TURNING TECHNOLOGY INTO BUSINESS

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

Its an accelerating escalator
Bob Hodgson
Santiago de Chile, March 2004
3
Some recent developments from the UK
Remember the golden rule!

• 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 Hodgson
Santiago de Chile, March 2004
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TURNING technology into business
Necessity of interaction

• Some underlying models
• Bridging institutions
• Differentiation

Bob Hodgson
Santiago de Chile, March 2004
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Underlying models classic systemic models
Bob Hodgson
Santiago de Chile, March 2004
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Underlying models Kline-Rosenberg
Bob Hodgson
Santiago de Chile, March 2004
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Underlying models Callon et al
Bob Hodgson
Santiago de Chile, March 2004
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Bridging institutions
Linking technology and business

• OTRI model industrial liaison, reactive style
• Competence Centre approach Taguspark
• Network development inside and outside, EMSEN
• Region wide Oslo technopole Tomsk network

Bob Hodgson
Santiago de Chile, March 2004
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Figure 5.1 Tomsk ST Management System
Committee of S T Management
Secretariat
Innovation Association
Seversk Technopark
Other Academic Institutions
Tomsk Technopark
Training
TSU
Expert Group
Information Centres
TSCC
Other RIs
TPU
Info Hub
Abbreviations TSU Tomsk State University TPU Toms
k Politechnic University RIs Research
Institutes AG Academgorodok TSCC Tomsk Science
Coordinating Centre
Business School
Morosov Centre
Chamber of Commerce
AG
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Differentiation and focus
One size does not fit all

• Market dynamic innovate and die v innovate or
  die
• Technology imperative bio compared to ICT
• Purchasing dynamic security and health
• Sustaining the support

Bob Hodgson
Santiago de Chile, March 2004
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Differential research intensity
Bob Hodgson
Santiago de Chile, March 2004
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Turning TECHNOLOGY into business
What are the crucial technology sources

• UK approach to sources
• building sustainability
• Business sources
• Role of universities
• Public research institutes
• Private sector dilemma

Bob Hodgson
Santiago de Chile, March 2004
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A sustainable ST system ISTC, Russia
A dilemma in Poland knowledge economy
assessment ISTC framework

• Internationally open networked
• Research Excellence
• Economic Value of RD
• Diversification of Funding
• Attraction of Young Talent
• Geared to National Purpose
• Social Value

Bob Hodgson
Santiago de Chile, March 2004
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Sources of innovative technologies
Where do firms look for technology and innovation?

• Customers
• Capital equipment suppliers
• Competitors
• Shows and exhibitions
• Peer professionals
• .
• .
• .
• .
• Public agencies
• Universities

Bob Hodgson
Santiago de Chile, March 2004
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Universities contribution and role
Avoid over emphasis on spin outs Contributions
in order of significance

• Graduates, and increasingly post graduates
• Knowledge reservoir
• Facilities and equipment
• Magnet and networks
• Social and cultural
• Research and development

Bob Hodgson
Santiago de Chile, March 2004
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Research institutes
Need to pick most appropriate profit models

• 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 Hodgson
Santiago de Chile, March 2004
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Private sector technology dilemmas
Case of the Turkish SMEs

• Leaders and followers
• Barriers to innovation
• awareness
• information
• cost
• skills
• risk
• Creating a sustainable dynamic, shared cost grant
  schemes

Bob Hodgson
Santiago de Chile, March 2004
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Underpinning models business drivers

• Leaders and followers - differential knowledge
  and interaction

distant invader
close invader
leader
distant invader
gaps
Core competence
gaps
distant invader
Bob Hodgson
Santiago de Chile, March 2004
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Turning technology into BUSINESS
Markets are the driving perspective

• Armenian ICT strengths
• Silicon valley linkages
• Sterile market disconnection
• Loss of dynamic when market turns down
• Building the new ingredients

Bob Hodgson
Santiago de Chile, March 2004
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Picking the profit model
Crucial to the creation of sustainable businesses

• Capital growth
• Service revenue
• Product development
• Market introduction
• Milking assets
• Mixed mode

Bob Hodgson
Santiago de Chile, March 2004
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The Commercialisation Cycle
Risk Of Failure
HIGH
LOW
Product Development Stage
CommercialValue

• gt Market consolidation
• gt Market expansion
• gt Market penetration
• gt Product enhancement
• gt Sales distribution
• gt Product development
• gt Marketing research
• gt Prototyping
• gt Market definition
• gt Innovation RD

IPO/MBO /Trade Sale
VC/ Expansion
Fiscal approaches
VC/IIF
Seed
SourcesOf Funding
Angels/3Fs
RD
Tier 0
Tier 1
Tier 3
Tier 4
Tier 5
Tier 2
Business Development Tiers

• Tier 2 - Incubation
• Mentoring
• Seed funding
• Contacts
• Consulting
• Clients

• Tier 3 - Post-incubation
• Funding
• Structuring
• Relationships etc

• Tiers 4/5 - Commercial Maturity

• Tiers 0/1 - Pre-incubation
• Direction
• Collaboration
• Guidance
• Resources etc
• Pre-Seed funding

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Incubation and incubators
A process to develop high growth firms

• 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 Hodgson
Santiago de Chile, March 2004
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Entrepreneurship
Born or made?

• 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 Hodgson
Santiago de Chile, March 2004
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Finally systemic approaches

• Aligning the culture
• Providing the infrastructure
• Incentivising the actors
• Developing the shared vision
• Building the history

Bob Hodgson
Santiago de Chile, March 2004