Two decades of fostering innovation in Greece: Lessons learned and implications for South East Europe Nikos Zaharis Director, South East European Research Centre
Contents of my presentation 1. About SEERC 2. The Greek experience A. Public research centers loosely linked to the Universities B. Public incubators and Technology/ Science Parks C. Private incubators D. Support for University Spin-offs E. Venture Capital fund F. Clusters creation G. Regional Innovation Poles H. Thessaloniki Innovation Zone I. Conclusions 3. South East Europe and what can be learned from the Greek Experience
WHAT IS SEERC? A non profit organization established by the University of Sheffield and CITY Liberal Studies. An interdisciplinary Research Centre designed to extend South East Europe s research capacity and role in the European Knowledge Society. MISSION STATEMENT: SEERC s mission is to support the sustainable, longterm political, economic, and social development of South Eastern Europe (SEE) by conducting pure and applied research and policy analysis in and for the region.
Four research tracks 1. Enterprise, Innovation and Development 2. Information and Communication Technologies 3. Governance, politics and society 4. Risk, well-being and cognition
Main research projects - current ELEVATE: Integrating pedagogically-documented, value-added e-training add ons in commercial software products of European Software SMEs (funded by FP7, Research for the Benefit of SMEs programme). ORGANIK: An organic knowledge management system for small European knowledge-intensive companies (funded by FP7, Research for the Benefit of SMEs programme). WBC-INCO Net: Western Balkan Countries International Cooperation Net (funded by FP7, Activities of International Cooperation programme). e-sdi NET+: European Network on Geographic Information Enrichment and Reuse (funded by the DG Information Society and Media, econtentplus Programme) J-WEB: Collaboration environment for Judicial European network in Western Balkans (funded by FP6-IST). Multi-level Governance in South East Europe Institutional Innovation and adaptation in Croatia, Greece, FYROM and Slovenia (funded by the British Economics and Social Research Council - ESRC). FUSION: Business Process FUSION based on Semantically-enabled Service-Oriented Business Applications (funded by FP6-IST).
Main research project - completed MIRIAD: Managing and Infusing Research Investment and Development (funded by FP6- Regions of Knowledge programme). EPOS: e-procurement Optimised System for the Healthcare Marketplace (funded by the eten programme, DG Information Society and Media). Ambient Learning: Ambient, multimodal and context-sensitive lifelong learning (funded by the eten programme, DG Information Society and Media).
Projects and events related to innovation management MIRIAD project (www.miriad.org) The International Conference for Entrepreneurship, Innovation and Regional Development (http://www.iceird.org/) May 8-11, 2008 Skopje The 2009 TII Annual Conference in Thessaloniki (http://www.tii.org/). April 2009 International Journal of Innovation and Regional Development (IJIRD) (www.inderscience.com/ijird). Nikos Zaharis is a member of the editorial board and SEERC s chairman Dr. Panos Ketikidis is the editor.
Greece: Types of interventions For the past two decades Greece has been investing into actions and programs that can be classified into two categories: 1. Support for R&D and innovation infrastructure. 2. Support for technology/ knowledge transfer and diffusion as well as the finance of innovation. The above were accompanied by legislative initiatives such as the laws on Venture Capital, Intellectual Property Rights, Private Industrial Areas and Public-Private- Partnerships (PPP).
A. Public research centers loosely linked to the Universities Established by the Greek General Secretariat for Research and Technology mainly during the 90s making use of the Structural Funds. Played an important role at providing flexibility to Universitybased researchers to perform applied research. Examples: Foundation for Research and Technology - Hellas (FORTH) based in Crete Centre for Research and Technology (C.E.R.T.H.) - based in Thessaloniki Ceramics and Refractories Technological Development Company (CERECO S.A.) - based in Chalkis Metallurgical Industrial Research & Technology Development Center (MIRTEC) - based in Volos
B. Public incubators and Technology/ Science Parks Established during the early 90s by Public Research and Technology centers, i.e. in Crete, Athens, Patra and Thessaloniki. Pros: First effort to encourage spin offs and support start ups Access to university and research centers facilities and expert personnel Cons: The public nature of the creators of the incubators inhibited a professional and business like approach No access to finance (venture capitals etc). Overall: limited success best successful example: Forthnet telecom company
C. Private incubators Established after 2002 as a result of an open call for proposals by the Ministry of Development (General Secretariat of Research and Technology). Main characteristics: The state puts 50% of the expenses and the incubator s owner/manager has to contribute the other 50% Provision of management services and access to venture capital is foreseen as necessary and vital. Success is judged by the ability of the incubator to attract and sustain start ups but also by business criteria. Pros: Private investors have a clear incentive to help star-ups grow Access of start ups to finance Emphasis on the business prospect of the start up along the scientific/ technological aspect Cons: Too much emphasis on bottom line can inhibit potentially successful start ups Limited interaction with Academia compared with the public incubators
i4g Incubator in Thessaloniki Established in 2003 by a EUROCONSULTANTS a major Greek consultancy based in Thessaloniki First private incubator in Greece Total Investment: 5,5 m Public subsidy: 50% Established firms: 12 (currently) Total available space: 1600 sp.m. of which 1200 for the incubated firms
i4g Services Co-operation among scientists, researchers, entrepreneurs and investors. Entrepreneurship encouragement by pointing out new ideas and supporting their business-wise utilization. Management Consulting and information provision support Investment support in the form of shared capital (essentially the incubator acts as a Venture Capital) Provision of building facilities including provision of common facilities Provision of professional services Technical assistance for growth Networking - synergies Mentoring / Coaching
i4g entry criteria Formal criteria Firms still in their early stage Recent presence in the market Innovative entrepreneurial activity Knowledge Intense activity section Legal status Essential criteria Competitive Product Technology level of both products and services Shareholders' reliability and commitment to the firm Managerial qualities (expertise and know-how, professional maturity) Flexible exit procedures Internal Return Rates (IRR) Payback period
D. Support for Universities spin -offs The Program was designed by the General Secretariat for Research and Technology to support the creation of spin-offs from the universities and public research centers. It was implemented in two phases: Phase A: A proposal by one or more academics/ researchers was funded in order to prepare a detailed Business and Marketing plan. Phase B: The Business and Marketing plans prepared in Phase 2 were evaluated and those that were deemed promising from a business perspective were funded. State aid was for 50% of Business Plan expenses up to 100,000 Up till today 200 projects with a total budget of 9 m have been funded Although officially not over, success of Phase B seems to be rather limited.
