Fourth International Seville Conference on Future-Oriented Technology Analysis (FTA)
FTA and Grand Societal Challenges – Shaping and Driving Structural and Systemic Transformations
Seville, 12-13 May 2011

Orienting Innovation Systems towards Grand Challenges and the Roles that FTA Can Play

Cristiano Cagnin

Scientific and technical project officer,DG Joint Research Centre Institute for Prospective and Technological Studies,

Effie Amanatidou

Visiting Research Associate / PhD researcher, Manchester Institute of Innovation Research, UK,

Michael Keenan

Honorary Associate Fellow, Manchester Institute of Innovation Research, UK,

Summary

The last few years have seen the notable emergence of a strong research and innovation policy discourse around the need to address so-called ‘grand challenges’. These can be considered ‘wicked problems’ insofar as they are largely impervious to top-down rational planning approaches, their meanings are highly contested by different actors, and any attempts to address them must span a number of long-standing organisational, epistemic and sectoral boundaries. If grand challenges are to be operationalised as rationales for research and innovation policy interventions,these characteristics shouldbe widely appreciated, as shouldthe dynamics of research and innovation processes and the scope and opportunities for steering their reorientation along more desirable pathways of development.

The paper is concerned with the contributions FTA might make to orienting innovation processes towards grand challenges. It takesa ‘system of innovation’ approach and focuses on the ‘functions’ of such systems to consider the roles that FTA might play. In this context, FTA can facilitate experimentation and learning by providing safe spaces for new ideas to emerge and existing knowledge to be combined in novel ways. As a source of strategic intelligence FTA can support the development of knowledge by providing, for example, insights on longer-term developments, the scope and opportunities for shaping futures, and the mutual positioning of innovation system actors in relation to the future. At the same time, FTA can support the emergence of ‘hybrid fora’ that bring together diverse and often disparate actors that might not normally interact. These allow for knowledge to be created, exchanged and diffused. FTA can also guide the direction of search and the selectionof choices based on the articulation of visions and expectations andsupporting in-depth analyses and assessments.FTA can help shape the spaces for new market formation, and lead to the mobilisation of actors and resources to fulfil the promises articulated in guiding visions.

The importance of the role of FTA in guiding the selectionof emerging themes and research priorities through knowledge production has already been recognised in recent EU policy instruments addressing global societal challenges. The paper concludes, however, that FTA could also play other important roles in shaping these new instruments by better exploiting its“structuring” benefits which are hardly recognised. These include the role of FTA in facilitating experimentation and learning which is critical in trying to find novel solutions given the unsustainability of established paths; the role of FTA in identifying the most relevant actors and stakeholders to engage, and even more importantly the relevant gaps in multi-level governance; the role in knowledge diffusion in achieving the inclusiveness claimed to be needed in dealing with grand challenges; and finally the role of FTA in creating spaces for market formation which is crucial given the integrated approach towards research and innovation in dealing with grand challenges.

1Introduction

Recent years have seen a great deal of discussion on how science, technology and innovation (STI) ‘systems’ might be reoriented to better meet several ‘grand challenges’ that affect not only contemporary societies but also the future of human civilisation itself. This is part of a ‘new’ mission-led approach to innovation policy that differs from an earlier mission-led period (1940s and 1950s) that was largely oriented towards the military-industrial complex and was more nationally focused. The new mission-led approach, by contrast, is more global in outlook and oriented towards more societal goals (Gassler et al, 2008). The issues covered by the term ‘grand challenges’ include various concerns around the environment, food security, resource depletion, disease, etc. Such issues naturally lend themselves to a global outlook, are grand in scope and scale, and are generally made up of ‘wicked problems’ (Rittel and Weber, 1973)that are difficult or even impossible to solveby single agencies or through rational planning approaches. This has been well-understood for some time and the articulation of such grand challenges is hardly novel. The main novelty lies in the increasing attention given to such issues in formulating new missions for STI policy. The reasons for this are complex: in part, they reflect a perceived growing urgency to address a series of problems that could have catastrophic consequences on a global scale over the next few decades if neglected. But they also reflect a more overt steering of STI efforts – at least those funded by the public purse – to meet explicit political goals.[1]

Innovation should have a critical role to play in addressing the problems associated with grand challenges. However, it is also important to recognise that innovation can just as much contribute to problems as it can to their solutions. This means that if innovation is to address grand challenges, it must do so through more than just end-of-pipe technological fixes. Innovation itself needs to be oriented along more sustainable pathways that enable positive transformations of socio-technical systems and lessen the conditions for adverse developments to occur. Certain branches of FTA, particularly technology assessment (TA), have included the orientation of technological trajectories and innovation activities as an explicit goal. But the impacts of FTA in this respect have fallen somewhat short of expectations up until now. The question is whether the new mission focus on grand challenges offers windows of opportunity for a more directed and positively transformative innovation practice to develop and if so, the supporting roles that FTA might play.

