Model of the Entrepreneurship Motivation and Innovation Culture programme

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Model of the Entrepreneurship Motivation and
Innovation Culture programme

• 22 March 2007
• Valdis Avotin, Agnese Grinevica, LIAA
• Rene Tõnnisson Wolfgang Drechsler, Tartu

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Operational Programme 2007-2013
Strand III support
Competency Centres
PPP Concept
TTOs LiOs
Pre-Seed
Foresight
2004-2006
Business incubators
New products and technologies
Riga NIP
Inno-Culture
Innovation-System Created
Risk capital scheme
Skills Centre
Risk Capital
Shared laboratories
Qualified personnel
Monitoring System
Training, consultancies
Business Angel networks
Need analysis
Techo-consultancies
EU networks
New product scheme
TI VCF scheme
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Culture

• Usually culture is understood as a diversity of
  values, norms and traditions which are reflected
  as common value of tools and environment of
  creative process. Culture always has been
  supposed as a result of peoples activity. It is
  fulfilling the role of societys social memory
  and provides connection of centuries and
  continuity of generations values.

In the economic aspect the term of culture is
used quite recently. First of all, as common
understanding of industrial relationships inside
of collective economic subject (company). Its
possible to describe the stable employees
relationships with the culture of business
administration in the company with the goal to
elaborate and define the decisions about
effective use of limited resources in the
production.
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Innovation Culture

• An entrepreneurship and innovation culture means
  an environment where people can explore and
  express their creative, innovative and business
  acumen. It is an environment whereby
  entrepreneurs and innovators are the norm in
  society rather than an exception.

The management of Innovation culture is defined
by the elaboration of the Innovation strategy in
the company together with access to all the
necessary analytical information.
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Innovation culture in the company

• Components which describes the innovation
  competence of managers and are related to their
  professional knowledge and experience during the
  innovation processes in the company
• Motivation for value, which describes the
  motivating power of innovatin culture common
  sense of demand factors, values, motives and
  stereotypes, which encourages the manager to
  implement the particular model of behavoiur
  during the innovation in the company. This level
  reflects the managers personal motivation.
• Behaviour, which includes all practical
  managerial activities in all innovation
  elaboration and implementation phases.

Its possible to divide the particular terms
entrepreneur and intrapreneur. The
entrepreneur is a person who establishes and run
the new private business company, while the
intrepreneur is a person who starts new
activities in the company owned by others.
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2. CULTURE FOR INNOVATION in the sense of an
innovation conducive climate within a certain
location (innovation milieu)
Innovation Culture
3. INNOVATION CULTURE in the sense of an
innovation-conducive habit or system or best
practise within a given company
1. INNOVATION AND EXISTING CULTURE (especially
regional / local) as it exists
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Market defficiences

• Lack of a visible, open enterprise culture
• Lack of National and individual self-confidence
• Lack of coherent, cohesive national vision in
  relation to entrepreneurship, innovation, and
  enterprise culture
• Poor understanding of enterprise in civil and
  public sectors
• Low Risk taking
• Low levels of R D
• Training for enterprise not developed
• Emigration of youth and educated workforce to
  other economies
• Low levels of partnership

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Only external barriers
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Assimmmetry of information (308 firms intervied)
RIS Latvia, 2003
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Share of innovative firms, , 2002-2004
17,5 innovative firms gave 42,3 of total
turnover in 2004 Only 4,7 product
innovative Only 3,5 high-tech in manufacturing
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Competitive companies
RD performance in business sector shows
positive pace Intramural RD in business sector
by research type, EUR mill.
Source Central Statistics Bureau, 2006.
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Two policies
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Division of business education in Education
system in Finland
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Lujo Brentano 1844-1931
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When I climbed out of the boat that had brought
us back to Naples, and gave to one of the boys
lying on the pavement my briefcase to carry, he
shook his head with the words I have already
eaten! (Brentano)
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• Mistakes come from lack of experiences and
  experiences come from mistakes

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WHAT ARE INNOVATIONS AND HOW DO THEY WORK?

• INNOVATIONS ARE NOT INVENTIONS
• innovation is an economic term
• innovation is lucrative

AND WHAT PROPELS INNOVATION?

