OCO Global Innovation Index for Investment Promotion Agencies June 2021
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OCO Global Innovation Index for
Investment Promotion Agencies
June 2021
Foreword from the CEO OCO are excited to launch a new annual IPA Innovation Index. With the arrival of the global coronavirus pandemic, IPAs (along with every other business) had no choice but to adopt new ways of working, and new approaches to communicating and transacting with clients. Our analysis shows that IPAs are beginning to adopt new approaches and embrace digital tools and process to reflect practices that have been embedded in their clients for some time. Although new project volumes were down, expansion and retention work tested the capabilities of many IPAs in account management and stress tested CRM. It also demonstrated that sacred cows such as remote working being less productive were myths. And most importantly the whole client journey became digital and in some cases more effective as a result. The top 2 innovation awards go to IPAs from emerging economies (India and Abu Dhabi) which demonstrates the level of ambition and importance of FDI for these countries, and fires a shot across the bows of the more established and complacent status quo. These organisations were already well advanced in respect of digital tools, sustainable sectors of the future and recognise that success is about liveability as well as well as economics. We are grateful to all of the IPAs who took part in the study and look forward to tracking progress and further proving out the relationship between innovation and success. Mark O'Connell Founder & CEO OCO Innovation Index Awards Report 2021 2
Global economies undergoing a period of unprecedented change
The coronavirus pandemic has accelerated changes in business practices and government policy...
Companies are used to innovating in periods of downturn,
but are Investment Promotion Agencies (IPAs)?
“ Developing an innovation strategy that reacts to or even anticipates a downturn, doesn’t just weather
the storm but creates a competitive edge for the future. We looked at 30 Fortune 1000 companies that
accelerated during 2008 and all of them invested in new growth options instead of just cutting costs. Bain
& Company came to a similar conclusion after analysing 5,000 companies over 10 years.
Gartner, 2020
”
GE Financial Services was founded Airbnb was founded in the financia Over 1/3 of bank branches in Europe
post the Great Depression as a crisis of 2008 as increasing number have closed in the last 10 years,
channel to sell its refrigerator and of cost-conscious consumer and owing to business model change
washing machine products to business travellers sought alternatives brought about by financial crisis. A
consumers. to hotels. an example, in Q3 2020 80% of all
Santander UK sales and customer
transactions were conducted via
digital channels.
OCO Innovation Index Awards Report 2021
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The OCO Innovation Index examines how effectively IPAs are adapting to
the challenges of Pandemic recovery, sustainability and digitisation.
The OCO Innovation Index, aims to:
• identify and assess those changes initiated by IPAs, in light of the challenges raised by the Covid pandemic, and
• assess how IPAs are positioning themselves for the post Covid investment landscape
Two elements to this study
Supported by a series of in-depth
A quantitative survey covering a qualitative interviews with IPAs to
series of 3 key topics spanning IPA expand upon the key themes emerging
innovation in the past 12 months from the quantitative survey, illustrating
best practice and highlighting key
examples of innovation
Methodology: The Innovation Index Explained
The OCO Innovation Index broken down: 10 categories across 3 areas (Strategy, Operations & Technology). Scored on
whether the IPA made a change or not in response to Covid-19 and new strategic opportunities.
I N N O V AT I O N I N D E X
OPERATIONS STRATEGY TECHNOLOGY
New Sectors New/updated Plan CRM/Tools Upgrade
New Markets Proactive M&A Virtual events/Conferences
New Services Engagement VC/JV Virtual Tours
Account Mgmt Focus
OCO Innovation Index Awards Report 2021
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Findings are based on 20 responses covering a broad
geographical spread of IPAs
Abu Dhabi Investment Offic Dubai FDI Invest in Holland
Austrade IDA Ireland Invest in Spain
Bahrain EDB Invest Hong Kong Invest India
Business France Germany Trade & Invest Invest Trinidad & Tobago
Invest in China Invest in Lithuania Italian Trade Agency
CINDE Costa Rica Invest in Denmark Switzerland Global Enterprise
UK Dept. for International Trade Invest in Finland ABA Austria
OCO Innovation Index Awards Report 2021
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The Global FDI market collapsed in 2020
And whilst there are signs of recovery in certain sectors, the outlook overall is uncertain.
