The Innovation TrapAnd How To Avoid It

New Economic SchoolGuest Lecturer on Innovation: Steven GeigerJanuary 23, 2013 Moscow

Topics

• Why countries are chasing innovation

• Common traps they fall into

• Specific challenges to innovation in Russia

• How to avoid innovation traps and succeed

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Why Countries are Chasing Innovation

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Why countries are chasing innovation

• Prosperity through economic growth

• National security

• Fear of “falling behind”

• It’s trendy

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Prosperity is no accident

It is the result of planning, investment,

risk-taking and innovation

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US R&D spending

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McKinsey innovation map

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So most countries chase innovation

HsinchuTainan

Leading global innovation centers8

If only it were this easy . . .

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Typical Innovation Traps They Fall Into

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“We must be like Silicon Valley”

• Tendency to blindly copy California model

• But SV is a culture, not a place. . . easy to copy culture?

• Timing issues; is SV model even still relevant?

• You’ll never lead through imitation; find your own style

2% to make it

50% for innovative IP

Who do you want to be?

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“We must have a shiny new city”

• “Field of Dreams” approach

• Try to avoid the “Edifice Complex”

• Remember, these were all built in a student dorm or garage:

Masdar City Skolkovo Songdo

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“The parts will make a whole”

• The abiogenesis approach: abstract, sterile assembly of “innovation components” that magically come to life

• Create an “innovation ecosystem” …and hope the “magic” happens.

• Magic doesn’t happen, you make it happen.

Alexander OparinCoacervates

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Think of innovation as a Rubik’s Cube

Entrepreneurs

Govt. Policy

Infrastructure

Large Corp.

VCs

•6 different elements, communities

•Different needs

•Any change affects all

Research &

academic

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Think of innovation as a Rubik’s Cube

A few changes to any side and pretty soon you have this:

Looks simple, eh?

Or worse, this

Only a holistic approach succeeds. And experience helps.

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Specific Challenges to Innovation in Russia

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General ranking not great: 51st

Source: The Global Innovation Index 2012 (Insead, WIPO) 17

But innovation “efficiency” not bad

Russia• Just slightly

below trend line

• Reasonable chances to improve

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The C-Word

• Karamzin said it best: «Воруют»(“They steal”)

• Innovation will struggle in Russia with current levels of corruption

• “Brain drain” will accelerate

• State innovation projects must be the vanguard of honesty

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Russia needs to “close the gap”

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Russia needs to “close the gap”

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Russia needs to “close the gap”

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Weaknesses in projects like Skolkovo

http://www.rbcdaily.ru/politics/opinion/562949985372676

• Scope is too broad (laser or flashlight?)

• Misalignment of shareholder-management interests

• Overly focused on building “shiny new city”

• Lack of internationalization

The good news: not difficult to solve these23

Recommendations for Successful Innovation

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1. Don’t force the glass slipper

• Innovation can’t be forced (though it can be encouraged)

• Accept that Silicon Valley was a rare convergence of factors

• Leverage your culture and strengths, don’t blindly imitate25

2. Be careful what you wish for…

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3. Can you handle the truth?

Innovation often requires:

• Great individual freedom

• Tolerating unconventional ideas and lifestyles

• Open exchange of information and ideas

• High tolerance for failure

• High risk-taking

In short, innovation is freedom: can you handle that?27

4. Set “stretch” yet achievable goals

• world's largest offshore windfarm• world's largest single operating CSP plant• world's first CSP plant using molten salt as a transfer fluid• world's first graduate-level research university dedicated to renewable energy • world's largest renewable energy conference & expo (25,000 annual visitors) • permanent UN headquarters for International Renewable Energy Agency

UAE example: can a tiny oil sheikhdom become a world leader in cleantech and sustainability? You bet!

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5. Don’t blindly follow “the experts”

They’re often wrong

(Nice shoes, Albert)

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Discussion

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