Policy instruments for S3 implementation

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Enhancing cross-fertilization among manufacturing SMEs:
The case of the "Production technology cluster" in Portugal

Following the 2008 crisis, Portugal's traditional manufacturing sectors (notably the metalworking, textile, shoes, wood and furniture industries) had to face common key challenges: ensuring the swift development and uptake of new industrial technologies, involving the strategic management of industries' transformative change, and the spread of the benefits throughout the value chains.

PRODUTECH, a production technologies cluster, has played a key role to strengthen collaborations among key actors in various industries and promote joint projects and activities covering the whole innovation cycle. Constituted of three kinds of stakeholders - a) Production technology & service producers, mostly SMEs; b) Higher education, Research organisations and technology centres; c) Leading companies from the most relevant manufacturing sectors (end-users) - the cluster has promoted a new way to cooperate among its more than 110 member organisations. In line with the S3 approach, the cluster has enabled members to identify the Key Enabling Technologies and skills needed and established the corresponding road map and an action plan.

Demonstrators and Pilot lines were important elements used by the cluster to assist SMEs in integrating R&D projects results and new technologies, in partnership with research organisations, hence providing an adequate response to customers' needs. This cooperative approach has benefited all clusters' participants. Thanks to the cluster's leading role, members were able to create a critical mass, define robust collaborative research & development projects and get a better grasp of the sectoral needs. Besides, cluster's members have invested in new technologies using a combination of funds (ESIF, national, regional and H2020) and gained access to new technologies thanks to applied research initiatives; they were also able to capitalise on existing technologies that could be transferred from one sector to another, promoting cross-fertilization and further uptake of existing technologies.

During the period 2011-2014, PRODUTECH promoted two large scale, collaborative R&D and demonstration projects: (1) PRODUTECH PSI - New Products and Services for the Manufacturing Industry and (2) PRODUTECH PTI - New Processes and Innovative Technologies for the Production Technologies Industry. They gathered 42 partners, in the research, development and demonstration of advanced technologies, solutions and applications, totalling an investment of 12,5 M€, supported with 8,8 M€ of public funding. They generated (i) 50 new technologies, solutions or applications; (ii) around 60 articles in technical magazines, scientific journals and papers (including PhD and MSc thesis and dissertations); (iii) 45 dissemination actions; (iv) over 10 new complementary projects and/or project applications (both national and international); and (v) more than 40 prototypes, demonstrators and/or pilot installations, including 5 pilot installations in real industrial environment.

A direct spill-over of these mobilizing projects was the MAPPLE project (2016-2018), aimed at developing and demonstrating an innovative production planning solution integrating energy optimization requirements. It leveraged solutions originally deployed in the metalworking sector and fostered its further development and implementation in the plastics films industry, being in line with the priorities set-up in the S3 of Portugal’s Norte region.

Another example of spill-overs and cross fertilization is the case of the SPIRE project MAESTRI. Based on the results achieved under the sustainability strand of PRODUTECH mobilizing projects, originally addressing the context of discrete manufacturing, MAESTRI aimed at the development of a total resource and energy efficiency management system for process industries.

These integrated mobilizing PRODUTECH projects are a key instrument within the R&D and Innovation axis of the cluster, as they gather the critical masses of capacities, competencies and stakeholders towards the deployment of cross sectorial industrial breakthroughs. During the same period (2011-2014), 67 additional projects were launched in line with the priorities of the cluster, leveraging 40 M€ of investments. Currently, under the pipeline of projects of the R&D and Innovation and Demonstration axis of the cluster, a new mobilizing programme is being executed - PRODUTECH SIF – Solutions for the Industry of the Future – together with several other complementary projects, directly promoted by the stakeholders, all of them fully aligned with the European research and innovation agendas and with the national and regional Smart Specialisation Strategies (S3).

Some key success factors can be outlined:

  • The mobilization of the cluster's members under the same strategy and the ability to agree on priority areas
  • The coordinated role of the cluster
  • The articulation between national and regional public authorities to develop a sound funding mechanism and a robust support framework, particularly the set of instruments managed by the National Innovation Agency (ANI)
  • The development of interregional collaborations within the EU framework (namely, the VANGUARD Initiative) and participation in R&D projects and initiatives at EU level.

The Smart Specialisation approach has also helped to address the cluster's needs through the thematic partnerships. Through the S3 Partnerships the cluster widens its access to businesses and RDI partners and funding sources, it gains international expertise and visibility, and gets targeted support. The Norte Region, where around 40% of Portuguese manufacturing companies is based, is active in 6 S3 thematic partnerships including Innovative textile, New nano-enabled products, High performance production through 3D printing (where it plays a leading role), Advanced manufacturing for energy applications, Efficient, sustainable manufacture, as well as Marine renewable energy.

Enhancing human capital in SMEs:
The case of the Centre-Val de Loire Region, France

Most of the Centre Val de Loire Region's economic fabric is composed of SMEs and sub-contractor companies. The region is taking part in an industrial transition pilot project launched by the European Commission to address some of the big challenges identified. They are related to the transformation of some economic activities (including reorientation towards other markets, search for new market opportunities, companies' positioning in value chains), the adaptation of workers' competences with special needs of skilled workers in strategic sectors, as well as the integration of new processes notably in the ecological and digital sectors.

