Grip on Control Points to Innovate More Effectively
Playing on multiple chessboards simultaneously, with some games having different rules or even rules that constantly change. Welcome to the world of 2025. A world full of geopolitical tensions, complex societal challenges, and new – potentially disruptive – technologies and value chains. In short, a world where nothing seems to be taken for granted anymore. The big question: how do we, as a small country, deal with this? What choices must we make to pursue broad prosperity now and in the long term while remaining flexible enough to quickly respond to geopolitical developments? This is such a complex challenge that even the best strategists often find themselves in the dark. A focus on control points could help them further. A literature review conducted by TNO on this subject provides interesting insights.
Report ‘Grip on Control Points’ (Dutch)
"A control point always involves a unique or leading business activity on which others are heavily dependent," explains Daan Pisa. As a researcher in innovation policy and ecosystems at TNO Vector, he has recently delved into control points with his colleagues. "During that literature review, we quickly saw that different perspectives coexist. So, we did not come to one all-encompassing definition. Not a problem, because it is precisely the versatility of control points that makes them so interesting."
Strategic Choices
"In the field of strategic management, control points have been a well-known concept for decades, but it mainly involves securing resources that provide a competitive advantage and are of economic importance to a specific company," adds colleague Joris Vierhout, an economist at TNO Vector. "But besides that company perspective, the concept of control points also appears to be applicable in other areas. For example, you can use it to look within networks to see which parties exert influence in important positions or are dependent on others. From a network perspective, it is possible to better map dependencies within markets, value chains, and ecosystems using control points."
These different perspectives help determine which positions are important and make better strategic choices. "That is not only important for companies to benefit economically," says Vierhout, "but also to better serve a public interest, such as ensuring national security or promoting the energy transition. And all this, of course, also influences the choices we make in the Netherlands in terms of innovation."
A Different World, a Different Country
Those who innovate must know how to respond well to new developments. And then it is quite challenging that the world has changed drastically in the past five years, and there is currently a lot of uncertainty about the future. Due to geopolitical developments, the international free market has come under a different light. Additionally, during the Covid period, it became painfully clear how vulnerable international production and supply chains can be. All this has caused globalization to be significantly questioned.
Meanwhile, the Netherlands itself has also become a different country, and the realization has dawned that fundamentally different choices are needed to maintain our broad prosperity. All this on a continent that is under considerable pressure and where active efforts are being made to make Europe more resilient and innovative.
Innovative Perspective
In light of recent international developments, TNO identifies the geopolitical and economic perspective on control points. This innovative perspective addresses strategic dependencies and the public functions of states. This includes ensuring national security, promoting economic earning and competitiveness, and meeting broader societal needs.
Control Points in a Geopolitical Context
Sometimes you come to a new insight that suddenly puts an existing concept in a new light. And that is exactly what has happened with control points, according to Vierhout. "That insight allows us to better map geopolitical and economic dependencies," he explains.
"Take the raw materials we need in the Netherlands and Europe for our technological innovations. For these, we are largely dependent on countries in the rest of the world, particularly China. Given the geopolitical unrest currently prevailing, it is important to also consider such insights when identifying control points."
Finding the Right Balance
The Netherlands is a small country and faces scarcity in many areas. This requires well-considered choices. Developing and making everything ourselves is practically impossible. But too much dependence on foreign parties is undesirable. Finding the right balance is currently the big challenge. Pisa cites cloud services as an example.
"For these, we in the Netherlands and Europe are dependent on Microsoft, Google, and Amazon, so on three large American companies. Our complete reliance on the US in this area creates a risky dependency. In geopolitical terms, this is a good example of companies collectively forming a control point. For strategy and policymakers, the question then arises of how to deal with such a dependency, which can legitimize interventions from industry and innovation policy."
Building and Dismantling Control Points
"It is always difficult to specify exactly what is needed to achieve a unique and influential position in a value chain," continues Pisa. "That is a holy grail that both companies and policymakers are searching for. But the idea now is that identifying and learning from control points in value chains can get us a long way. The challenge lies not so much in identifying current control points.
In an economy in transition, it is important to also consider possible future control points. Strategy and policy are then intended to realize these insights by dismantling existing dependencies and obstructive control points through policy interventions and building possible new control points. Innovation and technological complexity play a central role in this, making it important to focus on R&D-intensive sectors and companies."
ASML as a Striking Example
Anyone looking for a striking example of a control point in our country quickly comes to ASML. No other company worldwide can deliver a chip machine that works with extreme ultraviolet light and is a necessary link to produce the most advanced microchips. It is important to realize that such a control point brings both opportunities and risks.
NXTGEN Hightech
ASML has convincingly shown how valuable an innovative lead is. And that inspires other parties. In 2022, NXTGEN Hightech was launched, a National Growth Fund consortium focused on developing new high-tech products. "Identifying and developing possible new control points is one of the goals," says Tom van der Horst, Business Director Strategies for Industry and Innovation at TNO and Director of Strategy at the NXTGEN Hightech consortium.
"In the Netherlands, besides ASML, we have many more high-tech companies that are very good at machine building," he continues. "And the great thing is that the technology needed for machine building can be used for different application areas." This immediately indicates that high-tech innovations could be a good source for future control points. As a seasoned innovation strategist, he has therefore been delving into the question of how far the concept of control points lends itself to gaining more insight into value chains and where the interesting innovation opportunities for the Netherlands lie.
Thinking in Terms of Control Points
"That was exactly the challenge we focused on when setting up NXTGEN Hightech," recalls Van der Horst. "How do we ensure that the Netherlands continues to play a serious role in high-tech? What innovations should we focus on, for which domains? Which geopolitical developments can strengthen or weaken our position? We found that thinking in terms of control points helped us get a better overview. We also included that concept in our 2022 subsidy application to the National Growth Fund."
A Rolling Snowball
During conversations with several members of the fund committee, it became clear to Van der Horst that they were very enthusiastic about the plan to work with control points. "The term then started to appear in more and more places, such as in the National Technology Strategy. It was like a snowball that started rolling. And that while we did not even know at that moment how we could practically implement it."
Signposts
Meanwhile, the consortium of high-tech companies is already putting the principles of control points into practice. Within NXTGEN Hightech, promising high-tech solutions are currently being developed for various domains, mainly to ensure that the Netherlands can occupy important positions in the value chains of multiple domains. Control points are already guiding high-tech companies a bit by focusing on business activities where our country currently has a strong starting position and for which the prospects are promising.
The literature review launched with this article is intended to provide guidance and direction for identifying control points to strengthen or build strategic positions and reduce dependencies.
Next Steps
"With all this, it is good to know that control points are not an exact science," Vierhout finally points out. "It is not like a fall acceleration, where you can measure the speed precisely. It is more like the study of economics: you need many indicators to get a sense of which direction it is going. The literature review was the first step to define the concept of control points and argue where control points can be used.
And now that we have that in view, it is time for the next steps: developing a new tool to make it easier to identify control points, and then developing a method to actually realize these control points, as is already being attempted at NXTGEN. This way, we want to ensure that thinking in terms of control points provides tools for a better innovation strategy."
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