Act as You Innovate; I’ll Act as I Fund Innovation

by xabier

I have not posted anything in this blog for ages, and now it is time for a comeback. During these last months the economic situation in Spain —including Galicia— has been worsening and, even if we pay no attention to oracles such as the almost-always-right entrepreneur Marc Vidal, it must be admitted that a dark shadow is overwhelmingly spreading across Spain, disappointing and scaring the until now confident and somehow naïf citizens. One of the hopes often quoted as a possible way out for this situation is the stimulus of ICT industries. And the Galician government’s strategy for that sector is now about to be released.

The document (6 Mb) has been sent to ICT agencies as part of a process of consultation that must be done in less than a week. These are some of my immediate thoughts about the strategic document.

Let’s begin with the positive side. The first pages of the document are addressed to analyze why previous policies of promoting ICT innovation are failing in Galicia. I have found a policies’ document, in which it is acknowledged that government funding of innovation projects is quite often the companies’ goal, rather than the innovation projects themselves, to be very healthy. Companies with limited resources in a small market try to get public funding as a source of cash, but without looking for creating real innovative solutions. Funding lines come before the companies interest and that is naturally wrong. But this honest analysis does not finish the job: there is no economic evaluation of previous strategic plans —are they failing? How much have they produced or failed to produce? —. There is not a single figure in the document, and even worse, there is no shift in policy: instead, policies already deployed in 2010 and in tune with this still-to-be-published strategic plan insist on the old measures for promoting ICT industries, those very measures that are regarded as missing the point by this document.

The key issue is, however, more basic: Galician companies, and in particular ICT Galician companies, even if they have great ideas for new markets or new solutions, do not innovate, or innovate only a little, simply because of their size. They are, in general, too small. When we talk about large companies that are engaged in real innovation, they seldom require public funding for that: the market will reward their risks. Certainly, private loans are blocked by the mortgage market at this moment: therefore the problem is not about innovation, but about banks and how governments can replace banking functions efficiently. Yet in an environment of small and micro-companies, governments think that they are obliged to do something about innovation, and they choose the easy way: direct funding. Those small Galician companies struggle to attain the easy funding provided by the government, but they are still not big enough to employ that innovation beyond being funded: they act as they innovate just in order to be funded, and not the other way round.

The interest of the government is not related either to the innovation process in private companies. Its main interest is to benefit from ICT tools developed for public administration by companies (this is the main part of the strategic document), and to control the funding process in a bureaucratic way. The fear of fraud —a very understandable one owing to the proportion of fraud in the Spanish economy— has led to an endless process of requirements and justifications that are often unfair and unbalanced, and still ineffective: fake bills and false statements about figures, deadlines and market results are everyday issues for these companies, causing a new turn of the screw for inefficient and unfair control by the government, and so on.

Sadly enough, no intention of change is shown in the document. Government inertia in funding and control is stronger than the diagnosis of previous failing strategies. They will retain funding as a factor for conditioning innovation and not as an answer to the company needs (if any). For instance, one of the designated sectors for innovation is the tracking of maritime merchandise transport. How many companies would be already innovating in this field to be considered a strategic sector? They will also keep launching new bodies of discussion between representative associations and institutions. That policy of “councilization” is not very expensive, but grows exponentially with no results nor an improvement of real, open participation. But more importantly, the strategy defined in this document does not suggest any change in policy monitoring and evaluation: the 2011 document will present the same figures than that of 2010: none. And without figures, it is not possible to determine if a set of policies are effective.

Some extra pills

  • The document includes among its objectives the reduction of products and services created for no one or for very few people. However, there is no suggestion as to how to reduce this, apart from increasing bureaucratic control. However, as we have seen, in a normal environment companies will only innovate if they can offer that product or that service in the market for profit. The government task is to help in achieving that normal environment, not creating a totally artificial one.
  • The document states that “Xunta de Galicia is the most innovative government in Spain”. Even if the whole document lacks in figures, I would genuinely wish to see the numbers supporting this statement.
  • Metapolicing. Most of the document is wasted in setting out the policy of implementing policies. These writing strategies can cause a global blackout, and they are not adding new elements. Consolidating policies is not a policy unless that consolidation was completed with a list of actions and their costs. And there is none.
  • Language. The document is written in two languages simultaneously: most of it has been translated automatically from Spanish into Galician, but that automatic process has not been reviewed by humans. The text is unintelligible in many places. However, some of the sentences and words have escaped from that translation and still remain in Spanish in the middle of the text. In a nutshell, the document is not professionally produced.