MII Innovation Report

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1.

A Marketing Inst i tute of Ireland Commenta ry. October 2010

Ireland s Innovation Strategy

Time To Make It Happen!


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Table of Contents

ExecutiveSummary

CommentaryStructureandAdditionalKeyMessages

1. InnovationIreland,ReportoftheInnovation

Taskforce(March2010)

2. IrelandsSTIStrategyDevelopmentand

Implementation(20042010)

3. IrelandsInnovationandEnterprisePerformance

4. TheStrategicRoleof Marketing

5. ObstaclestoSTISuccessinIreland

6. GrowthinIrelandto2020andBeyond

7. RecommendationstoSupportDeliveryof Irelands STIAgenda

8. Bibliography

9. Listof Appendices

Pg.i

Pg.iv

Pg.1

Pg.5

Pg.13

Pg.21

Pg.25

Pg.31

Pg.39

Pg.42

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Executive Summary

Inthiscommentary,theMarketingInstituteofIrelandreviewsthe

developmentandimplementationofIrelandsScience,Technologyand

Innovation(STI)strategy.WeexamineeachmajorSTIstrategybetween2004

and2010,startingwithBuildingIrelandsKnowledgeEconomypublished

in 2004, and nishing with the latest report Innovation Ireland Report of

theInnovationTaskforcepublishedinMarch2010.

Weareclearthatthereisbothagoldenopportunityandacompetitive

necessitytoachievemuchbetteroutcomes,throughanewapproachthatis

moretransparent,innovativeandfast-paced.

InpublishingthiscommentaryitisourobjectivetopromptandcontributetoconstructivedebatewithSTIstakeholdersastohowbesttomakethis

happen.

Theneedforustotakeamoreradicalandinnovativeapproachisincreasingly

beingdrivenbythestandardssetbytopSTIcompetitorcountries.

Irelandsshareof eurozoneFDIhashalvedinsixyears.According

totheIMFStaffReportforIreland2009,Irelandsshareof Eurozone

FDIdroppedfrom13%in2001to6%in2007.

Wehavedroppedfrom12thto21stinworldcompetitivenessin2

years.Irelandscompetitivenessrankinghasdroppedfrom12thin 2008,to19thin2009and21stin2010.

OurEUinnovationrankinghasnotimprovedbetween2004and2009.

IrelandsEuropeanrankingfor2009remainsat9thnochangefrom

2004,andweriskbeingovertakenbyfastergrowingcountriessuchas

Estonia12th,Cyprus13thandSlovenia14thinoverallinnovation

rankings.

IrelandsSTIpolicydevelopmentandimplementationbetween2004

and2010hasmadelimitedprogress.TheMarketingInstituteof Ireland

believesthatthecurrentcommittee-styleapproachtoSTIpolicymakingand

implementationhasresultedinIrelandcontinuingtolagourcompetitorsin

R&Dandinnovationperformance.

Forexample:

BasedonthelatestOECDmeasures(2007and2008),Ireland

continuestolagkeySTIcompetitors(EU15plusNorway),being:

o 12thoutof16fornumberofresearchers;

o 13thoutof16forR&Dexpenditure;

Irelandsbroadbandinfrastructureisakeyweaknessthatmeansthat

Irelandisnotwellplacedtotakeadvantageoffuturetrendsin

broadband.

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Ananalysisof IDAAnnualReportsfrom1998to2009showsthat

Foreign Direct Investment (FDI) is no longer a signicant source of

netnewjobs. Thereappeartobeseriousproblemswiththewayinwhichsecond-

leveleducationimpactsoncreativityandinnovation.Oureducation

systemdoesnotproduceenoughtop-performingmathsstudents.

Irelandsproductivityrateshalvedfrom2000to2007.Thisreduction

inproductivitylevelswasdrivenlargelybyjobsgrowth(to2007)

inlocallytradedservicesandconstruction,whichexhibitlowerratesof

productivity.

Itisourbeliefthatoursituationdemandsthatallplayersinthisprocess,in

particularourpolicymakers,avoidtheunderstandabletemptationtodefend

thestatusquo,inthefaceofmountingevidenceof theneedforIrelandtotransformourcurrentapproachtoSTIimplementationonwhichsomuchof

ourfuturedepends.

TheMarketingInstitutebelievesthatcreativityandinnovation,athriving

enterpriseculture,auniquecompetitiveadvantage,andaworld-class

educationsystemarethekeystoIrelandsfuturesuccess.Weproposeavision

forIrelandto2020thatincludesthefollowingessentialcharacteristics:

astronginternationalreputationforcreativityandinnovation.

recognisedasagreatplacetogrowsustainablebusinesses,witha

thrivingenterpriseculture.

Irish people feeling condently independent and self-sufcient.

nationalpolicybeingtrulystrategic,long-term,nationalandall-island.

The Marketing Institute of Ireland has identied the following ve growth

driversinIrelandto2020:

A unique competitive advantage that clearly denes what Ireland can

offertheworld.

Astronganddiverseall-islandeconomythatisincreasinglydiverse,

underpinnedbyavibrantenterprisesector.

Aworld-classeducationsystemthatdrivescreativityandinnovation,

deliveringkeyskillsandfuellingouruniquecompetitiveadvantage.

A condent and creative outlook that both sets Irish people apart, and

connectsustotherestof theworld. Arecognitionof marketingsvitalroleindrivingsuccessininnovation

andenterprise.

TheMarketingInstituteof Irelandbelievesthatthefollowingrecommended

actionswouldconstituteaserioussteptowardsbringingaboutthenecessary

reformstoourapproachtoimplementingSTIpolicy.

Establishstrongleadershipbybringingtogetherasmallgroupof

peoplewithatrackrecordof deliveryandassigningthem

responsibility,overthenextthreeyears,toimplementSTIpolicyata

muchfasterpace.

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Adoptasimple,clearandconsistentpolicyframework,whereoverall

STIstrategyobjectivesareclearlyconnectedandreconciledtothe

actualtargetsofourenterprisesupportagencies. Setcleargoalsandensureaccountabilitybyquicklyagreeingwhatis

required in the next three years. We need to nd out how much money

isavailable,setclearmilestones,reviewtheworkofthe

implementationgroupeverysixmonths,andensurethestakeholders

committotheprocessandareheldaccountablefordelivery.

BenchmarkIrelandsSTIsystemagainstthetop-performingcountries

byestablishinganeffectivegovernanceframeworkto

ensureimplementationandtorobustlybenchmarkIrelandsinnovation

systemagainstthebestSTIcountriesinEuropeandtherestofthe

world.

Exploitthevalueof all-Islandpositioningbyembracinganinnovation strategythatencompassestheentireislandof Irelandwithregardto

ourenterprisepolicyandbusinessinnovation.

Strategicmarketingplaysacrucialroleininnovationatbothapolicymaking

levelandatenterprise-level.WithregardtoSTIpolicydevelopmentand

implementation,marketingcan:

createauniquecompetitiveadvantagebasedonthedifferences

inherentinIrishcultureandonarealcapacitytoinnovate

demonstratedbyIrishentrepreneurs.Marketingcanmakeavital

contributiontothedevelopmentof acompetitiveadvantagethat

isvaluedbypotentialcustomers,andtothecraftingofrobustmarket

propositionsforIrelandinSTInicheswherewecanmosteffectively

compete.Irelandmustdevelopauniquebasisofadvantage,as

competition intensies, that other countries cannot easily copy.

Fromanenterprise-levelperspective,marketingispivotalinthefollowing

tasks:

Marketinghasacrucialroleineachphaseof theinnovationprocess.

Realinnovationrequireschangesinconsumerbehaviourand

thereforemustbebothmarketandconsumerled.Marketinghelps

driverealinnovation.Theultimateeffectof innovationistocreate

valuethatcanbetranslatedintoadditionalsalestocustomers.

Marketingprovideskeyskillsrequiredbyinnovativecompanies-the skillsetrequiredincludesmanystrategicandoperationalmarketing

skills,suchasdevisingbusinessstrategies,persuasivelycommunicating

brandvaluesandpropositionstoconsumers,applyingtechnologies

tomarkets,gainingmarketunderstandingandinsights,and

commercialisingproductsandservices.Inthiscontextwemust

buildthenecessarymarketingcompetenciesforIrishbusinessto

suceedinternationally.

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Commentary Structure and Additional Key Messages

Thiscommentaryof theMarketingInstituteof Irelandisstructuredas

follows:

1. Innovation Ireland - The Report of the InnovationTaskforce (March 2010)

TheMarketingInstitutewelcomestheoverallthrustandmanyof the

guidingprinciplesof theReportof theInnovationTaskforce.

However,asablueprintforaction,theInnovationTaskforceReport

lacks specics on costs and deadlines, does not display a proper sense

of urgency, does not specically tackle areas of poor STI performance

inIrelandanddoesnotgofarenoughintermsofsecond-level

educationreform.

Thisimportant implementationreport,aspartof ouroverall STI

policy,illustratestheneedtodirectlyaddressthechallengesof

theMcCarthyReport(intermsof economicimpactandvaluefor

money).Inaddition,ithighlightsthenecessitytosubjectourSTI

approachtointernationalevaluationandtoplaceagreatervalueonthe

rolethatstrategicmarketingcanplay.

2. Irelands STI Strategy Development and Implementation(2004-2010)

ItisapparentfromourreviewofSTIPolicyfrom2004to2010,that

Irelandsapproachhascomprisedof avarietyof well-intentioned

strategiesthathaveledtolimitedprogress.ItisclearthatIrelandsSTI

strategyisindangerofbecomingagrandcompromisethat

ultimatelyfails,becausemajorstrategicchallengesarenotbeingtackled

andlackofdeliverybydominantSTIpolicymakersisacceptedandnot

challenged.

3. Irelands Innovation and Enterprise Performance

IrelandmustalsolearnfromthebestSTIcountriesintheworld

(e.g.FinlandandIsrael).Finlandrecentlysubmitteditsinnovation

systemtorigorousinternationalevaluation.IrelandsSTIpolicymakers

mustbepreparedtoadoptthesameopennessandmindsetinorderto

becomeasgoodasthebest.

Inaddition,someof thefactors(withregardtofunding,international

focusandenterpriseculture)thathavedrivensuccessforIsraelsSTI

strategycanalsoworkforIreland.

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4. The Strategic Role of Marketing

MarketingcanplayakeyroleinIrelandsfutureSTIsuccess. MarketingprovidescriticalinsightsintothechallengesIreland

faces.Theseinsightswillinformourvision,identifythebasisfor

uniquecompetitiveadvantage,pinpointfuturemarketniches,

contributetoeducationalreform,promoteavibrantenterpriseculture

andcontributetothedevelopmentandimplementationof a

substantiveandconvincingBrandIreland.

