How do you get a Silicon Valley - or three of them - in Europe? And what can policy makers do to help? These were the themes of an innovative round of discussions that took place earlier this year.
Innovation clusters: a Charter is born
The question of how to foster the development of internationally competitive high-tech clusters in Europe came under the spotlight at a meeting of thought leaders sponsored by Microsoft at the prestigious business school INSEAD earlier this year.
The resulting manifesto for action, setting out a Charter for Cluster Development and calling for the EU to focus a small percentage of its regional development funds on the creation of super clusters, or Special Innovation Zones for Europe (SIZE), was published in leading business newspapers across the continent (see box).
The manifesto is a distillation of the expertise, views and research of a select group of leaders - in European academia, industry and policy, who met as the Science|Business Innovation Board - a forum organised by the Science|Business news service to share their views and set out policy recommendations, and supported by Microsoft Corporation. The manifesto drew also on previous meetings and research carried out by Science|Business in a series of investigations into Innovation Policy.
The subject of high-tech clusters is particularly timely as the European Commission is preparing a pan- European policy for their formation.
The Innovation Board supports the idea of an overall policy that draws on relevant experience and research to create a blueprint for cluster creation. This is one way to prevent every city or region re-inventing the wheel, and setting up in competition with their nextdoor neighbors, rather than focusing on global competitors.
Innovation Board members Qian Yingaji, Dean of Tsinghua University School of Economics and Management, Frank Brown, Dean, INSEAD, Jean-Philippe Courtois, President, Microsoft International, Roch Doliveaux, CEO, UCB (from left to right).
But there is a danger that, as with many European Union initiatives, the Clusters Policy will be blunted by the lack of clarity that comes of trying to suit every constituency at once, and in the end pleasing none.
The manifesto drawn up at INSEAD can be seen as a plea for single-minded efficiency. In shorthand the question it aims to answer is ‘How do you make a Silicon Valley in Europe?' Europe of course already has some successful and growing clusters. Cambridge, Oxford, Münich, Grenoble, Leuven and Lund are all vibrant zones for scientific discovery, technological innovation, and jobs. But they are small in comparison to Silicon Valley, as a single statistic testifies. Just one US research institution in Silicon Valley, the University of California at San Francisco, has spawned publicly traded companies with a combined market value of $90 billion – three times the value of Europe's entire biotech sector.
Following Silicon Valley's lead, China, South Korea and Singapore have concentrated resources and tax breaks on mega-hubs for technology development.
By contrast, Europe's clusters are small, regional affairs. Vast amounts of EU money is pumped into them via Regional and Structural Development, diffusing the impact. As a result the EU boasts some 2,000 clusters, backed by at least 70 different national cluster policies and hundreds of regional programmes.
The Innovation Board feels that with cluster policy up for discussion and the €308 billion of new money that will be distributed through Structural Funds between 2007 and 2013, now is the time to act.
The EU's upcoming cluster policy, led by Vice President Günter Verheugen, could help guide that spending wisely. The Innovation Board urged that it incorporate the following principles:
A CHARTER FOR CLUSTERS
Build on existing strengths. Clusters cannot be planted on bare soil, wherever a politician feels like it. They can only be nurtured in places that have already demonstrated knowledge, skills and growth.
Focus resources. Don't scatter the money far and wide. Pick just a few of the most promising regions and sectors for support, and provide an environment – family-friendly, multidisciplinary, good salaries – that will attract the brightest minds.
Be open. Encourage the best people, wherever in the world they may be, to work in Europe's clusters. Promote open competition, among universities, companies and regions, for funding. Promote border-crossing – among people, ideas, scientific disciplines, and industries.
Benchmark, monitor and be transparent. Base funding and regulatory policy, not on the clash of political interests, but on empirical analysis of what's working and on open competition.
Encourage risk-taking, crossdisciplinary work, bold innovation and experimentation.
These are broad principles. One practical idea for implementation is to create Special Innovation Zones in Europe (SIZE).
The Innovation Board called on the EU to designate a few existing clusters to benefit from a new legal status as special innovation zones. The idea is to give them extra cash from that €308 billion structural funds budget to invest in schools, infrastructure and cultural amenities that attract the world's top knowledge workers and to stimulate university research, teaching and spin-out company formation.
There would also be special, temporary dispensation from rules that hamper free movement of people and ideas across Europe and make it hard for small companies to hire or fire, and from academic employment structures that impede working with industry.
SIZEs would tap seed funding, supported by the EU and managed by investment professionals. They could access low cost, high quality office space and support services. Resulting companies would benefit from a new low-tax status reserved for young, innovative companies.
The Innovation Board proposed that SIZEs be selected by transparent, international, data-based competition, and not through closed-door, regional politics. One model for this is the European Research Council, which last year disbursed €300 million in research grants based solely on the judgment of international experts.
In that process, 97 percent of applicants for the grants failed to make the grade. But the winning 3 percent are beyond any doubt doing world-class science, worthy of funding and destined to generate value for tax money.
If such an approach can work in the hidebound university sector, it can surely be made to work in regional policy.
On 16 July 2008, the Financial Times published a letter from the Science|Business Innovation Board calling for Europe's forthcoming clusters policy to incorporate the Board's Charter for Clusters, and highlighting a practical suggestion: the creation of Special Innovation Zones in Europe. The Board called for these centres of excellence to be identified “through transparent, international, data-based competition, rather than through closed-door, regional politics.”
The letter was co-signed by an impressive group of leaders: Esko Aho, President, Finnish innovation fund SITRA, and former Prime Minister of Finland; J. Frank Brown, Dean, INSEAD; Jean-Philippe Courtois, President, Microsoft International; Pat Cox, President, European Movement, and former President, European Parliament; Roch Doliveux, CEO and Chairman, UCB; Denis Payre, CEO, Kiala and Co-Founder, Business Objects; Philippe Pouletty, General Partner, Truffle Capital; Alfons Sauquet, Dean, ESADE Business School; Helmut M. Schühsler, Managing Partner, TVM Capital; and Harriet Wallberg-Henriksson, President, Karolinska Institutet.
To read the letter in full, please visit: www.sciencebusiness.net/info/innovationboard.php