This paper approaches innovation as a need and not as a choice, particularly in the case of mature systems, defined as localized systems of production that are deeply specialised in mature industries. Their only strategy to achieve competitiveness is an innovation-driven shake-out combining new technological patterns with the existing resources and involving local institutions in production in order to avoid an unbearable shock. The Italian case is useful to introduce the idea of an institutional division of labour limited by the extent of the market and the institutional coherence of the system. According to this approach, the innovation policy has also a political dimension, which development and competition possibilities depend on.