5. Obstacles to STI Success in Ireland

There are a number of specic areas, such as broadband, World

competitiveness,FDIperformanceandoureducationsystem,which

currently represent signicant obstacles to Irelands future success.

ForexamplewithregardtoBroadbandperformance,aswecontinue

tolagkeycompetitors,wemustaskandurgentlyaddressthekey

question:Whatsortof SmartEconomycanIrelandhaveintheshort

tomediumtermwithoutacompetitivebroadbandinfrastructure?

6. Growth in Ireland to 2020 and Beyond

TheSer vicessectorhasbecomeincreasinglyimportantforIreland.

Thesectorhasgrownfrom62%of totalemploymentin1997to67%

by2008.AccordingtoForfs,theservicessectorisexpectedtoprovide

themajorityofnewjobsintheIrisheconomyoverthenextdecade. Suchgrowthinserviceswillbedrivenbyboththeincreasing

servicisationof manufacturing,andtheincreasingelectronicdelivery

of goodsandservices.

Inthiscontext,avibrantandprogressiveIrisheducationsystemwill

be essential. Forfs, in a recent strategy, identied 11 forces of changes

impactingIrelandto2025-thisincludedEducationandSkills.Forfs

advocatestheneedtoundertakefurtherreformandincreased

exibility, if education is to continue as a key strength for Ireland.

Therefore,recentcommentsbytheMinisterforEducationopposing

any signicant Leaving Certicate reform is a worrying development.

7. Recommendations to Support Delivery of Irelands STIAgenda

TheMarketingInstituteof Irelandhasmadeanumberof high-level

recommendationsthatwebelievewarrantconsiderationasameans

of bringingaboutthenecessaryreformstoIrelandsimplementation

of STIpolicy.

Inadditionstrategicmarketingcanplayacrucialrolefrombotha

policymakingperspectiveandatanenterprise-levelperspective.

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Inthissection,weexaminethelatestreportonScience,Technologyand

Innovationstrategyimplimentation.ThereportoftheInnovationTaskforce,

published10thMarch2010,focusesontheimplementationofoneof the

ve key action areas which emerged from Building Irelands Smart Economy

(December 2008),thatisThe Ideas Economy Establishing the Innovation Island.

TheMarketingInstituteof Irelandwelcomesthisreportandacknowledges

thefocusitbringstothevitalareaof implementingIrelandsScience

InnovationandTechnologypolicy.The key recommendations of the Innovation

Taskforce Report are set out in Appendix 1, Page 45.

TheInstituteisparticularlysupportiveof thefollowingaspectsof thereport:

- Weagreethattheentrepreneurandenterprisemustbeatthecentreof

oureffortstofosterinnovation.

- Weacknowledgetheneedtofocusournationalresearchsystemon

areasof potentialstrategicandeconomicadvantageforIreland.

- Werecognisethatoureducationsystemmustfosterindependent

thinking,creativityandinnovationtoachieveourSmartEconomy.

- Wearepleasedthetaskforcerecommendsincreasesinthelevelof

fundingtoentrepreneurialbusinesses.Wewelcometherecent introductionofanewInnovationFundandthedevelopmentofanew

SeedCapitalFund.Wecommendtheproposeddevelopmentofa

network of sector-specic Business Angel Funds.

- Weagreethatcommercialcollaborationbetweenbusinessandour

HigherEducationInstitutionsshouldbeimproved.

- WewelcomeproposalstodevelopanationalIntellectualProperty(IP)

protocolandtostreamlineIPlicensingtobusinesses.

Webelievethattheobviousstrengthsof theInnovationTaskforceReport

canbebuiltuponinordertoaddressthefollowingobservationsfromour

reviewofthisReport.

Identifying costs and specic timeframes for implementation:

TherecommendationsintheTaskforceReportcontainneithercostings

nor specic timeframes for implementation of any of the 24 key

recommendationsorthe38supportingrecommendations.

1

1.InnovationIreland,Report of theInnovationTaskforce

(March 2010):


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Building condence by demonstrating urgency inimplementation, and achieving some early wins:

TheInnovationTaskforceReportistobewelcomedforitsfocusononeof

ve key action areas of the Smart Economy Strategy which was launched in

December2008,andwhichwasatthetimewasdescribedbytheTaoiseachas

anambitious5yearplan.If theSmartEconomyStrategyistoberealised

asenvisagedbytheTaoiseachwithinthistimeframe,itisessentialthatasense

of urgencyandmomentumbebroughttobear.

Developing rm measures to tackle areas where Irelands STIperformance is lagging key competitors:

ThepositivedispositionevidentintheInnovationTaskforceiswelcome,but

thismustnotbeallowedtoinanywayencouragecomplacencyaroundthe

extentofthechallengesaheadandthegapsthatarecontinuingtogrowin

IrelandsR&Dandinnovationperformanceasbenchmarkedagainstother

EUcompetitorcountries.Irelandsmostrecentperformanceisdescribedlater

inthiscommentary.

Benchmarking Irelands STI performance against the best:

ItisimportantthatIrelandbenchmarksitsSTIperformanceagainstthecountrieswiththebestrecordininnovationandlearnsfromwhatthese

countriesdowell.Forexample,arecentinternationalevaluationof the

FinnishInnovationSystemisworthyofconsiderationgiventhatFinland

isconsideredtohaveoneof thebestinnovationsystemsinEurope.This

evaluation,describedlater,containsanumberofkeythemesof Finlands

approachwhichcouldwellhaveresonanceforIreland.If acountrylike

FinlandissubjectingitsSTIsystemtointernationalevaluationanddriving

furtherimprovement,thenweinIrelandmusttakenoteandmakesubstantial

changestoourownapproach,inordertocorrectlyassessthechallengeswe

faceinthefuture,andtoobjectivelyevaluateourperformance.

2 1.InnovationIreland,ReportoftheInnovationTaskforce(March2010):


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Further developing the change recommendations for second-level education:

TheInnovationTaskforcemakesanumberof recommendationsonsecond-

leveleducation.Themainrecommendation(5.3)addressestheissueof higher

mathstake-upthroughpossibleincentivessuchasCAObonuspoints.There

arealsoanumberof supportingrecommendationswithregardtoteacher

trainingandmentoring,therolloutof projectmaths,andtheimplementation

of newsyllabiinbiology,physicsandchemistry.TheTaskforceReport

recommendationsonsecondleveleducationseemtofallshortof whatisrequired,basedontheworkoftheExpertGrouponFutureSkillsNeeds.

Thislattergroupobservedthatthereareseriousproblemswiththeway

inwhichsecondleveleducationimpactsonthecreativeandinnovation

capabilityof Irishstudents.Theseproblemshaveahistoryof beingquite

intractable because of the inuence of public examinations. The National

CouncilforCurriculumandAssessment(NCCA)appearstohavegrasped

theextentof thechallengethatthisposes,andismovingforwardwithwhat

appearstobeacoherentstrategytotackleit.Halligan (2009)

InthiscontexttheInnovationTaskforcesrecommendationswouldseem

torequirestrengthening,asevidencepointstooureducationsystemnot

deliveringeithertheeducationaloutcomesorthetechnicalorcreativeskills

requiredbyadynamicinnovation-ledeconomy.

Implementing rigorous value for money scrutiny of our STIsystem:

Intheabsenceof aprocessof internationalevaluationofourSTIsystem,

theMcCarthyReport(2009)representsareasonablestartingpointagainst

whichtocritiqueIrelandsapproachtoSTIpolicyimplementationtodate,

withregardtoeconomicimpactandvalueformoney.Thisisimportantgiven

thattheoverallthrustof theInnovationTaskforceReportistocontinueto

substantiallyincreaseSTIspendoverthemediumterm.

ConcernsraisedbyMcCarthyneedtobeaddressedcomprehensively

if condence is to be secured in the approach taken to STI policy

implementation.Theseincludetheviewthatevidenceadducedtodatefor

theimpactofstateSTIinvestmentonactualeconomicactivityhasnotbeen

compelling,therecommendationthatSTIfundingshouldbefunnelled

intoasinglestreaminordertoachievesavingsthroughtheremovalof

administrativeandresearchduplication,andissueswithregardtooutput

levelsandpossibleduplicationinthestateagencysector.

31.InnovationIreland,ReportoftheInnovationTaskforce(March2010):


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Theconcernof theMarketingInstituteof Irelandwouldbethatalessthan

comprehensivesetofactionstoaddresstheSTIissuesraisedbyMcCarthy

could lead to inefciencies being preserved within the system, with potentially

fatalconsequencesforthestrategy.

Bringing strategic marketing expertise to the implementation ofInnovation Ireland, beyond just marketing communications:

ThemarketingrelatedrecommendationscontainedintheInnovation

TaskforceReportarelargelylimitedtomarketingcommunications.For

example,therecommendationsinclude:

MarketingIrelandasanexcellentlocationforstartinginnovative

exportorientatedcompanies(9.8)

Establishanationalonestopshopwebsite(10.6)

DevelopandmarketIrelandasaninternationalinnovationservices

centre(12.1)

IDAinternationalmarketingcampaigntoattractinternational

entrepreneurs(12.3)

Asinglebrandidentitybasedontheconceptof innovation(12.3)

The full listing of the marketing related recommendations of the Innovation Taskforce

Report are set out in Appendix 2, Page 46.

Whilstsuchauseof marketingasatacticalcommunicationstoolhasits

place,itisimportantthatthetruestrategicvalueof marketingisfully

leveraged.Themorestrategicrolewhichmarketingcanplayinrelationto

STIimplementationingeneral,andtheinnovationprocessinparticular,is

describedlaterinSection4ofthiscommentary.

1.InnovationIreland,ReportoftheInnovationTaskforce(March2010):4


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Inthissection,wereviewIrelandsSTIstrategydevelopmentand

implementationbetween2004and2010.Itisapparentfromourreviewthat

thecurrentapproachtopolicydevelopmentandexecutionhasbeenlessthan

effective.

Irelands STI strategy would benet greatly from the implementation of four

keyelements:(1)havingclearleadership,(2)developingagreatersenseof

urgency,(3)morefocusedimplementation,and(4)greateraccountability.

Wewouldarguethatresultstodatehavebeencomprisedof avarietyof

wellintentionedstrategieswhichhaveunfortunatelyledtolimitedprogress

andlittlediscernablechange.Ourreviewsupportsastrongperceptionin

themarketingprofessionthattheroleofmarketinginSTI,anditspotential

tostrengthentheprocessofinnovation,istoalargeextentmisunderstood

by STI policymakers. The Ahead of the Curve report in 2004 identied a

seriousgapinthelevelof marketingcapabilityinIreland,butitsmarketing

recommendationsremainlargelyunimplemented.

