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Lecture 4. Rules of entrepreneur.
Innovation infrastructure
Stepan Vladimirovich Khachin
Head of Engineering Entrepreneurship
Department
Tomsk Polytechnic University
10 rules of
entrepreneur
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1. Success consists
of three parts
Idea
Success People
Money
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2. Produce something that sells
rather that sells that able to produce
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3. Business is comply with quantum relation of
uncertainty:
Δρ ΔS=const,
where Δρ – success probability,
ΔS – value of success (profit)
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4. Small and big business are the two big differences
Small – is Δρ и ΔS
Big – is
Δρ и ΔS
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5. The problem to spend a lot of money isn't
simpler than a problem to find those money
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6. Money should be invested in people
not in “equipment”
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7. Yet nobody has been able to share a lot
of money without scandal
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8.Without author of idea (technology) start of a
project is impossible, but on certain phase author
should be “shoot down”
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9. There should be minimum two to start
business, but than leader remain only one
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10. Take advice, but success is build by
decisions not by discussions, by action not
by planning
Innovation business is not the area of
activities but style of life!
Innovation economy: international
and Russian experience
Presence of a national innovation system is:
- non-linear (accelerated) growth of international investments and
gross product
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Infrastructure of Israel
1948
“RAFAEL”
Weapon and military machinery development
1961
DISkont
Discount Investment Corporation
1968
The Office of the Chief Scientist (OCS)
Development of innovation business
$300-400 million annually
1977
Israel-U.S. Binational Industrial Research and
Development (BIRD)
R&D commercialization
$110 million annually
1990
Technological (affiliated with OCS)
Innovation companies Start-up
1992
Magnet (affiliated with OCS)
R&D of small enterprises (compensation up to
2/3 expenses)
1993
Yozma (affiliated with OCS)
Venture capital
$170 million annually
1998
Yozma II
Venture capital + management
15
Foreign Direct Investments in Israel (balance of payments in USD)
Source: World Bank, World Development Indicators (as at 15 June 2010 ).
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Gross domestic product of Israel (in USD without inflation)
Source: World Bank, World Development Indicators (as at 15 June 2010).
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Israel
Lessons:
Threat of national security – motive of development.
Access to USA
Market
capital and technologies – resource.
knowledge and contacts (in USA) – management.
Comeback of Diaspora–self-fulfillment in their own country.
Create new
but not to destroy old!
Clear system of government support for innovation (OCS)
Venture finance
and management (BIRD)
Warnings:
Priorities in development – is not always good.
Strong leader is good feature
for start, but than management system will be needed
Support of start-up is not enough. Support in management
and marketing will be needed for all small and
mature companies. Otherwise their will be consumed by corporations, big fellas
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Infrastructure of Finland
1942
Technical research center of Finland (VTT)
Agent of technology transfer, technological
transformations and international programs
organization
1967
Sitra (The Finnish Innovation Fund)
Quasi-independent national fund which is
created for sponsorship of companies an
projects. Source of funding is a revenue from
sponsored projects
1967
Nokia
Telecommunication giant reformed with the
help of government and his development
institutes
1970
Finland Academy of science
Government organization funding science
research in Finland
1982
Science parks and incubators
Commercial support, infrastructure and
services
1983
Tekes (The Finnish Funding Agency for
Innovation.)
Research funding, innovations and regional
development
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Infrastructure of Finland
1987
Research and innovation Council (OKM)
Control of achievements in R&D, science and
technology sphere
1994
Expert centers program
Conduce development of regions
2001
Regional centers program
Conduce improving competitiveness
of Finland regions
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Foreign Direct Investment in Finland (balance of payments in USD)
Source: World Bank, World Development Indicators (as at 15 June 2010 ).
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Gross domestic product of Finland (in USD without inflation)
Source: World Bank, World Development Indicators (as at 15 June 2010).
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Finland
Lessons
Development
of national innovation system demands long-term and consistent government policy
Federal and local innovation politics
Innovation initiatives
should based on current technological potential
Government regulation
Innovation policy and
should strengthen each other
and direct involvement in economy could encourage innovations
financial solutions should be based on market tendency analysis.
Natural competitive
advantages: natural resources and geographical position should be used for innovation
economy development
Reconstruction of Nokia demonstrates
the role of the government in environment creation which is
prosperous for development of hi-tech company
Export orientation turns
out to be successful for country with a small local market. Besides, local and
international companies (under the condition of creation of workspaces within country) was also supported.
Science and technological
parks could be also self-sustained and pro-innovative at the same time
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Finland
Warnings:
Overdependence of Finland from singular big company (Nokia)
makes innovation economy of country vulnerable from changes
on international market
Extra attention to
regional policies and absence of connection with international markets and tendencies shows inefficiency
Bureaucracy could slow
down acceptance of a key solutions about granting of finance that’s why enterprises that need money
could lost their chance on market
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Infrastructure of India
Institute
Who establish and when
Description
Council of Scientific and
Industrial research (CSIR)
By central government in 1942
Autonomous organization, biggest R&D center in India
R&D organization of small
enterprises (SIRDO)
By Birla Institute of Technology in 1970
Provides start for small manufacturing enterprises
that was leaded by graduates from Birla Institute of
Technology
Science and technics
department
By Ministry of Science and Technology in
1970
Inspires development of a new scientific and technical
economic sectors and act as central element of
organization, coordination and inspiration for Indian
scientific and technical initiatives
Scientific and technical
plan (1974-1979)
By National Scientific and Technical
Committee in 1974
Makes for implementation and adaptation of a new
technologies and development of own capacities.
R&D organization
specialists training of small
enterprises (SIRDO)
By Birla Institute of Technology in 1978
Delivers technical know-how to entrepreneurs,
provide bank financing, marketing etc.
National bureau of
scientific and technical
enterprises development
(NSTEBD)
By Indian government, department of
Science and Technology in 1982
Inspires creation of knowledge-intensive and hi-tech
enterprises
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Infrastructure of India
Institute
Who establish and when
Description
“Research and
development enterprises
park” program
By National bureau of scientific and
technical enterprises development
(NSEBD) in 1984
Facilitates government approach to innovation and
entrepreneurship through creation of special
economic zones
Bangalore city
By Indian government in STEP program in
1985, Since 1945 was developing as
industrial and manufacturing center
IT capital and “Silicon Valley” of India. Plays great role
in inspiring innovation process and attracting
investments to India
Indian technical institutes
By Indian government in various years
15 autonomous engineering universities established
by Indian government and declared as ”Institutions of
national importance”
Ministry of Science and
Technology (MOST)
By Indian government in 1985
Establishes rules, standards, an laws regulating
scientific and technical Indian sphere
Technology, Information,
Forecasting and
Assessment Council (TIFAC)
By scientific and technical development in
1988
Foresights technologies, analyses tendencies of
technology development, supports technical
innovations, providing network events in certain
technical sectors of national importance
Innovation and incubation
center of Small Industries
Development Bank of India
(SCII)
By Small Industries Development Bank of
India (SIDBI) in 1990
Provides infrastructure and services to newcomerentrepreneurs, start-up companies, and technical
organizations
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Foreign Direct Investment in India (balance of payments in USD)
Source: World Bank, World Development Indicators (as at 15 June 2010 ).
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Gross domestic product of India (in USD without inflation)
Source: World Bank, World Development Indicators (as at 15 June 2010).
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India
Lessons:
Building of modern infrastructure, offices, and residential space
– is a essential condition for creation of
adequate business environment in poor country.
Big proportion of Indian innovation is initiated by foreign investments. As long as experience is gained
local investments appear.
Outsourcing industry is an example of substantial boost f a
national economy by means of hi-tech sector
that is built on completely different business principles and institutes.
Availability of high quality education with domination of science and engineering disciplines is essential
for providing innovation economic growth.
Quantity of scientific publication, links on them and
other traditional science indicators isn't always
reflect existed level of innovation development in country.
In order to achieve stated goal and
spend on R&D financing about 2 % of GPD, India should find a way to
invest in manufacturing on the same level as USA and China.
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India
Warnings:
Growth of knowledge-intensive sectors isn’t always
implies relevant growth of
innovation generally
Policy of technical self-containment and protectionism being goal in itself
seriously interferes innovation process, especially in the case when policy is
based on foreign technologies imitation.
Low-cost unskilled and skilled labor is a powerful
mean to attracting foreign
investments. However it could be impossible to support that cheapness
regarding development of economy.
Business based on maintenance of inventions that created by others isn’t lead
to increase amount of innovations. In India this is specially noticeable when it
comes to off-shore programming sector.
Scientists shouldn't trust
formation of innovation policy in that area that
should be based on market business criteria.
Participation in global innovation economy demands full-fledged
trustworthy legal system concerning IP
and
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Infrastructure of Taiwan
Institute
Who establish and when
Description
Ministry of economy
By government in 1949
Responsible for general manufacture development
(and economic development) in Taiwan
National Science Council
(NSC)
By government in 1959
Basic government agency in Taiwan that is responsible
for distribution of grants for scientific research
Industrial Development
Bureau (IDB)
By Ministry of economy in 1970
Inspire development of machine-building, food,
petrochemical, textile, and automobile industry
Industrial Technology
Research Institute of
Taiwan (ITRI)
By Ministry of economy in 1973
Perform R&D in the sphere of applied technologies to
private sector needs. Cover expenses on R&D and
consequently creates enterprises opened for private
capital
The Science and
Technology Advisory Group
(STAG)
By prime-minister administration of
Taiwan in 1979
Consults prime-minister administration of Taiwan on
the issues of scientific and technical development
Office of Science and
Technology Policy (OSTP)
By Ministry of economy in 1979
Coordinates issues of technical development that are
important for modernization of small and medium
enterprises (through small-scaled R%D)
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Infrastructure of Taiwan
Institute
Who establish and when
Description
Science and industry park
Sinchzhy
By government in 1980
Inspire technical development and creation of hi-tech
companies in Taiwan providing platforms,
infrastructure, services, tax benefits, relief from
customs duty, credits with low rate of interests and
direct funding of R&D
Industrial technologies
department
By Ministry of economy in 1993
Contributes development of industry through finance
an coordination
Industrial Technology
Development Program
By Industrial technologies department in
1999
Provide small and medium enterprises of Taiwan with
support in R&D and provide competitiveness
Innovation application and
services program
By Industrial technologies department in
1999
Improves quality of Taiwanese service industry
providing financing of unique business–models
development, applications and processes
Taiwanese transnational
innovation R&D centers
creation program
By Industrial technologies department in
2002
Inspire creation of R&D centers by local companies
(including cooperation with transnational
corporations)
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Taiwan
Foreign Direct Investment in Taiwan (balance of payments in USD)
Source: World Bank, World Development Indicators (as at 15 June 2010 ).
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Taiwan
Gross domestic product of Taiwan (in USD without inflation)
Source: World Bank, World Development Indicators (as at 15 June 2010).
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Lessons
“Building of innovation economy” strategy
“top-down’ in an authoritarian
environment is possible and even effective. Even martial law didn’t disturb
development of innovation sector. But in order to do so government organization
and sectors of industry should work as a whole in the limits of centralized
management and should build work based on clear understanding of world
economy sectors and appropriate chain of delivering value.
Government organizations with string-minded management, flexible rules,
financing and clear long-term tasks oriented on protection of sector interests
could build companies that have competitiveness on external market.
Inspiring of innovation processes in sectors with low-intensive R&D could be
achieved by public-private partnership.
Government could play important role in organization and financing R&D on
development of a new technologies for small companies that often has lack of their
own resources.
Transnational corporations could be a catalyst
of innovation sector creation
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Lessons
For the country that adsorb technologies quickly is critically important to learn
assimilate them quickly and start to manufacture new products by themselves.
Applied R&D are extremely important for countries that adsorb technologies
quickly. However fundamental research that have perspectives in applied areas
provides to create new, revolutionary products and technologies
Encouragement of acquisition of local manufacture components could stimulate
investment
National projects in hi-tech sphere – for example, transition to color TV – could
attract investments
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Warnings
Government policy couldn’t be effective
without clear understanding of market
and special aspects of a national industry.
Creating new sectors and/or companies, government should avoid to compete
with excising private enterprises in order not to demotivate entrepreneurs.
Policy contributing to development of only one industrial sector and completely
failed in other sector, because of mechanistic method of implementation without
proper sector analysis.
Doing only technology imitation and neglecting financing of fundamental
research, it’s possible to sabotage efforts to develop own new technologies
Transnational companies is a important source for new technologies and modern
business principles. However, if local entrepreneurs have no access to these
technologies and principles, there won’t be any positive effect.
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Russian Federation
 GDP in 2010 is equals to 85 % from GDP
in 1985
What about 2016?
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