Innovation – Key to Competitiveness BINASIA-Iran National Workshop Tehran, Iran 08-09 November 2005 Asian and Pacific Centre for Transfer of Technology

Innovation – Key to Competitiveness

BINASIA-Iran National WorkshopTehran, Iran

08-09 November 2005

Asian and Pacific Centre for Transfer of Technology (APCTT)

Changing Global Scenario

New realities the companies should consider to be competitive:

Shortening life cycle of products

Globalisation of world economies

Globalisation of technologies

Shift of emphasis from manufacturing to knowledge-based economies

Postulate on new technology:If you understand it, it is obsolete

Globalising Knowledge-based Economies: Realities

Idea & Concept

Product

Design & Prototype

Market

Signals For ChangeThe Innovation Imperative

New orimproved products

or services

TheOrganization

New orimprovedprocesses

Maintained orimproved

competitiveness

Technology Acquisiton

Top success factors in global competitiveness....

0.32

0.36

0.39

0.48

0.56

0.57

0.59

0.59

0.59

0.68

Skilled Labour

Quality assurance

Strategic alliances

New sources of capital

Key R&D talent

Government finan. Assist.

Increased exports

Financial management skills

Mang. company strategey

Develop. of new technology

Technology exchange

- between companies

Technology exploitation

- from R&D to industry

Technology Acquisition

Technology Acquisition Chain“The chain is no stronger than its weakest link”

English proverb

Marketing:•Networks•Agents•Retailers

Financing:•Loans•Venture Capital•Grants

Negotiation:•Technical•Financial•Commercial

Studies:•Technology•Feasibility•Market

Search:•Information•Opportunities•Partners

OECD estimates that between 1970 and 1995 more than half the total growth in output of the developed world resulted from innovation, and the proportion is increasing as the economy becomes ever more knowledge-intensive

New Reality - Knowledge-based Economy

Critical mass of commercially oriented research expertise

Industrial technology users

Investors and consultants, creating favourable conditions for the birth of fast-growing, high-tech companies

New talents & new money

Sustainable Innovation Environment

“Every organization-not just business-needs one core competence: innovation”Peter F. Drucker

•New products & services•Better ways for reaching customers•More efficient production techniques•Quality improvements•Novel cleaner production methods•Improved management systems•New approaches to gathering and dissemination of information•Better internal climate and services•New forms of employee & stakeholder participation

Innovation - conversion of new knowledge into new products and services

Sustainable Innovation - Key to Success. And Survival.

2%

3%

5%

10%

10%

14%

16%

17%

18%

38%

39%

52%

Patents

Research institutes

Universities

Computer networks

Consultancy

Conferences, journals

Fairs

Suppliers

Competitors

Clients, customers

Enterprise group

Within enterprise

Source: EU Community Innovation Survey (CIS), 1999

The lifeblood of any successful innovation

system is communication and

interaction

Information Sources Important for Innovation

34%

34%

33%

30%

26%

25%

24%

19%

19%

Economic risk

Lack of qualified staff

Cost of innovation

Organisational rigidity

Lack of finance

Lack of market response

Lack of tech info

Regulatory hurdles

Lack of market info

Per cent of innovating companies with abandoned or delayed projects

Factors Preventing Introduction of Innovation at SMEs (EU Survey, 1998)

Area Phase

Access to skills & competences

Access to financing

Access to the market

Environment for innovation

Gestation

Training and support

Public support

Market and tech info

Social protection for enterpreneurs

Start-up

High-level staff recruitment

Public/private partnership

Guarantee mechanisms

Market research

Administrative simplification

Promotion of equity culture

Growth

Networking New stock markets

Marketing assistance

Clubs of high-tech companies

Activities to Promote Innovation among SMEs

Innovation is not a one-off event, but a continuous response to changing circumstances. Ideally, it does not just solve a

problem but creates new capacity, opening up opportunities for further innovation

In the Information Technology industry, the recommended share

of employees in the company ownership is around 30%

Continuous Innovation: Motivation of all Employees Becomes Critical

Innovation Index

2.02

1.66 1.59

0.980.78

0.33

-0.33 -0.34 -0.43-0.62

-0.72-0.92 -0.94

-1.18-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

2.02 1.66 1.59 0.98 0.78 0.33 -0.33 -0.34 -0.43 -0.62 -0.72 -0.92 -0.94 -1.18

US Germany JapanSingapor

eAustralia S.Korea Malaysia Russia China India Viet Nam

Philippines

Thailand Indonesia

Source: The Global Competitiveness Report 2000, World Economic Forum

•R&D spending by government & private sector•Quality of R&D institutions and S&T education•Cooperation between R&D sector and industry•Pioneering of own products & processes•Incentives for innovation•Access to venture capital•Ease of starting businesses•IPR protection