In order to meet these challenges, the Centre Val De Loire region has defined five S3 priorities that respond to the regional industrial fabric's setbacks: 1) environmental engineering and metrology for with a focus on water environments; 2) biotechnologies for health and cosmetic industries, with a shift of the pharmaceutical industry towards bio-medicines; 3) systems design for energy storage, with a focus on high growth potential markets; 4) energy efficiency technology for the construction and renovation of buildings; and 5) ICT and heritage tourism. In parallel, it has placed human capital as a Smart Specialisation Strategy (S3) horizontal action and put in place a set of measures to reinforce workers' and firms' competences and adaptation to markets' demand for skills. This model is unique in France.

With regards to the main actors involved, the regional development agency, Dev'Up, acts as the coordinating entity to support the innovation ecosystem and ensures the stability and continuity of the entrepreneurial discovery process. A dedicated proximity network of public and semi-public organisations (Réseau des Développeurs Economiques - RDECVL) has grown tremendously in recent years and now gathers more than 350 stakeholders including inter alia BPI France, chambers of commerce and industries, the universities of Tours and Orléans, public research organisations and technology transfer institutions. It is in charge of the development of businesses in the region, detecting innovative projects and supporting SMEs in their expansion efforts. It promotes networking among regional actors and provides adequate skills with respect to funding, research capacities, technology transfer, partnership activities, etc. It boasts of a set of instruments including a collaborative open database that foster the advisory capacity of the ecosystem.

To further integrate SMEs and mid-cap companies in the structuring process of the ecosystem, the Centre Val De Loire region has conducted a survey to assess, inter alia, the needs of 2,500 firms, including training needs and to detect human resources good practices. In addition, the region has created a fund with 60 million euros to invest, dedicated to life-long learning to reinforce the workers' skills and to ensure both customer-centred and local services.

Besides, the region has put in place a series of instruments and infrastructures that enhance collaborations between public research organisations and companies of the region, along the line of the regional five S3 Priorities. The universities of Tours and Orléans together with the engineering school INSA play an important role in the implementation of S3 by mapping companies' need in terms of research capital (skills and competencies) and consolidating lifelong learning. For instance, the scientific programme PIVOTS was launched in 2016 to sustain the priority of environmental engineering and metrology. It brings together regional public and private actors that develop new technologies for remediation of degraded environments. Another illustration is the Bio institute, which is dedicated to research and training in the fields of pharmaceuticals, cosmetics and bio-technology industries and related industrial projects. It offers workshops for future and senior professionals, employees and temporary workers and supports skill management as well as process development for companies, to move toward bio-production. Similar setups are put in place in other S3 domains, notably for clean and renewable energy storage and transport.

Furthermore, the region seeks to develop a dynamic scientific community that includes public and private research stakeholders and promotes the outward international dimension of smart specialisation. Le Studium is the agency in charge of attracting experienced foreign researchers, promoting interdisciplinary exchanges between regional and international scientific communities and enhancing human capital for research, development and innovation. It has put in place a co-funded call for projects in line with the region's key S3 priority areas (including H2020 funding, Marie Curie fellowships as well as regional sources of funding) that raises a lot of interest in France and other EU regions.

The S3 approach has enabled the Centre Val De Loire Region to better respond to the territorial needs, involving small and medium size businesses in the process. The new set-up has brought forward three main contributions to firms: 1) simplification: firms have a single contact point and receive a global and coherent collection of feedbacks to address their needs; 2) firms benefit from the dynamic and structured regional network;  3) companies are provided with expert support and guidance tailored to their needs. These efforts have boosted corporate performance and are contributing to a better integration of SMEs in global value chains.

An "Open Innovation Call" as a policy instrument for implementing S3:
The case of Northern Netherlands

To undertake its Research and innovation strategies for smart specialisation (RIS3) the Northern Netherlands Region has defined 4 broad societal challenges that respond to local needs and encompass European and worldwide interest and concern: 1) Health, Demography and Welfare; 2) Food Security, Sustainable Agriculture and Bio-based Economy; (3) Reliable, Clean and Efficient Energy; and (4) Clean, Safe Water. The aim of the region is to facilitate the creation of an ecosystem for innovation and foster collaboration among stakeholders - businesses, knowledge institutes and end-users - within an environment that stimulates innovative behaviour and entrepreneurship.

Thus far, the Northern Netherlands Region did not have specific instruments focusing on niche markets that emerged out of the entrepreneurial discovery process (except for some innovation support schemes). Although the creation of innovation environments and structural collaborative initiatives has done a lot to improve the innovation ecosystem in the region, the region seeks greater economic impact.  In its monitoring process, it has identified that: 1) the interaction between businesses and knowledge centres could be amplified; 2) the few existing innovation processes that have been initiated are still to be developed; 3) there is not enough coherence between the innovation environments to exploit the potential for cross-sectoral and multidisciplinary interaction;  4) more importantly, the number of Small and medium sized enterprises (SMEs) actively participating in the initiatives is usually confined to a relatively small group of pioneers.

