eoincostello

My thoughts on a National Innovation System for Ireland’s Small and Micro Businesses that leverages our existing Institutes of Technology

In Innovation Ecosystem on January 3, 2013 at 9:30 am

For regular readers of my blog you will be aware of my thoughts on what an Irish National Innovation System might look like (and how it can leverage existing public investment in our national network of Institute of Technology incubation centres). I put my thoughts together in my recent submission to the public request by the Minister, please read my open letter below (all responses will be published on www.enterprise.gov.ie shortly)…..

Submission in respect of ‘Reforms of Supports for Micro-Enterprise’

Dear Sir/Madame,

Please find below a personal submission in response to the request by Minister Bruton and Minister Perry for submissions of opinions in respect of ‘Reforms of Supports for Micro-Enterprise’. In my submission I have highlighted in blue the relevant passages from the request for submissions published here: http://www.dceb.ie/News/Final-Reminder:–Reforms-of-Supports-for-Micro~Enterprise

In particular on Page 5 below I recommend the creation of a national “Next Level” Scaling Programme for Small & Micro Businesses. This programme would follow the successful model of the New Frontiers Entrepreneur Development Programme in terms of being delivered by the IoT network, having a common curriculum (such as preparing for exporting, Lean principles for SMEs, Finance etc) and, as a national programme, offering economies of scale, peer networking opportunities and a pipeline of high quality opportunities for Enterprise Ireland’s High Potential Start-up Unit.

The national objective of such a programme would be to create a continuous aligned pipeline of quality, innovative, sustainable businesses generating: growth in exports – increased employment – prosperity in Ireland.

My personal experience which is relevant to this request for submissions includes the following:

  • Member Enterprise Ireland Potential Exporters Panel – Current
  • Member Enterprise IrelandMentor Panel- Current
  • Member Enterprise Ireland Lean Consultant Panel- Current
  • SME Innovation Advocate, Info2Innovate National Programme 2011/2012
  • Former Director Dun Laoghaire Rathdown County Enterprise Board

 

Relevant extracts from request for submissions of opinions in respect of ‘Reforms of Supports for Micro-Enterprise’ and my responses

 “The key elements included in this planned reform programme are:”

“Create the best possible local environment for small business by combining enterprise support for business at local level with the business support service and expertise of Local Authorities”

1. The LEO One Stop Shop should focus expertise where it can have most impact. In speaking to contacts in the enterprise support sector the introduction of the “One Stop Shop” concept is generally welcomed and the associated “joined up” thinking on enterprise and innovation is also welcomed. However the “One Stop Shop” policy does have potential downsides, namely dilution of expertise and focus. While attending the annual conference of the Enterprise Europe Network in Poland last year, I attended a debate on whether the agency should move from its stated policy of being a “One Stop Shop” to specialisation in prioritised sectors and activities. Speakers felt that the “One Stop Shop” policy had stretched resources too thinly and prevented in depth specialisations developing within the agency. Partnering each Local Enterprise Office both with the new unit at EnterpriseIreland but also with relevant local Incubation Centres may help address this.

“Develop a strong network for entrepreneurship by working with local business and the wider community”

2. In December 2012 I met with Minister Bruton to present the findings of my Dissertation (available to view here http://www.eoincostello.ie/msc_ulster.html ). A key recommendation which would encourage the development of stronger networks was to introduce Mini Innovation Vouchers for Third Level Institutions. The objective is to increase the level of engagement between students, SMEs and academic staff in key engagement enablers such as course projects and assignments it is recommended that a system of “mini” innovation vouchers be established. To a maximum value of €500 students (supervised by academic staff) complete projects on behalf of SMEs with similar processes as exists in respect of Innovation Vouchers. Such an initiative has the potential to create symbiosis at the interface between the three and create a “tracer die” to measure the engagement objective mechanically. The low value of a voucher should not lead to complaints from providers in the private sector of displacement.

“Establish a network of Local Enterprise Offices in Local Authorities “

3. From my experience of mentoring start-ups perceptions are key, the perception of confidentiality, independence and impartiality is of the utmost importance. A key strength of the current County Enterprise Board (CEB) structure is autonomy, flexibility in response to local needs and the trusted advisory function of the board of directors (which gives the Boards the ability to tap into local knowledge and energies). These are core values that need to remain in place within the proposed Local Enterprise Office (LEO) structure.

Potential conflicts of interest: While completing my recent Dissertation (for my MSC Business Development & Innovation) I interviewed a number of local authorities. They referred to the fact that if those paying commercial rates see any support/preferment/promotion on the part of the County Council of individual SMEs (that have the potential to compete with them) there is a significant backlash. While CEBs currently observe the requirement to avoid displacement as much as possible it can be a fact of life in supporting the growth of innovative micro-enterprises.

4. Proposal: When established in 1993 the CEBs involved two significant innovations, the formalisation of supports to micro-enterprise and a concomitant relaxation of the previous mainstream industrial policy emphasis on manufacturing and internationally-traded services in respect of these micro-enterprises. In my opinion the introduction of LEOs must involve a similar commitment to innovation in provision. This can be achieved through the introduction of an independent early stage concept enablement/screening service in each LEO. The service will provide Irish potential entrepreneurs services (such as early stage conceptualisation, networking and advice on progressing to the next stage) based on the internationally successful Hub model (please see http://amsterdam.the-hub.net/ as an example of this). Each Hub would also advice on Innovation advice services for those small and micro businesses seeking to scale.

