Policy-making practices and governance models of transformative change

Policy-making practices and governance models of transformative change Marja-Liisa Niinikoski Eu-SPRI Conference 2012, June 12-13 Karlsruhe, Germany

Contents • Background of the paper • The focus of analysis and the research question • What is a transformative change? • Theoretical underpinnings: policy and governance • Empirical case study • The analysis framework and the aims of analysis • Preliminary findings • Conclusions

1. Background of the paper • The changing and expanding nature of innovation policy in various countries • Observations about difficulties to ‘implement’ broadened innovation policy have been increased • An uninvestigated question: • how the expansion of innovation policy has increased the political nature of innovation policy, since it covers wider areas in society and in the economy, and whether the ‘traditional’ policy-making practices are sufficient in this new policy era to govern a transformative change

2. The focus of analysis and the research question • One of the key elements, when trying to understand ‘effective’ governance of transformative change, is practices by and through which the policy is made. • It sheds light on the issues who are allowed to participate in policy-making, whose claims are taking seriously having truth-value in policy-making, how the rules defining the policy discourse are set. • The key question, which is discussed and which theoretical foundations are developed in this paper, concerns the interconnection between policy-making practices and public governance models. • The basic assumption lies at heart of the interconnection between policy-making, and public governance of transformative change. • If policy-making practices significantly differ from the means and practices how collective interest is pursued in order to enable transformative change, significant inefficiencies in public governance can be identified. • The study aims to make explicit how actual policy-making practices open, restrict, or legitimize broadening innovation policy, and thus creates conditions for governance of transformative change.

3. What is a transformative change? • The concept of transformative change tries to describe a ‘radical’ change, meaning a change from one form into another. • Relates to the question of negotiated aims of policy, problematized issue in policy (grand challenges, wicked problems) • From the point of view of the discursive approach applied in this study a transformation is a new discursive configuration, where the essential elements, relations, rules, and inter-discursive configurations are established in a new way. • In the field of innovation policy studies, with the notion of broadened innovation policy, the question is how transformative change is governed, and how innovation policy-making practices reflect the breadth and the depth of the aspired change.

4. Theoretical underpinnings: policy and governance • How to approach theoretically the question under the investigation • Policy as discourse highlighting its side of policy-making practices • Integration of the understanding (actual) policy-making practices in relation to the theoretical understanding of different governance models •  how empirically identified (identifiable) policy-making practices enable or restrict ‘effective’ governance of transformative change

4. Theoretical cnt... • Theoretically speaking four fundamentally different approaches to public governance can be separated • The market efficiency approach • The performance efficiency approach • The stakeholder relations approach • The people’s influence approach

5. Empirical case study • The broadening phase of Finnish innovation policy (the mid-2000s ) • Policy-making example • Preparing the national innovation strategy 2007-2008, the need for the national strategy was indicated in the government’s programme 2007 • Developing user-driven innovation policy and its measures 2009-, based on the points of view expressed in the national innovation strategy • Preparing and implementing the programme ’Innovations in social and healthcare services 2008—2015’ carried out by Tekes • Research material: policy documents, interviews, observations, partial participation

6.1 The analysis framework

6.2 The aims of analysis • Identification of policy-making practices • Elaboration of the identified policy-making practices in relation to theoretical understanding of governance models • The analysis aims to highlight how understanding of applied and actual policy-making practices can lead to better understanding of conditions how and why certain governance models enable or restrict a transformative change in society and in the economy.

6.3 Preparation of the national innovation strategy: three main parts (partly independently) + other practices

6.3 Part I: 11 thematic areas • 11 themes selected by policy practitioners (the Ministry of Trade and Industry + the Ministry of Employment, nowadays the MEE) • Growth companies (SMEs and young innovative companies) • IPRs (protecting knowhow) • Innovation activities of industrial clusters • Developing the public sector • Service innovations • Regional innovation policy • Exploiting the global and EU development • Developing working life • Research and education • Demand-driven approaches, market regulation and standardation • Structures, incentives and development of broad-based innovation policy • A) Thematic workshops: spring and autumn 2007 • Preparation of discussion notes between consultants and policy practitioners being responsible for one thematic area • One workshop per one theme • List of invited peoples, representing private and public sectors, prepared between consults and policy practitioners • About 20 invited participants per workshop • Results of workshops reported by consults

6.3 Part I cont. • B) Open consultation (www.innovaatiostrategia.fi): autumn 2007 • The same themes as in the workshops except the last one • The website was open between September 9, 2007 and October 31, 2007 • The questions: • The significance of all themes from the point of view of developing innovation environment • The current role of all themes from the point of view of innovation activities and their enhancement • Theme-related significant issues, stregnths, weaknesses • Aims and operations to be taken into account in the preparation of the innovation strategy 713 responses, 565 answerers • Report prepared by consults

Part I cont.: 565 answerers (open consultation)