Global FDI inflows 1995-2020 (US $bn)
2500
-35% vs 2019
2000 2020 volumes 30% below
financial crisis and back a
levels of late 1990s
1500 1390
1000
859
500
0
1995 2000 2005 2010 2015 2020
Latest UNCTAD Investment monitor report published last week shows
global FDI flows falling from $1.5 trillion in 2019 to $1 trillion in 2020.
Types of Investment Geographic Mix Outlook
$ value Greenfield $ valu •U
S picture expected
2020 vs 2019 2020 vs 2019 to improve under new
administration
35% decline in Greenfield 15% decline in Europe •M
&A H2 recovery in Tech and
Life Sciences seen as positive
10% decline in M&A 29% decline in USA indicator for these sectors
• Industrial / Manufacturing: slow
38% decline in Asia recovery expected as value
chains re-configu ed over time
Source : UNCTAD Investment Monitor
Some sectors have fared better than others…
RESILIENT NEUTRAL EXPOSED
Renewables Food & Drink Financial Services Automotive Hotels & Tourism
14% 29% 39% 55% 70%
Medical Devices Technology Aerospace Adv. Manufacturing
& Biotech
30% 69% 35%
15%
However the short term impact is only part of the story; more relevant is how the pandemic and its aftermath shapes
business models in both the resilient and exposed sectors; from the latter we expect acceleration of innovation (eg EVs in
Automotive) and new investment environment to emerge.
Source : fDi Markets, no. projects, 2019 compared to 2020
OCO Innovation Index Awards Report 2021
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Sometimes it takes a crisis….IPAs have been forced to adapt strategies, fle
operating models and embrace technology to maintain relevance
01 02 03 04
Time for an Update Innovative Upstarts Regional Dispersion Yes Minister
By happy coincidence Some of the more The exodus from the Investment attraction
for some IPAs the turn resilient strategies (that cities and success of has gone up the political
of the decade heralds required little update) remote and homeworking agenda both in terms
the 5 year strategy belong to younger IPAs has opened up new of security, and as a
update, and for all in emerging markets possibilities for regional stimulus for recovery
others a rewrite has like Dubai, Trinidad, dispersion and deeper so we can expect
been necessitated by and Costa Rica rather regional engagement more senior political
the pandemic than the more mature features in a number of engagement and not all
economies IPA strategy updates of it positive!
Operationally, there has been a pivot to resilient sectors & different modes of
investment, whilst IPAs are keeping faith with their historical source markets
05 06 07 08
Double down on Sector Refresh Sector Markets Open-to-all
existing clients Investments
With diminished new IPAs have pivoted to No discernible shift Some reactive positions
business pipelines resilient sectors such in global footprints moving to proactive on
all respondent IPAs as fintech, hea th tech, but IPAs beginning to M&A with pitchbooks,
have been righting an renewables, food and question the need for distressed cos and
historical imbalance drink, while tourism, such expansive overseas supply gap fi ling, while
of support for retail and manufacturing offices and less might b all IPAs now recognise
aftercare and account has consolidated. more in a virtual world. value of Venture Capital
management, versus Sustainability/Green China, India and Gulf as an channel to market
new investment growth is a new and rising in priority
recurring theme
Digitisation used to extend to the website & social media activity, now it is
pervasive across the value chain of operations for many IPAs
09 10 11 12
New Products Virtual Efficiencies Lean IPA Processes CRM Engagement
Family Offices Virtual tours, use of The linear investment Building deeper
Incentives for green drones and Zoom process from first contac relationships with fewer
investment, Special allows investors to visit to deal closure has but better investors
Economic Zones, geographically dispersed become ‘lean’. More requires sharper
and ‘special access’ sites in a morning as effective early stage intelligence and co-
for most significan opposed to a 3 day fam zoom meetings with key ordination. Many IPAs
investors are common, tour and opportunity to decision makers, tighter have upgraded their
and some near shoring, showcase regions more agendas and disciplined contact relationship
homeworking products inclusively follow up has shortened management tools
by IPAs close to the US sales cycles (CRMs)
OCO Innovation Index Awards Report 2021
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All of our respondents have either launched a new 2020-2025 strategy or
updated their existing one in response to the Pandemic
Key Findings Examples
67%
• F
rom March – August 2020, most IPAs pivoted • G
reen growth is
efforts to existing investors, initially to help a common theme Average Score of
navigate government assistance schemes and of these strategy Pillar No.1;
address supply chain, travel and social distance/ updates as is STRATEGY
remote working issues. digitalisation and
mobility. This means that
• L ater in the year, with depleted pipelines, many 64% of IPAs have
IPAs doubled down on retention and expansion • F
rance Relance, developed a new or
strategies, and many discovered that their UK Zero Carbon developed an existing
knowledge of the existing investor base and and Green strategy to deal with
their CRMs were not up to the task. shipping (HK) are pandemic
all good examples
• T
hose who updated their strategies redeployed of this shift to i.e; new plans, AM
resources and targets to account management, more sustainable focus, M&A, VC/JV
focusing on supply chains, upgrading and investment future.
