Horizo 2020 Policy Support Facility Specific Support to Lithuaia Fit for the future Icetivisig research ad iovatio parterships ad attractig iovative ivestmet to Lithuaia Alasdair Reid, Michel Lemage, Emily Wise & Has-Jörg Bülliger Vilius, 12 October 2017
Specific support to Lithuaia Support' activity focused o two subjects: cooperatio betwee the public sciece base ad busiess; ad attractio of iovatio-orieted foreig direct ivestmet (FDI) Support delivered i the followig steps: Kick-off (Brussels) o 22 February with the Lithuaia authorities Draftig of the backgroud report 1st missio of the expert team to Lithuaia (10-12 April) Draft report ad expert team workig meetig (23 May) 2 d missio 28-30 August to discuss the draft recommedatios Fial report ed September. Horizo 2020 Policy Support Facility Page 2
Challege 1 : policy does sufficietly address the key bottleecks i the system Itesive sciece-busiess cooperatio i Lithuaia is limited to a small umber of iche, high-tech sectors (e.g. biopharmaceuticals, photoic ad some iformatio ad commuicatio techologies). Wider-scale sciece-busiess cooperatio is hidered by a umber of clearly idetified barriers o both the supply (sciece) or demad (busiess) side. However, there remai specific gaps ad icosisteces i the policy measures to support sciece-busiess cooperatio. Horizo 2020 Policy Support Facility Page 3
Challege 2: support & icetivise busiessorietated strategies of applied research facilities. the sigificat ivestmet i research ifrastructure has ot bee matched by sufficiet growth i the umber ad skills sets of the maagemet, researchers ad techicias i the ope access research cetres (OACs). the OACs applied research activities remai overdepedet o core fudig from govermet, despite limited growth i cotract research (icludig testig ad related services) icome. Most of the OACs have bee uable to create more permaet ad structured busiess parterships which raises issues of future fiacial sustaiability. Horizo 2020 Policy Support Facility Page 4
Challege 3: better idetify ad proactively support busiesses with iovatio potetial there is a eed to build iovatio maagemet capacity withi a larger umber of compaies, across a broader rage of sectors. the Lithuaia smart specialisatio strategy seeks to cocetrate ivestmet, but there is a highly variable capacities amog busiesses across the priority areas to desig ad develop R&I parterships. Busiess eed more to advice ad support to develop iteral capacity they require to egage with ad absorb kowledge. Horizo 2020 Policy Support Facility Page 5
Challege 4 : a fragmeted sciece-busiess ecosystem Past policy iitiatives ad decisios have created a ecosystem of busiess support ad fudig agecies, sciece, educatio ad busiess valleys, OACs, sciece ad techology parks ad over 50 clusters. However, the system is either effective or efficiet ad leads to a dispersio of public fudig rather tha the cosolidatio of ivestmet ad targeted support for sustaiable ad strategic iovatio parterships Horizo 2020 Policy Support Facility Page 6
Specific issues for iovative foreig direct ivestmet Oly a few examples of iovative activities with the critical mass to attract higher value-added ivestmet from foreig sources. Attract other types of foreig ivestmet (R&D cotracts, iovatio pilots, veture capital ivestmets i start-ups) to improve Lithuaia s rakig as a iovatio-locatio. Critical importace of aftercare i securig loger-term, sustaiable ivestmet that eables Lithuaia to move up global value chai skills bottleecks i priority FDI sectors pose a sigificat challege. Talet attractio ad retetio are closely related challeges. Horizo 2020 Policy Support Facility Page 7
Overall visio cosolidate, segmet & icetivise to icrease active iovators Cosolidate ad professioalise busiess iovatio support ecosystem by creatig a sigle atioal agecy, reduced umber of clusters, etc. Segmet (prioritise) busiesses for support by their potetial to scale up ad icreased added value. Shift to accout maagemet of priority firms ad reiforce aftercare for foreig ivestors Icetivise co-operatio: New fudig model for applied R&D cetres to reward third party reveue Build capacity i busiess sector ad proactively develop projects (follow-o iovatio vouchers, Iterface Lithuaia) Horizo 2020 Policy Support Facility Page 8
