Smart specialisation

October 2015

Map with flag pinChristopher Middup MBCS, an associate academic at the University of Derby (UDOL), and Alexander Borg, a consultant at the Malta Information Technology Agency (MITA), discuss the state of smart specialisation in the United Kingdom.

Smart specialisation is a new strategic approach to regional policy that has been adopted by the European Commission (EC) as part of a wider initiative to ensure that European Union states collectively achieve ‘smart, sustainable and inclusive growth’ by 2020 (European Union, 2013).

At first glance, the term may suggest that the goal of the approach is to achieve very narrow specialised regional focus, but this is not the case. Specialisation is the starting point - so there must already be some core shared knowledge and skill in a region to exploit. From that, the ‘smart’ development is further diversification around that core of specialism (McCann and Ortega-Argilés, 2013).

In order to achieve this, the EC has produced a framework for its member states and their regions to develop research and innovation strategies for smart specialisation (RIS3). The framework consists of six practical steps (European Commission, 2013):

  1. analysing the innovation potential;
  2. setting out the RIS3 process and governance;
  3. developing a shared vision;
  4. identifying the priorities;
  5. defining an action plan with a coherent policy mix; monitoring and evaluating.

Although the six steps together are well supported by the EC (through an ad hoc RIS3 support platform based in Seville (Spain), with processes, documentation and answers to FAQs), perhaps steps 1 and 3 are the key drivers that will determine if a region can and will achieve smart specialisation.

Step 1 requires a regional champion, with belief in the potential for regional development that yields widespread benefit and feeds into step 3, where a breadth of local contacts sufficient to develop critical mass and direction is important.

Relevance to ICT

In view of the role of ICT as a driver of economic growth, innovation and productivity contributing on average five per cent to GDP across the EU, the regulation laying down the framework requires that RIS3 strategies must, at a minimum, include a specific chapter addressing digital growth for the prioritisation of ICT investment.

Indeed, in most circumstances ICT is either directly the product or service type that is a shared specialism or it is a key enabling function in technological leadership, research and general innovation initiatives (Foray et al, 2012).

Regionalism in the United Kingdom

During the last few years, there has been renewed interest in regionalism in the UK. There has been a steady devolution of legislative and administrative powers, particularly to Scotland and Wales, but also now extending to regions within England.

Prior to the Scottish Referendum, extensive regionalism in England was seen as unlikely (Pearce and Ayres, 2012), but the debates over Scotland appeared to also reenergise regionalism in England - to the point that Manchester will soon be one of the first UK cities outside of London to have an elected mayor, with some associated devolved powers.

Such developments are shaped by politics, and with a General Election due by May 2015, future extensions of this are far from certain. However, considering this apolitically, there does appear to be a groundswell of energy for more focus on local economies and how to develop them individually.

Underpinning smart specialisation is the drive for social innovation (Foray et al, 2012), where new interactions between different capacities, competences and pools of knowledge develop to meet specific local challenges.

There is little detail as yet of what ‘good’ social innovation may be to support smart specialisation, or whether such cooperative groups, when identified, can be either scaled up or replicated. However, if such systems can be identified and nurtured locally, they can be the underpinning framework for matching regional identity with technological specialisms.

The UK does have a history of using European Regional Development Fund (ERDF) financing to make regionalism work. In the West Midlands, for example, the Accelerate programme, which ran from 2002 to 2008, aimed at a shift away from traditional automotive supplies by developing innovative new products and services, with a goal of improving regional job retention (Ortega-Argilés, 2012).

Although preceding the concept of smart specialisation, the project embraced many of its principles: it connected industry and universities for focussed research; it consolidated local supply chains to add value; it involved many local SMEs. Additionally, it showed that a long-term commitment to regional development can yield strong results.

Entrepreneurs and the small organisation

Smart specialisation is a regulated and funded initiative that allows an entrepreneur or small, agile organisation to fully exploit the principle of co-opetition (where cooperation and competition can simultaneously be applied and exploited).

  • Cooperation. Smart specialisation is founded on the principle of cooperation. It requires self-organising groups to establish a shared specialism where, combined, they provide depth and quality for a particular product or service type. The idea is that the specialism should become synonymous with the region in question, so by reputation people know where to go for that product or service.
  • Competition. Within that, smart specialisation still leaves space for competition. In the same way that there is Champagne and then there are famous-named providers of champagne, the opportunity for the individual to still compete for reputation and market share exists. Sitting within a collective that draws the right attention, entrepreneurial activity to further specialise should provide both a focus and an opportunity for surer routes to markets, especially vertical or niche markets.

Specialism and mass customisation

In a world that is rapidly evolving towards universal digitisation characterised by growing market demands for mass customisation and consumer empowerment (Bosch, 2009), disruptive digital technologies such as mobile apps, big data, cloud, social media and the internet of things have a crucial role to play both as a specialism in themselves, and as powerful enablers of particular regional specialisms.

The latter could be anything from the automotive industry to oil and gas, or financial services to ambient assistive living. For some specialisms, regional hotspots will immediately spring to mind, such as the West Midlands/Birmingham for automotive, or Leeds for financial services.

In either scenario, to achieve the desired level of mass customisation, often requiring skills in developing things such as service mash-ups, self-configuring devices and predictive analytics, more targeted investments in education, research and innovation will need to be committed. Smart specialisation is a framework that could help support the synergies between entrepreneurial discovery, R&I and regional specialism.

References
 

Image: iStock/475917063

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