Modeling the Startup Dynamics of the Skolkovo Institute of Science

and Technology (SkolTech)

Eric Rebentisch, MITDmitriy Lyan, MITRaafat Zaini, WPI

4 December 2013

Rebentisch, Lyan, Zaini Dec2013

Overview

Background on SkolTech Stakeholder analysis Dynamic model Discussion

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SKOLTECH OVERVIEW

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SkolTech Overview A permanent, modern, international university with a physical

campus for research and education in Skolkovo, Russia. five primary education and research programs:

Information Science and Technology Energy Science and Technology Biomedical Science and Technology Space Science and Technology, Civilian Nuclear Science and Technology. Each program supports Master’s and Ph.D. degrees

A Center for Entrepreneurship and Innovation (CEI) within Skoltech provides education, research, and administrative functions related to entrepreneurship and innovation.

By 2020, Skoltech plans to have its own campus completed, which will host 1,200 students, 200 faculty, 15 research centers and 400 postdocs.

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Background on SkolTech Origins – Skoltech was founded in October 2011 by a collaboration of

nine Russian institutions and organizations. Skoltech then signed a trilateral agreement with the Massachusetts Institute of Technology (MIT) and the Skolkovo Foundation for a three year collaboration to build capacity in education, research, and entrepreneurship programs at Skoltech.

Purpose – The university’s aim is to catalyze research, teaching and innovation around pressing global issues, focusing primarily on biomedicine, energy, information technology, nuclear science and space, as well as entrepreneurship.

1st classes at Moscow campus in September 2013 for 50 incoming students The inaugural class of 20 students last year studied abroad at partner

schools around the world — including 12 who studied at MIT.

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Definitions SkolTech – Skolkovo Institute of Science and Technology Skolkovo Foundation – Skolkovo Foundation is a non-profit organization

founded in 2010 and charged by Russian President Dmitry Medvedev with being principally responsible for the Russian Skolkovo Innovation Center in Skolkovo near Moscow. Skolkovo is governed by a special law that provides companies special economic conditions for running their businesses. More than 300 companies have received the status of Skolkovo resident.

MIT Skoltech Initiative – Established in 2011 to support MIT’s multi-year collaboration in building Skoltech. The office coordinates MIT support with the design of educational curricula and research programs, innovation activities, administrative policies and structures, recruiting processes, and campus operations and infrastructure.

Skolkovo Innovation Center – A 100-acre industrial park and business incubator billed as “Russia’s version of Silicon Valley.”

CREI – Centers for Research, Education and Innovation, about half a dozen research initiatives to forge strong international research partnerships to build capacity at Skoltech in faculty, researchers, students, and facilities.

CEI – Center for Entrepreneurship and Innovation that supports the CREIs and Russian industry and will integrate the three pillars for entrepreneurship and innovation (E&I): Education, Research, and Commercialization.

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SkolTech Architecture

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STAKEHOLDER ANALYSIS(From Hess, Lukinova, Lyan, and Naumov May 2013 presentation and September 2012 draft report)

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Stakeholder Analysis Method Identify Stakeholders Identify Needs (inputs) & Value Delivery (outputs)

47 interviews conducted representing 12 stakeholder groups

Identify Flows Connect Value Delivery (outputs) to Needs (inputs)

Prioritize Flows Run Stakeholder Value Network Analysis (SVNA)

Software Analyze Results

Identify Stakeholders

Identify Needs & VD

Identify Flows

Prioritize Flows

Run Software

Analyze Results

Identification of Key Stakeholders

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Approach: Identified these high-level stakeholders before the data collection phase. Met with SkolTech top management to narrow list of SkolTech

stakeholders. Used the data from interviews to refine the stakeholder list.

Stakeholders Grouped and DefinedStakeholder Stakeholder Description

Skoltech Skolkovo Institute of Science and Technology

SkF Skolkovo Foundation

RF Institutions Russian universities (e.g. ‐MEPhI, PhysTech, MSU, BMSTU), Russian research institutes (e.g. ‐ Russian Academy of Science)

RF Gov Russian federal government, Russian local governments (e.g. ‐Moscow city government)

Public/Media Russian public, Russian media

InternationalInternational universities (e.g. ‐MIT, Stanford, Univ. Cambridge), International funding agencies (e.g. ‐ NSF, ERC), International governments, Russian diaspora

Industry Russian startups, Russian small/medium/large companies, Russian state enterprises, Multinational corporations in Russia 