Recommedatios 13 specific recommedatios grouped ito three themes: stregtheed foudatios for the R&I policy support system, sciece-busiess cooperatio, ad iovatio-orieted FDI. For each recommedatio, we summarise the ratioale uderpiig it, followed by the detailed recommedatio, ad we set out the operatioal steps required ad time frame for implemetatio. Horizo 2020 Policy Support Facility Page 9
Cross-cuttig recommedatios Horizo 2020 Policy Support Facility Page 10
Busiess-sciece co-operatio recommedatios Horizo 2020 Policy Support Facility Page 11
Iovative Foreig Direct Ivestmet recommedatios Horizo 2020 Policy Support Facility Page 12
R1: Cosolidatio of busiess support agecies A sigle atioal busiess ad iovatio support agecy, tetatively titled Busiess Lithuaia, should be formed by the phased merger of the five existig agecies. Horizo 2020 Policy Support Facility Page 13
R2: Segmetatio ad targetig of support to compaies with growth potetial. The ew Busiess Lithuaia agecy should develop a accout maagemet process for key segmets of the busiess base (domestic & foreig owed) ad a effective cliet iformatio system Horizo 2020 Policy Support Facility Page 14
R3: Review of icetives for iovatio ivestmet ad co-operatio A preparatory study, icl. bechmarkig with more advaced busiess support systems, should be udertake to assess ad review the criteria for awardig support icludig related State Aid rules. Greater priority be give to fudig collaborative projects through commercialisatio projects as well as by iovatio platforms ad pilots (ivolvig several compaies, research istitutes ad public sector i the joit developmet or testig of techologies). Horizo 2020 Policy Support Facility Page 15
R4: Iovatio Voucher follow-o awards Itroduce Iovatio Voucher follow-o awards (e.g. 30-50k) to ecourage firms to go beyod the stage of feasibility studies ad develop co-operatio with firms. Cosider itroducig a idustrial fellowship scheme to help firms recruit specialised R&D ad iovatio maagers for project delivery. Horizo 2020 Policy Support Facility Page 16
R5: Strategic review of operatios ad fiacig of OACs ad TTOs Udertake a strategic review of all OACs icludig staffig ad equipmet to assess idustrial relevace, Reitroduce the obligatio for reportig o key performace idicators related to busiess usage of equipmet Revise fiacig model towards a top-up of o-budgetary fuds Horizo 2020 Policy Support Facility Page 17
R6: Stroger, more iteratioally visible ad professioal cluster iitiatives Reduce the umber of clusters by applyig stricter criteria (related to critical mass, importace/potetial of domai, log-term strategy for collective actio, etc.) ad adjust approach to fudig Esure operatioal parterships with S&T park ad OACs Professioalise the maagemet ad delivery of cluster orgaisatios services to firms Horizo 2020 Policy Support Facility Page 18
R7: Pro-active egagemet with busiess: Iterface Lithuaia Create a sigle atioal iterface structure (staffed by idustrially experieced staff) to esure pro-active egagemet with busiess Iterface Lithuaia will be tasked with a pro-active busiess outreach fuctio that will iclude a programme of visits to compaies that require support i defiig their eeds for support for a R&I project Horizo 2020 Policy Support Facility Page 19
Timepla for implemetig iovative FDI recommedatios The six recommedatios uder the theme of iovatio orieted foreig direct ivestmet are iter-liked ad are steps towards a revised ad updated approach to optimisig the value obtaied from attractig ad retaiig more iovative foreig ivestors Horizo 2020 Policy Support Facility Page 20
R8: Revise classificatio of iovatio orieted FDI ad related key performace idicators This strategic overhaul should iclude revisig the defiitio of R&I projects, itroducig ew criteria to support decisio makig ad reviewig the target sectors ad source coutries for iovative FDI. The KPI of 20% of projects beig pure R&D is urealistic, does ot reflect market reality i Lithuaia, CEE or eve Wester Europe. A 10% target would be more realistic but still very challegig target Horizo 2020 Policy Support Facility Page 21
