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Lessons from Lerchendal on how to use innovation policy to tackle change

5. februar 2016

This year’s Lerchendal illustration, made by Peter-John de Villiers

By Special Adviser Per M. Koch, Innovation Norway

I had the pleasure of taking part in two interesting days at the Lerchendal conference in Trondheim this week. For me the most interesting part was listening to Mariana Mazzucato redefining the role of innovation policy in technological and social change.

Lerchendal has managed to become a venue that catches the new waves of innovation policy. This is the conference series that managed  to turn people’s interest towards green and sustainable innovation before societal challenges became an obvious part of the discussion.  (I should add, though,  that Innovation Norway got there at the same time as Tekna.)

Sustainable consensus

Being a pioneer has its price. This year’s general agreement on the need for an innovation policy that reorients industry towards the big challenges and sustainable development did not sound as radical as it did last year.

It is fascinating to see how the big political parties, represented  by Jonas Gahr Støre and Nikolai Astrup at the conference, now stick to this narrative. So did most of the industry representatives — Bjørn K Haugland from DNV GL being the one with the clearest vision, and Arve Ulriksen from Mo industripark giving the most telling example of what Norwegian industry can do in the area of green growth.

However, the discussion also revealed areas that needs more reflection, and where I believe there is a need for further reorientation.

Increased productivity means reduced employment

The first “paradox” was found in the discussion of digitalization.

Many (not least Karl Johnny Hersvik of Det norske) pointed to reduced productivity growth and the need to reduce costs by increasing efficiency.

Indeed, the reason we still have a thriving manufacturing sector  is that the companies have managed to increase productivity through digitalization and automatization. They have reduced the number of employees significantly. Now the oil and gas industry will  do more of the same.

The Lerchendal conference  an annual high-level conference which aims to put the most urgent topics for business and society on the national agenda. It is organised by Tekna (the Norwegian Society of Graduate Technical and Scientific Professionals), the Research Council of Norway, the Norwegian University of Science and Technology and SINTEF.

The untold tale from the conference is this one: Manufacturing will continue to thrive by reducing employment. It will have to do so, also for the sake of the whole economy, which needs exports that can replace lost petroleum  revenue.

No one seemed to have the answer to the obvious follow up question, though: Where do we find the new jobs, given this radical need for increased productivity?

Historically technological breakthroughs like steam, electricity and digitalization have caused long periods of brutal social transformation, with increased unemployment and political unrest. We need plans for how to make the current transition as smooth as possible.

The need for a future oriented innovation policy

The second  undigested dilemma was related to this need for future employment.

Although nearly everyone agrees that the solution to the challenges of transformation and the transformation of challenges is found in research and innovation, I do not think we have a clear idea about what this may entail, policy wise.

Innovation Norway has argued that if we are to use innovation as a tool for technological, social and economic change, we need to have an idea about where we want to go. Where can Norwegian industry – given its specific industrial structure, cultural framework and unique competences – contribute the most to solving global and national challenges, while at the same time conquering relevant global markets?

Many of the speakers at the conference asked policy-makers to identify and stimulate competence building and innovation in particular areas of relevance to the future. Still, it seems to me that many still think that providing broad funding in “open competitive arenas” will generate the needed changes by themselves, quickly and efficiently, bottom up and without “picking winners”.

Mariana Mazzucato’s on the role of the state in innovation

In her presentation Mazzucato attacked this traditional point of view aggressively, arguing that not only will such policies fail to bring in the needed changes within reasonable time, they have actually never done so.

Mariana Mazzucato

Mariana Mazzucato. Photo copyright M Mazzucato.

The title of her book, The Entrepreneurial State: debunking public vs. private sector myths, summarizes her message quite nicely. She argues that nearly all major innovations and society-transforming technologies have been developed thanks to public interventions and extensive public funding. The digital economy would not have happened without huge public investments in, for instance, the Internet or GSM.

Indeed, other speakers at the conference gave the development of the Norwegian oil and gas industry as the most clear example of a Norwegian strategic, goal oriented, innovation policy. If our current wealth is indebted to policy makers who make clear strategic choices in the 1970s, it makes sense to say that future wealth will be based on the choices they make today.

Looking at the state as a  passive and static bureaucracy  that is to “fix market failures” is a mistake, Mazzucato argues, because by doing so we remove the only tool we have for making the overall strategic choices needed to transform the economy in a sustainable direction.

Innovation policy tension

By saying so she also reveals the remaining tension in the Norwegian innovation policy debate.

There is now broad political consensus in Norway regarding the necessity for more research and innovation and the need for more relevant public funding. There is also general agreement as regards the desire to turn  industrial activities in a sustainable direction.

What remains unclear, however, is to what extent we are to treat research, innovation and entrepreneurship as black boxes into which we put public money, hoping for the best, or whether we think of innovation policy  as an integrated part of the innovation system and the social transformation process. The latter requires that both policymakers and stakeholders take a much more active and future oriented role in innovation policy development.

Videos from the conference.
Conference programme.

Update: Mazzucato’s presentation is available in this video:

Per M. Koch works as an innovation policy adviser at Innovation Norway. He has a background from innovation research and national and international research and innovation policy development.

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