NOTE ON THE RESEARCH MODERNIZATION SHOWCASES July 2023 1 Disclaimer This work is a product of the staff of The World Bank. The findings, interpretation, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. This report does not necessarily represent the position of the European Union or the Romanian Government. Copyright Statement The material in this publication is copyrighted. Copying and/or transmitting portions of this work without permission may be a violation of applicable laws. For permission to photocopy or reprint any part of this work, please send a request with the complete information to either: (i) Ministry of Research, Innovation, and Digitization of Romania, 21-25 Mendeleev str, ZIP Code 010362, Bucharest, Romania or (ii) the World Bank Group Romania (Vasile Lascăr Street, No 31, Et 6, Sector 2, Bucharest, Romania). This report has been delivered under the Reimbursable Advisory Services Agreement on Research modernization in Romania: Improving the quality of and relevance of the research sector signed between the Ministry of Research, Innovation, and Digitization of Romania and the International Bank for Reconstruction and Development on December 03, 2022. It is part of Deliverable 2 Note on cross-country analysis of research sector modernization efforts and showcases under the above-mentioned agreement. 2 Contents Abbreviations and Acronyms................................................................................................. 5 1. Introduction ....................................................................................................................... 7 2. Poland: Showcasing Łukasiewicz Research Network’s Journey...................................... 11 2.1 Introduction and Context to the Showcases ............................................................... 11 2.1.1 NRRP rationale for the showcase ....................................................................... 12 2.2 Context to the Showcase Country.............................................................................. 12 2.3 Operationalization of the Lukasiewicz network in the country .................................... 13 2.4 Results from the reforms ........................................................................................... 14 2.5 Lessons Learned ....................................................................................................... 15 3. Serbia: Knowledge Exchange Session for learning the experience of Reform Research Institutes Modernization ...................................................................................................... 17 3.1 Introduction and Context to the Showcases ............................................................... 17 3.1.1 NRRP rationale for the showcase ....................................................................... 18 3.2 Context to the Showcase Country.............................................................................. 18 3.3 Research modernization reforms in the country ......................................................... 18 3.4 Operationalization of the reform................................................................................. 19 3.5 Results from the reforms ........................................................................................... 19 3.6 Lessons Learned ....................................................................................................... 20 4. Croatia: Shifting towards results-oriented performance ................................................... 22 4.1 Introduction and Context to the Showcases ............................................................... 22 4.1.1 NRRP rationale for the showcase ....................................................................... 22 4.2 Context to the Showcase Country.............................................................................. 23 4.3 Research modernization reforms in the country ......................................................... 23 4.4 Lessons Learned from the introduction of the reform ................................................. 24 5. Finland: Best Practices of Technology Transfer .............................................................. 26 5.1 Introduction and Context to the Showcases ............................................................... 26 5.1.1 NRRP rationale for the showcase ....................................................................... 26 5.2 Context to the Showcase Country.............................................................................. 26 5.3 Operationalization of the Tech Transfer ..................................................................... 27 5.4 Results and Lessons Learned ................................................................................... 29 6. Israel’s Innovation Policy story: from visionary laws to innovation ecosystems................ 31 6.1 Introduction and Context to the Showcases ............................................................... 31 6.1.1 NRRP rationale for the showcase ....................................................................... 31 6.2 Context to the Showcase Country.............................................................................. 32 6.3 Research modernization reforms in the country ......................................................... 32 6.4 Operationalization of the reform................................................................................. 33 6.5 Results from the reforms ........................................................................................... 33 6.6 Lessons Learned ....................................................................................................... 34 3 List of Figures Figure 1 Customer experience journey for firms engaging Łukasiewicz network's R&D ...... 14 Figure 2 Łukasiewicz and innovation ecosystem ................................................................. 14 Figure 3 Croatian Research Sector ..................................................................................... 23 Figure 4 Business Finland's funding for research organizations from the 1st of January, 2023 ........................................................................................................................................... 27 Figure 5 Three avenues for tech transfer for VTT................................................................ 28 Figure 6 Impact of investing public funds at Business Finland............................................. 29 List of Boxes Box 1 Selected Reforms and Investments under the NRRP ................................................. 8 Box 2 Human Capital within the LN and Beyond ................................................................ 12 Box 3 Stakeholders and funding of the research sectors in Poland ..................................... 15 4 Abbreviations and Acronyms EU European Union GDP Gross domestic product IT Information technology KPIs key performance indicators LN Łukasiewicz Network MCID Ministry of Research, Innovation and Digitalization MNCs Multinational corporations NRRP The National Recovery and Resilience Plan OECD Organization for Economic Cooperation and Development PBF Performance-Based Funding PhD Doctor of Philosophy PRO Public research organization PSF Policy Support Facility R&D research and development R&I research and innovation RDI research, development, and innovation SME small and medium-sized enterprises TRL technology readiness level VTT Technical Research Centre of Finland WBG World Bank Group 5 INTRODUCTION 6 1. Introduction This document is part of Deliverable 2 under the Reimbursable Advisory Services (RAS) agreement on Research Modernization in Romania Improving the Quality and Relevance of the Research Sector between the Ministry of Research, Innovation and Digitization (MCID) in Romania and the World Bank (WB). As part of this agreement, the WB is providing technical assistance to the MCID for the Government of Romania’s ambitious research and innovation sector modernization efforts under Component 9 (Business Support, Research, Development, and Innovation) of the National Resilience and Recovery Plan (NRRP). The NRRP is a package of reforms and investments, supported by an estimated €14.2 billion in grants and €14. 