Whiletheapproachtakentodatehastheadvantageof achievingconsensus,

itisapparentfromourreviewofSTIstrategytodate,thatitalsohasa

numberofinherentdangers,suchasIrelandsSTIStrategybecomingagrandcompromisethatultimatelyfails,majorstrategicSTIchallengesnot

beingtackled,lackof deliverybysomedominantSTIpolicymakersanda

subsequentlackof accountability,withregardtooverallperformance.

Knowledge Economy (2004):

In2004,ForfspublishedBuildingIrelandsKnowledgeEconomysetting

out its vision for Ireland to 2010 and a clear set of specic recommendations

toachievethisvision.Irelandby2010willbeinternationallyrenownedfor

theexcellenceof itsresearchandbeattheforefrontingeneratingandusing

newknowledgeforeconomicandsocialprogress,withinaninnovationdriven

culture.(Knowledge Economy, 2004)The 2010 targets for this strategy and progress to date are described in Appendix 3, Page

47.

Basedonthelatestavailableinformation(2007and2008estimates)the2010

targetsfromthisstrategywillnotbeachieved.Forexample:

- By2008,grossexpenditureonR&Dhadachievedonly72%of

monetarygoal,and67%ofitsGNPgoal.

- By2007,only69%ofthenumberof researchersgoalhadbeen

achieved.

5

2.IrelandsSTI StrategyDevelopmentand

Implementation(2004 - 2010):


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Ahead of the Curve - Enterprise Strategy Group (2004)

Initsanalysis,theAheadof theCurvereportbytheEnterpriseStrategy

Group(2004)describedoursourcesof competitiveadvantageasour

educationandtrainingsystems,ourstableandadvantageoustaxationregime

andourreputationforeffectiveandagilegovernment,whichhavebeen

responsivetotheneedsof enterprise.(Ahead of the Curve, 2004)Italso,inthe

context of falling competitiveness, identied the need for Ireland to regain

ourleadershippositionintheseareas.

Ahead of the Curve identied additional sources of competitive advantage,

suchasexpertiseinsalesandmarketing,andtheapplicationofR&Dand

technologytothecreationofnewproductsandservices,whichwould

requirecomprehensiveandintensivedevelopmentandwouldmarkadecisive

neworientationof Irishenterprisepolicy.Italsodescribedfouressential

conditionsforsuccess,whichinthecontextof ourcurrenteconomic

difculties have proved to be prophetic - cost competitiveness, infrastructure,

innovationandentrepreneurship,andmanagementcapability.An extract of the

overall recommendations of this strategy are set out in Appendix 5, Page 49.

There were two specic recommendations with regard to Marketing as

asourceof competitiveadvantage,whichdonotappeartohavebeen

implemented:

1000SalesandMarketingPersonnel

Establish a ve-year programme, to place, on a cost-sharing basis, 1,000

graduates and internationally experienced professionals in Irish rms to

augmentthestockof nationalsalesandmarketingtalent.Thisinitiative

shouldbecomplementarytoexistingprogrammes.(EIandIDAIreland).

Practical CapabilitiesinSalesandMarketing

Incorporateworkplacementsandmodulesthatfocusonthepractical

capabilities required by rms into marketing and sales curricula. These shouldalsobeavailabletostudentsof technicaldisciplines.(HigherEducation

Institutions).

Inthecontextof thesetworecommendations,therecentannouncement

(30thAugust2010)bytheMinisterforEnterpriseTradeandInnovationto

place 50 top graduates in export-led rms as part of the new Graduates for

InternationalGrowth(G4IG),istobestronglywelcomed.Thisinitiative

which(willbedevelopedanddeliveredbyEnterpriseIrelandinpartnership

with UCD Michael Smurt Graduate Business School) will be of 18 months

72.IrelandsSTIStrategyDevelopmentandImplementation(2004-2010):


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durationwithgraduatesundertakinganintensivesix-monthintensivetraining

and skills development in an Enterprise Ireland client rm, followed by a 12-

monthplacementinarelevantoverseasmarket.

AthirdrecommendationtoattractSalesandMarketingprojectsunderthe

stewardshipofIDAIrelanddoesappeartohaveachievedsomedegreeof

success.

Target SalesandMarketingandEuropeanHeadquarterProjects

IDAIrelandshouldtargetsalesandmarketingandEuropeanheadquarter

projectsfrombothestablishedmultinationalsandsmallercompaniesatan

earlystageofinternationalisation.(IDAIreland)

Building Irelands Smart Economy - The Department of theTaoiseach (2008)

InDecember2008,Building Irelands Smart Economywaslaunchedwhich

setoutavisionforIrelandwhichstates:Todriveeconomicgrowth

through the enhancement of productivity per person by: securing scal

stability;enhancingR&Dintensiveforeigndirectinvestment;investingin

humancapitalandresearchanddevelopment;incentivisinginnovationand

commercialisation;investingincriticalpublicinfrastructure;andimproving

publicsectorperformance,withinahigh-qualityphysicalandsocial

environment.(Smart Economy, 2008)

Thisstrategydescribestwelveattributesof theSmartEconomy.These

attributes are listed in Appendix 6, Page 50, with some issues to be considered.

Setoutbelowaresixof theseSmartEconomyattributesandsomeissues

whichmustbeaddressedforIrelandtogaincredibilitytowardsearningthe

descriptionofsmarteconomy.

1. High-valueandrewardingjobs;Athrivingentrepreneurialculture; Issue:Wehavetalkedofbuildinganenterpriseeconomysincethe

CullitonReport(1992),whichadvocatedfosteringagreater

commitmenttodevelopingIrishindigenousenterprise,andwecannot

besaidtohavedeliveredit.

8 2.IrelandsSTIStrategyDevelopmentandImplementation(2004-2010):


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Science Foundation Ireland Strategy 2009-2013 (SFI, 2009):

Someof thestrategicobjectivesandtargetsto2013forScienceFoundation

Ireland(SFI,2009)fortheScience,TechnologyandInnovationsectorare

critiquedagainstanumberof McCarthyReportobservationsonSTIand

anumberofopinionpieceswhichappearedinthemediaduringJulyand

August2009.The overall strategic objectives and some detail of specic SFI targets are

described in Appendix 7, Page 51.

SFIsHumanCapitalTarget:WithregardtoSFIsHumanCapitalTargets,suchasthenumberof PhDs,theMcCarthyReport(2009)makesthe

followingobservation:Intheabsenceof aclearbusinessneedforthe

doublingof PhDscurrentlybeingfunded,thegroupisconcernedthat

graduateswillbeunderemployedorforcedtoemigrate.Indeedsome

empirical evidence suggests that 20% of new doctorate holders nd

employment overseas, and of those who remain in Ireland, most nd

employmentinthepublicratherthantheprivatesector.(McCarthy Report, 2009)

SFIsQualityOutputsTarget:InrelationtotheSFIqualityoutputtargets

and the use of metrics, such as citations in scientic journals, the Irish

Times(August20,2009),citesProfessorAmarBhidof ColumbiaBusiness

School,whoasksinhisbookTheVenturesomeEconomywhytheUShas

maintained,orpossiblyexpanded,itsproductivityandpercapitaincomelead,

while the EU and Japan have increased their share of PhDs, scientic articles,

etc.HealsosaysUSventurecapital-backedbusinessesusedifferentpeople

andproceduresthantypicallaboratoryhigh-levelresearch-theyemploya

muchsmallerproportionof PhDsintheirtechnicalstaff,andtheiroverall

workforcescontainalargerproportionof managersandsalesandmarketing

staff -peoplewhoareclosetousers.(Irish Times, August 20, 2009)

SFIsKnowledgeTransfer:WithregardtoKnowledgeTransfer,theIrish

Times(August20,2009),citesapreviouspiecebyDr.DeclanJordan(UCC

EconomistITJuly6,2009);Acensusof post-doctoralresearchersthatleftScienceFoundationIrelandfundedprojectsin2007foundthat9%went

toworkinscienceorengineeringbusinesses.Afurther10%wenttoworkin

industryinothersectors.Themostcommondestination,at38%forthese

post-doctoralresearchers,wasanotherpostdoctoralpositiononadifferent

research project. He expressed a worry that given the signicant taxpayer

investment,thatthereislittlemovementof researchersfromfundedprojects

intobusiness.Themosteffectivemethodof knowledgetransferfrom

universitiestobusinessisontwolegsheadded.(Irish Times, August 20, 2009)

10 2.IrelandsSTIStrategyDevelopmentandImplementation(2004-2010):


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AccordingtotheSFICensus2009,450teammembersleftSFIfundedteams

in2009(a10%increaseon2008).53%ofthesemovedoutsideIreland

(versus43%in2008).In200921%of theleaverswenttoindustry,while35%

movedtootherpostdoctoralresearch.

SFIsSpin-Off Target:IrishTimes,(August20,2009)Therewere8spin-offs

fromScienceFoundationIreland(SFI)researchbetween2002and2008and

SFI forecasts 30 in the period 2009-2013. Some of the existing rms are very

smallandEnterpriseIrelandclaimsa90%survivalratefromitsspin-offs

butthisistotallyout-of-linewithUSexperience.Simplyput,itsdataisnot

credible. .. (Irish Times, August 20, 2009)

Inits2009Census,ScienceFoundationIreland(SFI,2010)statesthatithas

doubleditsearlystagespin-outsto6in2009(from3in2008),consistent

withits20092013goals.

ToalargeextenttheanalysiscarriedoutbyAutio(2009)(insupportof 2009

Finnishinnovationsystemreview)supportstheconcernwithregardtosuch

optimisticforecasts.Autiocontendsthatwhilehigh-growthentrepreneurs

deliveradisproportionateeconomicimpactrelativetotheirnumbers,overall

theyarerare,notlimitedtotechnologysectors(canbeprevalentinservices),andthatachievinghighgrowthcantakealongtime.

Thiscritiquedemonstratesthatwemusthaveaclearerlinkbetween

thetargetssetbytheenterprisesupportorganisations,suchasScience

FoundationIreland,andanoverallSTIpolicyframeworkforIreland.

