INTELLIGENT CITIES Towards Global – Intelligent Innovation Ecosystems

Nicos KomninosURENIO Research, Aristotle University

www.urenio.org

PhD seminar “Intelligent cities: Systems and Environment of Innovation”

Lecture 2

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Contents

2nd G: Regional systems of innovation

1st G: Innovation clusters and technology districts

3rd G: Intelligent / global innovation ecosystems

Introduction: Intelligence and Innovation

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Research on human intelligence clearly links intelligence and innovation,arguing that intelligence is bears elements of novelty, problem-solving,achieving something that has never been done before by the particular

individual.“I think of intelligence as the high-end scenery of neurophysiology – theoutcome of many aspects of an individual’s brain organisation which bears on doing something one has never done before . . . This captures the element of novelty, the coping and groping ability needed when there is no ‘right’ answer, when business as usual isn’t likely to suffice”.

Calvin, W.H. (1998) How Brains Think. Evolving Intelligence, Then and Now, London: Phoenix. pp. 14 and 18.

The concept of the ‘intelligent city’ integrates all aspects of human,collective, and artificial intelligence enabling innovative behaviour andperformance of a population / community / city.

Innovative behaviour and performance, however, is systemic, emerging from systems of interactions between science, technology, production, funding, intermediary organisations and end-users. The foundation of intelligent cities are on territorial (place-based) systems of innovation. 3

Introduction: Intelligence and Innovation

Systems of innovation exhibit a continuous spatial and social enlargement enabling an increasing number of actors to be involved in the innovation process. Knowledge interactions and boundaries of innovation systems expand geographically all over the world.

Small innovation systems, based on physical proximity within clusters, have evolved into larger-scale regional / national systems due to institutional agreements and state policies; then with the introduction of advanced information and communication technologies they have become more intelligent and further enlarged to wider supra-national and global scales.

Three generations of territorial systems of innovation can be traced: (1) cluster-based, (2) regional / national systems, and (3) intelligent / global systems.

Observe,

watch,

evaluate

Acquire

existing

(state-of-the-

art) know-how

Invent /

create new

knowledge

Develop

knowledge

application

capability

Disseminate

new

knowledge

(embodied into new

products)

Knowledge interactions along the innovation process

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1st Generation systems:Innovation clusters and technology districts

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Explanations linking innovation and territory appeared in early 1980s in theliterature about industrial districts. The foundations of this paradigm canbe traced back to 1977, when Bagnasco and Becattini published theirstudies on the Third Italy, describing small cities and communities ofcentral Italy flourishing on the basis of innovative small company clustersbelonging to the same industry.

Michael Porter popularized the concept of industry clusters is his book TheCompetitive Advantage of Nations (1990). Porter recognized that themajority of economic activity takes place at the regional level and his ideasare commonly applied to cities and regions.Porter provides a simple definition of two types of clusters: verticalclusters, and horizontal clusters. Vertical clusters are made up of industriesthat are linked through buyer-seller relationships. Horizontal clustersinclude industries which might share a common market for the endproducts, use a common technology or labour force skills, or requiresimilar natural resources.

The basic concept of the cluster is a geographical concentration of industriesthat gain performance advantages through co-location and agglomerationeconomies, either of scale or scope.

1st generation systems of innovation Innovation clusters and technology districts

A group of the same or similar elements gathered or occurring closely together < <http://www.thefreedictionary.com/cluster>

Α group of small firms from similar industries that team up and act as one body <http://dictionary.bnet.com/definition/business+cluster.html>

A business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. Clusters are considered to increase the productivity with which companies can compete, nationally and globally. In urban study, the term agglomeration is used.