9 billion in loans for Romania from the European Commission, and intended to be completed by August 2026. A certain amount is dedicated to the national research, development, and innovation (RDI) system. The RDI-related portfolio of the NRRP comprises 4 reform packages (Reform 2: Streamline governance of research, development and innovation, Reform 3: Reform of research career, Reform 4: Strengthening cooperation between business and research, and Reform 5: Support for the integration of Romanian research, development, and innovation organizations into the European Research Area) and 6 investment packages (Investment 5: Establishment and operationalization of Centers of Competence, Investment 6: Development of Horizon Europe mentoring programs , Investment 7: Strengthening excellence and supporting Romania’s participation in partnerships and missions in Horizon Europe, Investment 8: Development of a program to attract highly specialized human resources from abroad in research, development and innovation activities, Investment 9: Support for the holders of certificates of excellence received in the Marie Sklodowska Curie Individual Fellowship Award, and Investment 10: Establishment and financial support of a national network of eight regional career guidance centers as part of the European Research Area Talent Platform) all aimed at modernizing Romania’s research, development, and innovation sector. The objective of the document is to outline and summarize five virtual country showcases (Poland, Serbia, Croatia, Finland, and Israel) that were conducted to discuss other countries’ efforts to modernize the research sector and connect it with industry, share global practices on the design and implementation of reforms, and introduce the global experts who spearheaded changes in the respective countries. The research modernization reforms illustrated by the before-mentioned countries correspond to NRRP Reform 4 (Strengthening cooperation between business and research), Reform 5 (Support for the integration of Romanian research, development, and innovation organizations into the European Research Area), Investment 5 (Establishment and operationalization of competence centers) and Investment 7 (Strengthening excellence and supporting Romania’s participation in partnerships and missions in Horizon Europe). These correspond to Romania’s research modernization efforts. For the objective of these specific reforms and investments, see box 1. below. Against this backdrop, the document summarizes the options explored to modernize each country's research and innovation ecosystem and highlights which approach could be prioritized. This is done by focusing on each country’s efforts to implement changes, their linkage to the NRRP reforms, and the results and lessons learned. 7 Box 1 Selected Reforms and Investments under the NRRP Reform 4. Strengthening cooperation between business and research : Objective: Creating an environment favorable to public and private investment in RDI by updating and simplifying national legislation on contracting, funding, monitoring, and evaluation of research, development, and innovation programs and projects, which stimulates the strengthening of the excellence of Romanian teams to be a catalyst for increased private investment in RDI activities and to stimulate the formation of sustainable partnerships between research organizations and nationally competitive companies. Specific objectives: Increase private and public investment in RDI by updating and simplifying the national regulatory framework for contracting, financing, monitoring, and evaluating research, development, and innovation programs and projects in line with European best practices. Reform 5. Support for the integration of Romanian research, development, and innovation organizations into the European Research Area: Objective: To integrate the business sector into European value chains and RDI organizations into the European Research Area by stimulating the sharing of research infrastructures and other facilities. Specific objectives: Establishing a methodology for assessing the quality and relevance of research and innovation activity in R&I organizations in relation to societal challenges and the needs of the economic environment. Regulatory framework to encourage the voluntary joint use of research infrastructures and other facilities by R&I organizations to develop a robust knowledge production system based on strategic research and innovation agendas, ensuring economic and social relevance and rapid integration into the European Research Area. Support the internationalization of public and private RDI organizations for participation in Horizon Europe programs. Investment 5. Establishment and operationalization of competence centers : Objective: To tackle the thematic fragmentation of research, development, and innovation organizations by supporting the implementation of Horizon Europe missions at the national level. The Centres will be established through a competitive call as consortia of public and private research institutes, including small and medium enterprises, to jointly implement the Strategic Research and Innovation Agenda of the corresponding mission from Horizon Europe. The projects will contribute to delivering solutions that improve citizens' lives, meet local needs, and increase the impact of research results at the community level. The investment will also allocate resources to upgrade shared research equipment and infrastructures and disseminate research results. Investment 7. Strengthening excellence and supporting Romania’s participation in partnerships and missions in Horizon Europe: Objective: To increase the success rates of applications for the Horizon Europe program. The investment shall grant complementary funding to research, development and innovation projects already contracted in the context of green or digital European research development and innovation Partnerships. The investment includes co-funding research projects recommended for funding under European Partnerships, complementary projects to increase the impact of H2020 projects, and capacity-building projects. Up to 20 projects will be financed with a maximum budget of EUR 300,000 for each Romanian partner, up to 15 projects with a maximum budget of EUR 1,000,000, and up to 20 projects with a maximum budget of EUR 500,000. The investment excludes research related to activities and assets that may cause harm to the environment, such as fossil fuels, waste landfills, and incinerators. 8 Table 1 Overview of Country Showcases and Corresponding Reforms and Investments under the NRRP Reform 4: Reform 5: Support I5: Establishment I7: Strengthening Strengthening for the integration and excellence and cooperation of Romanian RDI operationalization supporting between business organizations into of competence Romania's and research the European centers participation in Research Area partnerships and missions in Horizon Europe Poland X X X Serbia X X Croatia X X Finland X Israel X 9 POLAND: SHOWCASING ŁUKASIEWICZ RESEARCH NETWORK’S JOURNEY 10 2. Poland: Showcasing Łukasiewicz Research Network’s Journey Key messages from the showcase Łukasiewicz Network’s (LN) goals align with a nationwide Strategy for Responsible Development that has enabled a closer collaboration of the public and private sectors. Involving the research community early on in the discussions of the organizational model – a network over a centralized organization – helped get the researchers' buy-in and engage the private sector. Creating a network of research institutes (instead of merging institutes into one organization) helped maintain autonomy and align the institutes over missions and common goals. Enabling more straightforward access to the private sector steered the work of the institutes towards a solution-oriented mindset. Having more interest from the private sector stirred more demand and helped to overcome the fragmentation and make the research agenda more relevant to the private sector. Providing a strict set of performance-oriented Key Performance Indicators (KPIs) for research centers provided incentives for any internal changes within the organizations. Some smaller institutes did merge under the LN branding, which was created using incentives of "sticks" and primarily "carrots." For the “sticks” part, institutes found that they had faced challenges in meeting KPIs independently, which prompted smaller institutions to consider merging with more prominent institutes that could offer shared resources and expertise. Smaller institutes found it financially burdensome to operate independently. On the “carrots” side, institutes were incentivized by the opportunity to access best practices, information technology (IT) solutions, and professionalization opportunities available within the larger merged entity. Mid-term evaluations help fund efficiency within the system. The Polish ecosystem and the Łukasiewicz network primarily focus on applied research. Transparent evaluations every three years ensure accurate funding distribution and minimize self-assessment risks. 