Components

Technology Index

2.02 1.95

1.66 1.59

1.080.91

0.82

0.54

0.32

-0.07

-0.34 -0.35-0.51

-0.66-1

-0.5

0

0.5

1

1.5

2

2.5

2.02 1.95 1.66 1.59 1.08 0.91 0.82 0.54 0.32 -0.07 -0.34 -0.35 -0.51 -0.66

USSingapor

eGermany Japan Malaysia Australia S.Korea

Philippines

India Thailand Russia China Viet Nam Indonesia

Source: The Global Competitiveness Report 2000, World Economic Forum

Technological leadership on the global market•Aggressiveness in absorbing new technology

Components

Critical Issues for Entrepreneurial Activity: GEM 2000 Survey

Source: GEM Report 2000

Government Policy

Education & Training

Cultural, Social Norms

Finance

Australia 3 1 2

Germany 1 3 2

India 1 2 3

Japan 3 1 2Singapore 3 2 1

S.Korea 1 3 2

USA 3 1 2

1 -Most often mentioned by experts

3 -Third2 -Second

Critical Tasks in the Era of Globalisation, Innovation and Knowledge-driven EconomiesCritical Technological Development Tasks

Areas of Critical Intervention

To promote (cross-border) technological cooperation

•Joint R&D•Joint commercialisation•Sub-contracting

To promote growth of technology-led enterprises

•Technology business incubators•Innovation support systems•Regional associations

To develop effective risk financing mechanisms

•Business angels•Venture capital•High-tech stock markets

To develop vibrant communities of stakeholders

•Cross-border Web-aided communities•Local communities & networks

Critical Tasks in the Era of Globalisation, Innovation and Knowledge-driven Economies

Critical Technological Development Tasks


To promote cross-border technological cooperation








Cross-border Technological Cooperation: Building on Mutual Strength - Examples

Russia

! Advanced R&D

Republic of Korea

! R&D Commercialisation

India

! Advanced Biotechnology

Japan

! R&D Commercialisation

ASEAN Countries

ASEAN Industrial ProjectsASEAN Industrial Complementation Programme

ASEAN Industrial Joint Venture Programme












Technology Business Incubation

Technology incubators nurture hi-tech start-ups and present a technology-oriented variant of business incubators

•hands-on management assistance•access to financing•business and technical support services•shared office space, access to equipment

Incubators provide:Incubators provide:

Business incubation is a dynamic process of business enterprise development. Incubators nurture young firms,

helping them to survive and grow during the startup period when they are most vulnerable.

Specific Features of Technology Business Incubators

Generally linked to universities, research centres

Links

Established within a technology park or close to other sources of technological supportLocation

May require specific equipment (computing, testing, rapid prototyping, etc.) and other technical expertiseServices

Management & mentoring staff require specific expertise in dev’t of technology-led businessesStaff












Innovation Financing Chain

Venture capital cannot finance innovation on its own. Dynamic innovation demands an unbroken financing chain, from seed

capital to stock market. The financing chain is no stronger than its weakest link.

Idea

Pre-seed

Own fundsFamilyFriends

Start-up

Seed

Dev’t fundsBusiness Angels

Fortification

Hi-techstock markets

Expansion

Growth

Venture Capital

VC companies

T Y P E O F F I N A N C E R E Q U I R E D

P R I N C I P A L S O U R C E S O F F I N A N C E

Growing Role of Risk Financing Mechanism for High-tech Start-ups

Angel financing

Venture capital

Debt

Speed of technological change

Ro

le o

f d

ebt

an

d

ris

k fi

nan

cin

g

Private investments in emerging and new businesses dwarf the more formal venture capital outlays. In US alone total private investments in entrepreneurial companies in 1999 was more than US$ 63 billion – far more than the US$ 46 billion the professional venture capital industry invested during the same period in start-ups and growing firms.

Average Success of VC Financing (US pattern)

High profit (1/10)Moderate profit (3/10)

Break even (3/10)Total loss (3/10)

Company growth

Re

turn

on

inv

est

me

nt

New Technology Financing - Success Rates

6 in 1000 business plans get funded on average

The No 1 reason a start-up’s valuation is cut due to incomplete executive teams

10% of start up in a given venture capital portfolio will succeed

6 out of 1,000,000 technology ideas will result in IPO

Source: Artemis Ventures












Services Available to Web Communities of Technology Transfer Stakeholders

•Project preparation and management

•Building of the project team

•File sharing

•Pooling of resources

•Access to external services

•Discussion room

•Chat room

•Administration & reporting tools

Project Development:

•Access to relevant online news, databanks and support services

•Sharing of knowledge and ideas

•Posting of business proposals

•Matching of prospective partners

•Expert forums

•Chat rooms

•Personal/corporate sites

•User-customized work space

Stakeholder Networking:

Website: www.apctt.org

e-mail: [email protected]

Thank you

Documents

Innovation – Key to Competitiveness BINASIA-Iran National Workshop Tehran, Iran 08-09 November 2005 Asian and Pacific Centre for Transfer of Technology