Donors Private donors

Stakeholder Value Flows Defined

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SkolTech RF GovernmentRF InstitutionsSkF

Public/Media International Industry Donors

Example: Skolkovo Foundation Stakeholder Value Flows

Results: All 46 Flows in the Top 100 Loops

Results: Stakeholders’ WeightStakeholder Network Top 100 (first appears)Skoltech 94% ✓ (1)SkF 94% ✓ (1)RF Institutions 92% ✓ (14)RF Gov 80% ✓ (1)Public/Media 58% ✗ (236)International 57% ✗ (294)Industry 36% ✓ (1)Donors 1% ✗ (295)Note: Focal Analysis generated & analyzed 3,011,069 loops, and the Network Analysis generated & analyzed 3,015,794 loops.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Access to International (To: Industry)Enhanced Innovation System (To: SkF)

Reports of Substantial Progress (To: SkF)New Tools & Methods (To: Industry)

Technology, Know‐how, and IP (To: Industry)Role Models (To: RF Institutions)

Prospective Students (To: International)Knowledge Exchange (To: International)

Role Models (To: Public/Media)Educated Leaders (To: Industry)

Knowledge Exchange (To: Industry)Reports of Substantial Progress (To: RF Gov)

Research & Education Funding (To: International)Knowledge Exchange (To: RF Institutions)

Political Support (To: SkF)Reports of Substantial Progress (To: Public/Media)

Skilled Workforce (To: Industry)Venture Creation (To: Industry)

Regulatory Compliance (To: RF Gov)Policy Advising (To: RF Gov)

Project Consulting (To: RF Gov)Prospective Faculty (To: RF Institutions)

Prospective Students (To: RF Institutions)Access to Russia (To: International)

Prospective Faculty (To: International)Access to International (To: RF Institutions)

Educated Innovators & Entrepreneurs (To: Industry)Strategic Guidance (To: RF Gov)

Acad. & Sci. Resources & Infrastruct (To: RF Institutions)Recognition (To: RF Institutions)

Research & Education Funding (To: RF Institutions)Enhanced Innovation System (To: Industry)

Political Support (To: RF Gov)Salary (To: Public/Media)Recognition (To: Donors)

Payment for Goods & Services (To: Industry)

Results: Skoltech Value Delivery (Weighted)

SKOLTECH STRATEGY(From June 2013 presentation)

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SkoltechAccelerating InnovationУскоритель Инноваций

Building the Community

Updated Strategic Planfor 2013‐2015

Edward CrawleyJune 2013

Executive Summary ‐ Skoltech’s High‐Level Value Propositions

• Skoltech will produce ideas and talent to contribute to Russian economic growth and modernization– Creating new technologies, know‐how and intellectual property– Developing new tools and methods leading to products– Creating patterns for translating inventions into innovation, and 

competitive new company formation– Catalyzing new companies– Providing access to international industrial competencies, and helping 

develop strategic Russian industrial capabilities at or above international standards

– Helping to improve the rating of Russia as a place to do business – Contributing to national health

• Skoltech will contribute to strengthening the international prestige of Russian science, and raising the international ranking of Russian universities 

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Skoltech Mission – Accelerating Innovation

• To have fundamental educational, scholarly and economic impact in the Russian Federation and around the world,

• By accelerating innovation: building integrated research/innovation programs to effectively meet the needs of industry and society, and educating graduate students to be leaders in translating knowledge from science to innovation, 

• Using a fusion of exceptional Russian and international talent, key partnerships, and a world‐class infrastructure, all embedded in the Skolkovo innovation ecosystem.

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Skoltech is a new model of educational institution

Principal Outputs of the Institute

Other RFuniversities

Government

Scholarly impact: Ideas, Knowledge, Experience 

Innovation impact: Know‐how, Process,Technology, IP, Co’s, Prototypes

Policy Setting, Agenda SettingInnovation Culture, Access

Models, Networks, Reputation

Educational impact: Talent 

IndustryInnovation Centered 

Institute –the Skoltech community

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Goals of Skoltech

• Build a community– 200 professors in science, engineering and innovation, all with a view 

toward commercializing their work– 1200 students, 440 post docs, visitors and staff, all researchers and 

innovators

• Produce the value related outputs:– Educate young people to have a strong command of science, and a 

demonstrated working knowledge of how to commercialize scientific knowledge, and the abilities and inclination to lead in change processes

– Produce scientific and engineering thought, ideas and results of the highest international standards

– Produce technological outputs results specifically intended to strengthen innovation in Russia

• Making Skoltech the most economically impactful institute of science and technology in the world 

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Value‐Chain Processes: Research Linked to Innovation

Engage industry to understand needs

Build Teams to address problems

Research with a consideration of use

Knowledge Exchange

• Research Goal: Discover new ideas and develop novel technologies that address the pressing needs of members of society and society as a whole, and which build upon fundamental science and technology, yet are guided by a consideration of innovation.