2.1 Introduction and Context to the Showcases The chapter builds on the content of the showcase event organized on the 31st of August 2022 in a virtual format on research modernization practices. This workshop is 1st in a series organized by the World Bank team working with the Policy Support Facility (PSF) unit of the Ministry of Research, Innovation, and Digitalization of the Government of Romania in supporting its research modernization agenda. Following the success of the first session, a follow-up meeting was organized on the 6th of December, 2022. The speakers included: - Mr. Piotr Dardziński, President, Łukasiewicz Network; - Mr. Marcin Kardas, Director, Łukasiewicz Network; 11 POLAND: SHOWCASING ŁUKASIEWICZ RESEARCH NETWORK’S JOURNEY - Mr. Jakub Kaczmarski, Deputy Director, Łukasiewicz Network. - Ms. Izabela Najda-Jedrzejewska, Ministry of Education and Science 2.1.1 NRRP rationale for the showcase Lukasiewicz Network in Poland bears relevance for both Romanian NRRP Reforms 4 and 5. Reform 5 aims to transform the research systems in the country towards more integration of public research, development, and innovation organizations in Romania within the European Research Area. Reform 4 is set to enhance cooperation between the business and research sectors. The showcase then specifically addresses the questions of engaging the private sector following the best practices in Europe and by looking at the challenge of making the research more relevant to the societal challenges. These aspects were discussed during the showcase. 2.2 Context to the Showcase Country Following the Strategy for the Responsible Development directive, Poland’s innovation system has made significant strides towards more cooperation with the private sector. Between 2016-2020, the GERD/GDP ratio increased from 0.96% to 1.39%, reflecting higher investment in research and development in the country. The government had also implemented reforms such as tax relief measures and introducing a new type of PhDs - 'industrial PhDs' to foster closer collaboration between academia and industry. This has created an energized environment for public-private partnerships, benefiting approximately 1,600 entrepreneurs through R&D tax relief and witnessing nearly 2,300 industrial PhDs awarded between 2017 and 2021. See more on industrial Ph.D. statistics in Box 2. The research institutes had to overcome a high degree of fragmentation from the public sector to increase their relevance in the private sector. The Polish policymakers wanted to tackle the fragmentation of the research institutes in the country. Drawing inspiration from successful models like Fraunhofer and the Dutch TNO, the government wanted to unite the country’s institutes. Various approaches were considered. For example, creating a single research institute gained little popularity within the research community. Instead, the option of establishing a network of research institutes with a coordinating and overarching organization but leaving individual institutes with some autonomy and greater flexibility. Ultimately, this option was better received and chosen for implementation. Created in 2019, today, the LN stands as Europe’s third-largest research infrastructure network and a prominent player in the R&D market in Central and Eastern Europe. With over 7,000 employees, including over 4,000 engineers and scientists spread across 440 labs in the country, the Network boasts top-class research infrastructure. The Network's hosts include 3,762 key items of R&D equipment, of which 497 are unique in Poland, highlighting the Network's commitment to fostering cutting-edge research and innovation. Box 2 Human Capital within the LN and Beyond The research institutes host Ph.D. students’ research across two modalities: fundamental and industrial research. With 4200 out of the 7000 employees, Ph.D. students are considered researchers. The Network has established agreements with universities and research institutes, allowing Ph.D. students to attend university studies while employed by the Network to work on projects. Therefore, universities are responsible for the education of the studies, but the Network hires the students as researchers. The Network has two categories of doctoral students. The first type is industrial PhDs, which companies and universities jointly hire. The second type is focused on fundamental research, and 12 POLAND: SHOWCASING ŁUKASIEWICZ RESEARCH NETWORK’S JOURNEY discussions with universities are underway to ensure that this research eventually has practical applications. The Network is currently working on standardizing the process for these doctoral students. Furthermore, the Network has a number of activities for engaging with the younger generation and eventually helping with the innovation human talent pipeline. For example, the Network actively reaches out to young talents, such as math, biology, and physics Olympiad winners. Last year, they had 20 young researchers who were recognized for their achievements. 2.3 Operationalization of the Lukasiewicz network in the country Choosing to unite the research institutes through a network under the branding of LN rather than a forced merger provided autonomy to the institutes while making them more approachable to the private sector. Research institutes maintained their autonomy while working together towards shared objectives. The coordination part of the branding eased the access reducing fragmentation and making the research agenda more relevant to the private sector. To foster bridges across sectors, the Network is positioned as a solution provider to the business sector. The process is straightforward and easy, has a ‘rhythm ’(a challenge is posted every Friday), as well as clear deadlines and fast turnabout times (the firm receives an R&D proposal to its problem within 15 calendar days) (see figure below) including team formulation, preliminary schedules, and budgets to implementation. This ensures reliability, which is needed for the private sector, which operates on a tight budget and shorter life cycles than fundamental or academic research. Since its conception in 2019, the Network has received 1739 challenges, of which 657 were R&D challenges, and 1057 were product & services challenges from 714 companies. A quarter of the companies then decided to continue cooperation with the Network. The institutes hold branches of research dedicated to specific societal challenges areas, allowing for collaborations. The business model of the centers included several points about the setup that helped the creation and cohesion of the Network. The operational model for the centers follows a cross-matrix structure: hierarchy by management for each center by topics of research. Across the 38 institutes, there are four macro-groups: (1) sustainable economy and energy (for example, modular construction or hydrogen power), (2) digital transformation (from AI on new semiconductor materials), (3) smart and clean mobility, (4) healthy living. All groups have specific targets and encourage inter-institutional collaboration. The funding for the research among the members of the LN depends on the mid-term evaluations. Evaluations of organizations within the Network are conducted every three years by experts from the ministry. Grades, such as A, B, or C, are assigned to determine the funding. There are multiple levels of control to ensure self-assessment accuracy, including oversight from the Network itself. The Network is also subject to control by other necessary organizations every three years. The system aims to be transparent and minimize the risk of inaccurate self-assessment. 13 POLAND: SHOWCASING ŁUKASIEWICZ RESEARCH NETWORK’S JOURNEY Figure 1 Customer experience journey for firms engaging Łukasiewicz network's R&D Source: Łukasiewicz Network, showcase workshop presentation 2.4 Results from the reforms The research excellence and integration into the ERA are done through close cooperation and participation in European initiatives and associations. The European Initiatives and participation in various associations (e.g., European Association of Research and Technology Organisations (EARTO), Association of European Research Establishments in Aeronautics (EREA), Cooperative, connected and automated mobility (CCAM) (see Figure 2). Help to define internal and external KPIs for the organizations. Ultimately, participating in the associations impacts the research direction for the whole Network. Figure 2 Łukasiewicz and innovation ecosystem Source: Łukasiewicz Network, showcase workshop presentation The Łukasiewicz network in Poland achieved scalability and success despite the absence of legal enforcement, prompting other institutes to merge and apply for grants, with support from the Ministries of Education and Research to promote a common research agenda. From the legal point of view, there was no prescription to enforce the process of mergers of the institutes in Poland. Previously, research institutes remained outside of the Network and were subordinated under approximately ten different ministries. The speakers noted that since the introduction of the LN, more institutes started joining the Network and applying for grants. The speakers acknowledged that has been support from both the Ministry of Education and the Ministry of Research has assisted in combating the 14 POLAND: SHOWCASING ŁUKASIEWICZ RESEARCH NETWORK’S JOURNEY fragmentation. The overall spirit of getting the support, according to the speakers, was to recognize the importance of avoiding alienation and working towards a common research agenda. See more information on stakeholders’ engagement.in Box 3 2.5 Lessons Learned The decision to pursue a merger was driven by a combination of “sticks” and “carrots.” On the “sticks” side, institutes faced challenges in meeting KPIs independently, which prompted smaller institutions to consider merging with more prominent institutes that could offer shared resources and expertise. Additionally, smaller institutes found it financially burdensome to operate independently. On the “carrots” side, institutes were incentivized by the opportunity to access best practices, IT solutions, and professionalization opportunities available within the larger merged entity. Moreover, to support the higher costs associated with the functioning of merged institutes, the Network provided additional funding to facilitate a smoother transition and a solid financial foundation. For the Network, these mergers helped to optimize efficiency, collaboration, and resource utilization, enhancing the Network’s capacity for innovation and research in Poland. The community accepted research institutes to join the LN because employment guarantees were embedded early on in the process. While generally promoting a high level of turnover for greater spillovers. The LN addressed resistance within the research community by guaranteeing that all employees would have a position at the new institute after the merger, emphasizing a focus on transformation rather than layoffs. The Network closely monitors employment data, reports a net loss of 1,500 employees over three years, and hires 1,400 new individuals. Encouraging a culture of talent turnover, particularly when employees join the private sector or industrial partners, is seen as a success as it promotes collaboration across sectors. Box 3 Stakeholders and funding of the research sectors in Poland Within the ecosystem in Poland and the Łukasiewicz network, the speakers discussed the following stakeholders: - Universities: Universities have the primary role of teaching students, including basic research, but not limited to it. They also conduct research, mainly focusing on fundamental research. - R&D institutes: These institutes were established after World War II and are located near industrial centers. Their main task is to promote industrial research. Out of the 100 institutes, 38 were brought together to form the Network. - Firms: local and international firms, operating on tighter budgets, shorter time horizons. The firms need an easy way to engage (via the main website, without having to look for a particular research lab in the country), and reliability (they can post a challenge and within a few weeks get a quote for the research proposal). - Cities and regions: Previously, institutes focused on specific problems, like photonics, without indicating their location. However, institutions within the Network had the opportunity to rebrand, and those that incorporated the city name into their new names, such as the Poznan Institute of Technology, gained increased attention and support from the city councils. 15 POLAND: SHOWCASING ŁUKASIEWICZ RESEARCH NETWORK’S JOURNEY SERBIA: KNOWLEDGE EXCHANGE SESSION FOR LEARNING THE EXPERIENCE OF REFORM RESEARCH INSTITUTES MODERNIZATION 16 3. Serbia: Knowledge Exchange Session for learning the experience of Reform Research Institutes Modernization Key messages from the showcase 1. The recent research modernization reform in Serbia had two critical components: a. switching towards competitive funding had improved the quality of the research in the system; b. the participation of the institutes needed to be voluntary, with a close work with national champions to scale up and get acceptance from the community. 2. The speakers also shared that establishing trust within a change-resisting community required much effort and work. However, open communication and consistent alignment on objectives has helped. 3. The alignment was done through reinforcing a bold and ambitious vision and back- casting from the desired outcomes. 3.1 Introduction and Context to the Showcases This showcase was the 2nd in a series organized by the World Bank team working with the PSF unit of the Ministry of Research, Innovation, and Digitalization of the Government of Romania in supporting its research modernization agenda. The showcases invited notable speakers from the University of Belgrade who had also played essential roles in the public sector: • Prof. Aleksandar Belić, Research Professor and former Director of the Institute of Physics, University of Belgrade • Prof. Vladimir Popović, Dean of the Faculty of Mechanical Engineering at - University of Belgrade • Prof. Viktor Nedović, University of Belgrade All speakers contributed to and co-authored the strategic documents "The Strategy of Scientific and Technological Development of the Republic of Serbia, 2010-2015, Focus and Partnership", "The Strategy of Scientific and Technological Development of the Republic of Serbia, 2016-2020, Research for Innovation", and "The Strategy of Scientific and Technological Development of the Republic of Serbia, 2021-2025, The Power of Knowledge". The "Focus and Partnership" strategy inaugurated the primary reform process by establishing the Innovation Fund and making a considerable investment into research infrastructure. The follow-up reform in the next period included the creation of the Science Fund and the introduction of a new research funding scheme consisting of a balanced combination of institutional and project financing. Finally, in the current period, reform focuses on 17 SERBIA: KNOWLEDGE EXCHANGE SESSION FOR LEARNING THE EXPERIENCE OF REFORM RESEARCH INSTITUTES MODERNIZATION consolidating the gains and improving individual research institutions' quality and effectiveness. 3.1.1 NRRP rationale for the showcase Romania's NRRP Reform 5 aims to deeply transform the research systems in the country. The objective is to enhance the performance and integration of public research, development, and innovation organizations in Romania within the European Research Area (see Box 1). However, the reform has faced challenges in mobilizing its community through this integration. The Serbian showcase, therefore, focuses on the elements of engaging the scientific community in its reforms. 3.2 Context to the Showcase Country As a peer country, Serbia has been undergoing a similar journey as Romania vis-à-vis its research agenda. Since 2011, it has been undergoing modernization reforms to encourage excellence and relevance of scientific research. Like Romania, Serbian Science has pockets of excellence but has struggled to build upon its strengths and engage and unite its community. Around a decade ago, Serbia's Research, Development, and Innovation (RDI) system faced numerous challenges, incl. a lack of direction. The R&I landscape lacked orientation, and public institutes suffered from management shortcomings. The outdated legal framework further hindered progress, necessitating updates. There was a lack of trust, with instances of absences and overall eroding confidence. There was resistance to innovation activities, weaknesses in implementing instruments, and a worsened macroeconomic situation, which compounded the difficulties faced by the R&I system at the time. Although Serbia's R&I system had pockets of excellence, the government would award all the applications for the grants regardless of consideration for the country's economic development goals. In addition to the challenges listed above, there were certain positive aspects within Serbia's R&I system around a decade ago. The country had some advantages; for example, the University of Belgrade enjoyed its good ranking, reflecting its academic excellence and reputation. Additionally, there were selected research institutes that achieved exceptional results, indicating the presence of a robust research community within the country. These positive factors highlighted pockets of excellence and potential for growth within the R&I landscape during that period. However, the funding model that supported nearly 12,000 researchers would distribute the money almost equally, with limited consideration of the research's relevance to the country's economic development goals. 3.3 Research modernization reforms in the country In order to achieve its stated goal to reach and eventually surpass the EU average levels of excellence, impact, and end efficiency of its R&I system, Serbia recognized the need for and implemented reform to modernize and restructure R&I institutions. New laws were drafted, new institutions formed (The Innovation Fund and The Science Fund), and the funding scheme changed. Finally, after the environment in which they operate is improved, the concerted effort to transform individual R&D institutions is underway. 