better connectivity to regional partners.
Some evidence that IPAs have pivoted their sector focus towards the more
resilient sectors
8 • S
everal IPAs are looking to
target niches that have been
Tech Life Sciences 7 unaffected or seen a surge as a
Pivot to more resilient sectors result of Covid-19
No. IPAs Adding Sector as Priority
6
Agri-food • New subsector targets:
Logistics 5 - Cybersecurity
- AI
Renewables 4 - Blockchain
- Fintech
Tourism Heavy Manu. 3 - Disposable medical products
Electronics - Cleantech
Aerospace 2 - Agritech
Light Manu.
Retail - E-Commerce
Textiles 1
Oil & Gas Construction Financial Services • O
nly two sectors were
0 removed by IPAs as targets:
-80% -60% -40% -20% 0% 20% 3 removed Tourism and 1
removed Retail
% Change in Global Projects Jan-Nov 2019 vs 2020
Source: fDi Markets
OCO Innovation Index Awards Report 2021
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M&A still a bit too hot to handle for most IPAs, but much wider engagement
and facilitation of JV and active engagement with VC
Key Findings Examples
• P
ent up demand for deals coupled with • Business France, ICEX Spain and Austrade have
a global wall of idle capital and market launched initiatives to market investment
uncertainty presents the perfect storm for a tidal opportunities in ‘distressed’ companies, while
wave of M&A in 2021. Trinidad and Tobago are focusing on attracting
foreign capital into existing indigenous firms.
• IPAs have recognised the value of VC as a key
channel to tech investors of the future and • The UK has established an Office for Investment
are mobilising initiatives to get closer to VC to target foreign capital from SWF, Family
community in key markets. Asian IPAs have built Offices and High Net Worth individuals.
on established schemes in this space. Nordic
IPAs have been a first mover in the est. • Invest HK is piloting a new proposition to attract
family offices to invest in innovation and tech
funds in the region. ICEX is working to attract
foreign capital into 100 ‘start-ups’, and
Switzerland is undertaking a similar programme.
IPAs are pursuing starts ups and investment in starts ups more actively,
although still targeting traditional forms of FDI
Types of Investment
Only 5 of 20 added new investment types (although some were already
targeting outside of Greenfield
We anticipate a number of factors will
shape the post-Covid landscape and
alter the mix of investment projects:
• S
ignificant rise in innovation /
tech-rich sectors
• A
re-bound in M&A activity
• A
shortening of supply chains and
an opportunity / need for domestic
70% 67% 40% 40% 40% capabilities to populate value chains
• Increase in company failures
creating expansion opportunities for
strongest players
JV START-UPS DOMESTIC M&A EXPANSION
OPPORTUNITIES GREENFIELD
OCO Innovation Index Awards Report 2021
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Governments and IPAs have introduced incentives to support existing
investors, rather than designing offers that align with post Covid shifts
e.g. grants, loans,
subsidies
Financial
Non-Fiscal Fiscal
e.g. regulatory assistance, e.g. income tax,
setup assistance VAT, customs
6
Only 8 of 19 have adjusted 4
their incentives in response to
Covid, and some countries have 3
tightened FDI policies
(e.g. 4 cited new foreign
ownership restrictions)…
Financial Non-Fiscal Fiscal
(e.g. grants) (e.g. set-up (e.g. tax)
assistance)
OCO Innovation Index Awards Report 2021
10Unused travel and conference budgets are being redeployed on tech
platforms, staff training and new marketing collateral
Key Findings Examples
63%
• R
emote working and virtual investment ustrade and Invest
A
promotion has exposed the dependency on face India mentioned Average Score of
to face meetings. significant expenditu e Pillar No.2;
in CRMs and SGE have OPERATIONS
• IPAs have rushed to CRM providers to upgrade
developed their own
and improve their intelligence and insight on both This means that
platform.
