Assessing Innovation Capabilities for Urban Services: Understanding how Cities in Developing Countries Learn to Innovate

Jose A. Puppim de OliveiraUnited Nations University (UNU-IAS)

Tokyo, Japan

co-author: Paulo N. Figueiredo, FGV/EBAPE, Brazil

SIRC 2015 – Social Innovation Research ConferenceShanghai, 21-22 May 2015

The UNU

2

UNU-CRIS [regional integration] UNU-EHS [environment & human security] UNU-FLORES [material fluxes & resources]UNU-IAS [sustainability studies]

UNU-IIAOC [alliance of civilizations]UNU-IIGH [global health] UNU-IIST [software technology] UNU-INRA [Africa's natural resources]

UNU-INWEH [water, environment, health] UNU-MERIT [society, economy, innovation] UNU-WIDER [development economics]

http://www.unescap.org/publications/transformation-for-sdg

Urban Co-benefits and Development

AGGREGATED CO-BENEFITS

Economic benefits

Energy security benefits

Health and Safety

LEP reduction benefits

GHG reduction benefits

Co-benefits (climate policy+env policy)

Development (short term +long term)

Understanding Urban Co-Benefits in Practice

• Combine the sectoral approach with thematic interdisciplinary institutional analyses using a case-study based methodology to identify where, how and why policies related to co-benefits have succeeded in order to develop evaluation tools to analyze and measure effectiveness of co-benefits.

HOW CO-BENEFITS HAPPEN HOW TO MAKE THEM HAPPEN

Evaluation

Why?

Individual Research Cases• Shenyang, China (Energy-Tiexi District)• Shanghai, China (Energy-Baoshan District)• Shanghai, China (Building)• Kawasaki, Japan (Energy/industry)• Delhi, India (Transportation-Metro.)• Surat, India (Waste)• BRT Jogjakarta, Indonesia (Transportation)• CBSWM Jogjakarta (Waste)• Rio de Janeiro, Brazil (Transportation, vehicles)

(Existing) Technological Opportunities

q

Solutions to local socio-environmental problems Solutions to global

environmental problems

Co-benefit opportunity (technical feasibility)

Technological Development (more R&D, supply-side)

q

Co-benefit opportunity (technical feasibility)

Solutions to local socio-environmental problems

Solutions to global environmental problems

Limits

q

qEconomic/political/social viability

Co-benefit opportunity(feasible)

Solutions to local socio-environmental problems Solutions to global

environmental problems

Innovation and diffusion (Institutional Development?)

q

q

Economic/political/social viability

Co-benefit opportunity(feasible, promoted by public policies, market driven etc)

Solutions to local socio-environmental problems

Solutions to global environmental problems

OpportunitiesGreen

MarketsMarket Description Potential Multiple Wins

Inclusive, resilient green infrastructure

Roughly $6 trillion (about 10% of global GDP) is spent every year on infrastructure, which shapes future resource use patterns for decades ). Infrastructure investment could reach$ 10 trillion by 2015.

Sound infrastructure can promote job creation, efficient use of resources and increase resilience to climate change.

Clean energy The global energy bill for oil, electricity and natural gas amounts to about $5 trillion per year. Investment in clean energy amounted to $230 billion in 2011 and could reach $500 billion by 2020 .

1.3 billion people worldwide lack modern energy access, while 2.7 billion do not have clean and safe cooking facilities. Clean energy could: improve energy security; reduce energy bills; reduce local air pollution and associated health costs; provide affordable energy access for the poor; generate local employment and economic development; de-carbonize energy systems and reduce global climate change risks.

Waste management

An estimated 11.2 billion tonnes of solid wastes are collected worldwide each year, and decay of the organic portion is contributing to about 5% of global greenhouse gas emissions. The global waste market, from collection to recycling, is conservatively estimated at $410 billion per year.

Sustainable waste management and sustainable materials management could: reduce local and global health hazards; increase energy and resource efficiency; generate local employment; and reduce global climate change risks.

Green commodities

Agricultural commodities account for 10% of developing countries’ GDP. Food production will need to double by 2050. The present market for biodiversity-friendly commodities (e.g., certified coffee) is estimated at $60 billion/year and could exceed $200 billion/year by 2020.

Agricultural commodity production expansion is the largest driver of deforestation, with an estimated annual loss of 13 million hectares of forest cover Benefits generated by green commodities include: reduced natural habitat conversion to farmland; increased biodiversity within agricultural landscapes; enhanced access to markets and income for poor farmers; greater resilience to climate change and increased food security; and reduced net greenhouse gas emissions by commodity supply chains.

Tourism The tourism industry represents about 5% of global GDP ($3 trillion). Global spending on ecotourism is increasing by 20 percent a year, about six times the industry-wide rate of growth, and could be as high as $240 billion in developing countries.