18 SERBIA: KNOWLEDGE EXCHANGE SESSION FOR LEARNING THE EXPERIENCE OF REFORM RESEARCH INSTITUTES MODERNIZATION The reform efforts were accompanied by extensive communication initiatives, including document iterations, public consultations involving hundreds of researchers, and frequent meetings. The team acknowledged that they had put much energy into this part of the work. Clear and transparent communication was prioritized to rebuild trust within the R&I community. 3.4 Operationalization of the reform Implementing the reform involved allowing research institutes to undergo a two-step evaluation stage: self-assessment and international assessment. In terms of implementation, the evaluation process began shortly after the call. Initially, 60 institutes were invited to answer evaluation questions, including their willingness to continue the process. Encouragingly, nearly half of the institutes responded positively, demonstrating support for the evaluation. Eventually, 20 institutes enrolled in the two-step evaluation stage, which involved internal assessment followed by evaluation by international experts. The engagement of the institutes was in two waves: first, the pioneers and then the followers, encompassing 20 leading institutes out of 60 in the country. Overall, 20 institutes chose to get evaluated out of the total 60 in the country. The process took place in stages: initially, only six institutes were chosen to be the ‘champions’, and following the dissemination of the work of this first wave, other 14 institutes followed. Overall, the 20 institutes were all different in size and sector, some large and others smaller. The speakers noted that the involvement of diverse institutions was essential to ensure that any organization could benefit from the reform process. The evaluation process added value to the institutes in the quality of their research and ability to attract funding. Having passed the evaluation has helped to identify new needs and demands within the industry, fostering stronger research and innovation hubs. The process sparked bolder opportunities and facilitated greater collaboration, leading to the articulation of significant benefits. It became a strong signal to other institutes, incl. international firms, about the quality of the institutes. 3.5 Results from the reforms Serbia’s system has seen a fast pace of improvements recently following the reform. Serbia's R&I journey has faced challenges due to the destructive impact of the civil war, leading to a loss of scientific community and infrastructure. However, the country has made significant strides in recovery, catching up to the global average in publications and citations. While Serbia aims to become an EU country, it currently stands at three times the global average, with upward trends (EU at five times the global average) of the publications. The speakers noted that these positive trends did not happen in a vacuum – there had been favorable policies implemented in digitalization and business environment around 2012-2015 The reforms improved the quality of the research in the country. If in the past, the success rate for R&I project calls was as high as 95%, but now the Science Fund has introduced 8-9 entirely new calls with a success rate of approximately 10%. This signifies a shift towards more rigorous evaluation and selection processes. As a result, around 2,000 scientists are actively engaged in these calls and initiatives, indicating increased involvement and opportunities within the reformed R&I system. The results of these reform efforts have been notable. 19 SERBIA: KNOWLEDGE EXCHANGE SESSION FOR LEARNING THE EXPERIENCE OF REFORM RESEARCH INSTITUTES MODERNIZATION Comparing the present situation to the past, there is a sense of improvement. The Dean of Mechanical Engineering, for instance, acknowledges the positive changes. 3.6 Lessons Learned Having a bold and ambitious vision of elevating and improving institutions' status helped strategize necessary steps and activities. To continue this growth trajectory, Serbia needed to overcome certain obstacles. In 2011, the focus shifted towards improving institutions, their ability to attract funding, and increasing their overall prestige. The goal was set high: similar to how the United Kingdom is associated with renowned institutions like Oxford and Cambridge, Serbia aimed to establish the Institute of Physics as a prominent focal point for the country. While ambitious, this approach helped streamline and prioritize R&I activities and contributed to overall progress in the sector. Working with the champions helps to build up trust & get interest from more institutions to voluntarily and willingly be involved in the modernization reform. The Institute of Physics played a crucial role in initiating the assessment process. The speakers acknowledged that the institute's strong performance provided confidence in engaging with the evaluation. As a result, the institute evaluation project was launched with the involvement of international experts. Notably, participation in the evaluation was voluntary, allowing institutes to decide whether or not to be part of the assessment. The research institutions' participation was done thoroughly on voluntary principles. These reforms led to more than half of the researchers being employed through these initiatives. Convincing researchers to embrace these changes was challenging, as some were hesitant and preferred to retire rather than adapt to the new processes. However, introducing incentive models played a crucial role in garnering support, as more than 50% of researchers were willing to participate when incentives were offered. Although not all researchers participated, the resistance to the reforms decreased. Within the research community, some champions demonstrated greater success and a stronger focus on the market. These champions constituted approximately 5-10% of the researchers. Notably, the interest in participating in the reforms was evenly distributed across all age groups, indicating a collective willingness for change and improvement. Creating changes overnight without open and consistent consultations with the community may backfire when building trust. The roll-out of the reforms and the engagement of more research institutes in the evaluation process involved several vital steps. Firstly, European funding was obtained, which allowed to bring in international experts who provided recommendations for reform based on policy mix analysis. These recommendations emphasized the assessment of each participating organization separately. 20 SERBIA: KNOWLEDGE EXCHANGE SESSION FOR LEARNING THE EXPERIENCE OF REFORM RESEARCH INSTITUTES MODERNIZATION CROATIA: SHIFTING TOWARDS RESULTS- ORIENTED PERFORMANCE 21 4. Croatia: Shifting towards results-oriented performance Key messages from the showcase In the context of Croatia's highly fragmented research, development, and innovation (RDI) sector, the government has been working towards introducing Performance-Based Funding (PBF) for its institutions. The lessons that the showcase speakers shared were the following: • Initially, Croatia’s modernization efforts faced notable tension stemming from the numerous stakeholders involved. Therefore, it was hard to maintain autonomy while aligning with progress-oriented directives. The Croatian approach to implementing PBF relied on key factors, including allowing public research organizations (PROs) to adopt PBF with incentives and consequences. • The process of implementing the reforms relied on transparency and collaborative decision-making between implementors and PROs. The PROs were provided with a list of indicators from which they select KPIs and set targets. Mid-term evaluations of these KPIs determine the continuation or reduction of funding based on a thorough analysis. This approach aims to be mutually beneficial: implementors gain means to track funding efficiency while PROs maintain their research autonomy. 4.1 Introduction and Context to the Showcases The note looks at the showcase on Croatia organized on the 25th of January 2023 in a virtual format on research modernization practices. The Croatian government has been in preparation for a new law on higher education and scientific activity, that aims to shift the funding model for institutions from block to performance-based funding. This experience is of high relevance to the Reform 5. The speakers included: - Hrvoje Buljan, Professor of physics, University of Zagreb, Croatia, - Kristian Vlahoviček, Professor and bioinformatics group leader, University of Zagreb, Croatia. - Todor Milchevski, Senior Private Sector Specialist, World Bank, Croatia. 