Innovation key to_competitiveness
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Innovation – Key to Competitiveness
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Postulate on new technology:If you understand it, it is obsolete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
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
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
Critical Tasks in the Era of Globalisation, Innovation and Knowledge-driven Economies
Critical 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
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
Critical Tasks in the Era of Globalisation, Innovation and Knowledge-driven Economies
Critical 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
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
Critical Tasks in the Era of Globalisation, Innovation and Knowledge-driven Economies
Critical 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
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:
Thank you