112.IrelandsSTIStrategyDevelopmentandImplementation(2004-2010):


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Horizon 2020 IDA Ireland Foreign Direct Investment Strategy:(IDA, 2010):

IDAIrelandinitslateststrategy,Horizon2020,(IDA,2010)believesthat

FDIwillincreasinglycomefromearly-stagecompaniesthattheIDAcanhelp

attracttoIreland,inpartbecausesomanyestablishedleadingmultinationals

are already here. The IDA has identied the following sectors and segments

asitsfuturefocusto2020:servicesinnovation(healthinformaticsand

nancial analytics); clean tech (digital lifestyle management, nanotech and

surgicalimplant);convergence(smartbuildings);andcloudcomputing(IPtrading).

Aspartof itsHorizon2020Strateg y,theIDAhassetanumberof objectives

andgoalsto2014,inparticularanewjobstargetof 105,000.

Thisismadeupof 62,000directjobsand43,000indirectjobs(IrishTimes,

8March2010).Overthelast5yearsfrom2005to2009,IDAsupported

companiescreatedanannualaverageof newjobsof 9,714.Thereforea

62,0005-yeartargetrepresentsa28%increaseover5yearsoranannual

newjobsrateof12,400.ItshouldbenotedthatIDAsupportedcompanies

created4,615newjobsin2009.

Whenyouexaminethelikelylevelof netnewjobscreated(bysubtractingthe

totaljobslosteachyear)averydifferentpictureemerges.From2005to2009

IDAsupportedcompanieslostjobsatarate,rangingfromalowof8,239in

2006toahighof 18,028in2009.Thistranslatesintoanaverageannualjob

lossrateof 10,975perannum.

Thereforeif IDAIrelandachievesitsgoalof 62,000directjobsto2014

(12,400p.a.)andthecurrent5yearaveragejoblossrateof10,975persists,

thentheactualnumberofnetnewjobscreatedwillbejust7,125(fromthe

currentemploymentlevelsof IDAsupportedcompanies,124,800-2009)for

the ve year timeframe from 2010 to 2014.

.

2.IrelandsSTIStrategyDevelopmentandImplementation(2004-2010):12


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OECD - Measures of R&D and Innovation Performance:

TheOrganisationforEconomicCooperationandDevelopment(OECD,

Factbook 2009 and 2010) has identied a number of measures for the

developmentof R&Dandinnovationwithinmembercountries.Acritiqueof

IrelandsR&DandInnovationperformanceshowsthefollowing:

13

3.IrelandsInnovationand EnterprisePerformance:

Table 1: - Key Components of R&D and Innovation PerformanceIreland and Ireland Vs EU 15 Plus Norway:

Researchers

Per000

Employed

Expenditure

onR&D

(%GDP)

Investment

in

Knowledge

(%GDP)

Patents

Triadic

Families

ICT

Investment

%Fixed

Capital

Formation

Date 2007 2008 2003+ 2007 2007

Ireland 6.0

per000

1.43% 2.3% 78 5.6%

OECD

Average:

7.6

per000(2006)

2.28%

(2007)

4.9%

(2003)

NotAvailable

IrelandVersusEU 15PlusNorway

2008Ranking:

12thof 16

2008Ranking:

13thof 16

2003+Ranking:

12thof 13

2007Ranking:

12thof 16

2007Ranking:

14thof 14

Source:OECDFactbook2009andOECDFactbook2010-OECD2010;

+ 2003 Latest available gures:


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Irelands performance when compared to other EU 15 countriesplus Norway, shows that in relation to:

* Numberof Researchers:Irelandwas12th(6.0)outof 16in2008.The

topcountrybeingFinland(16.1);

* ExpenditureonR&D:Irelandis13th(1.43%)outof16in2008,the

topcountrybeingSweden(3.75%);

* InvestmentinKnowledge:Irelandis12th(2.3%)outof13in2003,

thetopcountrybeingSweden(6.3%);

* Patents(permillionofpopulation):Irelandis12th(c.15)outof 16in 2007,thetopbeingSweden(c.93).

* ICTInvestment:Irelandis14th(5.6%)outof 14in2007,thetop

countrybeingSweden(25%).

3% GDP Spend on R&D: - Is this a realistic objective for Ireland?

Aspreviouslydiscussed,theTaskforcehasrecommendedthatthisobjective

bepartof theSSTI2014-2020Strategy.Forfs2025(2009)hassuggested

thatasinnovationbecomesthedrivingforceinGDPgrowth,creatingnew

marketsandenhancingvalue-addedfunctionswillbekey.Inordertoachieve

thisForfsbelievesthatincreasingpublicandprivateinvestmentinR&D,

oneof thekeytargetsof theEUsLisbonAgendamustbeaddressed.

Thereisnowarequirementtodecidewhetherwearewillingtoimplement

theR&Dexpenditurelevelof 3%GDP.AsCraigBarrett,Ex-Chairman

andCEOof Intel,putitrecently,Irelandhasonlyachieved1.5%of GDP

investmentinR&DwhereunderLisbonobjectivesitshouldbenowat3%.

Why bail out the banks but not x innovation? The political will needs to be

there.(Barrett, 2010)

Inaddition,whilethelevelof BusinessExpenditureonR&D(BERD)has

doubledwithinadecade,concernshavebeenraisedthat70percentof

BERDisthroughnon-indigenouscompanies,whichtheIDAhassuccessfully

retained.Lookingcloseragain,70percentofthat70percentisexpendedby

about20companies,analltoonarrowabaseonwhichtobuildaknowledge

society.(Irish Times, BERD 28 May 2010)

14 3.IrelandsInnovationandEnterprisePerformance:


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European Innovation Scoreboard (EIS) 2009:

InthelatestEuropeanInnovationScoreboard(EIS2009),Denmark,Finland,

Germany,SwedenandtheUKaredescribedasInnovationLeaders,with

innovationperformancewellabovetheEU27average.AccordingtoEIS

2009,GermanyandFinlandareimprovingtheirperformancefastest,while

DenmarkandtheUKarestagnating.

Innovation Followers within the EU are identied as Austria, Belgium,

Cyprus,Estonia,France,Ireland,Luxembourg,theNetherlandsandSloveniawithinnovationperformancebelowthoseof theinnovationleadersbutclose

toorabovetheEU27average.Withinthisgrouping,CyprusandEstoniaare

seenasgrowthleaders,andSloveniaisdescribedasamoderategrower.

Ireland is included in the nal grouping described as slow growers along

withotherInnovationFollowercountriessuchasAustria,Belgium,France,

LuxembourgandtheNetherlands.

For2009,Irelandisranked9thoverall(nochangefromitsranking5years

previouslyin2004)intermsof thesummaryinnovationindex.Theconcern

isthatIrelandisaslowgrowerincomparisontootherInnovation

FollowerssuchasEstonia,Cyprus,andSlovenia,currentlyrankedbelowitin

12th,13th,and14thplace.ThekeychallengeforIrelandisunlessweincrease

momentum,thesefastergrowerswillovertakeusintheoverallinnovation

rankings.Irelands overall performance against the 7 dimensions used to calculate

overall innovation performance is compared with the EU 27 States plus Switzerland, in

Appendix 8, Page 52.

Irelands Innovation Performance:

TheExper tGrouponFutureSkillsNeedscharacterisedIrelandsinnovation

performanceasfollows:Irelandperformsstronglywhenitcomestothe

prevalenceof innovation,ranked7thintheEUfortheshareof companies

engagedininnovation(CSOCommunityInnovationSurvey2004-06).

Howeverwhenitcomestobroadermeasuresof Irishinnovationcapability,

thecountryisactuallyfairlyaverage.InparticularIrelandperformspoorly

withregardtothelowadoptionof product innovationsinventedbyothers,

andlowbusinessinvestmentinICT[InformationandCommunications

Technology]. (Halligan, 2009)

153.IrelandsInnovationandEnterprisePerformance:


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Global Entrepreneurship Monitor (GEM) An Ireland andGlobal Perspective

TheGlobalEntrepreneurshipMonitor(GEM)inits2008annualreportfor

Irelandsuggeststherehasbeennofall-off inIrelandslevelofthosewho

hadmostrecentlysetupnewbusinessesat4.3%(percentageof population

who have started a new rm in the last 3.5 years, paying wages). In addition,

itstatesthatIrelandcontinuestobetotheforeinEuropeinearlystage

entrepreneurs(7.6%).Therecontinuestobeahighnumberof established

ownermanagersat9%of theadultpopulation.(GEM Ireland, 2008)

ThereisalsosomeanecdotalevidencethatinIrelandthegrowthinearly

stageentrepreneursandestablishedownermanagershasbeenlargelyin

non-STIsectors,suchasinConstructionandPropertyinmorerecentyears.

Irelandenterpriseperformanceagainstmanyof theGEMkeymeasures

peaked in 2005 and our current low tech. enterprise prole, is quite similar

toGreece,whichranksaheadof Irelandin4outof 5of theGEMmeasures,

basedonitsglobalstudyfor2008.See Appendix 9, Page 53.

Inaddition,thisalsoshowsIrelandsrelativepositioncomparedwithother

InnovationCountries(18CountriesGlobally)-NascentEntrepreneur:

Ireland8th;NewFirmEntrepreneur:Ireland4th;EstablishedEntrepreneur:

Ireland5th;TotalEarlyStage:Ireland6thandExits:Ireland2nd.

GEM Ireland (2008), also points to a signicant decline in those actively

planningnewbusinesses(nascententrepreneurs)reducingfrom4.2%in2007

to3.3%in2008.Thereisalsoamajorreductioninthenumberof people

perceivinggoodopportunitiestostartanewbusinessdownfrom46%

in2007to27%in2008(oneof thesharpestdeclinesacrossparticipating

GEMCountries).A comparison of Irelands entrepreneurship performance compared

with key STI competitors such as Finland, Norway and Denmark as well as the level of

international orientation for each of these countries, is described in Appendix 10, Page 54.



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A Review of the Finnish Innovation System:

IrelandneedstobenchmarkitsSTIperformanceagainstthebest.The

resultsof arecentinnovationsystemreview,commissionedbytheFinnish

government,isinstructiveforIreland,asFinlandisregardedashavingoneof

themostdevelopedandsuccessfulinnovationsystemsinEuropeanditisnot

restingonitslaurels.BothFinlandandIrelandaredirectSTIcompetitorsin

thatbothcountriesarelookingtothewiderEuropeansinglemarkettoattract

internationalhigh-growthentrepreneursandresearchers.

