Boosting technology development through mission-oriented policy mechanisms

Most western countries – including innovation champions such as the USA – have a tradition of mission-oriented policy. These policies pursue the goal of supporting a particular set of new technologies. As such, they involve preferential interventions towards a certain technological domain and can be characterised by a higher degree of intentionality, prioritisation and centralisation than the standard policies focusing on framework conditions.

Traditionally, Switzerland has not really opted for such a policy logic. It rather prefers relying on strong framework conditions, market forces, spontaneous entrepreneurial initiatives and coordination to meet the technological challenges ahead. The main reason for not pursuing mission-oriented policies involves the well-known arguments about

1. the inability of the state and the government to decide on priorities and establish strategic targets and
2. the market distortion effects generated by preferential interventions.

These arguments are true in a certain context: If mission-oriented policy is poorly designed, it may easily and quickly become a central planning exercise.[1]

However, mission-oriented policy does not necessarily need to be designed poorly, as insights from national experiences show: Properly designed mission-oriented policy can be very effective in boosting technological domains and achieving specific innovation targets. An excellent example for such a well-functioning programme is the ARPA

(Advanced Project Research Agency) model.[2] Its featuring principles are the general organisational flexibility, bottom-up programme design, discretion in project selection and active project management. All these features rely on highly talented, independent and empowered programme staff. As analysed in literature, the stage-gated ARPA model showed that:

• it is possible to efficiently organise research & innovation around a technology-related mission or a set of overarching goals;
• it proved to be particularly optimal for areas where technology exists, is relatively unexplored and has great potential for improvement;
• it is also useful to solve friction on markets for ideas and technologies in sectors where the path from idea to impact is extraordinarily difficult (such as in energy because of so many obstacles, such as large amount of capital for demonstration and scale up, strong infrastructure inertia, etc.).

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This text is an excerpt from the SSC’ considerations in the recently published policy analysis 2/2019 “Dealing with disruption – The role of education, research and innovation in shaping financial innovation”. It is available on the SSC’ web site.

^[1] This refers to a principal agent governance, where the principal (i.e. the government) decides from the top what to do and sets the incentives for the agents (i.e. the firms) to execute the plan. This results in very poor information flows from the bottom.

^[2] Azoulay, P., Fuchs, E., Goldstein, A.P., & Kerney, M. (2019). Funding Breakthrough Research: Promises and Challenges of the ‚ARPA Model‘. Innovation Policy and the Economy, 19(1), 69-96.