The greening of the tourist industry can lead to efficiency improvement in energy, water and waste systems, more positive poverty-reducing effects through involvement of communities in the value chain, and investment in conservation of natural and cultural assets.

Glemarec and Puppim de Oliveira, 2012

Social Innovation

• “the process of inventing, securing support for, and implementing novel solutions to social needs and problems.” (Phills et al, 2008)

• “Social innovation is commonly defined as new ideas (products, services and models) that simultaneously meet social needs and create new social relationships or collaborations” (Grisolia and Ferragina, 2015).

• “social innovation is developed and diffused via organisations, whose primary purposes are not centred on mere profit maximisation” (Mulgan et al., 2007, p. 8).

Traditional Studies on Innovation

• Schumpeter five main types of innovations: new product, new method of production, new market, new supply of raw materials, and a new organization of any industry

• Economics of innovation: macro-processes of innovation (mostly patents)

• Management of innovation, particularly at the organizational level, looking at how firms learn, develop and adopt new technologies to improve processes and products (indicators: patents and others)

• Public Administration: Still limited conceptualization and empirical analysis of social innovation

Beyond traditional innovation studies

Topic Traditional This research

Developers Firms Cities

Motivation Economics Beyond economics

Demand Market Other (regulation, ethics, etc)

Object Technology Technology, institutional, organizational

Where Developed countries Also developing countries

Three aspects to be understood

• Supply side: Developer or diffuser of the innovation

• Demand side: Who is demanding the use of the innovation and why

• Learning: How organizations and individuals learn to adopt and use certain technology

Links

Supply Side Demand Side

Learning

Supply side

• How certain technology/knowledge is developed and diffused

• Role of R&D• Marketing and information• Knowledge transfer

Demand side

• Markets: How markets change and are changed (Porter, 1995)

• Regulations drivers of eco-innovation (Ashford et al, 1979)

• Other aspects (information, changes in culture, ethics etc)

Learning

• learning-by-doing• learning-by-using; and • Learning-by-interacting

Assumptions and Limitations• Developers: most of the studies also tend to assume that innovations

are driven mostly by firms, including the environment where they are located (clusters or innovation systems).

• Motivation: the main motivation for innovation is economics. Firms innovate to become more competitive and in the bottom line increase their profits and market value.

• Demand: the main demands for innovation are potential markets. Consumers and clients are eager to consume new products and adopt new processes.

• Object: the innovation studies look mostly at technological innovation, i.e. from the invention to the adoption of new technologies.

• Where: Most of these studies look at the high-end technological development such as R&D in leading firms and patents (LDCs?)

Innovation System

• An innovation system: the elements and relationships among organizations and individuals which interact in the production, diffusion or use of new, and socially useful, knowledge

• Generally geographically bounded• Innovation systems can be defined on various levels,

e.g., national, regional or sectoral systems of innovation

• Interaction among the systems• Cities as innovation systems (?)

Promoting Innovation

• Market driven • Non-market aspects of the development of

innovation systems, such as laws, governance, knowledge transfer and skills development, has largely been neglected (Foxton, 2008)

Socio-technical System

Sociotechnical systems consist of a cluster of elements, including technology, regulation, user practices and markets, cultural meaning, infrastructure, maintenance networks, and supply networks

Example of Sociotechnical systemsSociotechnical systems consist of a cluster of elements, including technology, regulation, user practices and markets, cultural meaning, infrastructure, maintenance networks, and supply networks

Transitions in a Socio-technical System

Link to the previous concepts

Co-benefits Transitions

QuestionsQuestion A: How has the trajectory of technological capability building related to co-benefits evolved in a particular sector in a city? Specifically, how has the direction and timing (speed) of technological capability accumulation of the selected sector in the city evolved over time in relation to co-benefits?

Question B: What have been the various sources used by the selected sector to accumulate technological capability related to co-benefits? Specifically, what has the role of different learning mechanisms (external and internal) in influencing the direction and speed of technological capability accumulation related to co-benefits? Question C: What have the outcomes of technological capability building been in terms of the generation of the co-benefits in that particular sectors? Question D:• What has been the role of certain components of the institutional framework in inhibiting or stimulating

the technlogical capabilities in the studied sector? • To what extent have the processes of learning and innovative capability building and their related

outcomes been affected, either positively and/or negatively, by the absence/presence, nature and functioning of components and critical events of the institutional framework around the selected cities and sectors?

• CAPACITY X CAPABILITY

Individual Research Cases for Studying Technological Capability

• INDIVIDUAL RESEARCH CASES• Case of Rio de Janeiro, Brazil (Transportation)• Case of Yogyakarta, Indonesia (Transportation)

Future• Case CBSWM Yogyakarta (Waste)• Case of Delhi, India (Transportation-Metro.)