There are a number of key themes that emerged from theFinnish Evaluation which have direct relevance to Ireland:

Innovationpolicymayneedtoshiftfromcompaniestoonewhich

nurturesandattractscreativeindividuals

Finlandsinnovationpolicyactorsdemonstrateuniformthinkingand

dontexpressremotelycontroversialopinions

Innovation policy in turmoil worldwide - structural and nancial crisis

createsasenseofurgency-thatshouldnotbewasted

The evaluation panel welcomes the ambition of the strategy - but nds

itvague

Thesystemlacksexplicitcross-ministerialdecisionmakingand execution

Weakco-ordinationresultsinwastefulreplication

Thetr uerefor mof sectoralresearch(publicresearchorganisations,

PROs)remainsingridlock;

Thepanelsupportsuniversityrefor m-butitmustgofurther.

(Finnish Innovation System Evaluation, 2009)

If Finlandispreparedtosubjectitsowninnovationsystemtointernational

evaluation,Irelandalsoneedstoadoptthismindsetinordertobecomeas

goodasthebest.



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GivenIrelandsfocusonhigh-growthentrepreneurs,basedonthelatest

InnovationTaskforceReport,itisusefultoexaminetheexperiencein

Finland.AspartoftheFinnishreview,ErikkoAutioproducedapaper,The

FinnishParadoxTheCuriousAbsenceof HighGrowthEntrepreneurship

inFinland,whichattemptstoexplainwhyFinlandsweakperformancein

high-growthentrepreneurshipgoeshandinhandwithitbeingaworldleader

inpercapitainvestmentinR&D.Aspartof hisanalysis,Autiocritiquedthe

literature on high-growth entrepreneurship and identied a number of what

hedescribesasstylisedfacts:

High-growthentrepreneursdeliveradisproportionateeconomic impactrelativetotheirnumbers.

High-growthentrepreneursarerare.

High-growthentrepreneurshipnotlimitedtotechnologysectors.

High-growthentrepreneurstendtobehighlyinnovative.

Achievinghighgrowthcantakealongtime.

High-growthentrepreneursdifferfromordinaryentrepreneursin

termsof theirdemographiccharacteristics.(Autio, 2009)

Autio (2009) reaches three main conclusions with regard to high-growth entrepreneurship:

1. High-growth entrepreneurship merits specic attention in a national

innovationstrategybecauseof thedirecteconomicpotentialassociated

withthisphenomenon.

2. High-growthentrepreneurship,inspiteof itsrarity,alsoappearstobe

quiteabroadbasedphenomenonintermsof sectordistribution(apart

fromjustthetechnologysector).

3. Thevolatilityof thehigh-growthentrepreneurshipphenomenon

suggeststhatsupportinghigh-growthentrepreneursisnottrivial.

Someevenarguethatpublicpolicyinterventionshavenoplacein

thecontextof supportinghigh-growthentrepreneurship,pointingto

theobservationthatmanyhighlysuccessfulstart-upsdonotappearto

have difculties in obtaining equity funding. In reality, the question of high-growthentrepreneurshippolicyiscomplex,andargumentscanbe

madebothways. (Autio, 2009)



28/68

Israels Science Technology and Innovation Success Lessonsfor Ireland:

Israelssuccessinthedevelopmentofaworld-classinnovationsystemover

thelast20yearscanprovidemuchlearningforIreland.

AccordingtoarecentarticleonIsraelsinnovationpolicy:Israelhasmore

high-techstartupspercapitaand,aftertheUnitedStatesmorecompanies

listedonNASDAQthananyothercountryithad63in2009,compared

with Irelands 5. Israel attracts ve times as much venture capital investmentpercapitathanIrelandandleadstheworldincivilianR&Dexpenditure

-4.5percentof GDPbetween2000and2005,comparedwithIrelands1.2

percent.(Irish Times, Israel, 28 May 2010)

IsraelsSoftwareIndustryhasseenitssoftwareexportsgrowfrom$90m

intheearly1990sto$2.6Bnin2000toover$3.6bnbytheendof 2008,

accordingtotheIsraelExportInstitute.(IEI, 2010)

The Export Institute has also identied a number of factors,critical to Israels success to date, including:

Acultureof innovation; Acultureof serial, nimbleentrepreneurship;

Internationallycustomerfocused;

Acultureof pioneering,earlyadoptionandnetworking;

Solutionscoveringabroadrangeof industries;

Amagnetformultinationalresearchandacquisit ions;

Governmentencouragement.(IEI, 2010)

Israel has also developed a number of signicant initiatives which have

helpedIsraelitechnologycompaniesbecomeworld-class.Onesuchinitiative

wasthedevelopmentof theIsrael-U.S.BinationalIndustrialResearchand

DevelopmentFund(BIRD).BIRDwasestablishedin1977andactsas

acatalystforjointR&DbetweenUSandIsraelicompanies,focussedon

emerging industries and novel technologies with signicant commercial

potential.Overthelast30yearsBIRDhassupportedover740companies

withcumulativesales(of productsdevelopedthroughBIRDprojects)in

excessof$8Bn.Inaddition,of the63Israelitechnologycompaniesquoted

onNASDAQ,over75%of thesecompanieshavereceivedBIRDfundingin

thepast.(BIRD, 2009)



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Following the success of BIRD a number of similar funds werealso established, for example:

1994,withCanada,calledtheCanada-IsraelIndustryandResearch

DevelopmentFoundation(CIIRDF);

1996withSingapore;TheSingaporeIsraelIndustrialR&DFund

(SIIRD);

1999,withtheUnitedKingdom;BritainIsraelIndustrialR&DFund

(BRITECH).

3.IrelandsInnovationandEnterprisePerformance:20


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Inthissection,wehighlighttheimportantstrategicrolethatmarketingplays,

notjustintheinnovationprocess,butmoregenerallyintheimplementation

of Science,TechnologyandInnovation(STI)policy.

WelookatthepivotalroleMarketingplaysateachphaseof theinnovation

processfrominitialresearch,throughtoproduct-mixdecisions,topost-

purchasecustomerevaluation.Marketinghasotherimportantfunctionsin

overallSTIimplementation.Customerbehaviourisakeyfactorinmost

instancesofinnovation.Wearguethatinnovationmustbeconsumerand

marketledratherthanpurelytechnologyorproductdriven.

Professional marketers have specic skills that are essential in the

implementationof innovation.Innovativecompaniesrequirepeoplewhocan

setstrategicdirection.Theyrequirepeoplewhohavestrongcommunications

skills,anunderstandingofhowtoapplytechnology,astrongmarket

understanding,thecapacitytoidentifyuserwantsandtheabilityto

commercialiseaproductorservice.Thesearestrategicandoperationalskills

exhibitedbyarangeof professionalmarketers.

Furthermore,MarketinghasakeyroleinensuringthatIrelandbuildsareal

anduniquebasisofcompetitiveadvantagebasedonacompellingmarketproposition.ThiswillensurethattheInnovationIrelandbrandwillbeone

of substancethatdeliversonitsbrandpromise.

21

4.The StrategicRole ofMarketing:


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Three out of Four Types of Real Innovation Require Changesin Customer Behaviour:

Halliganmakesthepointthatunlessabusinesschangesinwayswhich

makesitmorevaluable,thennoinnovationhastakenplace.TheExpert

GrouponFutureSkillsgoesontodescribefourdifferenttypesof innovation

thatdirectlycreatesuchvalue:

1. Newandimprovedproducts,oncetheyareboughtbycustomers;

2. Newandimprovedservices,oncetheyareboughtbycustomers,either

themselvesorbundledwithproducts;3. Changestothewaythecompanyrelatestothebusinesssystem

of whichitformsapartthatbringgreatervaluetothebusinessfrom

itscustomers;

4. Changestointernalprocessesandothercharacteristicswithina

businessthatimproveitseconomicperformance,whetherthrough

creatinggreatervalueforcustomersintermsof products,servicesand

businesssystem,orthroughincreasinginternaleffectivenessand

efciency. (Halligan, 2009)

Halligan points out that the rst three types of innovation rely on changes

incustomerbehaviour.Ifcustomersdonotrespondpositively,novalueis

created,andnoinnovationhastakenplace,nomatterhowgreattheinternal

upheavalwithinthebusiness.Thefourthreliesoninternalchangeswithin

thebusiness,whichcanalsocreategreatercustomervalueintermsof better

productsandservices.

Theimportanceof customerbehaviourtothesetypesof innovationclearly

emphasisesthesubstantialcontributionwhichmarketingcanmaketothe

overallprocessof innovation.

4.TheStrategicRoleofMarketing:22


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Marketing Plays a Pivotal Role in each Phase of the InnovationProcess:

Bettley(2007),statesthattheintegrationofmarketingwiththetechnology

andR&Dfunctionisestablishedasacriticalsuccessfactorininnovation.

Bettleyclearlysetsoutthemarketinginputsrequiredateachphaseof the

innovationprocessandclearlydemonstratesthatmarketingcanhavea

profoundimpactateachstage,frominitialresearchthroughtoproductmix

decisionstopostpurchasecustomerevaluation.Marketing Inputs into TheInnovation Process are described further in Appendix 11, Page 55.

Innovative Companies Need A Broad Range of Strategic andOperational Marketing Skills:

IntheSkillsinCreativity,DesignandInnovationreport,Halligandescribes

thetypesofpeoplethatinnovativecompaniesneed:

Leaderswhoaregoodatsettingstrategicdirection,canestablishan

innovation-friendlyculture,andwhoaregoodatinnovationmanagement;

Employeesatalllevelswhohavestronggenericskills,particularlyin

communications,teamworkingandproblemsolving;Peoplewithagood

understandingof howtoapplyrelevanttechnologies,withskillsinapplicationof informationtechnology;Peoplewithagoodunderstandingofthemarket,

both in broad aggregate terms and in terms of the specic needs and wants

of usersof theproductorservice;andPeoplewithastronggraspof

business:howtocommercialiseaproductorservice,andhowtoleveragethis

to build a strong, protable and sustainable business. (Halligan, 2009)

Manyof theskillslistedbyHalliganaredirectlyrelevanttothemarketing

profession:settingstrategicdirection,communications,agoodunderstanding

of howtoapplyrelevanttechnologies,anunderstandingof themarket,

understandingthewantsofusersof theproductandhowtocommercialisea

productorservice.

Suchskillsareclearlyinevidenceamongarangeof professionalmarketers

operatinginvariousfunctionsincludingStrategicPlanning,Marketing

Communications,ConsumerInsight/MarketResearch,Product

Development,CustomerRelationshipManagement(CRM)andBrand

Management.

234.TheStrategicRoleofMarketing:


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Marketings Role in Developing a Real Basis for CompetitiveAdvantage

TheInnovationTaskforcesambitioninmarketingInnovationIreland,and

itsresultingrecommendations,appearstorelegatemarketingtoarolelimited

topromotionandmarketingcommunications.Insomecasesitappears

marketingisbeingusedtomakeapresentationalratherthanasubstantive

caseforourcurrentSTIstrategy.