Reflecting the above considerations the paper starts byexamining the nature of grand challenges as such and as rationales for policy interventions (Section 2). Then the basic elements of innovation (Section 3) and innovation systems (Section 4) are presented. This is followed by a discussionof the roles that innovation can and should play in addressing grand challenges and what needs to change, if at all, to fulfil this role (Section 5). Section 6 then explores the roles of FTA in orienting and governing innovation systems and policies towards dealing with grand challenges. Assuming innovation systems need to be reoriented and governed differently than at present in order to meet grand challenges, the specific section addresses the new, different, extended, roles that should be constructed for FTA. Section 7 discusses the associated implications for international research and innovation collaboration and the degree to which recent developments cover the identified needs in the reorientation and governing of innovation systems and policies. In this regard, a few examples being debated at the Fourth International Seville Conference on Future-Oriented Technology Analysis are outlined in Section 8. Based on the discussions of prior sections, the last section (Section 9) summarises the main conclusions.

2Grand challenges

The nature of current and emerging grand challenges is complex and difficult to describe as they are usually interrelated and their causes and consequences are yet to be completely understood. As such, grand challengeshave been often more asserted than explained, at least to a degree of consensus in which joint action can be taken at global level. According to Boden et al. (2010), examples range from challenges stemming from non-sustainable human over-exploitation of natural resources, possibly leading to climate change, loss of biodiversity, increasing demand for food, deepening poverty and exclusion due to continued exploitation of natural resources, energy and water scarcity leading to competition and conflict, mass migration and threats in the form of radicalisation and terrorism. At the EU level the need for social, political, cultural, demographic and economic transformations in order to achieve a knowledge-based and prosper society relates to additional challenges such as economic growth mainly depending on increases in productivity, ageing societies increasing pressures on pensions, social security and healthcare systems, flows of migrants from developing to developed countries, need to empower citizens through enhanced education, and inability to keep up with the speed and complexity of socio-economic changes; to list but a few.

In spite of the uncertainty and lack of complete understanding permeating grand challenges, it is often accepted that these can lead to a great deal of disruption to societies and economies over the coming decades. Moreover, they are boundary-spanning in several respects, requiring, for example,

  1. Interdisciplinarity that transcends the boundaries of traditional epistemic communities. Addressing grand challenges will require the pooling of different knowledge bases and, in particular, closer collaboration between the ‘hard’ and social sciences and humanities.
  2. Cross-departmental coordination and coherence beyond the traditional silos that characterise policy making. Grand challenges require multi-agency responses and it is important that these are coherent if they are to be effective.
  3. Multi-level governance approaches that acknowledge the principle of subsidiarity while ensuring coherence between global, regional (e.g. European), national, and sub-national agendas and activities to address grand challenges.
  4. Technology convergence or fusion that opens up new possibilities to manage, mitigate or even eliminate some of the causes and harmful symptoms associated with grand challenges.
  5. Cross-sectoral collaboration between various industries with the complementary assets to address grand challenges.
  6. Longer-term time horizons to be introduced more explicitly into shorter-term policy agendas and business planning practices.

Dealing with grand societal challenges is presently amajor focus of research and innovation policies at the EU level. Innovation is considered one of the best means for successfully tackling major societal challenges. At the same time, the ability to drive innovation in products, services, business and social processes and models is amajor pre-condition for Europeto retain its competitiveness at a time of public budget constraints, major demographic changes and increasing global competition. Thus,grand challenges have a certain duality, being seen both as problems that have to be effectively tackled but also as opportunities for strengthening Europe’s competitive position(CEC, 2010).

3Innovation: some essentials

If innovation is to contribute to solving some of the grand challenges of our time, it is important to set out some sort of baseline as to what it is, how it is practiced and by whom, and the reasons / conditions for it to occur. In other words, it is important to move beyond the often glib political statements of the importance of innovation for grand challenges and towards an operational agenda that appreciates both the dynamics of innovation processes and the scope and opportunities for their steering / reorientation along more desirable pathways of development.

Innovation refers to a process of introducing a new product, process, service or organizational form into the marketplace and the social sphere. It occurs mostly in firms that respond to expected market opportunities by combining different types of knowledge, capabilities, skills and resources. Expectations of such opportunities can be created by any number of factors, many of them defined differently in different national spaces, e.g. through regulations, financial incentives, consumer preferences, etc. This suggests there are many potential levers for shaping the direction of innovation towards grand challenges. At the same time, innovation is a systemic phenomenon by nature as it results from continuing interaction between different actors and organisations. This means that a firm does not innovate in isolation but rather in interaction with its environment. Such environments are complex by nature and difficult, indeed, mostly impossible, to shape with a view to directing innovation in a predictable top-down manner. This has implications for any attempts at guiding innovation activities towards grand challenges.