existing investors and pipelines. 62% of IPAs have
• Z
oom, Teams and others have all been widely been agile, flexibl
embraced for project collaboration and targeted and resilient in the
events. It has also allowed more time for way they dealt with
engagement of senior people in such events. operations.
• T
raining and upskilling has also been a beneficiar i.e; new sectors,
of the pandemic, initially to help IPA executives new markets, new
in crisis management and more lately to upgrade services, etc.
skills in account management.
• T
ools such as Velociti for investor insight and
targeting, Proven to manage intermediaries
and GIS Planning to inventories and showcase
investment sites have all seen uptake by IPAs on
their digital journey.
Market focus: None of our respondents have radically upended their market
focus in response to the Pandemic
Key Findings Examples
• T
ravel restrictions limited IPA participation in • Ireland, Netherlands and Belgium have all
major overseas ‘recruitment’ and marketing moved assertively to target the EU market
events, increasing the reliance on other channels. seeking investors.
• M
any IPAs remain committed and confiden • C
entral American and Caribbean agencies like
in the potential for FDI from Asia and have CINDE and Trinidad and Tobago have jumped
maintained and even expanded their presence in on nearshore and remote working, plus are
these markets. targeting US fi ms with solutions that are close,
well regulated and highly cost effective.
• B
rexit has forced many European agencies to
reposition their offer to either UK companies.
• India and Middle East are attracting renewed
attention, plus, we are seeing new initiatives
across the Gulf and Indian States led by an
emboldened Invest India.
• M
any countries will be encouraged by the more
internationalist policies of Biden in the US and
the $1.9tn stimulus.
OCO Innovation Index Awards Report 2021
11...but that has not yet triggered a fundamental re-shaping of market focus...
% Reductions in Project Volumes from 2019 to 2020
Source Market Regions Top 20 IPAs With Most Resilience to Add New Source Markets – ADIO Most Resilient
N America Most Resilient
ADIO 100%
China 80%
ICE 80%
SGE 80%
North America 27%
Dubai 60%
EDB 60%
Latin America & IHK 60%
28%
Caribbean 60%
India
NFIA 60%
Western Europe 34% Austrade 40%
Austria 40%
CINDE 40%
Emerging Europe 39%
DIT 40%
France 40%
Middle East 41% GTAI 40%
ICEX 40%
IDA 40%
Asia-Pacific 45% IIF 40%
InvestDK 40%
Lithuania 40%
T&T 40%
If post Covid landscape is shaped by a re / near-shoring agenda and a shift in sector mix; likely that additional
shaping of geographic focus will be required
High Priority 20%
Source Countries • Changed Source Countries
Only 4 of 20 amended their Additions as priority
source market priorities • Germany – 3 IPAs
80%
• France, Hong Kong, USA – all 2 IPAs
Most of the ‘product offer’ innovation is connected to sustainability agendas or
new political priorities/alliances
Key Findings Examples
• A
more regressive move across many countries is • Notable examples are:
tighter screening and approval of investments in
- 8 new UK special economic zones with rates
sensitive sectors and from sensitive places due to holidays and incentives for investors.
security and self sufficiency conce ns.
- India’s new ‘Clearance Cell’ and ‘Investor Forum’
• A
number of IPAs (CINDE, IDA, NFIA) are to fast track strategic investments through
working closely with existing investors to help government and regional bureaucracy.
them address remote working challenges as - France Relance with high level political support
well as decarbonise their footprint and offer for recovery projects in automotive, aerospace
incentives and support to achieve this through and hydrogen sectors.
wider national initiatives.