Hence, some of the main challenges identified by the Northern Netherlands Region are to stimulate innovation among SMEs, to ensure the continuity of the Entrepreneurial Discovery Process and Furthermore, the region aims at improving  SMEs' knowledge base, reinforcing the effectiveness  of  networks,  fostering  the  valorisation  of  knowledge  and  stimulating  the development of innovative environments, like living labs and hubs. Thus, the region aspires to improve the climate for entrepreneurial risk-taking.

In order to foster continuous collaboration, the Northern Netherlands Region has launched the "Open Innovation Call".  Up to now, most of the instruments supported by the ERDF focused on the valorisation of individual innovation processes. Dedicated to businesses and knowledge centres, this new policy tool promotes the development of joint initiatives with the capacity of generating a series of related innovations, which in turns activate the region's innovation ecosystem and open ways to concrete market potential. Particular emphasis is given to 1) promising new areas that can emerge as new strengths (i.e. new niche markets and technologies, crossovers, etc.);  2) address the challenges  of  changing  market  conditions  with  new  value  chains  and/or  business models (users/developers); 3)            increase  the  innovation  potential  of  SMEs,  and,  in  particular,  increasing  the  number  of  small businesses that engage in open innovation processes. The Open Innovation Call is novel in terms of content, but in technique as well. For Structural Funds assessment criteria it is customary to strictly define the eligible project activities in advance. It gives more flexibility to initiators in the sense that it focusses highly on the project objectives. It is not specified at the outset what types of projects do or do not qualify. The best projects are the ones that contribute most to the objective of the call.

Applications are assessed by an external expert committee. A two-step approach is being used. At an early stage in the process each applicant has the possibility to informally pitch its initiative in front of the committee. Feedback provided by the committee gives the initiator direction to (further) improve the quality of the proposal.          

The region offers a total budget of € 20 million, of which € 12 million is provided through the ERDF and the remaining amount is provided by the Dutch government. The funding covers up to 40% of eligible costs for a period of up to four years and staged funding can be awarded for high-risk projects. Furthermore, top-up grants may be issued by neighbouring provinces and/or municipalities from Northern Netherlands. Moreover, to support the call, the Norther Netherlands region facilitates the connections of emerging initiatives with relevant partners and networks, hence fostering synergies and economies of scale. To accompany further the proposed projects, the region provides informal feedback.

Synergies between funds to reach S3 goals: The case of Lapland, Finland

The Region of Lapland (Finland) has used the Smart Specialisation Strategy (S3) framework towards the transformation of its regional economy. Lapland's economic backbone is based on mining and metal industries, bio-economy as well as tourism and related service sector. Through its S3, this uttermost, sparsely populated region seeks to unify stakeholders around a single strategy and shared goals as well as to combine the interests of the rural communities together with those of the industrial mining and tourism sectors. The region strives to maintain the right rural-urban balance whilst developing the necessary infrastructure to keep local communities alive. Another key challenge is to create the support framework to help very small businesses to grow. To these aims, Lapland has based its S3 strategy on five key clusters: 1) Arctic Industry and Circular Economy; 2) Arctic Rural Community; 3) Arctic Development Environments; 4) Arctic Safety; and 5) Arctic Design. In addition the work with the Tourism ecosystem has been launched.

Thanks to its systematic approach, Lapland has managed to gather approximately 20 million euros towards the implementation of its S3. There are several success factors that can be outlined. First of all, the regional authority's team, consisting of 6 people - 2 at the executive level and 4 at the operational level - have done an in-depth analysis to fully understand the rules and conditions of the European funding system and the ways in which funds can be used in synergy with one another. It has consolidated the regional financing package using H2020, Interreg Europe, Interreg Nord, Northern Periphery and Arctic, Interreg Baltic Sea Regions, Erasmus+ together with all European Structural Investments Funds. In addition, there has had been substantial national, regional and private contribution.

Besides, the region is engaging on a continuous basis with stakeholders via the clusters, and organises events and regular meetings to lead the process. Through a robust and open governance system, the region ensures regional actors' interactions and partnering, the identification of common needs to create a critical mass. Furthermore, the region has engaged Lapland's Universities and business development agencies, such as Digipolis, to play crucial role in the implementation of Smart Specialisation Strategy (S3). University researchers are involved in every cluster, hence reinforcing cross-sectoral dialogue among regional actors. In addition, Lapland pursues the internationalisation of its research and innovation activities, notably through its active participation and leadership in S3 thematic partnerships: it has a leading role in 3 of them - Bio-energy, Sport, Digitalisation and Safety for Tourism, co-lead in Mining Industry and participates in the Social economy and Sustainably Buildings, Advanced Materials for batteries and has expressed its interest in joining SME integration to Industry 4.0.

Lapland has used the structural funds framework to improve networking and business collaboration among regional stakeholders. The impact of the Lappish S3 strategy can also be seen through the improvement of support services: they have gained in quality and efficiency; capacities are widened too whilst reducing cost.