The point of departure for this study is the restructuring dynamics of the Norwegian Salmon farming ( Salmo salar ), which despite growing into one of the most profitable aquaculture industries in the world, has in recent years seen its growth curtailed due to challenges related to parasitic sea lice infections, and escape of farmed fish and mortality. To address these challenges, the Norwegian authorities launched in 2015 a new type of innovation policy instrument: development licences, to foster radical innovations focusing on the development of disruptive fish-farming technologies. Based on mapping of the technology development projects as well as in depth interviews with actors involved in these projects we show how the targeted industrial and/or innovation policy response by Norwegian authorities, is re- shaping the structure of the Norwegian aquaculture industry. W e argue that in the short term, the scheme appears to have succeeded in addressing not only the market failure but also the structural innovation system failures primarily associated with capabilities and network failures as it clearly played a crucial role in facilitating both the development of new knowledge and capabilities among the traditional aquaculture players. The scheme is also changing the structure of the Norwegian aquaculture innovation networks (and/or the development of new innovation eco-system) by facilitating entry of new actors and competences from adjacent sectors and strengthening ties between the actors involved in the network. However, overall success of the innovation policy instrument ultimately hinges upon sufficiently addressing some aspects of the institutional failures in the sector .