Regional and National Systems of Innovation

Size matters

Another important influence on the particular ways in which innovation is managed is the size of organizations. Typically smaller organizations possess a range of advantages such as agility, rapid decision making but equally limitations such as resource constraints. These mean that developing effective innovation management will depend on creating structures and behaviors which play to these – for example, keeping high levels of informality to build on shared vision and rapid decision making but possibly to build network linkages to compensate or for resource limitations.

But we need to be clear that small organizations differ widely. In most economies small firms account for 95% or more of the total business world and within this huge number there is enormous variation from micro-businesses like hairdressing and accounting services through to high technology start ups. Once again we have to recognize that the generic challenge of innovation can be taken by businesses as diverse as running a fish and chip shop through to launching a nanotechnology spin out with millions of pounds in venture capital – but the particular ways in which the process is managed are likely to differ widely.

National Regional Local Context:

Regional and national systems of innovation vary widely. By innovation systems we mean the range of factors – government, financial, educational, labor market, science and technology infrastructure etc – which represents the context within which organizations operate their innovation process. In some cases there is a clear synergy between these elements which create the supportive conditions within which innovation can flourish – for example, the regional innovation led clusters of Baden Wurttemberg in Germany, Cambridge in the UK Silicon valley and route 128 in the USA or the island of Singapore. Increasingly effective innovation management is being seen as a challenge of connecting to and working with such innovation systems — and this again has implications for how we might organize and manage the generic process.

The power of regional innovation systems:

Michael best’s fascinating account of the ways in which the Massachusetts economy managed to reinvent itself several times is one which underlines the importance of innovation systems. In the 1950s the state suffered heavily from the loss of its traditional industries of textiles and shoes but by the early 1980s the Massachusetts miracle led to the establishment of a new high tech industrial district. It was a resurgence enabled in no small measure by an underpinning network of specialists, skills ,high tech research and training centers (the Boston area has the highest concentration of colleges, universities, research labs and hospitals in the world ) and by the rapid establishment of entrepreneurial firms keen to exploit the emerging knowledge economy . But in turn this miracle turned to dust in the years between 1986 and 1992 when around one third of the manufacturing jobs in the region disappeared as the minicomputer and defence related industries collapsed. Despite gloomy predictions about its future the region built again on its rich network of skills, technology sources and a diverse local supply base which allowed rapid new product development to emerge again as a powerhouse in high technology such as special purpose machinery, opto electronics, medical laser technology, digital printing equipment and biotech.

Networks and systems:

One of the emerging features of the twenty first century innovation landscape is that it is much less of a single enterprise activity. For variety of reasons it is increasingly a multiplayer game in which organizations of different shapes and sizes work together in networks. These may be regional clusters, or supply chains or product development consortia or strategic alliances which bring competitors and customers into a temporary collaboration to work at the frontier of new technology application. Although the dynamics of such networks are significantly different from those operating in a single organization and the controls and sanctions are much less visible, the underlying innovation process challenge remains the same – how to build shared views around trigger ideas and then realize them.

Source: Managing Innovation John Bessant