Smart Specialisation in a City Context

Smart specialisation is a new innovation policy concept[1] which has been has been developed in Europe to indicate flexible and dynamic innovation strategies, which adopted by a single region but assessed at the national and EU level, with the aim to avoiding fragmentation efforts in the field of innovation support.

All EU member states Regions are asked by Brussels to draw up their Smart Specialisation Strategy outlines, based on available resources and attitudes, identifying the competitive advantages and the technological specializations consistent with their potential for innovation and detailing the public and private investments required with particular regard to research, technological development and innovation, in order to promote the efficient and effective use of public investment in research.

The goal of smart specialisation is to boost regional innovation in order to achieve economic growth and prosperity, by enabling regions to focus on their strengths. Smart specialisation understands that spreading investment too thinly across several frontier technology fields risks limiting the impact in any one area.

The guidelines to develop a smart specialisation strategy sets out a number of practical steps, namely:

1. the analysis of the national/regional context and potential for innovation,
2. the set-up of a sound and inclusive governance structure,
3. the production of a shared vision about the future of the country/region,
4. the selection of a limited number of priorities for national/regional development,
5. the establishment of suitable policy mixes, and
6. the integration of monitoring and evaluation mechanisms.

In this sense, to develop a smart specialisation strategy is very similar to the process to develop a vision and a strategy for a business company or an organisation, which is a well-known process in management science. A smart specialisation strategy needs to be built on a sound analysis of regional assets and technology. It should also include an analysis of potential partners in other regions and avoid unnecessary duplication.

Smart specialisation needs to be based on a strong partnership between the Quad Helix actors, government, businesses, public entities and knowledge institutions. Such partnerships are recognised as essential for success.

To push forward the smart specialisation concept, the European Commission announced the S³Platform in a 2010 Communication entitled ‘Regional Policy contributing to smart growth in Europe 2020’. This platform aims to assist regions in developing, implementing and reviewing regional smart specialisation strategies, and help regions identify high-value added activities which offer the best chances of strengthening their competitiveness.

The sweet spot model in the diagram above is the generic approach we use in development of strategy for both business organisations and places. After all, a place is a product just like any product offering from a company toward target markets, with the difference that they set of stakeholders and the complexity in the strategy development process is much more complex for a place than for a single business.

To define a focuses strategy requires critical decisions and trade-offs that cannot easily be reversed. The choice of objective will have a profound impact. As regards the scope, it encompasses three dimensions: customer offering, geographic location and reach and vertical integration. Clearly defined boundaries in these areas should make it clear to stakeholders which activities they should concentrate on and, more important, which they should not do. This will help to focus the actors in the Quad Helix system for both their long term and medium term actions.

Then, given that sustainable competitive advantages are the essence of any strategy, it should be no surprise that competitive advantage to achieve and retain a sweet spot is the most critical aspect of a strategy. Clarity on the sweet spot is the point that will help actors understand how they can contribute to the strategy´s successful execution. Therefore, the complete definition of a competitive advantage consists of two parts. The first is a statement of the customer value proposition and the second is to capture the unique activities or the complex combination of activities that will allow the place to deliver the customer value proposition.

To develop the strategy, the first step is to make a careful evaluation of the internal world landscape. This includes developing a detailed, fact based quantitative and qualitative understanding of which are the current target markets and their customer needs, segmenting customers and then identifying the unique ways of creating value in the smart specialisation focus through the clusters and value chains which the place choses to develop its specialisation within.

It also calls for an analysis of the external world, that is the competing places, their current strategies and a prediction of how they might change in the future. To do so, a place need o carefully select which regional and international places it will benchmark itself towards. The process must also involve a rigorous, objective assessment of the place capabilities and resources and those of competitors.

[1] See https://ec.europa.eu/jrc/en/science-area/innovation-and-growth and https://ec.europa.eu/jrc/sites/default/files/RIS3_GUIDE_FINAL.pdf