E. Venture Capital fund (New Economy Development Fund S.A.) The New Economy Development Fund S.A. has been established by the Ministry of Economy. Its purpose is to co-finance the formation of venture capital funds, which will be investing in innovative businesses at early development stages. The investment schemes in which NEDF will participate should invest in shares of small enterprises, preferably in early development stages, and with actual and registered offices in Greece. NEDF a minority investor VCs that NEDF invests in, should be managed by the private sector, and investment decisions should be taken by the managers on a commercial basis. Up to date 4 investments: Capital Connect Venture Partners 12 m Zaitech Fund 15 m IBG Hellenic Fund II 13,5 m Pancretan Development Fund 3 m
F. Clusters creation The ministry of Development initiated 2 programs at the end of the 90 s and the beginning of the new century to create sectoral and regional clusters of SMEs. The basic notion behind it was to bring together small enterprises in order to collectively tackle tasks that could not be attempted by each one of them on their own, such as: branding and marketing of products, new product development, expansion to international markets The 2 programs funded over 50 clusters all of Greece that were mainly sectoral The results were not up to the expectations mainly for 2 reasons: Bureaucratic structure of the program (i.e. requirement that the cluster becomes a separate legal entity resulted in new companies that were not profitable) The clusters were not build around new concepts that would give added value to the participating SMEs by bringing them close to other entities (such as researchers, supply chain, marketing experts etc) that can offer this added value. Rather in most cases it was business as usual but in a collective way and with all the inflexibilities of a centrally managed program.
G. Regional Innovation poles An imitative of the Ministry of Development, funded by the OP Competitiveness (Structural funds). Main objective is to enhance regional competitiveness through fostering of the research, technological and innovative activities of a Region as well as of the organizations and businesses that are operating in this region. Activities: R&TD projects designed to effect a large number of enterprises through cooperation with research and technology organizations Creation of Regional Technology Platforms (idea based on the Technology Platforms of FP6) Access of the region s SMEs to European and International clusters and networks Transfer of know-how and technology to the region s SMEs Support the creation of spin-offs and start-ups Further development of public R&D infrastructure on sectors of regional interest. Training of researchers and staff on R&D and innovation 5 RIPs are established all over Greece (Athens area is excluded). In Central Macedonia the RIP is centered around ICT. Other examples: RIP of Thessaly: food and bio-fuels RIP of West Macedonia: energy
H. Thessaloniki Innovation Zone The Eastern part of Thessaloniki has been developed during the last 10 years as a de facto innovation zone that encompasses: The Centre for Research and Technology with its 4 Research Institutions The Thessaloniki Technology Park and its Incubator 2 private High-tech incubators (i4g and THERMI) 2 private High-tech incubators (to be established) The Thessaloniki Technopolis (to host 70 100 ICT companies) The Technology Museum of Thessaloniki An increasing number of IT and consulting companies Labs of Aristotle University of Thessaloniki
H. Thessaloniki Innovation Zone (cont.) The Thessaloniki Innovation Zone named Alexandrian Innovation Zone - AIZ is an initiative of the Greek state to capitalize of the above described de facto situation (high intensity of research and innovation activities). AIZ is a regional development project that aspires to foster the links between research and the industry and to improve the business environment aiming at: Supporting embedding innovation in current business operations with a view on competitiveness development Attracting new knowledge based investments in the region including FDI Exploiting the region s human capital and avoiding brain-drain Creating new high education jobs and know how Improving quality of life of the citizens and the employees Supporting social cohesion The project s ultimate goal is to establish Thessaloniki as a Centre for the Development and Diffusion of Innovation in South East Europe and provide a pole for development of the whole region of Northern Greece.