Suchanapproach,coupledwithalessthancompellingbasisofcompetitiveadvantage,isnotlikelytoproducesuccess.Thereasonsareclearlyenunciated

inHalligan(2009)indescribingthecompetitivethreatwefaceintothefuture:

thatnotonlyarecountriessuchasChina,IndiaandBrazilaimingtooccupy

thelowandmediumvalueaddedpositionsintheworldeconomythatIreland

andothercountriesarevacating,theyarealsoaimingtodevelopmuchthe

samesortof highaddedvalueknowledgeeconomythatweare.(Halligan, 2009)

Inthiscontext,Halliganmakesthepointthatinnovationiscritically

importantinsuchacompetitiveworldandthatIrelandcanderiveunique

advantagefrom:competingonourdifferences,whethertheyarecultural,

orresultfromsuperiorinsightintoparticularmarkets,orfromparticular

expertise in applying technologies, or from specialist scientic, technological

orbusinessexpertise.(Halligan, 2009)

Theclearimplicationof theseobservationsisthatwemustdevelopand

deliverarealbasisofcompetitiveadvantageforIreland,whichisnot

easilycopiedbycompetitorcountries.Thecurrentproposition,suchasan

increasinglyaverageeducationsystem,speakingEnglish(whichcontinues

tohighlighttherelativelypoorlanguageskillsof Irishgraduates),andan

attractivetaxregime(whichiseasyforcompetitorcountriestocopy),isno

longer t for purpose, in an intensely competitive global market.

4.TheStrategicRoleofMarketing:24


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Broadband:

InJanuary2010,ForfspublishedastudybenchmarkingIrelandslatest

broadbandperformance.

It has suggested that Ireland has made signicant progress over the last

twoyearsinimprovinglevelsof broadbandcoverageandtake-up(with

broadbandconnectionsupfrom58%to90%,representingabigtransition

awayfromdial-up).Howeveritgoesontodescribeourkeyweakness

as follows: Irelands key weakness is the lack of deployment of breinfrastructureclosertotheconsumerforbothwiredandwirelessnetworks.

(Forfs, Broadband 2010)

For example in Ireland only 0.6 % of total broadband connections are bre

comparedwithanOECD28countryaverageof 11.3%.Thiscompareswith

bre broadband connection rates in other countries of: 51% in Japan; 46%

in South Korea and 21% in Sweden. From a European perspective, bre

connectionsarealsorapidlygrowinginothercountriessuchasDenmark,

Norway,HungaryandtheSlovakRepublic.

ItisamatterofconcernthattheInnovationTaskforceisrecommendingthat

seriousactiononbroadbandshouldbealongtermobjective,asopposedtoa

shortormediumtermobjective.

Giventhecriticalneedforadvancedbroadbandservicesinbuildinga

highlyinnovativeenterprisesector,thenationalroll-outofNextGeneration

Network(NGN)services,forbandwidthuptoandsurpassing1Gbps,

shouldbeprioritized.(Innovation Taskforce 2010)

InFebruary2010,CraigBarrettinhisRIApresentationonIrelands

competitivenesshitoutatIrelandscurrentbroadbandstrategy;TheFinns

haveenshrinedbroadbandasacitizensright.TheFinnsareserious,theIrish

needtobeserious.(Barrett, 2010)

AccordingtoForfs,Irelandiscurrentlynotwellplacedtotakeadvantage

of futuretrendsinbroadband....Irelandsrelativepositionhasnotimproved

asothercountriesaremovingaheadatanevenfasterrate(Forfs, 2025, 2009).

Thisraisesthekeyquestionastowhatsortof smarteconomycan

Irelandhaveintheshorttomediumtermwithoutacompetitivebroadband

infrastructure?

25

Obstacles toSTI Success in

Ireland:5.


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Competitiveness

There are signicant underlying issues with Irelands level of competitiveness.

AccordingtotheEuropeanGrowthandJobsMonitor2009(Lisbon,2009)

whencomparedagainsttheLisbonAgenda(R&D)criteria,Irelandhas

droppednineplacesfrom4thin2008to13thoutof 14countriesin2009.

Lisbon(2009)describesIrelandsperformanceasfollows;Bycontrast,

Ireland fell the farthest - and the hardest, to No. 13, just ahead of Italy, the

perenniallaggard.Irelandsrelianceonexternaltradeandtheimportanceofits nancial services sector in national output made it particularly susceptible

to the global economic downswing while the ongoing correction in

constructiononlymademattersworse.GDPgrowth,productivityandpublic

nances all deteriorated precipitously in Ireland. (Lisbon, 2009)

Intermsof worldcompetitiveness,IMD(2009)showsthatbetween2008and

2009Irelandhasdroppedfrom12thpositionto19thintheworldrankings

of theIMDWorldCompetitivenessYearbook.Inacomparisonof Irelands

performancewiththeotherEU15countriesplusNorway(someof our

biggestFDIcompetitorsandtradingpartners),placedIreland9thoutof the

16countries.

Inaddition,IMDalsocarriedoutastresstestonparticipatingcountries

basedonits2009resultsandrankings(IMD,StressTest,2009).Thepurpose

of thisanalysiswastodeterminewhichcountriesarebetterequippedto

farethroughthecrisisandimprovetheircompetitivenessinthenearfuture.

Irelandsperformancewasbenchmarkedagainsttheother16Countriesthat

makeupEU15plusNorway.ItcanbeseenfromthatanalysisthatIreland

(whichranks25thinWorldrankingontheStressTest)ranks9thoutof the

16othercountriespreviouslydescribed.

InrecentweekstheIMDWorldCompetitivenessrankingshavebeenreleased

for2010andthishasseenIrelandsoverallcompetitivenessrankingdropfrom19thin2009to21stin2010.(IMD, 2010)

26 5.ObstaclestoSTISuccessinIreland:


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FDI: - No longer a signicant source of net new jobs for Ireland

IncreasinglyitappearsthatForeignDirectInvestment(FDI)willnolonger

be a signicant source of net new jobs for Ireland. According to Craig

Barrett,theFDIeraisoverforIreland,therealeconomicinvestmentwill

beindigenous,andgrowthwillcomefromthatinvestment.TheInternational

Monetary Fund, in its 2009 review, identied that not only had Irelands share

of international exports fallen sharply, but also Ireland has had a signicant

lossof eurozoneFDI.

Irelandssharehaddeclinedfrom13%in2001to6%in2007.Themarket

leader,theNetherlands,alsofollowedthistrenddroppingfrom27%to23%

between2001and2007.Atthesametimeanumberof otherbenchmark

countriesgrewtheirsharefrom2001to2007;Belgium(from20%to24%),

Finland(from3%to3.5%),Italy(from11%to12%)andSpain(from17%to

18%).

275.ObstaclestoSTISuccessinIreland:

0%

5%

15%

25%

10%

20%

30%

Table 2: - Foreign Direct Investment

(% Share of Eurozone FDI) Ireland: 2001 - 2007:

Source: IMF (2009) Adapted from Fig. 3, P.11. IMF 2009, Based on IMF

World Economic Outlook and IMF Staff Estimates:

Austria Greece Belgium Finland Italy Spain Portugal Netherlands Ireland

2001 Share 2007


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An analysis of IDA Irelands Annual Reports from 1998 to 2009shows that:

The number of net new jobs created has reduced signicantly from an

averageannualincrease(between1998and2000)of9%toan averageannualdecrease,between2007and2009,of -3.2%.The

totalnumberof companiessupportedbytheIDA,reachedahighof

1,262companiesin1999,reducingto987companiesby2009(afallof

22%).

Thelevelof directfull-timeemploymentcreatedbythesecompanies

peakedat142,302in2000,droppingto124,759by2009,(adecrease

of 12%).Alsoitisestimatedthatanadditional100,000(IDA,2010)

areindirectlycreated,asaresultof thepresenceof FDIcompaniesin

Ireland.

Between2006and2009theproportionofIDAsupportedcompanieswitha

signicant R&D mandate is relatively slow moving, increasing from 16.5% in

2006to20%in2009.Forfs2025(2009)reportedthatin2008greaterthan

40%of FDIprojectswonbytheIDAwereinResearchandDevelopment

initiatives.

-4%

0%

4%

8%

-2%

2%

-10%

-6%

-8%

6%

12%

10%

Table 3 : - % Of Net New Jobs Created (1998 - 2009)

IDA Supported Companies:

2000 2001 2002 2003 2004 2005 2006 2007 2008 20091998 1999

Source: Various IDA annual reports 2000 - 2009 (IDA 2000 - 2010)

28 5.ObstaclestoSTISuccessinIreland:


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Education Attainment and Spending:

TheCSO(2009)statesthatintheperiodfrom2000to2008,thetotal

percentageofthepopulationagedbetween25and34withathirdlevel

educationincreasedfrom29%(in2000)to42.3%in2008.Evenmore

signicantly during this timeframe the number of females with third level

education rose signicantly from 30.5% (2000) to 49.9% in 2008. In contrast

theincreaseamongstmales,from29.0%(2000)to42.3%in2008,wasless

pronounced. This widening gap reects the increasing tendency for females

toremainineducationforlongerthanmales.ComparingIrelandwiththeEU15plusNorwaycohort,Irelandisjointthird,withBelgium,behindCyprus

(47.5%)andNorway(43.6%).Thebottomthreeperformingcountrieswithin

thisgrouparePortugal(23.2%),Italy(19.8%)andAustria(19.2%).

WhileIrelandsperformancewithregardtoeducationattainment(thirdlevel

educationdescribedabove)isstrong,ourspendasapercentageofGDPis

lowincomparison.WhenIrelandsspendineducationfor2006(4.9%)is

comparedtotheEU15plusNorwaygroup,Irelandranks11thoutof these

16countries.ThetopthreecountriesbeingDenmark(8.0%);Sweden(6.9%);

andNorway(6.6%).

Fromareviewof Irelandsperformance(OECD/PISA,2009)inScience,

ReadingandMathematicswithregardtotheproportionof topperformers

basedon2006PISAscoresitcanbeseenthat:

IrelandisstrongestinReading(ranked6thofthetopperformers),and

signicantly above the OECD average (ranked 18th);

Weareranked19thinScienceof topperformersslightlyabovethe

OECDaverage(ranked21st);

WithregardtoIrelandsperformanceinMathematics,weareranked

30thinTopPerformers)comparedwithanOECDaverageof19th.