Part I cont.: Selected themes

6.3 Part II: Preparation of the ’proper’ strategy: the autumns 2007 – the summer 2008 • Mr. Esko Aho – chairman of the steering group • Aho’s approach • Aho’s political background, the President of Sitra (the Finnish Innovation Fund) • Secretary in the Ministry of Trade and Industry • Members of the steering group • Industry representatives: 4 (forest industry, industrial association, ict, manufacturing) • University representatives: 2 (rector, professor) • State administration and public agencies: 5+1 (2 MEE, MINEDU, SOCIAL AND HEALTH CARE, public agency/Tekes + Sitra) • Others: 2 (venture capitalist, labour union) • Secretary from the MEE • International conference and national seminar with experts in the spring 2008 • Hearings of international experts • The proposal (June 2008) • Statements from various ministries about the draft • All ministries gave their statements about the proposal and almost all ministries required in their statements that they could participate in the strategy process and its implementation in the next phase. • The ministries argued that without participation it would be difficult to reconcile their own activities to the strategy.

6.3 The structure and the content of the strategy (draft)

6.3 Finalizing the strategy • The final strategy, as expressed in the Communication of the government on innovation policy, was prepared between the MEE and the MINEDU • the aim was to strengthen the aspects of ongoing policy measures in education and research in the strategy • The same foundations and basic elements as in the draft • Added definitions and the description of the current state of innovation activities • Changes in the operational plan (not so precise any more)

6.3 Part III: Processing in the Parliament: a written question to the Minister September 2007

6.3 Part III: Processing in the Parliament: the communication of the government • More about informing than redefining • (still has to be analyzed)

6.3 Other policy-making practices to inluence on specific issues • Based on the preparation of the national innovation strategy a group of three men, two State Secretaries from two ministries, the Ministry of Finance, and the Ministry of Employment and the Economy, and the President of Sitra, was established to make a proposal, on how the governance structure and practices could be improved.

6.4 Interviews: Observations of the process • “I observed that there was a break in the process. I do not actually know, whether the work done [in the thematic] groups came at all across to the next level, or it did not match expectations. In a way there was a break, and it could be noticed that the issues, which we had discussed in the groups, were not visible in the next phase. And actually, since I know the procedure, it happened that we had in a way two processes. There were very wide working group activities, which were done, and the discussion was good. [...] But then another process started which went against the stream. And then there was a third process, as the proposal was not accepted, the strategy was written once again.” [A civil servant, a research institute]

6.4 Interviews cont.: Observations of the process • ”The result which came from the preparatory work, it did not really help in the strategy work, since what should have been done were technical proposals. We wanted to reach for a strategy through the main aims which should be achieved through innovation policy and what kind of basic solutions should be done in order to improve capacity. [...] In the role of chairman I started to reach for and to try to find a significant developmental line. The problem in Finnish administration culture and in the preparation culture of issues is that people start to define the lowest common denominator, and various aims are tried to smooth things over, and it is believed that this is the way to define aims. But we were in a situation where this was no longer possible, as we had to make choices, and on the other hand I did not believe in those methods, and when the starting point was to search for a significant change.”

6.4 Interviews cont.: How defines? • ”The innovation strategy, which was produced under the guidance of the Ministry of Employment and the Economy, it was not balanced with education, research training and scientific education and traditional technology policy, with how the situation is now in the Government’s Communication on Innovation Policy, which was prepared based on the strategy.” [Civil servant, the Ministry of Education] • “The innovation strategy, it was prepared quite strongly from the point of view of innovation policy, not from the point of view of science policy. And this opened the possibility of going deeper and to speak out more strongly from the point of view of the needed renewals in innovation policy.” [Civil servant, Tekes]

6.4 Interviews cont.: What is broad-based innovation policy? • ”In the preparation of the national innovation strategy we discussed a lot about the issue of what a broad-based innovation policy could be and the concept of innovation in general. And it was defined in the strategy as an utilised competitive advantage either commercially or in another way, which was an effort to bring a new element into the innovation policy discourse. It has its own merits and it is interesting but I think that this still is OECD innovation policy in the sense that there are as elements education policy, innovation policy, higher education policy, science policy. Not in the way that innovation policy could cover all of them but it is comprised of them. [...] In innovation policy contributions are needed for these various policy fields. [Civil servant, The Ministry of Education]

6.4 Interviews cont.: What is broad-based policy? • ” In my opinion efficiency and productivity and high quality are issues, which are the core questions of innovation policy. In other words a well-functioning innovation system produces better, more efficient, which means lower costs, more [...] and quality. [...] Productivity and quality, they are the two things which are produced. We labour under the delusion that productivity could somehow be inhuman and asocial, when the fact it is totally the opposite. [...] This delusion leads to a situation, that in the social and health care sector we are afraid of the word productivity and it is seen that it could lead, from the point of view of social and equality aims, to an unfavourable outcome, when actually it is the other way around. People can be treated justly and fairly only if public resources are used efficiently.”[Industry representative]

