focus (within top 10% of clusters in the economy)
38
3. Place- Based Dimension of the RIS3
Cluster Analysis- top 10 sectors in N.I. within EU context
Business services
Aerospace
Education and knowledge creation
Stone quarries
Construction
Financial services
Processed food
Power generation and transmission
Tourism and hospitality
Building fixtures, equipment and services
0
1
2
3
4
5
6
Total Score
Data extracted from cluster observatory
Size
Specialisation
Focus
Star clusters represent 11% of total NI employment
39
3. Place- Based Dimension of the RIS3
Cluster Analysis-N.I. Industry Focus
Business services
Three largest sectors
are ‘star clusters’
Construction
Financial services
Education and knowledge creation
Processed food
Remaining largest
sectors are not ‘star
clusters’ but NI may
have strengths in
these areas
Transportation and logistics
Tourism and hospitality
Building fixtures and equipment
Distribution
IT
0
5,000
10,000
d) NI Industry Focus
15,000
20,000
25,000
30,000
Employees (2009)
40
3. Place- Based Dimension of the RIS3
Cluster Analysis- Key groupings
NI below UK average although
above EU27
Proportion of Total Employment
14%
12%
10%
8%
NI below both UK and EU27
averages
6%
NI below both UK and EU27
averages
4%
2%
0%
Creative and Cultural
Business Services
NI
UK
Life Sciences
EU27
41
3. Place- Based Dimension of the RIS3
EU Star Clusters in N.I. within EU employment context
Data extracted from cluster observatory
Star clusters represent 11% of total NI employment
42
3. Place- Based Dimension of the RIS3
FDI Analysis
Research Capabilities Analysis
• Identified R&D intensive sectors
• Identified Research Capability (R.A.E. , R.E.F. etc)
• Alignment of research capability with FDI sectors
• Prioritisation of FDI sectors using Northern Ireland
Research Capability i.e. CRITICAL MASS
43
3. Place- Based Dimension of the RIS3
FDI Analysis- Exploiting N.I. research base
High Correlation with Matrix Market Opportunities
44
4. Looking beyond regions boundaries
45
4. Looking beyond regions boundaries
Major research studies on Economic and innovation policy
in EU and worldwide using expert advice
• Small peripheral EU States- Finland, Ireland, Sweden,
Estonia
• Productivity, Innovation & Competiveness in Small
open economies- New Zealand, Singapore, Rep. of
Ireland
• Policy approaches analysis in comparing regions of
similar economic, industrial and institutional
structure as Northern Ireland
46
Looking beyond Regions boundaries
47
Looking beyond Regions boundaries
“Continual international
benchmarking scanning
a top priority”
48
5. Entrepreneurial Dynamics
49
Smart Specialisation Process
Eco-System
Eco-System
Feedback
Coordination
Coordination
Feedback
Rebuilding and Rebalancing the economy
50
5. Entrepreneurial dynamics
Knowledge Exploitation
Knowledge Generation
“ A wide range of
Innovation
programmes”
Knowledge Exchange
51
5. Entrepreneurial dynamics
“ A wide range of Innovation programmes”
Driving New Knowledge
Applying New
Knowledge
Technology Led
Competence Centres
Grant for R&D: Industrial
Research
Collaborative R&D
Adoption of
Knowledge
Building
Innovation
Open Access Facilities
Grant for R&D:
Experimental
Development
Knowledge Transfer
Partnership
Intellectual Property
TDI
Design
Developing Capacity
Proof of Concept
Innovation Advice
Innovation Vouchers
Market
Led
Business Innovation Link
Short Term Reward
Long Term Reward 52
5. Entrepreneurial dynamics
Collaborative Network Programme
“a collection of businesses working in conjunction to share their
complementary strengths and capabilities in order to achieve some
common goal. By engaging in collaborative activities, it is envisaged that
companies can ultimately improve the productivity and compete more
effectively on the regional, national and international stages’
