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News : Irish Last Updated: Apr 24, 2009 - 5:31:05 PM

Coughlan appoints Enterprise Feedback Group on plan for Ireland to become a world-class knowledge economy by 2013
By Finfacts Team
Dec 4, 2008 - 8:57:31 AM

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HP Invent National Competition Prize winner, University of Limerick graduate, Kate Corish, shows her innovative new device to Lionel Alexander, Vice president and MD of HP Manufacturing Ireland in March 2008. Kate was awarded a €5,000 prize for her final year project designed to enable construction workers to safely lift and manoeuvre sheet materials.

The Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan, T.D., on Wednesday announced her establishment of an Enterprise Feedback Group (EFG) on the implementation of the Government’s Strategy for Science, Technology and Innovation (SSTI) plan for Ireland to become a world-class knowledge economy by 2013 . The EFG is to be charged with providing feedback from business and industry on the SSTI and advice on the commercialisation of research outcomes from the Government’s substantial investment in research and development.

The EFG is to be chaired by Lionel Alexander, Vice-President and General Manager of Hewlett Packard Manufacturing Ltd.

Addressing the inaugural meeting of the EFG, the Tánaiste said that establishing the group would“send out a clear signal that in Government we are not investing in R&D for its own sake, but rather, we have taken a key strategic decision that R&D is going to drive our economy in the years ahead”.

She continued, saying: “Research and development funding must be at the cutting edge and focused on achieving outcomes that have significant market potential and ultimately result in job creation and a return for the State.”

Finfacts has said from the outset in 2006, of the announcement on spending €8.3 billion on Science, Technology and Innovation by 2013, that there were no specifics provided on how we were going to become a world class knowledge economy in six years and it raised the question as to how much was aspiration and if the then  minister really knew himself? The question remains unanswered.

US IT research firm Forrester Research said in a report, which was published in December 2006, that governments put innovation high on their national agendas as a way of creating jobs, economic growth, and general well-being.But much of the tax money invested goes to waste because many politicians and bureaucrats confuse innovation with invention.

Successful strategies will build on the comparative advantage of each nation in a global Innovation Network consisting of Inventor, Transformer, Financier, and Broker nations.

Developed nations should select two of these innovation roles, while developing nations should stick to one. Forrester's evaluation shows 26 different nations which roles they should focus on and with which other nations they can partner to make their policies a success.

Navi Radjou, one of the authors of the report  The Forrester Wave: National Innovation Networks, Q4 2006, was interviewed on the Innovate Forum on issues of innovation.

You cite this statistic in your findings, as well – “Only 17% of global CEOs even mention R&D when listing their sources of innovation, and less than 3% of CEOs consider their R&D managers capable of leading enterprise-wide business innovation. So, what gives? After all – investment in R&D has historically been viewed as a bellwether of a firm’s ability to innovate – is this simply not true anymore?

That’s right – it’s simply not true anymore. Investment in R&D is not a bellwether of a firm’s ability to innovate. The nail in the coffin was a study conducted by Booz Allen Hamilton – which showed no correlation between R&D spending and innovation. But you do have to be careful here. As you can see in the case of even something like the iPod, the iPod is just a device – the real value is in iTunes. So it’s not that R&D is necessarily being seen as less important, it’s just that traditionally, R&D was focused on generating product innovation.

Today, however, more and more CEOs are finding that business model innovations – offerings like iTunes,  car insurance that you pay as you drive, or tailored drug delivery -  are just as important as coming up with a better mousetrap.

The numbers reflect this. For example, on a global basis - 46% of company CEOs say that new products and services will give them a competitive advantage, whereas 54% say that new business models will give them a better competitive advantage.

So, from this perspective, they’re not saying that R&D isn’t important, they’re saying that if the kind of innovation that matters is business innovation – like new operating models or new alliances – whatever it is, then how much – realistically – can R&D help with that? After all, R&D is made up of scientists and PhDs – and they can’t help you to improve your supply chain or your business model, right?

If you break down the numbers by region, it’s kind of interesting as well. While U.S. companies still seem to believe that products and services are more important – in Asia Pacific, it’s radically different. Those interviewed from the Asia Pacific region ranked new business models as being much more important than coming up with a new widget -- which is very interesting – because what we’ve been seeing is that the power is shifting to the Asia Pacific region.