Ireland performance in Reading, Mathematics and Science in compared with other key STI

competitor countries, such as Denmark, Finland, Norway, Sweden and United Kingdom

- See Appendix 12, Page 55.

Inaddition,TheExpertGrouponFutureSkillsNeeds(Halligan,2009)

makesanumberof keypointswithregardtoinnovationandtheIrishsecond

leveleducationsystem:

295.ObstaclestoSTISuccessinIreland:


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Thereareseriousproblemswiththewayinwhichsecondleveleducation

impactsonthecreativityandinnovationcapabilityof Irishstudents.These

problems have a history of being quite intractable because of the inuence

of public examinations. The National Council for Curriculum and

Assessment(NCCA)appearstohavegraspedtheextentof thechallengethat

thisposes,andismovingforwardwithwhatappearstobeacoherentstrategy

to tackle it. The NCCA deserves support in this, and it is important that

theprocessshouldnotbeallowedtobeslowedbydefenceof thestatusquo,

byexcessivelytightapproachtofundingorinitiativesorbyover-reactionto

anystumblesthataremostlikelyinevitableinambitioustransformationalinitiativessuchasthosethatarenowunderway.(Halligan, 2009)

5.ObstaclestoSTISuccessinIreland:30


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11 Key Forces of Change Impacting Ireland to 2025:

ForfsinitsstrategySharing our Future; Ireland 2025, Strategic Policy Requirements

for Economic Development identies 11 Key Forces of Change Impacting Ireland

to2025.These 11 Key Forces of Change are briey described in Appendix 13, Page 56.

Of these11Forcesof Change,5haveparticularrelevancetoSTIpolicy

developmentandimplementation.TheseareTechnology,Innovationand

Entrepreneurship,Education/Skills,Infrastructure,EnergySupply/Security

andClimateChange.The strategic policy requirements for these forces of change aredescribed in Appendix 14, Page 57.

The Irish Economy and International Trends:

In2004,TheEnterpriseStrategyGroup,inAhead of the Curve (2004)

attributedIrelandseconomicprogressinthepreviousdecadeasbeinga

result of both good planning and of providence. It identied a number

of factorsthatfacilitatedtheswiftpaceof economicgrowthincluding:

membership of the European Union and signicant regional aid, long-

term social partnership, a well-qualied workforce, Irelands favourable

demographic prole and the unprecedented growth of global trade.

Inthesecondhalf of 2007,thepaceof Irelandseconomicdevelopment

reduced,followingacontractioninthehousingsector.Intheprevious

decade,housepricesinIrelandhadrisensubstantiallyandinvestmentin

housingincreasedfrom6%of GDP(in1996)toalmost15%in2006.

31

6.Growth inIreland to 2020and Beyond:


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Productivity:

Irelandsaverageproductivitygrowthrateinthethreeyearsfrom1998to

2000averagedjustunder5%perannum.Incontrastouraveragerateforthe

threeyearsfrom2005to2007wasjust2.5%.

AccordingtoBradleyandKennelly(2008),thiscanbeexplainedasfollows:

unlike the boom years where jobs growth was often in high-productivity

modernmanufacturing,high-technologyorexportservicesrunby

multinationalcompanies,muchoftherecentjobsgrowthhasbeeninlocally

tradedservicesandconstructionwheretherateof productivityismuch

lower.(Bradley and Kennelly, 2008)

TheNationalCompetitivenessCouncil(NCC,2010)initsmostrecentanalysis

statesthatbasedontheGNPperhourmeasure,IrelandsproductivitylevelsremainbelowtheOECDaverage,withIrelandranked24thintheOECD

between2008and2009.

Export Performance:

TheNationalCompetitivenessCouncil(NCC,2009)statesthatIrelands

growthinexportsduring2000-2003waswellabovetheOECDaverage,but

ourrelativepositionworsenedin2003-2006.Irelandsshareof globaltrade

was1.2%in2006,downfrom1.4%in2002,withtheshareof goodstraded

droppingfrom1.3%to0.8%.Irelandsshareof servicestrade,asmallerbut

growingcomponentof overalltrade,increasedfrom1.9%to2.5%overthe

1

2

3

4

5

6

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

4.3%

5.7%

4.6%

3.2%

5.3%

3.9%

1.7%

2.4%2.2%

2.8%

Table 4: - Labour Productivity Growth (GDP Per Hour

Worked) Ireland - 1998 to 2007:

Source: OECD Factbook 2009; (Page 57) Economic, Environmental

and Social Statistics ISBN 978-92-64-05604-6 OECD 2009:

32 6.GrowthinIrelandto2020andBeyond:


42/68

same period. In 2007, Irish exports were worth over 154Bn.

In2009,accordingtoNCC(2010),whileIrelandstotalexportsfellby1.8%

,thisdeclinewasmodestcomparedwiththesharpdeclinesexperiencedin

othercountries(forexampleanaverageof14.1%intheEurozoneand13.6%

withintheOECD).

Aheadof theCur ve(2004)highlightedthefactthatoverallindigenous

exports had not grown signicantly in real terms in the previous decade;

Untilnow,Irelandsprincipalenterprisestrengthshavebeeninthe

operationalaspectsof manufacturingandservices,ratherthaninmarkets

andproductdevelopment.Thisisparticularlytrueof theforeign-owned

sector,whichaccountsformostof ourexportsandwhich,forthemostpart,

producesgoodsthatweredesignedelsewhere,tosatisfymarketrequirements

that were specied elsewhere, and sold by other people to customers with

whomtheIrishoperationhaslittlecontactandoverwhomithaslittle

inuence. It is also substantially the case in the indigenous sector. Food,

whichaccountsforover55%of indigenousexports,hasbeenprimarily

productionratherthanmarketled.(Ahead of the Curve, 2004)

Inexcessof 70%of IrishexportscontinuetoderivefromIDAsupported

rms operating in Ireland (IDA, July 2010). The OECD (2010) states that

336.GrowthinIrelandto2020andBeyond:

-6

-5

-4

-3

-2

-1

0

1

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

+0.8%

+0.2%

-0.4%-0.7%

-0.9%

0.0%

-0.6%

-3.5% -3.5%

-5.3% -5.3%

Table 5 - Current Account Balance of Payments (As % GDP):

Ireland - 1998 to 2008:

Balanceas%G

DP

Source: OECD Factbook 2010; (Page 77) Globalisation and Trade

ISBN 978-92-64-08405-6 OECD 2010.


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Irelands current account decit (in balance of international payments) rose

from-0.6%of GDPin2004,to-5.3%in2008.

TheNationalCompetitivenessCouncil(NCC,2010)suggeststhatwhile

foreignownedcompaniesaccountedforalmost90%of totalIrishexports

in2008,thisoverstatestheireconomicimpactandsuggeststhatthe

contributionof indigenousandforeignownedtradingsectorstoemployment

anddirectspendingissimilar.

Our Vision for Ireland to 2020 and Five Key Growth Drivers:

Over the next few years, Ireland faces a number of very signicant challenges

inreturningourcountrytoeconomicprosperity.Inseekingtoensurethatthe

marketingprofessionisproperlyguidedtoplayitsfullroleinthistask,the

MarketingInstituteof Irelandearlierthisyearcarriedoutareviewofcurrent

Irishandinternationalbusiness,economicandsocialdata,andsoughtoutthe

viewsof keyIrishopinionleadersintheareasof business,entrepreneurship,

marketing,theeconomy,socialenterpriseandacademia.Oneof the

outcomesof thisexercisehasbeenthedevelopmentof avisionforIreland

to 2020, which we have dened as follows:

Ireland has developed a strong international reputation for creativity

and innovation and is recognised as a great place to grow sustainable

businesses, with a thriving enterprise culture. Irish people now feel

more independent and self-sufcient and we see ourselves as being

clearly rooted and condent in the local, with a superb capacity to

reach out globally. Our national policy and its implementation reect

the critical need to be long-term, truly strategic, national and all-

island. These strengths, along with our unique culture, our capacity to

build rapport with people and to understand them and our reformed

and now world-class education system has created a basis for unique

competitive advantage.

In addition, the Institute has identied ve growth drivers which we believe

willcontributestronglytotheeconomicandsocialdevelopmentof Ireland

overthenext10yearsto2020.

1. UniqueCompetitiveAdvantage:

AclearvisionforIreland,andasubstantivebasisof competitive

advantage that denes what we can offer the world; an Ireland which

is strong and condent in the local but connected globally, with a

stronginternationalreputationandacompellingbrand.



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2. StrongandDiverseAll-IslandEconomy:

Astrongandincreasinglydiverseeconomy,spanningthewholeisland,

withavibrantandcelebratedenterprisesectorcompetingtoworld

classstandardsinselectednichesinboththesmartandgreen

economy;whichhelpsussustainajustsociety;underpinnedby

effectiveregulationandgovernance.

3. World-ClassEducationSystem:

Arefor mededucationsystem,whichdrivescreativityandinnovation,

focusingonlearningratherthanteaching,anddeliveringkeyskillsin

languages,mathsandthesciences;fuellingouruniquecompetitive

advantage;withaneducationsystemthatcanbemarketedtoother

countries.

4. A Condent and Creative People:

A deeply-rooted condence in ourselves as Irish people, with a highly

creativeanduniquemindsetwhichsimultaneouslysetsusapartand

helpsusconnectwiththerestoftheworld;apeoplecomfortablewith

beingdifferent,andwithnoneedtoimitateotherlargercultures.

5. MarketingPositionedtoDriveSuccess:

Marketinghasthepotentialtoprovideuniqueinsightsintoour

challenges,informthevision,identifythebasisforcompetitive

advantage,pinpointthemarketnichesandopportunitiesforthe smartandgreeneconomyagenda,contributetoeducationalreform,

promoteavibrantenterpriseculture,developandimplementastrong

BrandIreland.Todothiswemustensureappropriatelevelsof

marketingcapacityandcapability.

Inthecontextof thesegrowthdrivers,theMarketingInstituteof Ireland

believesthatIrelandsScience,TechnologyandInnovation(STI)strategyand

itseffectiveimplementationisakeyelementinensuringeconomicsuccess.



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Growth in Services Sector:

AccordingtotheOECD(2009),thegrowthintheservicessectorinIreland,

Iceland, Luxembourg and Turkey has been particularly signicant. In Ireland,

agriculturecontinuestofallandtheservicessectorhasgrownstronglyover

thelastdecade.Theservicessectorrepresentsapproximately67%oftotal

employment(2008)inIrelandcomparedto62%in1997.

