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Governance arrangements for innovation precints

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Governance arrangements for innovation precincts vary. They can be simple networks that share information, strategic alliances that coordinate and align activity and investment, or involve dedicated facilitators and organisations to drive collaboration.

This guide summarises some models for consideration when making decisions about the best type of governance for an innovation precinct. It outlines the role of governance, common governance models, sources for further advice and gives an example governance structure.

Please note that the department does not advise or recommend establishing any particular entity type over another. We encourage precinct managers and facilitators to keep the needs of their particular precinct in mind and consider engaging a suitably qualified professional for advice.

Role of governance in innovation precincts

The governance settings for an innovation precinct will influence its success.

Getting the governance settings right can help to ensure that:

  • participants are engaged in the precinct
  • sufficient resources are available and financing is properly managed
  • activities are efficiently executed
  • overarching goals are met

Both under-governance and under-investment, and over-governance and over-investment, can have negative impacts on the development of an innovation precinct.

Under-governance and under‑investment may result in a lack of strategic direction and suboptimal growth. In contrast, too much, too early, can stifle bottom-up organic growth and impose financial and legal risks on innovation precinct participants and funding bodies.

Governance arrangements may change over the course of an innovation precinct’s life. Precinct managers should regularly review their governance to ensure it is still fit-for-purpose. It should focus on the precinct’s growth through strategic collaboration activities.

Look to other precincts and peers for advice

Precinct facilitators should consider seeking guidance from communities of practice on suitable arrangements. Communities of practice are networks for collaborative learning and sharing of experiences between practioners in a given area of expertise.

In the context of innovation precincts, these groups include can include facilitators, academics, innovation precinct and cluster managers, representatives from university research and technology transfer offices, representatives from planning authorities and regional development agencies, and other interested stakeholders.

Communities of practice that can help access and share learnings around innovation precincts include:

  • University Industry Innovation Network: an international network of academics, practitioners and business focussed on improving engagement between industry and researchers.
  • Global Institute on Innovation Districts: a global network of leaders in the theory and practice of establishing and maintaining innovation districts.
  • MIT Regional Entrepreneurship Acceleration Program: The MIT REAP Program is a two-year program where representatives from a region work together to strengthen innovation driven entrepreneurial ecosystems through an evidence based, practical process.
  • Network of Corporate Relations Officers: a network of academia, industry, and government that work to strengthen relationships between research institutions and industry to create mutually beneficial outcomes.
  • TCI: a global network or organisations and practitioners with expertise in cluster management and facilitation to raise the competitiveness and innovative capacity of firms, cities and regions.

Governance models for innovation precincts

There is no one-size-fits all governance model for innovation precincts. Depending on the age, scale and sophistication of the precinct, different arrangements may be appropriate.

In the paper, ‘Governance Models and Frameworks for Smart Specialisation’[1], Howard Partners describes a potential framework for collaboration governance:

  • Networks are an informal collaboration where members exchange information through conferences, meetings, communities of practice or networks.
  • Associations build relationships where members interact on common themes and interests. People and organisations pool their interests, and sometimes resources, to work towards an end result that has only been loosely defined or articulated.
  • A strategic alliance is an agreement between two or more parties to pursue a set of agreed objectives, while remaining independent organisations.
  • An incorporated venture involves formally established corporate arrangements that cover governance, management and accountability protocols.[2] They may require formation of a corporate entity. They give effect to strategic partnerships between parties where there are significant resource commitments involved, and delivery of outcomes is required.

Key attributes of each of these governance structures are outlined in Table 1.

Table 1: Governance structure attributes - Tailoring governance to an innovation precinct’s development level