J. The Greek experience: Conclusions Positive outcomes of the last 2 decades: The establishment of Research Centers and Technology companies overall contributed to the extroversion and flexibility of academic research, allowing Greek researchers to cooperate and compete at a European level. A lot of academic and business organizations have now a significant experience of collaboration. A number of spin-offs and start ups have been created and supported by venture capitals and incubators. A new type of professional (being a technology transfer expert, a consultant or a liaison officer within a research organization) has emerged and has assisted the creation of a new favorable environment and the internationalization of research and innovation.
J. The Greek experience: Conclusions (cont.) Drawbacks of the last 2 decades : Not much progress in terms of the basic innovation outputs (i.e. Intellectual Property, high tech employment, new product development) Access of small innovative start-ups and spin-offs to finance has been almost impossible in the first years and even now is still difficult. Initiatives that were mostly driven by academic institutions, suffered severely from a lack of understating of the business environment and its requirements, resulting to uncompleted and non-viable efforts. Similarly initiatives driven by private entities (VCs, consultants, private investors) were constantly underestimating the potential of the scientific content resulting a lot of times in inhibiting potentially promising ideas.
J. The Greek experience: Conclusions (cont.) A really successful national/ regional research and innovation system will have to find a fine balance between the scientific/ technological perspective which only an extrovert, flexible and innovative academic community can offer with the business perspective that a risk prone, entrepreneurial and global-minded finance community can contribute. Putting together researchers and business people to achieve this fine balance is the challenge of the future for Greece.
Implications for South East Europe South East Europe new member states: Bulgaria, Romania, Cyprus, Slovenia candidate states: Croatia, Turkey, fyrmacedonia prospective candidates: Albania, Bosnia, Montenegro, Serbia Where do they stand? European Innovation Scoreboard 2007: Slovenia, and Cyprus are moderate innovators with SII scores below that of the EU27. Greece, Croatia, Bulgaria and Romania are catching-up countries. Turkey is currently performing below the other countries included in the EIS.
How will the SEE countries fund their innovation strategies? Member States (Greece, Cyprus, Bulgaria, Romania, Slovenia) have access to structural funds All the rest have Instrument for pre-accession (IPA) funds All the SEE countries have access to FP7 and CIP (Bosnia is the last expected to sign the relevant agreement) All of them have access to Territorial Cooperation Funds (i.e. South East European Space that include all the countries above plus Italy, Austria, Hungary, Moldova and Ukraine) All the above mentioned programs have a strong innovation support element influenced by the Lisbon Agenda.
Example: SEES territorial cooperation program 4 priority axis: 1. Facilitation of innovation and entrepreneurship 2. Protection and improvement of the environment 3. Improvement of the accessibility 4. Development of transnational synergies for sustainable growth areas
SEES program, Axis 1: Facilitation of innovation and entrepreneurship 1.1. Develop technology & innovation in specific fields Create / support innovation-oriented networks in specific technology fields in the industrial and service sectors Promote innovative aspects in public procurement 1.2. Develop the enabling environment for innovative entrepreneurship Networking of existing SME-support facilities 1.3. Enhance the framework conditions and pave the way for innovation Exchange and coordination mechanisms for technologies and innovation policies (governance aspect) Increase public awareness on the importance of technological progress (awareness aspect)
So, what can the SEE countries learn from the Greek experience? Understand the dynamic relation between R&D and innovation: Research = Turning money into knowledge Innovation = Turning knowledge into money Research is one of the inputs of innovation Promote entrepreneurship and innovation to the society: Aim for the young people (in high schools and Universities). They are the future innovators and entrepreneurs. Create a long term strategy that will involve all the stakeholders before starting interventions. Make tough choices (i.e. sectors) not a strategy to cover all needs. Set up a mechanism to access the implementation of the strategy. Put a rigorous legal framework in place (i.e. a law on Venture Capital funds was introduced on 2002 and a law defining University spin-offs was introduced in Greece on 2001, both well into the implementation of the 3 rd CSF)
So what can the SEE countries learn from the Greek experience? (cont.) Aim for the creation of a critical mass of researchers and practitioners, preferably around regional poles with a thematic or sectoral specialization: Focus the efforts around these poles in order to ensure long term and multiplying results. Create intermediary mechanisms that will serve these efforts. Promote all aspects of the enabling environment: a strong financial sector that is encouraged to take risks along side the legal framework and the innovation promotion interventions.
So what can the SEE countries learn from the Greek experience? (cont.) Facilitate long term cooperation and synergies between the research and business communities. Create a positive continuous dialogue between the business community and the research/ technology people. Use innovative ways to bring them together i.e informal gatherings, open-end projects, link public procurement with innovation, open innovation.
Suggested reading Nicos Komninos, Achilleas Tsamis The system of innovation in Greece: structural asymmetries and policy failure Int. J. Innovation Regional Development, Vol. 1, No. 1, 2008