Miapetra Kumpula-Natri: What role for the public sector in the innovation policy of the future?

Text: Miapetra Kumpula-Natri, Member of European Parliament

It’s hard to imagine that the words ”public sector” could carry a more negative connotation than they do in today’s political narrative concerning innovations or disruptive innovations. Public sector or the state is considered to be bureaucratic, (too) big, slow, cumbersome and an overall hindrance to agile and free flowing innovation. Of course, any serious attempt in innovation, industry, science or economic policy-making has to look beyond such caricatures. The public sector is and has been a key instrument in developing and bringing about new technologies, new markets and new incentives for scholars, entrepreneurs and innovators.

This alternative look at the public sector’s role was perhaps best captured in Mariana Mazzucato’s 2013 book Entrepreneurial State. Mazzucato argues that it was in fact the state, which enabled such breakthroughs as Apple’s iPhone or Google’s search algorithms – by investing in obscure technologies out of the scope for private investors and by providing a backbone infrastructure for riskier product development.

Of course, this does not suggest that the state is always right. There are scores of examples where a deep-pocketed state has, by picking winners, poured taxpayer money to projects well beyond their expiration date. What we can learn from Mazzucato is that a good innovation policy does not try to distinguish between idealised versions of private and public sector, but rather see the two interlinked.

I would like to see innovations developed anywhere to help the globe and societies. So to put it simple: if sector is run by private businesses, how on earth can we solve challenges in that sector without taking the sector along for transition, to innovate. Just think about eg energy sector.

How could this discussion shape the way innovation policy is designed in Europe in the 2020s? I believe that there needs to be a stronger link between society’s needs and R&D output. This is needed for three reasons.

First of all the problems we are facing have gotten so big that we need all efforts to solve them. Combating the effects of climate change, completely changing our relationship to the planet’s natural resources and the way we our societies will continue to function in the post-industrial age – to name a few – are big challenges that will not be solved without a clear indication of the direction we want to go.

Second, the continued scrutiny by citizens to the use of any public funds demand that they are used properly. This is not usually questioned in the national level innovation policy, but especially the EU level needs to show that public money produces results. This is why there needs to be greater accountability of public R&D money.

This need has been already recognised to some extent. The European Union’s Horizon 2020 programme, already the largest public R&D programme in the world, has a one of its three core pillars seven societal challenges where funding is channelled. From health, demographic change and wellbeing to smart, green and integrated transport and protecting the freedom and security of Europe and its citizens, the societal challenges have been an attempt to steer innovation towards goals that matter to citizens.

The problem, however, is that with such a wide and varied approach, the challenges end up being a catch-all and in the worst case just another chapter of meaningless empty phrases on the top of a funding application. Societal goals and challenges can be hard to pin down and formulate properly. And it is hard to get right the ambitiousness of the stated goals and making sure there is still room for the actual innovations outside the box drawn by policymakers.

The EU is now preparing the next Framework Programme (FP9) for R&D and innovation. Funding might rise from the current EUR 80 billion to a whopping EUR 100 billion for the period 2020-2027 (yet at the moment Brexit and multiannual framework is not solved, so exact numbers are too early to say). It is time we get the link between policy objectives and funding inputs right. The time for discussion is now.

I believe this is something that the Naked Approach project can help us with. By stating a clear goal (a change from gadget­-centric to user centric world) and from sector specific programs to goal solutions and encouraging a wide range of partners to produce the concrete answers, the project can show us that such a vision-led approach to innovation policy could be a model to better bring in line policy needs and R&D.

Oh, and the third reason to have a stronger link between policy objectives and R&D? A new way of doing innovation policy might be what we need to really push technological and societal development to the next level. If we only rely on the short time horizon of venture capital or the next product cycle, we will never solve the big questions our society is facing.

Public sector’s role doesn’t stop in financing innovations nor setting criteria for funding. Education systems, industrial polices etc. while not to forget public services. Social innovations are needed as well – and we are in a hurry, as technology will change the role of work, taxation, social benefits.

The role of shaping future via innovations needs to be supported by coherent policies in law making. I would like to see every state aid decision to be reflected with a recent scientific results i.e. what is possible already. Why support small steps for better if revolutional solutions are already there in the labs?

If we stop treating public resources as a technology-neural, idea-neutral, non-committal platform and start using them as tools to change the world, we might just accomplish that – change the world.