4.1.1 NRRP rationale for the showcase The Romanian NRRP Reform 5 aims to transform the research systems in the country profoundly. The objective of the reform was to enhance the performance and integration of public research, development, and innovation organizations in Romania within the European Research Area (see Box 1). However, the Reform faced potential risks of resistance within the community to introduce the ranking system. 22 CROATIA: SHIFTING TOWARDS RESULTS-ORIENTED PERFORMANCE 4.2 Context to the Showcase Country The institutional setup in Croatia's Innovation landscape is similar to Romania's and also faces a high level of fragmentation. In the country, the changes introduced and implemented by the Ministry of Science and Education play the primary role. Three institutions hold significant importance within the implementational arm of the ministry (Figure 3). Firstly, the Agency for Higher Education and Science serves as a quality control body for over 140 public research organizations in Croatia. Their role is to ensure standards and maintain quality within the sector. Secondly, the Science Creation Science Foundation focuses primarily on research projects, albeit transitioning from pure and basic Science to applied research and collaborative endeavors. Lastly, the Croatian Agency for SMEs, Innovation and Investments funds innovation projects. In addition to these institutions, bodies such as the National Council for Higher Science, Higher Education Technology, and the National Innovation Council operate as three-part entities with multiple stakeholders. Overall, this level of fragmentation – especially among the research institutes – contributes to a lot of tension and resistance to any changes. Figure 3 Croatian Research Sector Source: World Bank, showcase workshop presentation The research modernization reforms focused on pushing the public research sector towards changing the nature of funding from block funding to performance-based funding. The idea is to encourage institutes to have more results and reward them with more funding. There is one tension - reorganizing and potentially consolidating the research structure. There is a lot of feeling and request for autonomy. Therefore, understanding the level of flexibility has been essential. The timing is opportune – as the Croatian government is also working with the Recovery and Resilience Plan (RRP). 4.3 Research modernization reforms in the country Croatian Reform for a shift towards Performance-Based Funding for Public Research Organizations should strike a balance between autonomy and strategy execution. The intervention logic for the Reform includes several key elements. The primary objective is to transition towards Performance-Based Funding (PBF) and encourage more Public Research Organizations (PROs) to sign up for the agreements and join the transition. One specific indicator of success is the share of scientific publications among the top 10% most cited globally. Currently, at 4.01%, the aim is to increase it to 5.2% by 2026. The design of the program agreement accounts for both sticks and carrots for the implementation, but research institutes’ participation remains voluntary. The Performance-Based Grants (PBG) agreements have been introduced to facilitate this shift based on a new funding model. Institutions are encouraged to sign up voluntarily, but there are financial implications for not participating – the ‘sticks’ of the Reform. Funding received by 23 CROATIA: SHIFTING TOWARDS RESULTS-ORIENTED PERFORMANCE non-participating institutes gradually decreases over time. The ‘carrots’ of the Reform are the eventual increase in funding and freedom in choosing the parameters from the prepared comprehensive list. The list ensures that an institute for economics is not measured against parameters for Science, technology, engineering, and mathematics (STEM) research and vice-versa. The Reform included several decision points based on evaluations to maintain flexibility and transparency for the decision to increase, maintain or decrease the funding. The agreements are done between the Agency and institutions upon agreement on the KPIs (for example, publications). There are two elements to the funds – the development component - for a PRO to choose a direction to pursue and explain where they see themselves. The variable component - is if they develop the funding -they get more funding. The funding is then distributed twice over the two years. The first payment is made at the beginning of the process. After two years, there is a mid-term evaluation to discuss the progress. If the institution is set to be on the way (‘green flag’), it is given the rest of the funding and has the eligibility to apply for more funds later. If there are delays or other obstacles (a ‘yellow flag’), a deeper review studies the cause, and the Agency may reduce the funding for the remainder of the period. 4.4 Lessons Learned from the introduction of the reform The Reform is in the process of being implemented, but the team has shared some of the lessons learned from the process. The first is that the PROs are not forced to join the Reform, as they can do so voluntarily. They also maintain full Autonomy in Goal Selection. The ministry does not impose specific goals on PROs. Instead, PROs are responsible for selecting one output and one outcome indicator, setting their baseline, milestone, and target values. This approach gives them flexibility. The team highlighted two important aspects of reaching the agreement within the community: 1) Transparent Institutional Financing: The Reform encompasses a variety of instruments and programs for institutional financings, such as technology infrastructure. It emphasizes the need for a transparent process that demonstrates the performance and progress of each instrument or program through monitoring and evaluation (M&E). 2) Transparency in the process: The message of the reforms needs to be precise. The government is to approach the system from a top-down approach and to keep it simple and manageable. The ministry used to micro-manage research groups, and it was very hard to monitor. The idea was to shift the dialogue from the ministry to the institutions. 24 CROATIA: SHIFTING TOWARDS RESULTS-ORIENTED PERFORMANCE FINLAND: BEST PRACTICES OF TECHNOLOGY TRANSFER 25 5. Finland: Best Practices of Technology Transfer Key messages from the showcase 1) Within the Finnish Innovation landscape, tech transfer is not a standalone activity. Multiple actors are involved and aligned to support the commercialization of innovative activities. 2) Cooperation in instrument design is key. Tech transfer tools can vary in form, none of them target a single beneficiary, and they have all the elements of co- (co-creation, co-innovation, co-research) at heart. 3) Continuous Impact measurements are key for successful policy changes. One of the successes of the agility of the R&D system is continuous impact measurement on the level of organization, but also nationally. 4) Research institutes facilitate effective private/public sector collaboration through clear mission statements and well-defined roles. 5.1 Introduction and Context to the Showcases The note looks at the showcase organized on the 21st of February in a virtual format on research modernization practices. The showcases invited the following speakers: - Nina Kopola, CEO of Business Finland - Tomi Erho, Aalto University, - Antti Vasara, VTT (Technical Research Centre of Finland) 5.1.1 NRRP rationale for the showcase Within the context of the NRRP reforms, the showcase was aimed at Reform 4, which aims to enhance cooperation between business and research (see Box 1 for more details). The Theory of Change (ToC) workshops and other RAS engagements highlighted some key findings on Reform 4. While Reform 4 of the NRRP aims to streamline processes such as contracting and promoting stronger collaborations, it was observed that the reform had not fully considered the organizational capacities required to undertake or support technology transfer. Furthermore, there was a lack of awareness among researchers and policymakers regarding industry needs and constraints. As Finland is an aspirational peer for more private- public cooperation, the showcase therefore focused on good practices, in particular on Tech transfer. 5.2 Context to the Showcase Country In Finland, similar to any other leading innovation country, technology transfer should not be considered a standalone activity for innovation. Technology transfer is an integral part of the entire chain of processes, necessitating multiple stakeholders' integration. The transfer from universities to companies, encompassing the journey from the initiation of research to the acquisition of equity by the company, requires attention and alignment from all parties. The 26 FINLAND: BEST PRACTICES OF TECHNOLOGY TRANSFER research sector can often act as the starting point – comprising basic research, applied research, development, innovation, and commercialization. However, there should also be demand from the private sector. After years of lowering the R&D budget, Finland has been gaining momentum in the RDI Policy: from New Climate Act adopted in 2022 to support the country’s target to become carbon neutral by 2035 to be legally binding. The R&D will increase to 4% of GDP by 2030, whereby the public contributes 1/3 and the private sector the other two-thirds. Finnish research organizations, i.e. VTT, have already been changing their strategies to secure the future 1:2 funding ratio. 