6.4 Interviews cont.: What is broad-based policy? • ” We have two clear fronts in innovation policy, which could be drivers of paradigm or changes. There can be some other things as well but this is one way to look at it. One, this is our global competition and competitiveness-centred thinking, and in my opinion it is the real and right innovation policy, and it has pushed through many changes, phenomena and even instruments. But on the other hand we have this domestic field and in relation to it innovation policy has become mainstream in Finland, when in this regard innovation policy was started to be handled as a policy sector, and no longer like a type of expert-driven occultism, when its relation to regional policy has been obligated to be renewed to a large extent and now it can be seen that during the last year broad-based innovation policy has been spoken about, which has ambitious well considered issues on how in every sector the possibilities to use innovation policy in them will be deliberated on and what the field of innovation policy could be there. From the domestic side the horizontalisation of innovation policy has broken through. [Researcher, a research organisation]

6.4 Interviews cont.: What is broad-based innovation policy? • ” What the sectors, like ours ask, when the tools and financing possibilities of innovation policy are introduced to our sector, is whether we bring at the same time the dominance of business policy to our sector. [...] I do not wonder at all that most people ask what we get with financial resources, and whether we can develop our sector from its own starting points. Or does it mean that business policy crawls into our sector as a Trojan horse.” [Civil servant, The Ministry of Social Affairs and Health]

6.4 Interviews cont.: Governance structure • ”The essential content of the proposal was that the government, when it starts its operation, defines carefully strategic aims, especially concerning the innovation system, and to the Cabinet Committee on Economic Policy tasks are given for preparatory work, decision-making, and monitoring. It means that various issues in different sectoral ministries are constructed to be bigger entireties, and instead of one sectoral ministry the Cabinet Committee is responsible for them. Thus, the Cabinet Committee is responsible for implementing the strategic aim instead of one ministry. This is a new thought in the Finnish administration, since it would lead the operational model of a concern. Big issues would be managed at the concern level instead of at the level of ministries or through their cooperation. [...] This change can be implemented easily, since it does not require any renewals in the constitution or changes in legislation. It can be handled to a large extent through internal decisions of the government. [A participant in the national innovation strategy process]

6.4 Interviews cont.: Governance structure • ” Based on the proposal nothing has happened. [...] Those kind of actions have not been implemented, and I do not know whether they will come, and if they will come, when. Now the top [co-ordination mechanism] of the steering role of the state concern is missing. But the Council, it has been changed. [...] But there is nothing radical in the question at the level of the Council.” [Civil servant, The Research and Innovation Council]

6.4 Interviews cont.:Governance structure • ” But at least the Ministry of Education [...] saw it as a weakening effort of their power and position. [...] This would disconnect them [from the policy-making]. [...] I think that this was not truly working for the Ministry of Employment and the Economy, since [...] the ministry did not want to have any strong coordinating body above them.” [Civil servant] • “Everyone is afraid that their positions will weaken, and this is very characteristic. This is the reason why the silo-type structure exists. [...] And the frame budgeting, which helped to reach economic joint responsibility inside of the government, now actually the frame budgeting has aggravated these silos. As much as the frame budgeting is a good thing it has also led to a situation where silo thinking is even more than before deeply embedded in the government. [Industry representative]

6.3 Other policy-making practices to inluence on specific issues • The prepared proposal by the three menwas never published. • Based on interviews it contained proposals: • to increase the significance of the new Research and Innovation Policy as a strategic policy-making body more closely integrated with the operations of the Prime Minister’s Office with extra resources and t • to centralise decision-making in the Cabinet Committee on Economic Policy to cover broadly issues relating to ‘innovation policy’ regardless of the fact of how these issues have been traditionally seen to belong to various policy sectors and their administration. • The various silos of policy fields and their policy-making practices were seen to hinder the planning and implementation of the national innovation system –oriented policymaking, or the so-called ‘broad-based innovation policy’.

6.5 Outputs/outcomes

7. Preliminary findings • What is broad-based innovation policy: what is ’effectively’ governed; what is the significant change to be carried out  this is a political debate • The role of the participatory elements: ’real’ deliberation or ’Micky Mouse’ democracy? • The access to define the policy problem, to set up the policy agenda: themes given; making a ’significant change’ • The role of the strong historical institutional setting of the political bodies and the role of the ’traditional two ministries’: problems to change the public governance structure • The question is about resources • The role of ownership by participating

8. Conclusions • The aims of the policy in relation to its governance models • The market efficiency approach • The performance efficiency approach • The stakeholder relations approach • relying on ‘traditional stakeholder approach’ • integrating partly the Minister of Social and Health Care Policy, not fully involvement • The people’s influence approach

Thank you!

Policy-making practices and governance models of transformative change