• Innovation Goal: Make Skoltech an engine of economic growth by rapidly moving ideas to impact, by engaging Skoltech students and faculty in entrepreneurship and innovation, and by accelerating research outcomes toward commercialization and broader social impact.

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Value‐Chain Processes: Education Embedded With Innovation 

Attract/AdmitStudents

Learning Experience Place inNetwork

• Education Goal: Educate students in integrated science, technology and innovation based Master’s and Ph.D. programs, empowering a new “Skolkovo generation” with the skills, knowledge and competence to enable them to bridge the gap between fundamental science and innovation, to become transformative members of society, and to make economic and social impact in the Russian Federation and around the world.

• Student Goal: Attract, support and nourish an outstanding cadre of students who have the capacity to become agents of knowledge exchange, innovators, company founders, and leaders who will have impact on the Russian Federation and around the world.

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Value Chain Processes: Building a Faculty Community With Shared Values

Attract Grow and Broaden

Mentor andDevelop  Lead Change

• Faculty Goal: Attract, promote and nurture at Skoltech an internationally prominent body of scholars, successful innovators, and young rising stars, who are dedicated to effective education and research with a consideration of innovation. They will be the key reasons Skoltech achieves top academic prominence internationally and serves as a model for the integration of research, education and innovation. 

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The Role of MIT – Skoltech’s Major International Partner• MIT is pervasively involved in every aspect of Skoltech’s development

– Recruiting and selecting faculty– Planning education– Delivering innovation program– Selecting CREIs– Recruiting students– Writing policies– Planning campus– Establishing endowment program, etc, etc

• There are many intangible benefits of MIT’s involvement, the most important of which is instant reputation

Measures of Success – Agreed Set 

• Number of professors• Number of students• Non budget financing• Direction of construction

• Educational programs• Research programs• Innovation programs

• New international practices networked to Russian universities

• Number of events with industry

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Summary of Strategy• Outcomes

– Recognize the five value outcomes of the Institute – talent, science, innovation, impact on other universities and policy

– Plus less tangible value outcomes • Programs

– Build key value processes into programs in research & innovation and education 

• People– Attract targeted 20+ top world‐class scientists – Attract the best Russian graduate students and retain them in Russia

• Partners– Build a network with MIT and international partners – Build the Skoltech Network to help strengthen other Russian universities

• Infrastructure– Build the campus, community buildings and cyber‐infrastructure

• Create a stable financial base and business model

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PRELIMINARY MODELING OF THE DYNAMICS OF A STARTUP UNIVERSITYBased on the work of Zaini and Lyan

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Modeling a Complex Emergent Enterprise How can you operationalize an understanding of stakeholder

values and the processes that affect their delivery? Objective: Build on stakeholder analysis work to study the

impact of strategic initiatives, resourcing policies and incentive structures on dynamic development of SkolTech and its ability to delivery value to its key stakeholders. Develop a simulation model that captures the impact of

resourcing policies, incentive structures and strategic initiatives on SkolTech’s short and long term performance

Perform scenario analysis and come up with a set of recommendations on strategic initiatives and resourcing policies, which maximize SkolTech’s ability to deliver value to its key stakeholders.

Modeling based on stakeholder analysis and strategy documents from SkolTech.

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Partnerships

Inauguration

Academics

FinancialResources

10 yearsVision Realized

Performance

Hope(solid

curve)

Fear(dotted curve)

What Drives These Outcomes?