Another statistic that you quote is that 90% of the engineers in 2008 or 2010 will come out of Asia. So , apparently they’re building up their technical talent, yet at the same time, you’re saying that they expect their innovations to come from new business models, not from product innovations – the two don’t really correlate. How do you explain this seeming contradiction?

That’s a good question. In the U.S., we’ll be tapping into their engineering talent, potentially – because we still think product innovation is where it’s at – but that puts us in kind of a precarious position. Which is why I’m worried. Because basically, what’s happening is that in the U.S., we have CEOs who are still obsessed with product innovation – and, in particular, with product design. In fact, we have publications like Business Week giving away design awards for innovation, which reinforces this obsession with product innovation.Yet we know that business model innovation is equally, if not more important. The challenge is - how do you reward or recognize something that relates to a business model, which is much less tangible than say, a new product design?

So, what we’re thinking is going to happen is that - because the U.S. doesn’t produce enough engineers and they have an aging R&D workface – they’re going to leverage the engineers from the Eastern countries more and more for product innovation. At the same time, companies from the East are going to play their cards very, very carefully. Take India, for example. India is going to say, “Ok, U.S. company – you need my engineering talent to drive your product innovation. That’s fine. We can supply you with engineering talent. But in the meantime, we’re also going to develop companies that are going to compete with you on a business model level.”

Finfacts Dec 01, 2008 Report: Innovation, The Venturesome Economy and Ireland- -Amar Bhidé in his recently published book, The Venturesome Economy, makes similar points and questions the link between public spending on basic research and economic growth.

Coughlan said on Wednesday that the SSTI represents an unprecedented investment in science, technology and innovation intended to:

  • raise the qualifications and skills of our workforce;
  • support the translation of research to application;
  • increase the contribution of research to economic and social development; and thereby
  • promote Ireland’s global competitiveness, sustain Irish productivity, and grow quality jobs.

The SSTI is co-terminus with the National Development Plan and runs to 2013.

The Tánaiste expressed her appreciation, and that of the Government, at the commitment being made by the members of the Group to support Ireland’s economic advancement. She outlined to the Group the mix of policy measures the Government has adopted to advance the aim of growing our business R&D capacity, specifically:

  • Stimulating and supporting a significant level of business expenditure on R&D;
  • Putting in place mechanisms and structures to facilitate the transfer of knowledge between enterprise and academia;
  • The formation of business networks to collaborate and cooperate amongst themselves to innovate;
  • The encouragement and incentivisation of higher education institutions to commercialise the outputs of their research;
  • The development of R&D initiatives for the needs of small and micro businesses

Coughlan concluded, saying:“Now that the SSTI is fully operational it is appropriate to develop this ongoing dialogue with key stakeholders. The EFG is constituted as a group of stakeholder representatives with a wide spread of business expertise for the purpose of a sustained dialogue with the Departments and agencies concerned with delivery of the SSTI goals. It is my intention to incorporate feedback from the EFG into the continuing development of policy for achievement of the SSTI’s targets and, in particular, toward realisation of the commercial value of the taxpayer’s investment in R&D.”

A list of the members of the Enterprise Feedback Group is as follows:

Lionel Alexander (Chair) Vice President and General Manager, Hewlett Packard Ireland
Sean Baker IT Consultant
William Carty Finance Director, Abbott Ireland
Dr. Gabriel Dennison NTR plc
Aidan Fitzsimons Commercial Director, Dairygold Cooperative Society
Michael Gallagher Managing Director, Swan Net-Gundry Ltd
Eleanor Garvey General Manager, Pfizer Ireland Pharmaceuticals
Tony Golden Managing Director, Citi Ireland
Cathy Kearney Managing Director, Apple Computer International
Henry McGarvey Managing Director, Pramerica Systems Ireland Ltd
Sean McGrath Chief Technical Officer, Propylon Ltd
Martin McVicker Managing Director, Combilift Ltd
Julie O'Neill General Manager, Gilead Sciences Ltd.

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