Dimensions of Analysis in the research

1-Mapping and analysis of the socio-technical system. Provide a map of the main aspects of the innovation system2-Technological capability of a innovation system in a specific case (the cases we studied in FY2011). Use the Handbook3-Learning mechanisms in the same case. Use the Handbook. Provide an answers to the questions and an analysis of the case4-Enabling institutions/policies in the socio-technical system that facilitated the outcomes of the innovation. Use the handbook. Provide an answers to the questions and an analysis of the case

1-Socio-technical System

Sociotechnical systems consist of a cluster of elements, including technology, regulation, user practices and markets, cultural meaning, infrastructure, maintenance networks, and supply networks

2-3: Technological Capability StudyFocus of the study ontechnological capability

Technological capability

Technological capability

i) Operational capabilities: capabilities to use and operate existing technologies and production systems at given specifications.

ii) Innovation capabilities: capabilities to carry out and manage different degrees of technological change.

Technological Capabilities through Functions

• Function 1 (A): AVOID. Avoid pressure. This function includes the initiatives that aim to avoid the environmental pressure in the first place, such as avoid trips or avoid waste generation.).

• Function 2 (S): SHIFT. Shift to a less polluting activity or system. This function encompasses all initiatives that try to shift the pressure to less polluting activities but providing the same services, such as shifting car drivers to bus riders, or diesel to biofuel or shifting from open dump to landfill with methane capture (waste

• Function 3 (I): INTENSIFY. Intensify the efficiency of the use. This function involves the activities to try to make processes more efficient to save energy, material or widen the scope of the initiatives in the sector. For example, increase the amount of waste collected or improve the efficiency of the cars.

Measuring Innovation

• Measure the level of innovation (outputs/outcomes)

• Measure the degree of innovative capability (technological capability or “stocks”)

Levels of Capability• Level 1 - Basic innovation: being able to introduce very minor technological changes

in technologies which are mostly experience-based or reliant on the introduction of new vintages of technologies in production systems.

• Level 2 - Intermediate innovation: being able to introduce technological changes

which are mostly adaptations to technologies based on design and engineering activities, not formal R&D. For example, re-design production processes.

• Level 3 - Advanced innovation: being able to introduce technological changes based

on R&D close to the technological frontier, within an existing and established technological trajectory (“along the beaten track”).

• Level 4 - World leading innovation: being able to introduce technological changes

based on world-class R&D that advance the technological frontier and help to establish new directions and trajectories of technological change (“off the beaten track”).

Measuring the degrees of Capability for Each Function

Scale will be calibrated with advise from experts in the area and benchmarking With other cities

Function Avoid Function Shift(S)

Function Intensify (I)

Operational Capability (levels 1, 2, 3)

Innovation Capability (below)

1-Basic (new to the city)

2-Incremental/Intermediate (new to the country)

3-Advanced (new to the world)

…..

Learning processes and mechanisms

Identification of

FUNCTION (e.g.

avoid, shift or intensify)

-

-

Identification of a

TECHNOLOGICAL CHANGE

/ INNOVATIVE CAPABILITY

in the reported function, in

a specific period of time

(e.g. last 5 years)

Identification of

LEARNING MECHANISMS

that helped, enabled and

supported the creation

of the specific capability

Exploration of a specific

LEARNING MECHANISM

that helped, enabled and

supported the creation

of the specific capability

How the innovation system/organization built the capability

Learning mechanismsL

evel

of c

ongn

itiv

e ef

fort

s

High Low

(A) Rank ELM

(B) External learning mechanisms (C) Internal learning mechanisms (D) Rank ILM

2

Two-way knowledge

flows

R&D-based interactions with foreign organizations

Knowledge codification 2

High complexity

R&D-based interactions with local universities and research institutes

Knowledge sharing/socialization

R&D-based interaction with suppliers

Learning from formal R&D experimentation

R&D-based interaction with users

Learning from engineering and design experimentation

Exchanges of knowledge with foreign organizations or other cities

1

One-way knowledge

flows

Hiring of expertise

Internal training 1

Low complexity

Education and training programmes

Learning from operational experimentation

Learning from technical assistance and consulting services

Learning from supply assistance

Learning through feedback from lead users

Searching into specialized knowledge sources

Dimension 4- Institutional studyFocus of the study onInstitutions for enabling changes

Institutional study

• 1-Understand which factors influenced learning and building technological capability

• 2-Understand how institutions (which factors) linked “production” to “use”

• The institutions and factors that affected learning, tech capability and outcome will be studied through interviews or surveys

1-Understand how institutions influenced learning and building technological capability

learning

learning

Factors that played a role in determining the success or failure of the outcome

Case 1 Case 2 Case n Case n+1

Van der Bergh et al, 2007

Steps of the research framework on innovation and co-benefits (FY2012-FY2013)

• Conceptual Basis (concepts)• Empirical Basis• Metrics (adaptation to each case)• Empirical measurement (cases by partners

and IAS researchers)• Classification• Analyses

Handbook for research

Framework for assessing the Operational Capabilities, with some general references from the transportation sector Levels of capabilities/ Functions

Management of the bus system

Level 3High OperationalCapabilities

Excellent management of existing systems which, even without innovation, leads to high levels of efficiency that reduce the use of resources (e.g., periodical inspections in the vehicles, measurement in the use of fuel, management of the passager-kilometer (PKM), synchronization of the traffic signs).