• Invest HK is developing a ‘co-location’ offer where
investors can manufacture in mainland China but run
administration, finance and HQ f om Hong Kong.
• T
&T and Costa Rica are offering special visas and
relocation supports for businesses and workers who
want to enjoy more remote working by the beach.
OCO Innovation Index Awards Report 2021
12Spending splurge on digitization, and some new performance measures
Budgeting New measures added
16 of 19 agencies have adapted their staff or budget levels
Regional
dispersion of 3
projects
13 Projects' corporate
social responsibility 4
(CSR) credentials
10
Levels of CAPEX 4
10
7
Quality / salary
levels of jobs
5
2
1 1 1
Digital Spend to service Permanent Temporary Change in Introduction of
new technologies
8
marketing investors change in staff change in staff other marketing
spend headcount headcount spend
Increase Decrease
*2 IPAs noted that already measured some of these pre-Covid
Remote working and travel restrictions have forced and accelerated adoption
rates of technology platforms across the IPA value chain
Key Findings Examples
63%
• M
any IPAs were attached to traditional models IDA Ireland, Invest
of client engagement. They have been forced to India, Business France, Average Score of
evolve, and will likely remain post-pandemic. SGE and Bahrain Pillar No.3;
EDB described TECHNOLOGY
• A
poll of IPAs around digital adoption 18 months
how the traditional
ago would have seen very few in the sphere of This means that 64%
sequential approach
operations or delivery. of IPAs have used
of initial overseas team
• Z
oom meetings, remote working, virtual targeting, outreach technology under the
investment tours etc are now common practices and introductions etc. just-right framework
among IPAs we interviewed, and many wish they had been condensed to win investments,
had engaged with tech platforms earlier. into one or two Zoom facilitate it and
meetings where all promote it.
• It is possible to bring in heavy weight decision
the key actors could
makers and politicians at an early stage. i.e; CRM/Tools
be present with clear
Investment Promotion has become ‘Lean’ and upgrade, Conferences,
agenda and next
peripherality is less of an issue on a virtual tour. Virtual Tours.
steps, and the elapsed
Drones don’t complain of travel sickness!
time between firs
contact and investment
significantly educed.
OCO Innovation Index Awards Report 2021
13Adoption and expansion of digital services has surged with 90%+ of
respondents making some change
CRM/Tools Conferences Virtual Tours
upgrade
High
Additional
Digitalisation
Medium
Additional
Digitalisation
Low
Additional
Digitalisation
Note : Assessment shown is representative of each grouping
Working from home used to be a slacker’s charter, now some will never return
to the office full tim
Key Findings Examples
• G
overnment organisations are typically • S
ome pointed to the success of their first tim
not well organised for remote working due virtual annual staff conferences such as IDA
to technology constraints, security and Ireland, and NFIA.
confidentialit , and less agile HR policies. A lot • B
usiness France have created a secure Extranet
has changed in 12 months. ‘data room’ for strategic investors to access
their files emotely at any time and keep the
• Indeed many respondents cited productivity projects on track.
gains, better collegiate and collaborative
behaviour and greater client impact. • Invest
India has been developing a national
database of industrial sites which can be
• It is recognised that for larger strategic accessed remotely.
investments, site visits will always be essential,
but for services and technology investors with
limited capex, a project can be secured and
mobilised without a client visit – IDA Ireland
spoke enthusiastically about a virtual tour
covering 3 locations taking 2 hours instead of
2 days.
