21 July 2018
Hong Kong should boost funding to private R&D activities if it wants to spur innovation. Photo: Bloomberg
Hong Kong should boost funding to private R&D activities if it wants to spur innovation. Photo: Bloomberg

Systems approach needed for innovation

Hong Kong’s Chief Executive Leung Chun-ying put forward in his policy address last month some new measures regarding innovation and technology. Admittedly, this reflects the administration’s commitment to the innovation industry, but the current technology-led and piecemeal approach still has much room for improvement. In this regard, Finland’s success in innovation, especially its systems approach, might serve as a lesson for the city.

Finland’s funding mechanism would be a good starting point of analysis. Currently, the Hong Kong government does provide some form of support to the innovation industry, but that is inadequate and ill-positioned. While Tekes, Finnish funding agency for innovation, handed out around HK$5 billion to the industry in 2013 alone, our Innovation and Technology Fund (ITF) has approved merely HK$8.9 billion between 1999 and 2014.

More than 40 percent of Tekes’ funding was allocated to small and medium enterprises (SMEs) and 680 start-ups benefited. In contrast, our ITF funding is highly skewed towards the public sector in terms of the application requirements and the amount of funding.

Among the four schemes of ITF, the Innovation and Technology Support Programme, which accounted for 83.5 percent of the total approved funding as at the end of 2014, requires the lead applicants to be publicly funded universities or R&D centers for most of the projects. This meant little help for industry-led R&D activities.

In addition to boosting funding support to private R&D activities, the government may consider integrating existing services and providing one-stop matchmaking and business counseling to successful ITF applicants.

It is also important to strengthen the demand-side policy, for example, by introducing special clauses to the government procurement policy to encourage SME participation. In fact, Finland already started similar reform in 2013.

Albeit without much detail, the “Enterprise Support Scheme” announced in the Policy Address has the potential to provide incentives for private R&D. To avoid letting slip promising proposals, industry participation in the vetting process is indispensable.

Innovation is not just about high tech, but also about engaging the society. Investing in R&D is just half the story. The boundaries of innovation should be pushed and extended beyond the laboratory.

Some foreign governments have tried to incorporate open innovation and crowd-sourcing into public administration. For instance, of the US, which calls for citizens’ solutions to technical and policy challenges posted online, has attracted submissions from 42,000 people since 2010.

Another example is Helsinki, Finland, where the government drafted a Local Digital Agenda, proposing to test novel ideas such as smart urban design and low-carbon economy in the community.

These Living Labs are usually public-private partnerships. Local community does not only try out the new technologies, but also returns feedback, “co-design” and “co-create” with the project team. Such bottom-up, user-driven innovation can cultivate the culture of entrepreneurship and innovation in the society.

Back in Hong Kong, the CE expressed interest in developing East Kowloon into a smart city. The “Living Lab” model that blends innovation and technology into daily life and engages citizens in the process certainly deserves consideration by the government.

Innovation is not a one-way process that turns lab findings into products, but a complex process embedded in the social context, progressing in tandem with other areas of development. Therefore, the government should seek not only technical advances, but also social innovations.

Finland’s education system, for example, is one of the most egalitarian in the world, honoring the principles of “no child left behind” and joyful teaching and learning. Students enjoy free education and are always eligible to progress to the next stage after completing one level of study. In 2012, the ratio of university graduates among working population is 39.7 percent in Finland, much higher than the 26.2 percent in Hong Kong.

Finland has adopted an ecosystem-based approach to its innovation strategy. Education, culture, welfare, urban design… all policy areas work to facilitate innovation.

Hong Kong’s innovation policy needs to transcend the one-way, technology-led model. More emphasis should be put on governance and social innovations. We hope that the Innovation and Technology Bureau, for which the funding request is now stuck in filibustering by pan-democratic lawmakers, will be established soon and that a more systematic innovation strategy will be formulated.

A detailed analysis of the Finnish experience could be found [here] (Chinese version).

Ben Lee and Germaine Lau are the co-writers of this article.

–Contact us at [email protected]


Savantas Policy Institute

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