Resilient Innovation for Economic Transformation Innovation: The Role of Business Incubation Hanoi University of Technology Hanoi, Vietnam October 3-5, 2007 Dr. David E. Martin, CEO Batten Fellow, Darden Graduate School of Business Administration, University of Virginia
Modern Innovation Paradigm Russia s Sputnik satellite (50 years ago) and Japan s semiconductor market dominance (30 years ago) shook science & technology complacency of the West 1960 s Vast nationalization of R&D funding 1980 s Creation of intellectual property R&D trade barriers
U.S. Bayh-Dole Act of 1980 Stimulated vast monopoly holdings in the form of patents and intellectual property Triggered extensive equity speculation Created huge stockpiles of innovation with NO market Over 90% of all patents from publicly funded R&D never put to commercial use Most IP&R from industry abandoned prior to expiration of patents
Policies Lack Industry Reality Majority of innovation succeeds by large enterprise merger & acquisition deployment NOT THROUGH BUILDING LONG TERM BUSINESSES Note: Countries without large legacy companies have little to gain from building small & medium sized technology companies for global market distribution Compare investment flow Seed capital into technology US$ 2 billion M&A capital into consolidation US$ 8 trillion Mature equity markets require investment returns prior to technology deployment life cycle
What has worked? Governments preferentially purchase from SME s rather than invest in them Sharp silicon solar photovoltaics in Japan IBM U.S. government purchaser Oracle launched from a CIA commercial project Purchases are at or above global market rate but selected because of strategic industry incentive
How does Asia-Pac compete? Majority of trained scientists and engineers between Beijing and Delhi Over-patenting in the West has created useless, anti-growth barriers which do not have foreign equivalents Asia-Pac can exploit Global Innovation Commons filled with geographically limited IP&R Linking researchers with collaboration platforms can put best ideas in hands of best collaborators for non-legacy economies
Immediate Actions Governments and Agencies purchase rather than invest $1 invested is $1 added to economy $1 from purchase by a recognized customer can be leveraged to $3-5 in debt financing or $10 in equity Buying from SMEs and SME networks builds economies, not just a single enterprise Buyer networks can be facilitated by governments and NGOs
Leverage 30 years of excess Vietnamese Ministry of Education & Training could institute require reading of patents to teach how others solved technical challenges to learn successful solution frameworks Asia-Pac governments can build laws encouraging trade networks built on innovation rather than building barriers such as anti-monopoly regulations U.S. and European Anti-Trust Laws prohibit many patent pooling efforts these laws are outdated due to excessive patenting activities on incremental innovations Incubation can focus on Collaboration Networks and licensing pools rather than individual enterprise creation
New Asia-Pac Era Competing for the next scientific advance not the lowest labor cost Build networks of commercial interdependence rather than proprietary isolationism Focus on global challenges sustainable quality of life rather than material consumables: Water, bio-energy, sustainable agriculture, distributed information networks, communication, education
Case Study Wind Technology from Hanoi Vietnam Possible Commercial Partners Known Commercial Efforts
Making Markets and Networks
Instant Market Viability Assessment Third Party Research and Commercial Markets Here
How does this work?
Knowledge Network Potential Partners Competitor Agreement Domestic Local Knowledge Foreign Innovation Commons Potential Partners Potential Partners Domestic Foreign Foreign Potential Partners Competitor Agreement
Global Innovation Commons Potential Partners Domestic Potential Partners Local Knowledge Potential Partners Competitor Agreement Foreign Innovation Commons Potential Partners Domestic Foreign Foreign Competitor Agreement 1. Qualify global position & market 2. Leverage existing knowledge networks 3. Identify affinity innovators & challenges 4. Seed new challenges to affinity innovators
Fusion Networks Grassroots synergy no person is alone Fusion networks built by proven capability to innovate Improved by collaboration evidence (willing to share for a common good) Grow using guided innovation where networks are united around common problems