R9: Review the sector ad coutry targetig to improve coverage of likely sources of iovative FDI Review sector ad sub-sector targetig with the goal of idetifyig the most promisig FDI opportuities for Lithuaia. This should iclude the full spectrum of FDI opportuities rather tha just focusig o greefield ivestmet. focus o the potetial ivestmet deal flow (i.e. the market size) i cojuctio with the competitive stregth of Lithuaia s sector/iche FDI value propositio. Review coutry targetig priorities to cosider the potetial from other importat Europea ad global FDI source markets Horizo 2020 Policy Support Facility Page 22
R10: Shift towards FDI aftercare strategy based o strategic, key accout maagemet By ed 2018, the Ivestmet divisio of Busiess Lithuaia will have developed a key accouts strategy i order to idetify the existig foreig ivestors with greatest potetial for migratio to R&I ad other higher value-added fuctios i Lithuaia: Re-focus the KPIs so that the overall balace for aftercare should accout for 60% of all FDI jobs ad 80% of R&I FDI jobs Appoit a dedicated aftercare lead ad two assistats Map, segmet ad prioritize the existig foreig ivestors i order to idetify the cohort of compaies that will be accout maaged vs more idirect support; Produce a SWOT aalysis for each idividual key accout which would form a key compoet of the accout pla Develop key accout plas which iclude amed accout maagers, accout teams ad KPIs for each of the key ivestors. Horizo 2020 Policy Support Facility Page 23
R11: Reiforce the staffig available to attract FDI, otably i the overseas etwork By the ed of 2020, the resourcig for FDI attractio to Lithuaia should be improved I Lithuaia expad ad icrease resources to iclude a etwork of ivestmet promotio officers at each of the mai city ecoomic developmet agecies across Lithuaia, supported ad metored by Busiess Lithuaia s regioal ivestmet maagers Implemet a atioal iward ivestmet traiig ad quality certificatio process for city ecoomic developmet persoel by 2020, to esure high quality, best-practice services ad to icrease the commitmet of cities to busiess ad FDI support Strategic assessmet of the opportuity ad challeges of establishig direct i-market employees from Busiess Lithuaia Creatio of a dedicated ivest-i overseas etwork i each of Lithuaia s core ad secodary target markets. Horizo 2020 Policy Support Facility Page 24
R12:Attractio of alterative modes of iovatio-orieted FDI projects ad activities that are precursors to FDI A umber of actios should be take durig 2018-2020 to improve the promotio of Lithuaia as a locatio for coivestmet, testig ad pilotig by foreig ivestors: Proactively market opportuities for Lithuaia iovatio pilots, R&D cotracts ad parterships to both existig ad ew foreig ivestors. Develop a etwork to focus o attractig iteratioal veture capital ivestmet with the goals of icreasig the coectios of the Lithuaia start-up ecosystem to Nordic, Europea ad global VC etworks. Ecourage the developmet of pilot testig platforms or projects, these could iclude, for example, smart city pilotig opportuities. Busiess Lithuaia should start to promote M&A opportuities. I particular, this is essetial for the liquidity of the start-up ecosystem Horizo 2020 Policy Support Facility Page 25
R13: A talet attractio iitiative to reiforce Lithuaia s image as a place where iovators live ad work By 2019, we recommed to establish a dedicated uit withi the ew Busiess Lithuaia agecy with resposibility for talet attractio. The focus of the uit should be twofold: a) the Lithuaia diaspore ad b) immigrats. I 2018, durig the process of the creatio of the ew Busiess Lithuaia agecy, this uit could be icubated withi IvestLT. I our view, the highest priority should be give to the Lithuaia diaspora ad could be lauched as a pilot exercise durig 2018-19. Horizo 2020 Policy Support Facility Page 26