5.3 Operationalization of the Tech Transfer An important part of the design of all the projects to enhance business-academic collaboration is the inclusion of the ‘co’- in the activities). For example, at Business Finland, a government organization under the Ministry of Employment and Education, four chief instruments are directed at supporting tech transfer. None of them target individual beneficiaries, and they must include the ‘co- ‘component. For example (see also Figure 4), - Co-research: aims to create new business opportunities for allowing universities to set research goals together with companies, covering a share of project costs - Co-creation: to initiate research and join project projects with firms and to create consortia - Co-innovation: to allow join projects for companies and research organizations - Finally, the 'leading company’ instrument is aimed at supporting whole ecosystems by encouraging large firms to involve various local stakeholders in addressing challenges. In these cases, leveraging the ecosystem surrounding the firms becomes essential to maximize regional development impact. Figure 4 Business Finland's funding for research organizations from the 1st of January, 2023 Source: Business Finland, showcase workshop presentation Besides the tech transfer, ensuring the proximity between collaborators is an important asset. For example, for Aalto University – which had been created by the merger of three schools in the 90s –the main campus was set amidst research centers and an accelerator. As a result, Aalto University's startup services can extend an open invitation to the broader community. In fact, half of the university’s 40-70 startups in the pipeline originate from external communities, showcasing the inclusive and collaborative nature of their entrepreneurial ecosystem. This physical proximity cultivates a vibrant environment, fostering fruitful interactions, knowledge exchange, and the cross-pollination of ideas, ultimately bolstering the overall innovation landscape. 27 FINLAND: BEST PRACTICES OF TECHNOLOGY TRANSFER What helps research institutes to work with the private sector's shorter time horizons and investment profiles is the organization's sharp definition of the roles. For example, the VTT – a renowned and highly successful research institute established almost 80 years ago- boasts an impressive turnover of 260 million euros and employs over 2,200 professionals, with over one-third holding a doctorate. VTT plays a pivotal role in fostering the utilization and commercialization of R&D outcomes in both the business sector and society. The challenges of the role are that the private sector, universities, and state research work on different time horizons and have slightly different goals. What helps the organization, however, is clearly defining what VTT works on (and not). They offer support for R&I policy with policy advisors on national and regional scales. Working in R&I on multidisciplinary societal challenges, such as climate change or semiconductors, providing R&D Infrastructure to support these. Within the private sector, the research institute supports large enterprises, small and medium- sized enterprises (SMEs), and their spinoffs, but within technology readiness level (TRL) 3 and TRL 7. VTT’s support for the tech transfer is also well articulated. There are only three paths: 1) collaboration with firms, 2) licensing, 3) startups (Figure 5). Figure 5 Three avenues for tech transfer for VTT Source: VTT, showcase workshop presentation 1) Synergistic partnerships with entrepreneurial ventures facilitate the translation of ideas into tangible innovations. 2) The largest share of the activities lies in collaborative research with companies; These projects entail a specific objective, with the resulting intellectual property (IP) owned by the company involved. 3) The second path is seldom, as the organizations primarily license specific IPs to accompany firms. However, the VTT notes that this type of arrangement is less frequent for our organization, as spinoffs or startups have emerged as the predominant avenue in recent times. Startups represent a significant pathway for commercializing VTT's research, encompassing both instances where their personnel establish startups and become entrepreneurs and cases where existing startups license their technology and engage in collaborative research with them. This dual approach fosters a dynamic ecosystem where our research findings find practical applications and synergistic partnerships with entrepreneurial ventures. Such synergy facilitates the translation of ideas into tangible innovations. 28 FINLAND: BEST PRACTICES OF TECHNOLOGY TRANSFER 5.4 Results and Lessons Learned ‘Continuous Impact measurements are key for successful policy changes. We are operating on the taxpayers ’money, and we have to make sure that the re is a positive return ',on the investmentwhich is a powerful message from Business Finland. By constantly holding a hand on the pulse – the Agency collects data and runs numerous impact studies on their projects. For example, their estimates for the innovation funding of 25 times return on the investments help to lobby for more support in the R&D sector. (Figure 6). Figure 6 Impact of investing public funds at Business Finland Source: Business Finland, showcase workshop presentation. As one of the speakers pointed out, the overall public policymaking vis-à-vis funding R&D is also primarily supported by evidence-based policymaking. By understanding and measuring the actual outcomes, the desired results can be delivered, ensuring the desired impact and efficacy of the initiatives. This allows for effective pivoting for any policy changes and rules. 29 FINLAND: BEST PRACTICES OF TECHNOLOGY TRANSFER ISRAEL’S INNOVATION POLICY STORY: FROM VISIONARY LAWS TO INNOVATION ECOSYSTEMS 30 6. Israel’s Innovation Policy story: from visionary laws to innovation ecosystems Key messages from the showcase Although the speakers insisted that most of the 'secret sauce' behind the Israeli success as an innovation leader may need to be replicable, some lessons learned could bring value to the Romanian counterparts. The speakers’ advice is to focus on the following key steps: - To define outcomes for the innovation policy early on, such as job creation. - For the Israeli, the long-term vision for the policy was rooted in a law from 1985 that states its desired outcomes clearly: innovation is there to create jobs. Therefore, most of its activities are selected through that lens. - All subsequent decisions align with these goals. All the support measures, for example, specify the involvement of the private sector. - The timing of the reforms matters. Israel used the challenging economic conditions of the 80s to pivot support towards R&D and innovation. - Execution efficiently matters – for Israel, it was through the creation of the Office of the Chief Scientists (Innovation Authority) to run all coordination and all RDI matters. - Efficient and consistent support for the private sector can initially be a challenge, but the growing involvement of multinational corporations can track sustainable ecosystem growth. - Romanian counterparts were advised to monitor innovation on the ecosystem level and actively foster collaborations for success. 6.1 Introduction and Context to the Showcases The note looks at two showcases organized as a follow-on series after the study visit to Israel by a Romanian Ministry of Research, Innovation, and Digitalization (MCID) delegation. The speakers included: - Anya Eldan, former Venture Partner of the Israel Innovation Authority - Uri Gabai, CEO of the Startup Nation Policy Institute 6.1.1 NRRP rationale for the showcase The upcoming Romanian Reform 4 – on research and business beyond increasing the cooperation between businesses and research development and innovation - aims to create a favorable environment for public and private investments in the sector. (see Box 1 for more details). The reform aims to have at least one business entity active, including SMEs and startups as partners, in projects funded by MCID. However, the reform faces challenges in not addressing the capabilities of organizations to undertake or support technology transfer (e.g., provision of staff training) nor the role of intermediaries that accelerate the commercialization 31 ISRAEL’S INNOVATION POLICY STORY: FROM VISIONARY LAWS TO INNOVATION activities (e.g., technology transfer offices (TTOs)). There is also limited knowledge (mainly among researchers) concerning the industry's needs and constraints and a lack of mechanisms to encourage contact. 