Mobilising private investment to address societal challenges

Executive summary

Mission-oriented innovation policies (MOIPs) mobilise science, technology and innovation in order to address well-defined objectives related to technological or societal challenges. Governments cannot achieve these goals alone but require the buy-in of companies, academia, and civil society. In addressing major challenges through a greater systemic and collaborative approach, missions present an opportunity for engaging with these stakeholders more actively than traditional innovation policies. Because many missions were initiated in 2020, the role of the private sector in supporting missions will continue to grow as they mature, and the deployment of novel solutions becomes increasingly critical.

To unlock the potential of the private sector’s engagement, governments need to develop new relationships and ways of interacting with companies. In this regard, this report delves into how governments are mobilising the private sector in designing and implementing mission-oriented policies. It draws on interviews with private-sector actors (including firms and industry associations) to reflect their experiences with mission-oriented policies from around the world.

What is the expected added value of mission-oriented innovation policies for businesses?

Effective 'crowding in' relies on unpacking the reasons why private sector organisations are interested in participating in missions to begin with:

• They acknowledge the substantive importance of realising mission goals in creating a better society or planet, so try to support these goals for the broader social good.

• They appreciate the signals that missions provide in terms of governments' longer-term priorities.

• Missions provide more coherence across government by aligning support for R&D with other activities (e.g., regulatory changes and funding for demonstration or deployment).

• As mechanisms for collective action, missions help in coordinating wider value chains and creating more impact than individual companies can alone.

• Companies see the economic benefits of a mission in how the goals are aligned with their current business models and areas of research.

At the same time, governments often undermine their missions by changing mission goals, abandoning their work under their MOIPs, or not fully committing to the systemic nature of missions.

How to engage the private sector in the framing of the missions?

Missions engage a wide array of stakeholders in the selection of well-informed societal challenges to be addressed and the development of strategic agendas to tackle them collectively. In addition, their buy-in for the implementation often depends on their acceptance of the mission goals. Missions need to be clearly defined, going beyond their overarching statements (e.g., using roadmaps and theories of change to provide more details). At the same time, policymakers should balance the influence of different parties (including incumbent versus emerging viewpoints within these stakeholder groups), as missions risk being ‘captured’ by parties with vested interests who could frustrate change. To strengthen the engagement of the private sector in their missions, governments should:

• Develop an approach for framing missions that balances private sector input and with establishing transformative mission targets beyond the “business as usual”.

• Engage stakeholders broadly and early to test their risk appetite and build buy-in from stakeholders around the missions who could form the 'coalition of the willing' (e.g., calls for expression of interest), before launching missions.

• Produce strategic agendas, which help the partners understand the underlying assumptions for the missions and the relationships regarding the objectives, implementation and impact.

• Inspire mission partners and stakeholders to take part in the framing and implementation of the mission by developing a compelling mission narrative. The narrative might have to be tailored to specific stakeholders.

How to mobilise the private sector in the implementation of the missions?

The changes required to meet mission goals are systemic and often require whole sectors or supply chains to embrace the new solutions that are developed, rather than individual organisations in silos. As a result, some MOIPs use existing bridging organisations or establish new ones to reach out to industry. Ongoing engagement with industry is necessary to build momentum, ensure there is a steady pipeline of project applications, and to disseminate knowledge regarding successful projects. Offering a systemic policy mix of both demand- and supply-side support is important in incentivising private sector actors to prioritise missions. While most missions focus on the supply side, governments can do more to leverage their demand-side instruments. Governments have several tools at their disposal in this regard, including procurement for innovation programmes, larger scale commercial procurement, and modifying procurement rules. Governments can also work more closely with regulators when setting missions and throughout their implementation. The financial sector is also an important actor in creating more mainstream buy-in to missions. These institutions often specialise themselves, so governments can target their outreach accordingly (i.e., venture capitalists focused on cleantech or health). Ultimately, many businesses see the value of missions, but policymakers should provide a larger number of tools to scale up this engagement. To strengthen the mobilisation of the private sector in the implementation of missions, governments should:

• Institutionalise commitments to missions to signal that they are long-term priorities (e.g., through dedicated funding, legislation, or contracts). Multi-year, flexible central pots of funding are also ways to instil confidence that missions are long-term priorities beyond electoral cycles.

• Work with bridging organisations to leverage established relationships and networks to support the missions. In some cases, these organisations already exist, and in other cases, establishing them can be part of the mission programming.

• Use mission portfolio management, ensuring there is a pipeline of project applications and continuously steering existing activities towards the mission goals.

• Broaden the research and innovation policy portfolio to include incentives that are more attractive to the private sector, such as public procurement, demand-led policies, supporting mission-relevant demonstrators, prototypes or technology infrastructures.

Embed experimentation in the policy mix to explore a variety of technological and non-technological pathways in achieving the mission goals (e.g., living labs, regulatory sandboxes and stage-gated approaches). These experiments should provide opportunities to learn from the different approaches and formal off-ramps to scale up promising techniques for addressing the missions.