This term industry cluster, also known as a business cluster, competitive cluster, or Porterian cluster, was introduced and the term cluster popularized by Michael Porter in The Competitive Advantage of Nations(1990). The importance of economic geography, or more correctly geographical economics, was also brought to attention by Paul Krugman in Geography and Trade (1991).<http://en.wikipedia.org/wiki/Business_cluster>

1st generation systems of innovation Clusters definition

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Type A – Cohesive ClustersCohesive Clusters are the oldest type. The operational characteristics of these agglomerative economies were mentioned by Weber (1909) and Marshall (1925). Cohesive clusters are groups of firms which initially located together to reduce costs. They tended to specialize in industries such as fashion items, reproduction furniture, and printing. The main economic advantage has traditionally been described as the reduction of ‘transaction costs’ particularly transport costs.

Type B – New Industrial Districts New Industrial Districts tend be knowledge-based – that is they often have a high proportion of companies in high-tech sectors such as computing, Information Technology (IT) and micro-electronics. They rely extensively on R&D for the creation of new products. They tend to be located on the fringe of urban areas or even at some distance from them – examples include Silicon Valley in California and the M4 Motorway Corridor in Britain. Type B clusters are composed of a range of different size firms, from Trans-Nationals to SMEs. The large firms form, often, long-standing relations with their smaller suppliers and they work jointly on projects – in some cases with time horizons of decades.

Type C – Innovative MileuxThe description of the third type of cluster is largely based on the work of the group of researchers called GREMI which emphasized the importance of social capital and collective learning in promoting innovation. The Type C Clusters actively seek to promote innovation rather than simply rapidly responding to it and actively work together to promote common, medium and long-term innovative goals.

Type D – Proximity ClustersProximity clusters are so called because they are located in a relatively close spatial relationships with each other but do not form the kind of Local Production Network which the previous three clusters exhibited in different ways. They are not so much embedded in an area but weakly attached to it.

Source: D.A. Hart, Innovation clusters: key concepts, http://www.reading.ac.uk/LM/LM/fulltxt/0600.pdf8

1st generation systems of innovationInnovation clusters typology

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Basic elements

Specialised firms / skilled workers

Buyers / catalysers

Structuring elements

Flexible combinations

Nontraded inputs

Technological spillovers

Buyers / catalysers

Specialised firms / Skilled workers

Flexible combinations

Technological spillovers Nontraded inputs

1st generation systems of innovationIndustrial districts in traditional sectors

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The Silicon Valley patternFundamental processes sustaining innovation in the Valley are:

Basic research, knowledge generation and application capability of the kindnormally found centred on advanced private research or leading edge publicresearch laboratories.

Venture capital is crucial as the means by which ideas have been screenedand selected are given a chance to fly as commercial products or services.

Law firms are important as gatekeepers, advising firms on appropriateinvestors, counselors assisting entrepreneurs to access other services, andsources of contracts for many things ranging from recruitment to contractmanufacturing.

Specialist consultants in business and technological services ranging frommanagement accountants rather than simple auditing services, head huntingservices and specialist engineering, software and media, and regulatoryadvisers or property development services, including specialised publicprovision.

A local value chain of firms that can conduct, for example contractmanufacturing, design and fabrication, and various fairly prosaic supplies likelogistics, or exhibition organisation and specialised catering services.

Source: Cooke, P. (2003) ‘Economic globalisation and its future challenges for regional development , IJTM, V.26

1st generation systems of innovationTechnology districts in high tech sectors

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Enterprise

SME

EEE

Enterprise

SME

Big Firms

Public Sector

National/Regional

Administration

Business

Consultants:

Services

Universities

Technology

Centres

Finance-

Banks

Valu

e C

hain

Clu

sters

Mento

ring S

chem

es...

Inno

vation

Sup

port

Sch

emes

Bus

ines

s In

nova

tion

Cen

tres

Innovation Management

Techniques

Technology Audits

Technology Foresights

Intermediaries

Clu

ster

Pol

icy…

Bus

ines

s For

ums

Seed C

apita

lventu

re C

apita

lB

usin

ess A

ngels

Technolo

gy T

ransfe

r

Pro

jects

R&

D V

alo

risatio

n

Graduate P

lacement

Schem

es

University-E

nterprise

Cooperation...