Forfsstatesthattheservicessectorsareexpectedtoprovidethemajority

of new jobs in the Irish economy over the next decade, with nance and

businessservicesgrowingbyalmost200,000employees,togetherwithan

increaseofover100,000inpublicadministration,healthandeducation.It

alsosuggeststhatservicesexportsarebeingdrivenbyboththeincreasing

servicisationof manufacturing,theincreasingelectronicdeliveryofgoods

andservices,suchassoftwareanddigitalmedia.(Forfs 2025, 2009)

-15%

-5%

5%

15%

-10%

0%

10%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: OECD Factbook 2009; (Page 64, 67) Economic, Environmental

and Social Statistics - ISBN 978-92-64-05604-6 OECD 2009;

Table 6: - Evolution of Value Added By Activity

(Annual Growth %): Ireland 1998 - 2007

Agriculture, Forestry, Fishing Industry (incl. Construction Services



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STI Growth Sectors:

EnvironmentalGoodsandServices(EGS)orGreensectorworldwideworth

$800billionby2015:

TheSmartEconomy(2008)estimatesthatthevalueof theEnvironmental

GoodsandServices(EGS)orGreensectorwasinexcessof$600billion

worldwidein2005andislikelytoexceed$700billionby2010and$800

billionby2015.ThestrategysuggeststhatIrelandhasanopportunityto

play a leading role in developing a green economy and thereby beneting

fromtheassociatedjobandwealthcreationopportunities.ForfsdescribestheroleofInformationandCommunicationsTechnologiesasfundamental

enablersforthedevelopmentof theeconomyasawholeandstatesthatICTs

will be an essential underpinning infrastructure specically next generation

networksinfuturemarkets,services,skills,enterpriseandeconomic

development. (Forfs 2025, 2009)

KeyAdvantagesinFood&Drink;Healthcare;andLifeSciences:

Forfs has also identied a number of key advantages for Ireland, specifying

thefoodanddrinksectorasofferingfurtherpotentialtodevelophigher

value-addedproductsandrelatedservices,thehealthcareandlifesciences

sectorwithitsstrongexistingbase,andtheenergy,environmentalandclean

technology sector offering potentially signicant opportunities, given Irelands

resourcesandlocation.

ChinasEmergenceasaMajorEconomicPowerandR&DInvestor:

AccordingtoForfs2025,(2009),emergingeconomiesarethemaindrivers

of growth,withChinanowsecondonlytoGermanyastheworldslargest

exporter(andisexpectedtosurpassGermanyin2010).Chinaisalsointhe

topthreeintermsof R&Dinvestment.Chinesedomesticdemandin2008

was forecast for the rst time to become the main driver of world economic

growth,andisnowabiggercontributortoglobalgrowththanUSdomestic

demand.



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Future Trends in Enterprise Structure:

Forfs2025(2009)contendsthattheenterprisestructurewillcontinueto

evolveto2025,withamixof largeandsmallinnovation-intensivecompanies,

indigenousandmultinational.Leadingservicesenterpriseswilloperatefrom

Irelandandcontributeover80%of thecountrysforeignearnings.With

regardtoenterprisestructure,thefollowingtrendswillemerge:

SMEs and self-employment will ourish:

Small businesses and self-employment will ourish to take advantage oflocal opportunities. Signicant levels of entrepreneurship will have emerged

andspecialistskillsandresourceswillbeimportantinthedevelopmentof

enterprises.

Virtualcompaniesandgreaterentrepreneurship:

Virtual companies will ourish, enabling new alliances and more global

operations even from a small home market. Companies will be more exible,

abletoform,re-form,andcreateallianceswithgreaterease.Remotecross-

bordercollaboration,withinteams,acrosscompaniesandbetweencompanies

willbecommonplace.Failurewillberecognisedaspartof success,increasing

entrepreneurshiplevels.

New services and technologies will ourish:

New services sectors, in particular nance, information and professional

services will continue to ourish and developments in nanotechnology,

biotechnologyandICTwillunderpintheemergenceofsectorssuchashealth

andbio-informatics,high-techfunctionalfoodsandclothing.Climatechange

challengeswillprovideIrelandwithmanyopportunitiesintheenvironmental

goodsandservicessector.Therewillalsobeopportunitiesinhigh-tech

businessserviceareasmanagingcomplexsystemsandprovidingspecialist

supporttooverseasmultinationals.

ICTs create signicant business opportunities: ICTs will also create signicant business opportunities within the sector itself,

achievingveryhighlevelsof investmentandeffectiveutilisation.Widespread

installationof ICTs,ambientintelligence,location-basedservicesanda

convergenceof ICTswillproliferate,withadvancesinlifesciencesimpacting

healthmanagement,longevityandqualityof life.(Forfs 2025, 2009)

6.GrowthinIrelandto2020andBeyond:38


48/68

FollowingourreviewoftheInnovationTaskforceReport2010,andScience

TechnologyandInnovationStrategybetween2004and2010,theMarketing

InstituteofIrelandmakesthefollowingrecommendations:

Overall STI Policy and Implementation Recommendations:

WebelievethatthecurrentapproachtoSTIpolicymakingand

implementationinIrelandhasresultedinIrelandcontinuingtolagour

competitorsintermsof R&Dandinnovationperformance.

1. Install leadership and have a clear focus on implementation:

Bringtogetherasmallgroupof peoplewithatrackrecordofdelivery

andassignthemresponsibilitytoensureimplementationof Irelands

STIpolicyoverthenextthreeyears,atamuchfasterpace,subject

tovalueformoneystandards,andwithaprocessof international

review,evaluationandbenchmarking.

2. Implement a clear and consistent policy framework:

AdoptaclearandsimpleSTIpolicyframework,whereoverallSTI

strategyobjectivesareclearlyconnectedandreconciledtoactual

targetsof relevantenterprisesupportagencies.

CurrentlyoverallSTIpolicyobjectivesandtargetsdonot

appeartoreconcilewithactualtargetsthatindividualenterprise

supportagencieshavecommittedto.Forexample,thejobcreation

aspirationsoftheTaskforceReportversustheIDA2020Horizon

jobcreationobjectivesareinconsistent.Thegoaltoproduceincreasing

numbersof PhDsinSTI2006to2013andScienceFoundation

IrelandsownPhDobjectivesto2013donotreconcile(leavingaside

thechallengesof theMcCarthyReport).Weneedaclearandsimple

STIpolicyframework,whereoverallSTIstrategyobjectivesare

clearlyconnectedandreconciledtotheactualtargetsoftherelevant enterprisesupportagencies.Thereisalsoarequirementforfull

transparencyindeterminingwhystrategicSTIobjectivesarenot

achieved,wherethisoccurs.

7.Recommendationsto SupportDelivery ofIrelands STI

Agenda:

39


49/68

3. Set clear goals and ensure accountability:

Quicklyagreeandnaildownwhatisrequiredinthenextthreeyears

andhowmuchmoneyisavailable;setclearmilestonestobeachieved;

formallyreviewtheworkoftheimplementationgroupeverysix

months;ensurethatallstakeholderscommittotheprocessandare

held to account for delivering specic implementation objectives.

Inaddition,policymakersneedtoaddresstheMcCarthyReport

challengesofcurrentSTIpolicy(withregardtovalueformoney,

overalleconomicimpact,aswellasduplicationof effortamongst

theenterprisesupportagencies)oralternativelyaccepttheneedfor radicalchangetothecurrentapproach.

4. Ensure the strategy is implemented and benchmarked against

the best:

Wemustnowestablishaneffectivegovernanceframeworktoensure

implementationandalsorobustlybenchmarkIrelandsinnovation

systemagainstthebest,suchas,Finland,Israel,Norwayand

Sweden.Wemustdeliverinpracticeontherhetoricof wanting

tobethebest,bytakingrealactiontomakeithappen.Theuse

of aninternationalevaluationpanel,similartotheReviewof the

FinnishInnovationSystem,canhelpIrelandtobuildmomentum,and avoidthetrapsof complacencyandinertia.

5. Exploit the value of all-island positioning in enterprise policy

and business innovation:

TheIDAmediacampaignof 2009intheUStopromotethe

InnovationIslandinvolvedanall-Irelandpositioning,andthisistobe

welcomed.Thereisanopportunitynowfortheinnovationstrategyto

encompass the entire island of Ireland. Whilst the logic and benets of

suchanapproachareclearintermsof internationalmarketing,it

shouldnotstopthere.Themoresubstantialissueofintegrated

enterprisepolicyisonewhichpresentsarealopportunityforall

stakeholders.Adoptingacomprehensiveisland-wideapproachto

innovationinbusinesswouldleveragegreaterresourcesandengendera

senseof collaborationandinterdependenceamongstakeholders.

7.RecommendationstoSupportDeliveryof IrelandsSTIAgenda:40


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Marketing Specic Recommendations:

1. Create real competitive advantage based on difference - Irish

culture / a real capacity to innovate:

Wemustcreatearealanduniquebasisof competitiveadvantage

forIreland.Marketingcanmakeastrongcontributiontodeveloping

arealcompetitiveadvantagewhichisvaluedbypotentialcustomers,

andtocraftingrobustmarketpropositionsforIrelandinSTIniches

wherewecancompete.Asacountrywithaspirationsof beinga

leadingexporterthroughindigenouscompanies,withastrong reputationininnovation,Irelandneedstocomeupwithacredible

offering.

2. Exploit the potential of marketing to create real value added

innovation:

Thepurposeof realinnovationistocreatevaluewhichcanbe

tradedassalestocustomers.Thisrequiresasophisticateduseof

marketingthroughouttheinnovationprocesstoensurethatitismarket

andconsumerled.Sucharoleformarketinghasclearimplicationsfor

thefuturelevelsof marketingcapabilityinIreland.

3. Assess current marketing capability and identify future

marketing skills needs;

IndevelopingIrelandasahighlyinnovativeSTIeconomy,wemust

fullyunderstandthecurrentlevelof marketingcapabilitywehaveand

ourfuturemarketingskillsneeds.

Themarketingskil lsetsrequiredbyinnovativebusinessesinclude:

devisingbusinessstrategy,persuasivelycommunicatingbrandvalues

andpropositionstoconsumers,applyingtechnologiestonewand

existingmarkets,gainingmarketunderstandingandinsights,and

commercialisingproductsandservices.

Akeysuccessfactorinthedevelopmentof IrelandsSTIeconomywill

betoensurethatwegrowcurrentmarketingcapabilityandskillsets

basedonlikelyfutureneeds.

417.RecommendationstoSupportDeliveryof IrelandsSTIAgenda: 41


51/68

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IEI(2010);BasedonarecentarticlefromTheIsraelExportInstituteavailableontheirwebsitewww.Export.

Documents

MII Innovation Report