OCO Innovation Index Awards Report 2021
14Our preliminary Innovation Index scoring clusters around 4 groupings
4 Groupings
30%
20%
Abu Dhabi Resilient Performers:
Austria Switzerland Limited change, with
10% investment remaining robust
Ireland
0%
% Change in Projects 2019-20
0.50 0.55 0.60 0.65 0.70 0.75 0.80 Wait and See: Limited
Lithuania
-10% changes, despite
Dubai investment headwinds
-20%
Italy
Australia
-30% Bahrain
UK Netherlands Reformers: Initiating change,
-40% Spain India
but (as yet) insufficient t
France counter the Covid effect
Finland Germany Hong Kong
-50%
Costa Rica
-60% China Planning ahead: Initiating
Denmark Trinidad & Tobago significant eform and
-70% planning for the longer term
Innovation Index Score
IPA Innovation Winners
Overall
1st 2nd 3rd
77% 72.5% 71.8%
Invest India Abu Dhabi Austrade
(India) Investment Offic (Australia)
(UAE)
Strategy Operations Technology
1st 86% 1st 82% 1st 80%
Department for Abu Dhabi Investment Offic Invest Lithuania (Lithuania)
International Trade (UK) (United Arab Emirates)
2nd 75%
2nd 84% 2nd 78% Invest Hong Kong (Hong Kong)
Invest India (India) Invest India (India)
2nd 75%
Invest Denmark (Denmark)
3rd 82% 3rd 76%
Austrade (Australia) Germany Trade & Investment 2nd 75%
(Germany)
Bahrain Economic
Development Board (Bahrain)
OCO Innovation Index Awards Report 2021
15Innovation already in action: Selected Examples
Invest India have innovated Dubai is positioning itself as a new ADIO consciously chooses to focus
intensely to improve connectivity East/West axis and promoting itself as on 5 target sectors within Knowledge
to their States Industrial landbanks. a safe haven for retreating/reshoring Intensive industries aligned to the
They offer Investors access to a manufacturers building on the 2030 scale and make-up of the talent base
one stop shop and understand Industrial Strategy. They also promote in the region. These sectors are also
connectivity with R&D and centres lifestyle and work/life balance in their aligned to the broader economic
of excellence. They have also built positioning to investors. They are and social strategy of Abu Dhabi. In
an Investment Clearance Cell to pushing the sustainability agenda, order to create competitive clusters in
help foreign investors navigate e.g. announcing flagship p ojects like these areas, ADIO has a programme
state level bureaucracy. FDI Project world’s largest solar park. Dubai has of financial supports aligned t
development Cells have been also migrated its entire service offer innovative, fast growing companies
embedded in 29 Ministries to on line and can be accessed from (Series A, B) within these sectors
reduce bottlenecks and improve the anywhere by investors. where through a transparent set of
investor journey. Finally a new $29bn financial ebates they can plan their
incentives pool for manufacturing has market entry with certainty.
been launched.
Innovation already in action: Selected Examples
Earlier this year, the UK Office for As part of its recent 5 year strategy Austrade has a new focus on
Investment was launched within DIT, setting, NFIA will now work under a attracting VC into indigenous start
but jointly attached to the UK Prime different targeting regime - where ups to help them internationalise.
Minister’s Office the primary investment targets will The remote working and virtual tour
now be set on a 5 year basis vs the opportunity has been a great leveller
Its remit is clear – to lead and co- previous annual timeframe. for Austrade with its remoteness.
ordinate efforts across whole of Austrade have also launched a
government in attracting strategic This will enable NFIA to maintain new investment assessment tool
inward investment. a clear focus on targeting strategic throughout the project cycle to ensure
investment that delivers long term quality and value is prioritised.
The office comprises senior ex value and re-investment in priority
private sector ‘deal enablers’ sectors, and avoiding the ‘chasing’
working alongside experienced civil of short term / lower value wins that
servants to offer a seamless investor inevitably distracts from the core
experience. mission.
OCO Innovation Index Awards Report 2021
16Back to where we started:
How will innovation shape IPA 2025?
IPA 2020 IPA 2025
• Focus on R&D and high value activity • Focus on job creation
• Large international office footprin • Smaller deeper footprint in core hubs
• Organised by Sector • Organised by modes of investment
• Process largely delivered in-house • Working in tandem with partners
• ‘All things Tech’ as the priority • Shift to Green Economy and CSR
• Skills at the heart of proposition • Incentives and SEZs back in fashion
• General PM facilitation capabilities • Business advisory/deal making skills
• 80% effort on new 20% AM • 80% focus on stock, 20% on new
• Digital mainly for marketing • Digital investment process
• Open for all investment • Tougher screening and approval regime
• Annual budgets and measures • Impact measured over med to long term
OCO Innovation Index Awards Report 2021
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