A unit of “The Hub” could be located in each County Council in conjunction with the LEO and under the management of the local IoT Incubation Centre.  It would provide a pipeline of concepts and entrepreneurs for the New Frontiers programme.

“Specific targets will be set for the new structures to deliver, including on:”

“• Increasing the number of and 5-year survival of new start-ups”

5. In the recent past policy has been focused on coordinated, national actions at facilitating the startup phase (such as the County Enterprise Board programmes and the New Frontiers programme). These programmes have been very successful as evidenced by the figures contained in the regular Global Entrepreneur Monitor reports. However in respect of scaling the development of micro businesses, actions are currently more piecemeal and uncoordinated on a national basis. This is an opportunity missed as good companies that do not fit Enterprise Ireland’s High Potential Start-up Unit or Enterprise Board criteria struggle to get adequate support to scale their activities.

The “Action Plan for Jobs” 2012 identifies “Better support for indigenous companies to improve their performance” as a priority it cites the Enterprise Ireland Lean programme as catering for this priority. However, while this is an excellent programme, the ability to benefit from it is limited to current EnterpriseIreland clients and quite specific in its application.

 “Big gap/jump from CEB to EI and nothing in between.Quote from SME Owner Manager to me

Due to the focus of many CEBs resources on startups they often don’t have sufficient time or resources to focus on the business development aspect of their mandate. Arguably more “winners” in terms of employment will emerge from the support of sustainable early phase businesses in addition to startups.

“• Increasing job-creation and innovation in the sector”

6. Any new services facilitated by the LEOs needs to be about sustainable job creation without excessive focus on whether they are in prioritised sectors or not. In speaking to one SME travel operator recently (employing 10 staff) she felt that current policy of “If you are not in certain sectors or exporting we are not interested in you” is a big challenge for the growth of her business and staff numbers. SMEs want practical solutions that will contribute immediately. Many SMEs are constantly told “In business you need to keep re-inventing yourself” however national, integrated and coordinated support/programmes that  approaching this challenge in a structured way for all small and micro businesses are currently lacking. Our big successes of tomorrow may come from this underserved sector.

The link between expert interventions in the area of small business development and innovation and sustainable growth is widely documented. When I was working on a national project with the Enterprise Europe Network last year for DG Enterprise our goal was to identify the obstacles that prevent Irish SMEs from engaging in innovation. Of the 33 individual recommendations that arose from the focus groups a large number concerned the need for increased support in the area of education and facilitation to SMEs in the development of their businesses and innovation. Commercial business development & innovation consultants are too expensive for the majority of small businesses therefore there is a market failure in this space which the proposal below of a “Next Level” national scaling programme (described below) could productively address in the national interest.

“• Increasing exports from microbusiness and small business”

7. This could be addressed by the establishment of a national Next Level scaling programme to be delivered by the New Frontiers providers.

 PROPOSAL

A potential strategy for a National Innovation System that leverages the existing Incubation Centre Infrastructure in Ireland

As a result of my role of SME Innovation Advocate to the national Info2Innovate programme I had a number of opportunities to explain the potential of a national scaling programme to Minister Perry (the guest speaker at a number of the seminars I spoke at). I also outlined this proposal at an initial concept level to the new head of the Micro and Small Business unit at the Action Plan for Jobs event at Clontarf Castle on April 16th.

In contrast to when the CEBs came into existence, Ireland now has an infrastructure of approximately 22 Incubation Centres located in strategic locations around Ireland (the majority of which are publicly owned, funded and located within host Institutes of Technology (IoTs) at strategic geographical locations around the country). They currently provide considerable specialisation and expertise in terms of start up support.

One could argue that specialisation should take place where the start up support mandate of Incubation Centres is broadened to the role of identifying sustainable, high growth potential startups from the early concept stage in conjunction with the LEOs.

How this National Innovation System for Micro & Small Business could work

Entrepreneurship and Innovation are intertwined activities and as such as capable of being served by a single function within the National Innovation System – the network that would best facilitate this function I suggest is the existing national network of IoT Incubation Centres. The progression of opportunities through the process (both in terms of start-ups and scaling) may work as follows:

Stage 1 – Early Stage Conceptualisation / Identification of Scaling & Innovation Needs

This would be done by a partnership of the IoT Incubation Centres and the LEOs via independent Hubs being located in each LEO (outlined in detail in point 4 above). This would enable the IoT Incubation Centres to leverage each Hub to provide an integrated pipeline of businesses needing both startup and capacity building/development thereby providing Ireland with a cohort of growth businesses capable of creating sustainable jobs.

Stage 2 – New Frontiers Entrepreneur Development Programme

This existing, successful national programme would recruit some of its pipeline from the above Hubs with the advantage that the Programme Managers are getting very early visibility of the opportunity.

Stage 3 – “Next Level” Scaling Programme for Small & Micro Businesses

From my research to date I believe that the specific programme that could best aid the state in its goal of  “increasing the… 5-year survival of new start-ups” would be the creation of a national “Next Level” Scaling Programme for Small & Micro Businesses. This programme would follow a similar model to that of the New Frontiers in terms of being delivered by the IoT network, having a common curriculum (such as preparing for exporting, Lean principles for SMEs, Finance etc). 

 Eligibility for participation on the Next Level Programme: The programme would be available across the spectrum from post Incubation Centre start ups to non EI companies up to 50 staff. The key criteria being that they are sustainable rather than the sector they occupy. The key goal of participating in the programme is the objective of engaging in exports, innovation and growth in a sustainable, measurable way.

image national innovation system for Ireland

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: