1. TURNING TECHNOLOGY INTO BUSINESS Lessons from Asia and Southern Europe Bob Hodgson Zernike (UK) Limited Santiago de Chile March 2004 ZERNIKE (UK) Transforming innovation systems: strategies and institutions

2. ZERNIKE (UK) It’s an accelerating escalator Key lessons  Stress the interaction more than the infrastructure  Integrate the instruments at delivery point  Create a unified and shared vision  Have the highest quality of management  Be market oriented for sustainability Bob HodgsonSantiago de Chile, March 2004

3. ZERNIKE (UK) Remember the golden rule! Some recent developments from the UK  Regional venture funds – filling a gap  Entrepreneurship in education – all levels  Cluster mania – positive but overdone  University challenge and local solutions  Cambridge-MIT alliance  Leeds IPR model  EMSEN network Bob HodgsonSantiago de Chile, March 2004

4. ZERNIKE (UK) Necessity of interaction TURNING technology into business  Some underlying models  Bridging institutions  Differentiation Bob HodgsonSantiago de Chile, March 2004

5. ZERNIKE (UK) Underlying models: classic systemic models Bob HodgsonSantiago de Chile, March 2004 Performance or Production Problems Development Technology Commercial Application Pure Science Applied Science Research & Development Product Enhancement Need/demand Changes MARKET PULL SCIENCE PUSH

6. ZERNIKE (UK) Underlying models: Kline-Rosenberg Bob HodgsonSantiago de Chile, March 2004

7. ZERNIKE (UK) Underlying models: Callon et al Bob HodgsonSantiago de Chile, March 2004

8. ZERNIKE (UK) Linking technology and business Bridging institutions  OTRI model – industrial liaison, reactive style  Competence Centre approach – Taguspark  Network development – inside and outside, EMSEN  Region wide – Oslo technopole Tomsk network Bob HodgsonSantiago de Chile, March 2004

9. Committee of S & T Management Secretariat Innovation Association Tomsk Technopark Other Academic Institutions TSU TPU Business School AG Morosov Centre Other RIs TSCC Expert Group Info Hub Training Information Centres Chamber of Commerce Seversk Technopark Figure 5.1: Tomsk S&T Management System Abbreviations TSUTomsk State University TPUTomsk Politechnic University RIsResearch Institutes AGAcademgorodok TSCCTomsk Science Coordinating Centre

10. ZERNIKE (UK) One size does not fit all Differentiation and focus  Market dynamic – innovate and die v innovate or die  Technology imperative – bio compared to ICT  Purchasing dynamic – security and health  Sustaining the support Bob HodgsonSantiago de Chile, March 2004

11. ZERNIKE (UK) Bob HodgsonSantiago de Chile, March 2004 Differential research intensity

12. ZERNIKE (UK) What are the crucial technology sources Turning TECHNOLOGY into business  UK approach to sources  building sustainability  Business sources  Role of universities  Public research institutes  Private sector dilemma Bob HodgsonSantiago de Chile, March 2004

13. ZERNIKE (UK) A sustainable S&T system: ISTC, Russia Bob HodgsonSantiago de Chile, March 2004  Internationally open & networked  Research Excellence  Economic Value of R&D  Diversification of Funding  Attraction of Young Talent  Geared to National Purpose  Social Value A dilemma in Poland knowledge economy assessment ISTC framework:

14. ZERNIKE (UK) Where do firms look for technology and innovation? Sources of innovative technologies  Customers  Capital equipment suppliers  Competitors  Shows and exhibitions  Peer professionals .  Public agencies  Universities Bob HodgsonSantiago de Chile, March 2004

15. ZERNIKE (UK) Avoid over emphasis on spin outs Contributions in order of significance: Universities – contribution and role  Graduates, and increasingly post graduates  Knowledge reservoir  Facilities and equipment  Magnet and networks  Social and cultural  Research and development Bob HodgsonSantiago de Chile, March 2004

16. ZERNIKE (UK) Need to pick most appropriate profit models Research institutes  Core public funding – a declining source  Membership fee – ensuring the value added  Advanced services – developing the market  Asset management – physical and intellectual  Mixed model – what is the balance – Brodarski Institute, Croatia Bob HodgsonSantiago de Chile, March 2004

17. ZERNIKE (UK) Case of the Turkish SMEs Private sector technology dilemmas  Leaders and followers  Barriers to innovation  awareness  information  cost  skills  risk  Creating a sustainable dynamic, shared cost grant schemes Bob HodgsonSantiago de Chile, March 2004

18. ZERNIKE (UK) Leaders and followers - differential knowledge and interaction Underpinning models: business drivers Bob HodgsonSantiago de Chile, March 2004 leader distant invader Core competence gaps close invader distant invader distant invader

19. ZERNIKE (UK) Markets are the driving perspective Turning technology into BUSINESS  Armenian ICT strengths  Silicon valley linkages  Sterile market disconnection  Loss of dynamic when market turns down  Building the new ingredients Bob HodgsonSantiago de Chile, March 2004

20. ZERNIKE (UK) Crucial to the creation of sustainable businesses Picking the profit model  Capital growth  Service revenue  Product development  Market introduction  Milking assets  Mixed mode Bob HodgsonSantiago de Chile, March 2004

21. > Market consolidation > Market expansion > Market penetration > Product enhancement > Sales & distribution > Product development > Marketing & research > Prototyping > Market definition > Innovation & R&D Tier 0Tier 1Tier 3Tier 4Tier 5Tier 2 Product Development Stage The Commercialisation Cycle Tier 3 - Post-incubation  Funding  Structuring  Relationships etc Tiers 4/5 - Commercial Maturity Business Development Tiers Risk Of Failure HIGH LOW Commercial Value R&D Angels /3F’s Seed VC/IIF VC/ Expansion IPO/MBO /Trade Sale Sources Of Funding Tiers 0/1 - Pre-incubation  Direction  Collaboration  Guidance  Resources etc  Pre-Seed funding Tier 2 - Incubation  Mentoring  Seed funding  Contacts  Consulting  Clients Fiscal approaches

22. ZERNIKE (UK) A process to develop high growth firms Incubation and incubators  Climate and culture – valuing enterprise  Assistance pre launch – Incubator of Ideas  Launch and market  Harden and move on  Celebration and empowerment  Post graduate assistance and pay back Bob HodgsonSantiago de Chile, March 2004

23. ZERNIKE (UK) Born or made? Entrepreneurship  Illogical behaviour – an unreasonable belief in self  Knowledge and technical skills can be added  Challenge for the trainer  Enterprise in education – Oslo example  EMSEN internal and external networks Bob HodgsonSantiago de Chile, March 2004

24. ZERNIKE (UK)  Aligning the culture  Providing the infrastructure  Incentivising the actors  Developing the shared vision  Building the history Finally: systemic approaches Bob HodgsonSantiago de Chile, March 2004