• because at least for a time, the novelty that
  marks the innovation makes it impossible for
  competitors to get into the action

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But this is just half of the story...
There are innovations that are only good for the
entrepreneur, and there are innovations that are
also good for state, society, and economy. And
while entrepreneurship is nice as such, the
interest for the state side and regions lies in
promoting it in precisely those areas that have a
snowball effect to produce a general increase
in production and wealth.
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Therefore, the question or challenge implied in
asking about regional innovation culture is
not so much, or not only, about creating an
innovation-friendly culture,
but to create a set of innovation incentives
which are in line with the existing culture!
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Regional culture can ATTRACT innovation
During economic globalization, which is marked by
a divorce of value-addition and physical product,
life remains real and must be lived.
Thus, to attract innovative business, as or more
important than tax advantages etc. may be LIVING
ENVIRONMENT and quality of life for the
innovators and their families
which are partially cultural, partially
infrastructural, partially natural (landscape and
climate), but they ARE promotable and should be a
focus of any regional innovation strategy.
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Tartu Software Micro Cluster

• There are about 50 software companies who are
  employing about 1000 software engineers in Tartu
• Skype thought that it is a good place to recruit
  new people
• But people did not want to move so it was forced
  to set up an software developement office in
  Tartu, which became catalyst for most succesful
  Cluster Initiative in Estonia

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• Therefore it is actually one of the best
  strategies for a region that wants to attract
  innovative enterprises and entrepreneurs to
  create an environment in which those people feel
  happy and actually want to live.

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The basic description

• 7 years programme 2007 - 2013
• The budget needed is 7 MEUR
• National programme
• Part contracted out (50-70)
• Potential applicants universities, local
  governments, NGOs, TTOs involving private
  intermediates

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The main objectives

• To increase local interest and involvement in
  Education and Research as a source for
  innovation
• To promote conductive climate for innovation in
  Latvia
• To increase investment in RD and Innovation at
  both regional and national levels
• To use available resources to support and attract
  young highly skilled professionals to strengthen
  Latvias innovative capacity
• To create a new and dynamic culture to existing
  companies.

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Short term goals

• To promote an enterprise culture though
  educational programmes and competitions at each
  of the three levels of education
• To develop a greater understanding of the
  importance of enterprise creation among public
  and civil servants
• To assist the formation and sustained development
  of high potential start up businesses
• To put infrastructure in place to support
  enterprise creation.

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Outputs of the programme

• Number of
• enterprise courses delivered, persons engaged in
  training and skills development programmes(i.e.
  Investment readiness, Masterclass,
  Self-assessment tools other short studies)
• promotional activities undertaken such as
  articles in newspapers, magazines, Interviews in
  TV, radio, presentations in relevant seminars,
  conferences, workshops
• enterprise competitions organised (Competition on
  Innovation prize)
• innovation awards organised, marketing plans of
  future entrepreneurs designed, business plans
  created, enterprises supported/created
  (Competition of Youth innovative business ideas)
• student firms created (Innovation and Marketing
  training for students)
• enterprise awareness programmes for public and
  civil servants organised (Best practices)
• Lean technology approach promoted (value
  concepts, productivity, efficiency, sales, new
  products introduced etc.)
• MIDDLE term target 200 FINAL target 500 events
• MIDDLE term target 1000 FINAL target 3000
  enterprises approached

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Beneficiaries

• Private sector manufacturing companies and the
  ones providing services
• Public sector governmental institutions, local
  authorities, NGOs
• Support infrastructure business incubators,
  technology incubators, technology transfer
  contact points, universities etc.
• Society potential entrepreneurs

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Benefits from the programme

• More innovative and high growth start-up
  businesses in knowledge and technological based
  industries
• More innovation and creativity in existing
  industries
• More intrapreneurs
• More focus on Global market opportunities
• More productive and competitive enterprises
• More high value job opportunities for graduates
• More spin-out enterprises from research projects
• Closer linkages between
• industry and Universities.

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Selection criteria

• Need for financial support
• Value for money
• Ability to reach programme and measure
  objectives
• Spillovers generated jump of high effectiveness
• Cost effectiveness
• Potential to reposition of attitudes
• Impact on Regional Development
• Skills and experience

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Pre-seed FacilityProgramme Model
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Early Stage Finance Availability in Latvia

• The early stage equity market for knowledge
  based start ups in Latvia suffers from
• lack of investor ready projects
• the dimension of the market, not big enough to
  allow proper risk pooling
• the perception of the risk/profit ratio by the
  operators, due to the lack of specialization (and
  consequent asymmetry of information) and to the
  dimension of the market
• the difficulties of way out
• Existing equity gap (valley of
  death)between idea and investor ready
  business plan

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Role of State in Early Stage

• Existing equity gap between idea and investor
  ready business plan
• Private investors not interested
• State needs to interfere

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Role of Pre-seed Facility
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Pre-seed Facility Model

• Operated by private service management company
• 6 year programme
• Initially 3 year pilot phase

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Innovation Culture is thus not about having more
technological innovations
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... but it is about the right attitude and
understanding how to make best out of innovations
in your specific situation
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Thank You for attention!
Perses iela 2, Riga, LV 1442, Latvia Phone 371
7039410 Fax [phone] E-mail
valdis.avotins_at_liaa.gov.lv http//www.liaa.gov.lv