53
Example of S3 Process
Collaborative Networks “working together to achieve a common goal”
“ Government provides Industry Experts as Honest Brokers”
54
5. Entrepreneurial dynamics
Examples of Collaborative Networks
Plastics & Polymers
Medical Devices
Global Maritime
European Connected Health
Glantek
Whisple
55
5. Entrepreneurial dynamics
Examples of Collaborative Networks
56
S3 process in action
Recommendations
Consultation
Feedback
Short listing
Innovation ecosystem
Collaborative Networks
Competitive Call
•Route to Market
•Industrial Innovation Communities
•Limited Liability Partnership
•Competence Centres
•Innovation Ecosystem
•Open Innovation
Expression of interest
Industry
Scoping
Facilitation (by Industry experts)
57
5. Entrepreneurial dynamics
Competence Centre Programme
•Evolution of Collaborative Network Programme
•Based on Competitive Call process
•Potential Competence Centres in:•Sustainable Energy
•Advanced Engineering/ Composites
•Connected Health
•Cloud Computing
•Agri-Food
58
5. Entrepreneurial dynamics –
business to business mentoring
59
5. Entrepreneurial dynamics
Innovative Procurement – endorsed as policy across N.I. Government
Phase 1- Proof of Concept
Phase 2- Prototyping
N.I. - 3% of UK Applications
N.I. - 11% of UK contracts
N.I. - 12% of total UK funding
60 SBRI
Source: Technology strategy Board;
Innovative Public Procurement (SBRI)
Un-met Need
Competition Phase
S
B
R
I
Proof of Concept
X
Proof of Concept
Proof of Concept
Prototype
Full Open
Procurement
X
Proof of Concept
Prototype
6. Governance
62
Innovation Support Ecosystem
EUROPE
NATIONAL
LOCAL
Framework
/ H2020
R&D Tax
Credits
Government Departments
EU
Structural
Funds
TSB
Enterprise
Ireland
BIS
Invest NI
InterTrad
e Ireland
* Includes NISP, MATRIX, Sector Bodies etc
HE / FE
Other
Support
Orgs*
Public
Research
Institutes
6. Governance
Programme For Government- Executive Committee
Economic Strategy-Sub Committee
Innovation Strategy
64
65
66
Process
Independent
Review of
Economic
Policy 2009
Northern Ireland
Economic
Strategy
March 2012
Start
Consultation with the Regional
Knowledge ecology
Northern
Ireland
Government
SubCommittee
on the
Economy
Northern
Ireland
Government
SubCommittee
on the
Economy
Consultation with the
Regional Knowledge
ecology
•Public Authorities &
Agencies
•Civil society
•International experts
•Actors of knowledge
•Investors
•Private Enterprises
Draft
Economic
Strategy
Economic
Strategy
Steering
Group
Consultation
Response
Document
Economic
Strategy
Working
Group
Consultation
Paper
Consultation with the Regional
Knowledge ecology
67
Consultation
Process Inception
Independent
Review of
Economic
Policy 2009
Northern
Ireland
Government
SubCommittee on
the Economy
Northern Ireland
Economic
Strategy
March 2012
Northern
Ireland
Innovation
Strategy
2013
RIS3?
Economic
Strategy
Steering
Group
Draft
Economic
Strategy
Northern
Ireland
Government
SubCommittee on
the Economy
Consultation with the
Regional Knowledge
ecology
•Public Authorities &
Agencies
•Civil society
•International experts
•Actors of knowledge
•Investors
•Private Enterprises
Consultation with the Regional
Knowledge ecology
Consultation
Response
Document
Economic
Strategy
Working
Group
Consultation
Paper
Consultation with the Regional
Knowledge ecology
68
7. Priorities
69
7. Priorities
Economic Strategy
Rebalancing & rebuilding
themes;
•Innovation, R&D & Creativity
•Skills & Employability
•Competing Globally
•Business Growth
•Economic Infrastructure
70
7. Priorities
Clusters
Rebalancing themes
71
7. Priorities within clusters
72
8. Implementation and Budget
Programme For Government-
Economic StrategyStrategic Framework & SMART Targets
Innovation StrategyAction Plan & metrics
(in preparation)
73
9. Measuring the Process