Level 2Good OperationalCapabilities

Good management of existing systems which, even without innovation, leads to efficiency reducing the use of resources (e.g., ad hoc maintenance of vehicles, monitoring in the number of passengers or vehicles).

Level 1Basic OperationalCapabilities

Basic management capacity of existing transportation system of the analysis with little capacity for planning for less intense use of resources. Improvements happen due to external factors or to solve problems as they appear (e.g., more bus passengers due to increase in the national or international fuel prices).

Innovation Capabilities in Urban TransportLevels of capabilities/ Functions Management of the bus system

Level 4World leading innovation

Use of R&D for the introduction of cutting edge technology processes (e.g., staff aware of the main world trends in the area, existence of an organization to develop new technologies for intensification of energy use, experimentation of new technologies), along new technological trajectories to improve the efficiency of process to reduce energy use per unit (e.g., introduction of more efficient bus engines).

Level 3Advanced innovation

Initiatives for the introduction of new processes along existing trajectories that can improve efficiency per unit (e.g., integration with land-use and transportation, adapt part of the existing innovative initiatives to new initiatives to intensify use, for example energy intensification of biofuels using former initiatives to intensify diesel).

Level 2Intermediate innovation

Initiatives to introduce technological changes to improve energy or environmental efficiency per unit which are mostly adaptations to existing technologies in other cities or even in the same city in other sectors. Dominate the technology and are able to make small further adaptations to improve its performance

Level 1BasicInnovation

Being able to introduce very minor technological changes in technologies to shift present activities to less polluting activities which are mostly experience-based or reliant on other actors.

The Case of Rio de Janeiro

• Bus Rapid System (BRS) in the City of Rio de Janeiro• Rio de Janeiro has made some efforts to improve the

urban transportation system recently due to the World Cup in 2014 and the Olympic Games in 2016.

• The BRS made gradual adjustments to improve the existing bus system.

• These changes were able to reduce the travel time in up to 50% in certain routes, improving mobility and reducing fuel consumption

• The city is also building new initiatives in the bus system such as a Bus Rapid Transit (BRT).

Socio-technical system in Rio de Janeiro

Application domain, technology in use

Regulation (Transport Bureau)

Production

Design of the BRS Operators of the BRS

Maintenance

Human resources

Communication with users and use

Cultural meaning

Vehicles

DriversInfrastructure

Superior Education

Knowledge base

Capability levels• Operation Capabilities. (level 2), since the operators are required

to develop monitoring processes that assess the following parameters: average speed of buses; number of passengers; situation on the bus stops; number of kilometers traveled; and similar data. Thus, the city managers are able to evaluate which are the most critical routes and understand how the demand for the public on-road transport system varies during the day.

• Innovation capabilities, (between levels 2 and 3). The main initiatives in course are mostly adaptations to existing technologies in other cities, as is the case of the BRS and the BRT. The existing monitoring systems enable the city to improve the road public transport system`s performance and devise measures to reach greater efficiency.

Learning Mechanisms Internal learning mechanisms External learning mechanisms

Two-way knowledge

flows

Knowledge sharing/ Socialization

Learning by doing Socialization of information Collective learning (performance review, debriefing)

Interaction with users and operators

Project discussion and dialogue over how to solve emerging problems

One-way knowledge

flows

Learning from operational experimentation

Skill or knowledge is acquired as a by-product of undertaking particular activities (transport system planning, use and operation)

Education and training programs Interactions with foreign organizations

Undergraduate and post-graduate programs Contract of specialized consultants

Types Examples Types Examples

Main points on Innovation in Cities• Understanding innovation goes beyond firms (e.g., city management,

urban governance, communities)• Innovation is place based, and I would say mostly city based• Other factors beyond economics (e.g., culture) explain the

appearance of innovative places/innovation systems• Individuals and organizations are important, but their interactions are

key to understand innovative places, and those interactions go beyond economic transactions

• Innovation goes beyond technological innovations (e.g., social innovation)

• Spatial dimension of processes (e.g., shaping urban spaces and communities),

• Public policies can nurture the development of place based innovations, but can also hurt

THANK YOU FOR YOUR ATTENTION!

Jose Antonio Puppim de Oliveirapuppim@ias.unu.eduwww.ias.unu.edu/urban www.unu.edu