Attribute

Governance structure

Network

Association

Strategic Alliance

Incorporated Venture

Basis of governance

Shared interest

Collective action, membership

Joint action in deed of agreement

Provisions of the Corporations law

Level of participant commitment

Loose, casual, voluntary

Weak

Strong, committed

Enforceable

Mission

General statements of purpose

Specific statements of purpose

Clear statement of purpose

Clear statement of objectives, results

Breadth of agenda

Narrow

Specific interests

Focussed

Encompassing strategy

Governing board involvement

Casual

Limited

Strong

Diligent

Decision making processes

Consensual

Representative

Contractual

Corporate, judgemental, expert

Role of Chief Officer / Secretary

Administrator, facilitator

Administrator, adviser, broker

Executive, manager, broker

Executive (decision maker) manager

Role of Finance Officer

Absent, limited funding

Important

Significant

Strong

Focus of operations

Communication, knowledge sharing

Cooperation, consensus

Coordination, alignment

Corporate, integrated

Cost of formation

Minimal

Exchange of letters, emails

Low

Registration as a Not For Profit Association

Moderate

May involve contract lawyers and counsel

High

Expensive lawyers and accountants

Operating instruments

Informal, consensus

Memoranda of Understanding

Formal agreements and obligations

Incorporation, legislation, deed

Basis of operation

General agreement, good will

Statement of Intent, Membership fees

Agreed Business Plan and budget

Legal Entity

Cost of operation

Minimal

Low

Moderate

High

Capacity to deliver large programs or projects

Limited – small, specific projects

Moderate – project specific

High – project specific

High – project and program specific

Accountability for stakeholders

Informal reporting

Project acquittal

Formal reporting in financial statements

Formal reporting in financial statements

Formal reporting covered by law

Risk for stakeholders

Minimal

Low

Moderate

High

Source: Developed by John H Howard from Howard Partners’ work relating to collaborations (page 20).

A potential governance model

Figure 1 shows a hypothetical model organisation and governance structure for an innovation precinct. This arrangement could be suitable for a more established innovation precinct, such as a strategic alliance or incorporated venture, or a similarly formal arrangement (as outlined in Table 1).

Figure 1: Example governance structure

This diagram explains the following relationships. Partnership (key players) elects Steering committee (in charge of strategy development and decision maiking). This committee appoints a facilitator (in charge of day-to-day management of the precint). The Facilitator interacts with Precinct members (core and non-core partners). Precint members then form the Partnership.

In this example, there are key roles for a partnership, steering committee, and facilitator.

Partnership

The partnership consists of large and small enterprises, universities, and other entities that take part in and have ownership of the precinct.

In this example, an innovation precinct partnership consists of:

  • Core partners: enterprises and other participants who choose to have an active involvement in the precinct and the various projects undertaken by the innovation precinct and could, for example, participate on a fee-based membership basis. This could include academic institutions managing innovation and research in partnership with other precinct participants.
  • Non-core partners: participants who have a lesser involvement in the innovation precinct and may only be engaged on specific projects. These participants could, for example, participate on a ‘services-in-kind’ basis. Examples of non-core participants are certain ‘expert’ groups/individuals (e.g. law firms) or government institutions.
  • Informal connections: collaborative relationships with domestic and international centres of expertise and other complimentary innovation precincts and industry clusters. These collaborations lead to increased expertise in the innovation precinct and contribute to knowledge transfer, enhancing innovative capabilities and competitiveness.

Steering committee

The partnership elects a steering committee to represent their interests. It consists of leaders from a selection of the innovation precinct participants, spanning the industry, research and skills/training sectors.

The steering committee is responsible for:

  • developing and updating the innovation precinct’s strategy as a basis for the growth initiatives within the precinct, and a set of Key Performance Indicators (potentially with support from the facilitator)
  • driving implementation of the innovation precinct’s strategy
  • prioritising the innovation precinct’s actions and activities
  • high level decision making within the innovation precinct, including the selection of the facilitator.

Facilitator

The steering committee appoints a facilitator or team of facilitators to handle day-to-day management of the innovation precinct and act as an honest broker.

The facilitator could be a single person (small precinct) or a small team (large precinct or extended regional innovation network).

The facilitator has:

  • advanced interpersonal skills, with the ability to bring people together from across sectors to reach a collective understanding
  • an understanding of the relevant industry sector including some of its challenges and opportunities
  • an expansive network across sectors, including industry, government, the research sector and education and training institutions
  • an ability to build trust between enterprises within the partnership and between the partnership and external stakeholders, including across industry, research and education/training sectors
  • strong facilitative leadership skills to deliver collaborative projects

Take home: tailor governance arrangements

  • Adopt governance structures that will help to ensure the success of your innovation precinct.
  • Periodically review your governance arrangements as the precinct grows to make sure it is still fit‑for‑purpose.
  • Seek guidance and advice on the appropriate model for your innovation precinct.

Footnotes

  • [1] Howard JH, Williams T and Agarwal R (2016) Governance Models and Frameworks for Smart Specialisation
  • [2] An incorporated venture refers to formally established corporate governance arrangements through entities including corporations covered under the Corporations Act 2001 and entities such as Incorporated Associations covered under relevant State and/or Territory legislation