2nd level, ”Academics”: dynamic relationships between academic staff, quality, and facilities

Top level: dynamic relationships between performance, academics , partnerships, and financial resources

3rd level, “Academic staff”: students, faculty, and research teams, and faculty load dynamics

2nd level ,”Performance”: Innovation, impact, and reputation dynamics

Top level dynamic hypotheses

Dynamic relationships between performance, academics, partnerships, and financial resources

“ Performance”: Innovation, impact, and reputation dynamics

“ Academics”: dynamic relationships between academic staff, quality, and facilities

“Academic staff”: students, faculty, and research teams, and faculty load dynamics

2nd level, ”Academics”: dynamic relationships between academic staff, quality, and facilities

Top level: dynamic relationships between performance, academics , partnerships, and financial resources

3rd level, “Academic staff”: students, faculty, and research teams, and faculty load dynamics

2nd level ,”Performance”: Innovation, impact, and reputation dynamics

Top level dynamic hypotheses

Model Sectors

International PartnersIndustrial PartnersRussian Universities

Government FundsNon-budget FundsLicensing fees and RoyaltiesOperating BudgetBudget allocations

Growth TargetsQuality standards

Master StudentsPhD StudentsPostDocsProfessionalsAlumni/dropouts

FacultyVisitor FacultyResearch staff

Submitted, Approved, and Funded ProjectsProjects underdevelopmentDeveloped projectCommercialized projects

Team composition

Students QualityFaculty QualityGraduates QualityPublication QualityResearch Team ProductivityReputationWord Of Mouth

FacilitiesResearch Facilities

EntrepreneursStartupsMatured BusinessesIndustrial workforceBrain DrainAcademicsDemand for graduates

Key Stocks and Flows

ProspectiveStudents Students Alumni

ApplicationRate

AcceptanceRate

GraduationRate

ProspectiveFaculty

FacultyRecruitment

RateHiringRate

TurnoverRate

InnovativeResearchPrograms

InnovationImpact

ResearchStart Rate

DevelopmentRate

+

+

ReputationChange inReputation+

+

StakeholderExpectations

-

R

R

PartnershipsGrowth RateAttrition Rate +

+

+

+

FacilitiesConstruction

Rate

+AvailableBudgetAnnual

RevenuesAnnual

Spending

+

+

+

+

<AnnualSpending>

+

+

+

Key Partnerships grow as a function of SkolTech’s reputation. The strength of SkolTech’s partnerships in turn drive the number and the quality of prospective faculty and students as well as the size of available budget.

Operating Dashboard and sample model runs

1. Base case2. Active

Quality and Reputation Impacts

3. Active Quality, Reputation and Budgetary Impacts

Model Runs – The Base Case

The model is able to reproduce envisioned growth of students, faculty and facilities.

Comparative model runs Case 1 &2, number of

students and graduates did not change as there was no influence of the drop in quality ( case 2) on students dropouts

Case 3 shows a drop in number of students and graduates as financial limitations become effective around 2017

Comparative model runs Case 2 shows a drop in academic

staff since quality drop impacts number of faculty getting tenure. Reputation drop also impacts the ability to hire visitor faculty and research staff, and also weakens the pool of prospective faculty

Case 3 shows a turning point in academic staff due to budget limitations and higher production of commercialized projects relative to Case 2 since the limited financial resources could lead to a more selective process of faculty and students which keeps the admission fraction low and maintains quality. Higher quality impacts research team productivity and when combined with proper research funding the progress becomes faster in the innovation pipeline. However, the progress slows down as a result of lower numbers of students and faculty.

Comparative model runs Case 2 shows a drop in HR

demand by the industry despite keeping a strong growth of startups.

Case 3 indicates an increase in HR demand due to a decline in number of prospective employees and a gradual increase in number of startups which still raises questions about the long term sustenance of this approach.

Case3: Financial resources impact

Limited financial resources although limit aggressive growth could also lead to a more selective students admission and faculty recruitment process that could maintain quality and reputation.

Quality and reputation alone can not maintain performance without growing academic staff to have a sensible impact of innovation and the economy.

Key Insights From the Model

SkolTech’s ability to meet its strategic targets relies in part on its capability to rapidly grow its student and faculty population

There is a clear tension between the pressure to scale SkolTech’s impact and SkolTech’s ability to attract and retain exceptional talent.

The “chicken and egg” dilemma of needing brand/reputation to attract talent and needing talent to build reputation is addressed by MIT/SkolTechpartnership

Next Steps Refine dynamic model focus and empirical

foundation Engage key stakeholders at startups Continue peer review process to ensure quality

Develop generic structure to enable key stakeholders in startup research universities to understand available options and operating dynamics for sustainable growth

Develop theory of “transplanting knowledge systems” through startup research universities

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QUESTIONS?

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