System dynamics for system innovation : first steps in the development of a system dynamics computer simulation model of system innovation

In times of radical socio-technical change, system-level or transformative innovation (hereafter simply system innovation) is necessary in order to achieve, or maintain, economic prosperity, in ways compatible with environmental sustainability and a cohesive society. There is growing policy interest and experimentation with transformative innovation policies, which seek to address pressing societal challenges, including global ones, such as climate change, and domestic ones, such as successful industrial transitions. Existing tools for measuring, modelling and evaluating innovation policy inputs and outcomes are unable to capture crucial features of transformative innovation policy, including synergies, tipping points, multi-level interactions, sequencing and rebound effects. This report documents an exploratory, one-year research project to build the knowledge base and assess the feasibility of a system dynamics model of system innovation. The project centred around the development of a proof-of-concept version of POLYTRoPOS (a POLYvalent model for the evaluation of TRansformative POlicy Scenarios), a system dynamics model focused on the interactions between technology deployment and productive capability accumulation. The prototype, in this early form, cannot yet provide policy guidance, but is meant to illustrate key concepts, demonstrate policy relevance and generate lessons for the later development of a more fully-featured model.