Systems of innovation production and consumption .

1. Systems of innovationproduction and consumption. A systemsperspective on goal-oriented transformative changetotacklegrandchallenges Matthias Weber AIT – Austrian Institute of Technology, Department Foresight & Policy Development Harald Rohracher IFZ – Inter-University Research Centrefor Technology, Work and Culture ofthe University of Klagenfurt

2. Introduction • Background • Dominant innovationpolicythinkingbuilds on themarket/systemfailureargumenttojustifypolicyintervention • Policiestosupportgoal-oriented transformative change still tendtoremain outside thescope of dominant policyapproaches, but arekey in the Grand Challengesdebate • A betterfoundation and rationales for such policiesareneededthatarecompatiblewithprevailingpolicythinking • Howtoenhancethecompatibility of transitionthinking in R&I policy? • Openingup of currentinnovationpolicythinking (which still emphasizesinnovation per se) tolong-termstrategicorientation and integrationwithotherpolicies  Strategic ratherthanstructuralinnovationpolicy! • Formulate strong rationales tolegitimizestrategicpolicyinterventions • Extendthenotion of systemfailurestoincludeideasfromtransitionthinking • Howtobuild an integratedconceptual model tounderpinthesethoughts in a coherentmanner?

3. The basicidea • Combininginsightsfrominnovationssystems and MLP in an integratedframework • Integrateelements of transitionthinkingwithintheinnovationsystems-inspiredframework • Expandtheframeworkbeyondinnovation and takeintoaccount also production and consumptionsystems • More emphasis on diffusionside of innovation and theiractualuse in practice • Addressingmicro-levelinnovation, production and consumptionactivities • Embedding in multiple institutionallayers (institutionalfields) • Inspirepolicydebatesbyprovidingnovel rationales for interventionintoprocesses of trransformativechange • Bring togethertherigour of IS basedpolicies and theesteemithas in policycircleswiththe reflexive and strategicorientation of transition-orientedpolicies • Pay attentiontoproblems and issuesassociatedtolong-term transformative changewhenspecifying rationales for intervention, … • … bytranslatingthemintonotions of systemfailures, in order to bring transitionideaseffectivelytotheattention of policy

4. A comparativeassessment of IS and TM approaches

5. … and stepsbeyond: TIS and reflexive governance • Technological Innovation Systems • Links micro-levelprocesses and interactionto an innovationpolicythatsupportsstabilisation of emergingtechnologies/newsocio-technicalconfigurationbydefiningsomekeyfunctions • Patterns and performancealongkeyfunctionshelpsidentifykeypolicyissues/problems; compatibilitywithsystemfailures • BUT: Still nocoherent link betweenstructuralinnovationpoliciestothepolicyrequirements of transformationalchange • Reflexive governance and reflexive arrangements • Calls for newforms of problem-handling, lessconsensus-orientedthan TM • Offersscope for plurality of national styles and arrangements in howreflexivityisorganised, e.g. in terms of thepolitics in whichitisembedded • „Reflexive arrangements“ to inter-connect different areas of publicdiscourse • BUT: Reflexivityis still not an issue in prevailing „failures“ • Manybuildingblocks in place, but… • Nointegratedset of basic rationales tolegitimizepolicyintervention in processes of transformative change • Nointegratedconceptualframework

6. Key features of SIPC – Systems of Innovation, Production and Consumption • Goingbeyondinnovationonly • Takingintoaccountinnovation, production and consumptionactivities • Centredaround‚domainsof transformation‘thatareembedded • Thematicallydefinedinstitutions (technological, sectoral) • Territoriallydefinedinstitutions (regional, national and international) • Institutionalembeddingsarecoupledin a non-hierarchicalway • nohierarchicalrelationshipsbetweeninstitutionaldomains • Dynamics of changedrivenbytheinterplay of microleveldynamics of actors and institutionalembedding (organisational fields) • Interdependenciesconstrainthedynamics of transformative change, whicharedrivenbythecomplexinterplaybetweenactor strategies and institutionalchange

7. SIPC – Systems of innovationproduction and consumption

8. Towardsnew rationales for policies for transformative change • Threeelements of rationales for policyintervention • Explicatetheneed for and legitimacy of interventions • Effectiveness of possibleinterventioninstruments • Efficiency of theseinterventions • Focus on legitimacy of intervention • Demonstratethatoverallsystemperformanceisunsatisfactory • Howtodemonstratethis for matters of transformative change? • Identifythereasons for under-performance in terms of theinternaloperation of thesystem • The usualfailureargumentsare not sufficient; additional types of failuresareneeded

9. Market failures • Main types of marketfailures • Information asymmetries • Knowledgespill-over • Externalisation of costs • Over-exploitation of commons • These marketfailures (and possiblysomeothers) arestill valid in an SIPC framework

10. System failuresmark I • Types of systemfailures (Woolthuis et al. 2005): • Infrastructure failures • Institutionalfailure • Soft institutionalfailure • Hardinstitutionalfailure • Interaction/networkfailure • Strong interaction/networkfailure • Weakinteraction/networkfailure • Capabilitiesfailure • These types of failuresarealso valid in thecontext of transformative change, but theyaretoorestrictive ! • Theycanberegardedas „structuralsystemfailures“

11. System failuresmark II: Fouradditional „transformationalsystemfailures“ • Directionalityfailure • Sharedfuturesvisions • Collective coordinationmechanisms • Regulation and standards • Key innovationinfrastructures • Demand articulationfailure • Joint learningprocesses • Demand sidepolicies • Policy coordinationfailure • Horizontal, vertical, multi-level and temporal colicycoordinationfailure • Reflexivityfailure • Continuous monitoring and anticipation • Distributed decision-making and intelligence • Adaptive policyapproach

12. Market and structuralsystemfailures

13. Transformationalsystemfailures

14. Conclusions • Transition ideascanbeintegratedinto a systemsframework for transformative change, combininginnovation, production and consumptionactivities • SIPC providetheconceptualfoundation for specifyingnewtypes of transformationalsystemfailures - beyondthe well-known ‚innovationmarket and systemfailures‘ – thatcanbeusedtolegitimizepolicyintervention for governinggoal-orientedprocesses of transformative change • The comprehensivefailuresframeworkprovides a coherentinstrument for supporting policy design