The Networked Economy

Lawson and Lorenz (1999) argue that the technological dynamism of districts is dependent on the firms within them, sharing two forms of cooperation: (1) the provision of collective goods and services such as training, education, R&D, and (2) sharing of certain norms of reciprocity such as information, subcontracting, refraining from wage competition. Reciprocity was identified as the key element of technological dynamism, reducing the risks associated with new product development and discouraging wage competition.

Source: Landabaso, 1999

1st generation systems of innovationInnovative milieu

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Technological valorisation of property Spin-offs Tech Transfer Attraction of firms Tech Transfer New round of investment

(A) R&D Units

(C) Innovative Firms

(B) Technology Transfer

Organisations

Technology diffusion

(D) Space, Property, infrastructure

1st generation systems of innovationPlanned districts: Science and technology parks

The complexity of networks within the district makes ‘technology districts planning’ extremely complicated.

The nearest application of the district concept to urban and regional planning comes through science and technology parks.

About 400 cases in Europe

Four constituting elements: (a) land / infrastructure, (b) R&D institutes, (c) technology intermediary organisations, (d) innovative companies.

Four types of technology cooperation: joint R&D, technology transfer, spin-off creation, technology dissemination.

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The innovation mechanism within the cluster / district is based on threefactors:

The concentration of many and diverse skills in the cluster or districtcovering various fields of knowledge and production. Even in cases wherethe whole cluster focuses on a single industrial sector, the multiplicity ofskills comes from specialisation in different stages of the productionprocess.

The cooperation networks between the members of the cluster.Cooperation produce innovation, as the later stems from the combinationof skills, knowledge, and qualities that are put together. A minimumnumber of cluster members is necessary to actualise spontaneousnetworking (i.e. 100 companies has been considered as the threshold forthe definition of a production complex as an industrial district).

The presence of “catalysts” that facilitate combinations among the manyand diverse skills and units. The function of the catalyst, at Prato, forexample, is ensured by the “impannatori”, who constantly re-organise theproductive processes of the district in relation to trade orders. VC functionsas catalyst also in high tech clusters. The central administration and liaisonoffices in the case of technology parks.

1st generation systems of innovation Cluster-based innovation mechanisms

2nd Generation systems: Regional systems of innovation

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In 1990s, a radical shift from district theory took place. Three changes occurred:

From district theory to learning regions. The contribution of the District theory write Lawson and Lorenz (1999) was more in the area of understanding the territorial foundations of inter-firm cooperation than in understanding the contribution of territorial clustering to a firm’s capacity to learn and generate new knowledge.

From individual to organisational learning (OL): Individual learning refers to theacquisition of information, knowledge, understanding and skills, throughparticipation is some form of education, training, whether formal or informal.Organisational learning depends upon individual learning and builds upon. OLamplifies the knowledge created by individuals, by appropriating knowledge fromoutside or by creating new knowledge in interaction and collaboration to otherorganisations

From linear (within the Lab) to systemic (within the territory) innovation : A process hermetically sealed within the research lab of the large company has been transformed into a system that covers an entire city-region involving participants from the finance, the technological, and the production communities.