6.2 Context to the Showcase Country As an aspirational peer to Romania, Israel is a known innovative leader globally. And although the speakers warn that many of the 'secret sauce' ingredients that worked to Israeli's advantage may need to be replicable, there were some noteworthy takeaways and lessons for the Romanian Innovation Policy, especially on creating an environment of collaboration. 6.3 Research modernization reforms in the country On the central aspects of the Innovation Policy’s success, the speakers pointed out the following ingredients that were key to the success and are necessary components to have in place (see Figure 1). These ingredients included having a vision, willingness, and ability to execute the vision. Each of these points is described below: Figure 7 a strategic framework for the innovation policy Source: Startup Nation Policy Institute, showcase workshop presentation. Articulation and inclusion of the longer-term outcomes for the law-making helped align the policy. The 1985 law established a consensus by encapsulating a visionary outlook that guided subsequent activities. Its overachieving goals were to generate employment opportunities within the scientific and technological sectors, fostering a broader technological spillover effect beyond the individual gains from research and development. Additionally, the law aimed to cultivate an innovative industry by leveraging and expanding Israel's technological and scientific infrastructure and human resources. Over four decades since the law's implementation, the speakers acknowledged that some measures were more successful than others. However, that vision for job creation based on R&D ultimately pushed the country toward its leading position. Creating opportunities and timing the reforms well is critical: the Israeli case leveraged bad economic conditions to overturn the policy towards more support and acceptance of R&D and innovation. The timing of the 1985 law was particularly significant as it coincided with a period of economic adversity. Before 1985, Israel faced challenging economic conditions, including a staggering inflation rate of 450%. The government deficit reached 15%, defense spending accounted for 13%, and public debt stood at 285%. However, the challenging economic circumstances prompted a shift in direction, seizing the crisis as an opportunity rather than allowing it to go to waste. This allowed for the implementation of 32 ISRAEL’S INNOVATION POLICY STORY: FROM VISIONARY LAWS TO INNOVATION innovative policies and strategies that would ultimately shape the future of Israel's technological and scientific landscape. 6.4 Operationalization of the reform Office of the Chief Scientists (Innovation Authority) takes a central position with the National Innovation System and works on fostering the R&D together with the private sector. The execution of the policy was done through a newly created Office of the Chief Scientist (now known as the Israel Innovation Authority). It became a centralized authority on all scientific aspects the Ministry of Innovation, Science, and Technology deals with. The Innovation Authority was a central point for all the matters on RDI and was in the position to coordinate any programs run. One of its primary underlying principles was always to involve the private sector – as the 'market will always be smarter than the government,' Uri Gabai said. Encouraging more risk-taking - providing loans and no equity or getting entrepreneurs ‘to have skin in the game ’helped the journey. Finally, the Authority saw to covering the entire innovation pipeline with its programs: from support to conception to commercialization, but with the participation of the private sector at all stages. Figure 8 Principles for the Office of Chief Scientists (Innovation Authority) Source: Startup Nation Policy Institute, showcase workshop presentation. The role definition of the Innovation Authority relied on five pillars: exclusivity of its roles, adjustability, efficiency, independence, and consistency. Its ’job has also included monitoring all the essential external and internal trends. For example, the Agency worked with Israel's need for more human capital. It worked towards emphasizing opportunities for technical education and fostering collaboration with the industry to ensure the skills and knowledge taught to students were relevant to the market. Uri Gabai offered some examples: For example, the Israeli government has invested approximately $70 million to promote technical education and courses outside traditional academic settings, such as AI, data science, and food tech. The Universities have also been encouraged to collaborate with the industry, offering internships and inviting professionals from the high-tech sector to teach students. 6.5 Results from the reforms Although we know that Israel has a high share of unicorns and startups, the speakers argued that a sign of sustainable R&D is the growing inclusion of MNCs. The ecosystems approach is different as it requires a more nuanced dialogue with the private sector. The stakeholders were recognized as risk capital, startup, academia, and multinational corporations (MNCs). The involvement of the latter – the MNCs- should not be scouting for technologies but focused on establishing partnerships within the ecosystem. ‘Once you 33 ISRAEL’S INNOVATION POLICY STORY: FROM VISIONARY LAWS TO INNOVATION convince them to work with you – it makes a lot of difference. It’s a good source of environment. Corporates are no longer aggressive’, says Anya Eldan. Industry-academy collaborations play a vital role in fostering innovation. While there may be numerous research institutes, the focus on technology transfer can be limited. Often, these institutes are engaged in problem-solving for external companies. Many innovative companies are built upon in-depth academic research. A separate commercial entity is typically established, and intellectual property (IP) ownership is defined upfront, ensuring transparency. Government support is crucial and may involve direct investments in groundbreaking, high-risk technological innovation. Such support encourages collaboration and facilitates the transfer of knowledge and technologies between academia and industry, fostering a thriving innovation ecosystem. It is important to highlight that government involvement in industry-academy collaborations is done primarily through public-private partnerships. Grants and funding that the government provides are not given at 100% of the total cost but require partial contributions from the private sector. This approach encourages competition and ensures diverse goals and stakeholders are involved. Rather than targeting specific sectors, the competitive nature of the collaborations aims to identify and remove barriers to innovation. This dynamic environment fosters a more robust and inclusive ecosystem. 6.6 Lessons Learned Staying focused on the outcome helped the organization remain agile, dynamic, and consistent in its private sector support. For example, in the late 2010s, evidence emerged that more than the high-tech miracle alone would be needed to bridge the productivity gap. The need for the Innovation Policy shifted towards finding other ways to transfer innovation across sectors and change its approach to support innovation ecosystem policy. Three levels of change were implemented to support the shift: (1) structural changes to create new entities, (2) strategic changes to review the mission and goals of the Authority itself, and (3) organizational changes to restructure internal business units. Focusing on key steps: monitoring the research landscape and actively fostering collaborations can enhance the quality and impact of the work done by R&D professionals. The first step should always be to work with active and relevant data to see if there are any gaps in technology transfer and deal flow. Grants should be provided for commercialization efforts and include the private sector. There should be intervention to facilitate collaboration among stakeholders by bringing people together. Building a strong community is crucial, allowing participants to connect and collaborate. If certain players are missing, government support can be sought. There should be consideration about establishing an R&D fund and ensuring a consistent deal flow. ‘Remember,' Anya Eldan says, 'the ecosystem approach requires combining forces and fostering collaboration with multinational companies, academia, and other potential partners. 34 ISRAEL’S INNOVATION POLICY STORY: FROM VISIONARY LAWS TO INNOVATION „NRRP. Funded by the European Union – NextGenerationEU” https://mfe.gov.ro/pnrr/ https://www.facebook.com/PNRROficial/ 35