The Innovation Trap (and How to Avoid It)

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

2

Why Countries are Chasing Innovation

3

Why countries are chasing innovation

• Prosperity through economic growth

• National security

• Fear of “falling behind”

• It’s trendy

4

Prosperity is no accident

It is the result of planning, investment,

risk-taking and innovation

5

US R&D spending

6

McKinsey innovation map

7

So most countries chase innovation

HsinchuTainan

Leading global innovation centers8

If only it were this easy . . .

9

Typical Innovation Traps They Fall Into

10

“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?

11

“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

12

“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

13

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

14

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.

15

Specific Challenges to Innovation in Russia

16

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

18

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

19

Russia needs to “close the gap”

20

Russia needs to “close the gap”

21

Russia needs to “close the gap”

22

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

24

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…

26

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!

28

5. Don’t blindly follow “the experts”

They’re often wrong

(Nice shoes, Albert)

29

Discussion

30