2nd generation innovation systemsAn institutional breakthrough

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RESEARCH AND

TECHNOLOGICAL

DEVELOPMENT

Research institutes University research

R&D in large companies

Innovative SMEs

INNOVATION FINANCE

Venture capital funds

Technology incentives

Regional incentives and aids

Spin-offs / start-ups

NEW PRODUCT

DEVELOPMENT

Provision of

management, product,

market, and quality

services

Specialised centres

Business consultants

PROCESS

INNOVATION

Clusters and networks

Technology co-operation

Supply chains

Alliances

Distribution &

Promotion

TECHNOLOGY

TRANSFER

Co-operation between

universities and

companies

Technology brokerage

Licensing

R&D Innovation

Funding

Production

Re-toolingNew

Product

Development

Strategic

Company

Planning

Market

Research

Production

Runs

2nd generation innovation systemsAn institutional breakthrough

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REGIONAL SYSTEM OF

INNOVATION

Innovation Financing

Banks, Business Angels,

Venture Capital, Regional

Incentives

Technology Transfer

Organisations

Tech Parks, Tech Networks,

Brokers, Consultants

Universities /

Research

Institutes

Public R&D

Laboratories

Private R&D

Departments

and Centres

Technological Information System

Patents, Standards, Technical

Publications, Emerging Markets,

Foresight

CLUSTERS

Group of companies in co-

operation

Vertical / Horizontal

The region is conceptualised as living organism with technology learning, management, selection, and knowledge development capabilities

Innovation is based on a system of clusters, R&D, tech transfer, and finance

The system includes (1) demand and supply institutions, (2) knowledge networks

Networks allocate ‘formal’ and ‘tacit’ knowledge and enable collaborative innovation

Institutions work as switches selecting (on) and rejecting (off) innovations

Priorities are on intangible infrastructure, skills, human capital, finance, cooperation and social capital.

2nd generation innovation systemsLearning regions / regional systems of innovation

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2nd generation innovation systemsLearning regions / regional systems of innovation

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The model denotes the “university-industry-government” relationships as a complex of interdependent institutional spheres, which overlap and complement each other along the process of innovation.

2nd generation innovation systemsTriple helix alliances

C

TT R&D

FU INT

R&D: Research and development; TT: Technology transfer; INT: Information intelligence; C: Companies (innovative) and Clusters; FU: Funding.

2nd generation innovation systemsPrecarious regional systems of innovation – Missing elements

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In 1994, core concepts of the ‘learning region’ paradigm (collaborative networks, organisational learning, institutional agreements, social capital, political consensus) were adopted by the European Commission

A new family of policy schemes was introduced having a strategic view over technology and innovation at the regional level: Regional Innovation and Technology Transfer Infrastructures and Strategies (RITTS), Regional Technology Plans (RTP), Regional Innovation Strategies (RIS), and Programmes of Regional Innovative Actions (PRIA).

The objective is to create regional systems of innovation capable to sustain and facilitate innovation in small companies in manufacturing and services

2nd generation innovation systemsPolicy model: Regional Innovation Strategies

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RIS principles are reflected in the policy’s methodology :

1. Raising awareness about innovation and building a regional consensus among key regional actors;

2. Analysis of the regional innovation system (its actors and their interaction), including technology and market trends assessment, technology foresight and benchmarking with other regions ;

3. Analysis of the strengths and weaknesses of regional firms: assessment of regional demand for innovation services, including technology audits (in SMEs in particular) and surveys regarding firms’ needs and capacities, including management, finance, technology, training, marketing, etc.;

4. Assessment of the regional innovation support infrastructures and policy schemes;

5. Definition of a strategic framework – including a detailed action plan and the establishment of a monitoring and evaluation system. The action plan may involve pilot actions and feasibility studies as well as concrete projects that might be financed under existing structural funds operational programmes.

2nd generation innovation systemsPolicy model: Regional Innovation Strategies

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Strategic priorities to support

a regional system of innovation

Advance R&D

capability

Strengthen

technology

transfer

capability

Improve intra-

company

innovation

capability

Offer risk

and start-up

funds to

innovation

Advance

market and

technology

watch

2nd generation innovation systemsPolicy model: Regional Innovation Strategies

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INNOVATION POLES In some countries (France, Italy) more

than one districts, clusters, and science parks were developed within the same urban system, creating larger innovation poles.

Innovation Poles rely on multi-cluster systems.

The emphasis is on clusters and networks. Networks of collaboration, communication and co-ordination ensure the cohesion and synergy among the individual poles.

Dev. Org. Univ. Labs

Res. Inst.