Global Competitive Index (Global Context)
Economic factor-driven
Efficiency-driven
Innovation-driven
Rebuilding & Rebalancing themes (Regional Economic Themes)
Innovation &
R&D
Skills &
Employability
Competing
Globally
Business Growth
Economic
Infrastructure
Key Innovation metrics (N.I. Research & Innovation themes)
Knowledge
Generation
Knowledge Exchange
Knowledge
Exploitation
Leadership &
Behavioural changes
74
75
Structure of Innovation Strategy
Medium-term
Knowledge Generation
Medium-term
Knowledge Exchange
Medium-term
Knowledge Exploitation
Supporting
programmes
Supporting
programmes
Supporting
programmes
Behavioural Changes (leadership, risk etc)
Long-term (2025)
Innovation Strategy Goals
Proposed Innovation Indicators
LONG TERM INNOVATION STRATEGY GOALS
NI
Moderate
EU regional ranking on innovation scoreboard
11th
UK regional innovation performance
Employment in knowledge-intensive sectors (as % of total employment)
32,200%
NI
KNOWLEDGE EXCHANGE
NI
KNOWLEDGE EXPLOITATION
NI
Total R&D expenditure
(£m)
521
Total spend on non-R&D
innovation assets (£m)
**
Turnover from innovative
goods & services (% of total)
25%
BERD by indigenous SMEs
(£m)
83
Firms with innovation activity
(% of firms)
27 %
Firms applying for a form of
innovation protection (%)
8%
Number of R&D companies
430
45 %
18 %
Private equity backed firms
(per 1,000 VAT businesses)
16
STEM graduates (as % of
total graduates)
Co-operation on innovation
activities (% of innovators)
HE income from collaborative
research (% of total income)
8%
University spin-offs (per
million persons)
27
KNOWLEDGE GENERATION
** To be developed
Proposed Innovation Innovation Indicators
FULL DETAILS ON INNOVATION INDICATORS
Indicator
Measure
Source
Data
NI
UK
EU regional innovation scoreboard
-
PRO INNO
2008-10
Moderate
Follower
UK regional innovation ranking
-
Innovation Survey
2008-10
11 (12)
-
Employment in knowledge economy
as % of total employment
NISP Report
2011
4.6%
6.1%
Total R&D expenditure
£ millions
R&D Survey
2011
568
-
BERD by indigenous SMEs
£ millions
R&D Survey
2011
83
-
Total number of R&D companies
-
R&D Survey
2011
430
-
STEM graduates
as % of total graduates
DEL, HESA
2011/12
18%
22%
Total spend on non-R&D intangible assets
£ billions
NESTA Innovation Index
2009
-
108
Firms with innovation activity
as % of total firms
Innovation Survey
2008-10
27%
31%
Firms with co-operation agreements
as % of total innovators
Innovation Survey
2008-10
45%
47%
HE income from collaborative activities
as % of total income
HE-BCI, DEL
2010/11
18%
12%
Turnover from innovative goods & services
as % of total turnover
Innovation Survey
2008-10
25%
30%
HE spin-offs still active after 3 years
per million persons
HE-BCI, DEL
2010/11
27
16
Firms applying for innovation protection
as % of total firms
Innovation Survey
2008-10
8%
12%
Number of private equity investments
per 100,000 VAT businesses
BVCA, NISP Report
2011
16
32
LONG TERM STRATEGY GOALS
MEDIUM TERM KNOWLEDGE GENERATION
MEDIUM TERM KNOWLEDGE EXCHANGE
MEDIUM TERM KNOWLEDGE EXPLOITATION
Potential future Innovation Policy
"Thematic
Leads" in key
areas to
access funding
R&D to MATRIX
areas
Knowledge
Bank" for
public funded
IP
Trade envoy
exchange
Open
Innovation
Centre
Knowledge
Exchange
Innovative
public
procurement
E-Comms Centres
Knowledge
transfer
Strategies
Acceleration of
High Growth SME’s
Exploitation
Knowledge
Generation
“competitive
Call” process
high growth
potential SMEs
“MATRIX” areas
priority
areas
Innovation
Councilproviding
Leadership
Align FDI, exports
and skills to
regional
strengths (Critical
Mass)
Information
and
communication
strategy
Leadership
& Change
Chief Scientific
Advisor
79
Expectations
“On the right track?”
80
THANK YOU
Michael.Lilley@detini.gov.uk
#InnovationNI
81