Innovations can be radical and disruptive but often result from a long process involving many interrelated innovations. Furthermore, many economically significant innovations occur while a product or process is being diffused since the introduction of something 'new' in a different context often implies adaptation and technology transfer and/or organisational changes. This incrementalism often leads to ‘lock-in’ and path-dependency along technological ‘trajectories’ that can be difficult to escape, even if consensus exists that alternative trajectories would be more beneficial to follow. Such lock-in has to be borne in mind when linking innovation agendas to grand challenges as it will likely act as a barrier to the radical changes that are most likely needed.

It is also important to highlight that the factors influencing innovation differ across industries, and this has implications for policy. Factors vary, for instance, on R&D intensity (i.e. 'high-tech', 'medium tech', and 'low tech') and issues such as availability (or possibility to develop) skilled labour, a culture of learning by doing, ways and intensity of interacting within and beyond the sector, business routines as well as organisational and institutional patterns and infrastructures, finance available (and FDI), public procurement, standards, IPR, regulations, etc. This highlights the fact that a one-size-fits-all approach to promoting innovation is unlikely to work across the range of grand challenges to be addressed. Rather, a more nuanced and context-sensitive approach will be required that takes into account the nature of each challenge and the industries and sectors that need to react and that will be affected.

4Innovation systems: their structure and functions

As already pointed out, innovation can be understood as a systemic activity, with firms and other innovating actors operating in linked environments of institutions and other actors. In this view, national innovation systems are complex constructs, displaying a variety of structures in a range of contexts while performing various functions. The advantages of thinking in terms of innovation systems is that they provide a more complete picture of the topography of innovation-relevant actors and the relations between them, which are patterned by nationally- and sectorally-specific institutions (including ‘hard institutions’ like law, but also ‘soft institutions’ like trust). There are distinct differences in actors and relations-shaping institutions between countries and sectors, and in the way they perform. This means there is no possibility of a one-size-fits-all policy mix to improve innovation systems’ performance.

Innovation system analysis often takes as its starting point the system’s structure. It is here that innovation system ‘failures’ that demand policy attention tend to be identified, focused around actors’ capabilities, the scale and nature of system interactions, and the workings of institutions (Arnold, 2004; Woolthuis et al., 2005). Indeed, expected system elements might be completely absent in some national settings – particularly in less developed countries – and/or weakly developed or dysfunctional in others. Each of these structural elements is further described below:

  1. Actors – these include a wide range of organisation type, including firms (large and small, multinational and domestic), universities, public research labs, government ministries and agencies, various intermediary bodies, such as industry associations, private consultants, etc. In many innovation systems, such organisations are either missing or are weakly developed, thereby hindering their performance. All organisations possess a history, culture and memory that are expressed in their missions, values and routines (that define and defend their interests). These contribute to organisations’ dynamic capabilities, which are unique to each organisation and are technical and organisational in nature. Any reorientation of innovation systems towards grand challenges is likely to require both the establishment of new organisations and the adaptation of existing ones.
  2. Interactions – cooperation and interactive learning are central to the process of innovation. Such interactions involve not only firms (though firm-firm interactions tend to be the most common in innovation systems), but also universities, government labs, ministries and funding agencies, etc. Weak interactions are commonly diagnosed as problems for innovation systems, since cycles of learning and innovation are less likely to become established when system connectivity is poor. As Woolthuis et al. (2005) point out, however, higher levels of interaction need not necessarily be better for innovation system functioning either. This is because strong cooperative relationships can lead to over-embeddedness, marked by myopia and inertia. This point is important to bear in mind when innovation systems need to be reoriented, as this will require a lot of ‘unlearning’ and disruption of existing linkages as part of processes of transformative change.
  3. Institutions – these constitute the ‘rules of the game’ and ‘codes of conduct’ that reduce uncertainty in the innovation system. Institutions are ‘emergent’, in that they are ‘generated’ by the activities of actors and their interactions with one another. At the same time, they also ‘structure’ these activities and interactions. Distinctioncan be drawn between ‘hard’ and ‘soft’ institutions. Hard institutions are the formal institutional mechanisms that may stimulate or hinder innovation. They include formal written laws and regulations, such as those around technical standards, labour laws, the general legal system relating to contracts, intellectual property rights (IPR), etc. By contrast, soft institutions refer to the implicit rules of the game that can enable or hinder innovation. They include social norms and values, the willingness to share resources with others, the entrepreneurial spirit in organisations and countries more generally, tendencies to trust, risk averseness, etc. Generally speaking, institutions provide important levers for policy to shape actors’ behaviours and interactions. This makes them an essential starting point in efforts to set in motion virtuous cycles of transformative change directed at grand challenges.

Extending the heuristic construct of ‘systems’ of innovation, some authors (e.g. Bergek et al., 2008) have recommended ‘functions’ of innovation system as an alternative point of analytical departure.[2]Such functional analysis, which is intended to supplement rather than substitute more traditional structural analysis, implies a focus on the dynamics of what is actually achieved in an innovation system. This is a potentially useful perspective for efforts directed at reorienting innovation systems towards grand challenges.