Tech Park

Cluster

ClusterMontpellier: An early multi-cluster concept in master plan of the city (1980’). Four clusters (Agrofood, Pharmaceutical, Media, Automation) + Housing + Leisure

2nd generation innovation systemsPolicy model: Innovation Poles / multicluster systems

3rd Generation: Intelligent / global innovation ecosystems

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New trends in innovation Open innovation and rising Asia

Business R&D expenditure rose by 5.2% in North America, 2.3% in Europe, and 3.8% in Japan during 2000-05, but by 17% in India and China, and by 19.7% in Australia, Brazil, Singapore, South Korea,

and Taiwan combined. 26

New trendsInnovation offshoring

The majority of the new R&D centers to be created by MNCs will be located in India, China and Asian cities

Cisco has R&D facilities in Bangalore

Toyota in Thailand

Nokia operates nine satellite design studios located in India (Bangalore), China (Beijing), and Brazil

Source: United Nations (2005) UNCTAD Survey on the Internationalization of R&D

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New trendsGlobalization of innovation clusters

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Bangalore (India) one of the largest ΙΤ clusters (satellite platform).

Zhongguancun High Technology Development Zone (China), cluster in consumer electronicς.

Taiwan, Hsinchu Science Park, cluster leader in semiconductors.

Singapore, new clusters in disk drivers, multimedia, broadband technologies, financial services.

Korea, Teheran Valley near Seoul, a nucleus of national industry, clusters inbroadband technologies and mobile communications.

Malaysia, long term effort in semiconductors, electronics, and software: Multimedia Super Corridor, and cyber cities Cyberjaya, Purtajaya, Penang.

New trendsEmerging innovation clusters in China, India, Malaysia

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New trendsGlobal online technology brokers

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New trendsGlobal online science communities

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Collaborative innovation environments based on community spaces, enable the involvement of population in innovation development: Creative communities

New trendsInnovation co-design with end-users / Crowdsourcing / Living Labs

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New trendsGlobal online networks over innovation ecosystems

New trends (innovation offshoring / digital brokers) create a global virtual / organizational space over the local / regional system of innovation

Glocalisation of innovation: Local systems open to global cooperation, global networks in technology acquisition, global product development, global supply chains, product promotion

Intelligent cities enable local innovation systems to integrate global networks and advance people-led innovation

Innovation System

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R&D

NET

TT

FIN

PD

Innovation ecosystem Physical Space

Innovation ecosystem Virtual Space

All these trends (global innovation supply chains, open innovation, Crowdsourcing, web-based innovation) create a new innovation spatiality, linking territorial systems of innovation to the web, online knowledge management tool, and digital cooperation / communication spaces.

Key processes:Dematerialisation of infrastructureOnline learning and technology

managementVirtual technology co-operation and

exchangeVirtual communitiesDigital promotion of innovationTechnology transfer as communication

Intelligent cities and regions are territories combining strong innovation systems with IT infrastructure and digital innovation services

3rd generation systems of innovationIntelligent cities and regions

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Advantages Weaknesses

Clusters/

Technology districts

• Direct participation of companies

• Well known and wide spread concept

• Planning barriers

• High development costs

• Innovation through infrastructure ?

Learning regions /

Regional systems of innovation

• Wider system of reference

• Participation of R&D institutions

• Emphasis on institutions

•Public policy support

• Need for high institutional thickness

• Strong public-private partnership

•Sustainability after the public support period

Physical – virtual environments of innovation /

Intelligent cities

• Low development cost

• Easy access

• Global communication and networks

• Involvement of people

• Digital gap

• IT literacy

• Complex environments

• Need for simultaneous physical / digital interaction

Territorial systems of innovation: Continuous enlargementAdvantages and weaknesses

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More:

Komninos, N. (2002) Intelligent Cities: Innovation, knowledge systems and digital spaces, London and New York, Taylor and Francis (Part 1 and 2)

Komninos, N. (2008) Intelligent Cities and Globalisation of Innovation Networks, London and New York, Routledge (Chapters 3 and 4)

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