GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS (TECHNOLOGIES AND KEY PRINCIPLES)

GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS BRIEF VERSION Moscow Hong Kong Daedeok Lund Montpellier Oxford Beijing San-Francisco Singapore Helsinki 2012 1

BRIEF VERSION CONTENTS RESUME.... 3 Annex No. 1. SOURCES OF EXPERIENCE... 6 1.1. The Biggest Innovation Centers of the World. Ratings of Innovation Centers... 6 1.2. Top-30 of World Innovation Management... 10 1.3. Factors of Success When Founding Innovation Centers... 12 Annex No. 2. BASIC TECHNOLOGIES OF CREATING INNOVATION CENTERS... 14 2.1. Business Incubation... 14 2.2. Attracting External Financing For Innovation Projects.... 16 2.3. Establishing Horizontal Links... 17 2.4. Creating the Efficient Technological Park Infrastructure... 19 2.5. Establishing Social Links and Creation of Reputation (PR and Branding)... 21 2.6. Organizing the Work of Innovation Center Management Bodies.... 22 2

GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS RESUME We ourselves would never dare to prepare the document in the genre so ambitious, as the Guide, but for one circumstance. Co-authors of the present document can be pardonably considered those people who have achieved the highest success in creating innovation centers and innovation environment. Moreover, only those apparently have the right to express their weighty opinion about how innovation centers are created and how they develop. They have founded the environment in which the innovation business has grown with the turnover of more than 2.5 trillion dollars of annual operation; their sponsored companies include Intel, Nokia Group, DuPont; among their innovations are such technologies as Bluetooth, cloud programming and EPROM memory chip. The Guide is a result of numerous conversations with the Founding Fathers of the leading innovation centers, and with their team-mates, of meetings with employees of innovation companies and with their partners. One must say that often we got a picture, which significantly differed from habitual presentations of technological parks: partly, as the result of the inevitable difference between theory and real life; in some degree, due to the fact that this work was carried out in the period of conceptualization of aftercrisis changes, which have devaluated some truths, unit recently unshakable. This work is also based on studying the experience of 35 most efficient innovation centers of the world on the rating list. Finally, the third basis of the present work was the survey among the most reputable innovation managers on the secrets of their success and about the mistakes in their work. The Guide generalizes managerial approaches and practices for creating the innovation infrastructure, which have proved their efficiency in the most successful innovation centers of the world. The history of every of them is unique. Thousands of factors determined their development: historical peculiarities and business lifestyle, the level of education of population and development of industry, as well as state policy. As the result, the researchers from time to time become convinced that establishing a creative environment is akin to art. And if it is so, there is no need to generalize; it is important to learn from one or two congenial masters. But, nevertheless, there is something common. First of all, all projects of innovation centers have emerged as the result of deep crises and of realization of the fact that innovations may help overcome the difficulties. Thus, foundation of the Ideon Research Park in Swedish province of Skone was the response to decrement of the basis of local industry wharves, under the pressure of South-Korean competitors at the end of the 1970s. And foundation for organizing the network of Technopolis Research Parks was laid in the Finnish backwater district the city of Oulu, which started to lose population sweepingly after the Second World War. In this sense, Russia certainly is in the mainstream. Secondly, the trace typical for the majority of successful innovation centers is the fact that they develop in strongly defined sequence, passing a number of stages in course of development: I. Concentration of resources (this stage is characterized by growth of scientific and research potential of the region and formation of good entrepreneurial climate, primarily, for beginning and small companies, where innovation center is being formed; overcoming the Great Wall of China between research centers and industry); II. Formation of innovation ecosystem (i.e., symbiosis of technological startups, small enterprises and large-scale high-tech business; stable parks of science-intensive companies are formed; regional authorities start the active policy of supporting the innovation business and creating the required infrastructure; large-scale advertising and PR-campaigns are carried out, aimed at forming a new brand of the region as an innovation center); 3

BRIEF VERSION III. Breakthrough (rush growth of turnover of large (anchor) companies and their transformation into global players; significant growth of the number of technological startups; formation of the market of venture investments and of the mechanism for separation of risks of venture investors, for example, within the frames of private and state partnership); IV. Mature development (created infrastructure for supporting the innovation enterprises works efficiently; it becomes more and more «technological» and scalable; development of own brand of the innovation center takes place; incorporation in the existing technological chains, and creation of the new ones, on the basis of international cooperation). Attempts to ignore the above sequence and huge resources aimed at resolving the tasks of the next stages that aren t prepared yet (as well as attempts to skip a stage) at best lead to stagnation and to absence of the desired results. And finally, thirdly: practically all successful innovation centers have encountered a certain number of general problems in their progress. The technologies of their solution are already developed: each of them in its turn consists of a set of simpler problems. And practically all more or less successful innovation centers are the result of combination of these elementary items. Here are the basic technologies of innovation management: 1. Business incubation. Contrary to the conventional opinion, the term «business incubator» has rather rough relation to real estate object. The problem that technological business incubators have to resolve can be simply formulated as: Deficit of successful technological startups. They can be attracted not by low rental fee, but by creation of efficient business environment, as well as by providing the innovation startups with the kind of services and premises that they really need. The most important service is transfer of entrepreneurial skills to the participants of innovation startups, for which experienced and well-paid business coaches are required. 2. Establishing the system of projects financing. Continuing financial and economic crisis has entailed serious deterioration of the situation with attraction of private venture capital. In this connection, solution of the problem of attracting financial resources requires technological parks to search for nonstandard mechanisms of attracting external financing of innovation projects and, respectively, creation of maximally comprehensive and amicable climate for the investor. The condition for origin of such climate on the one side is private-state partnership based on granting interest-free or conditionally reimbursable loans to innovation projects and, on the other side, an extremely wide choice of projects that are promising from the point of view of the investor. 3. Establishing horizontal links between the participants of an innovation centre researchers, innovation entrepreneurs, venture investors and institutions of development. The simplest and the most obvious way to stimulate formation of horizontal links between various participants of an innovation system is gathering them under the same roof. This significantly helps create comfortable sites for communication where various participants of the innovation system could regularly intersect in course of day-today operations, get to know each other, share ideas and establish partner relations. Apart from its function of a site for communication, the innovation center should perform functions of the influencer for companies located in it. The possibility of obtaining a recommendation and of direct connection with the necessary person or organization is often not less important than financial or consultative support. 4. Creating infrastructure of the technological park. This infrastructure should be oriented at satisfying the needs of small technological enterprises first of all and be maximally flexible: small premises that are capable of quick expansion when necessary, and compact laboratories equipped with all required communications and facilities. Outside the walls of the technological park, such premises 4

GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS are impossible be found for a reasonable fee in the majority of European, American or Asian cities. Territorial proximity to universities and other R&D centers may simplify the task of creating the highquality infrastructure. Concentration of small technological companies in the same place serves as a strong magnet which afterwards attracts large rich companies. 5. Branding and PR. Development of long-term high-risk project such as a scientific park or an innovation centre to great extent depends on the expectations, which are formed in the society with regards to its results: what tasks and objectives are set to a specific technological park, what is the limit of its possibilities, direction and strategy of development. This requires constant explanatory work with mass media. Furthermore, the destiny of the innovation center practically always is the derivative of successes and misfortunes of its residents. However, at the initial stage of development of startups, while they have no their own «employment history», their perception by banks, venture companies and other counteragents is significantly determined by the reputation of the technological park where they are residents. That s why investments into PR are never useless: they facilitate attraction of startups into the innovation centre, and afterwards also of investors. 6. Organizing the management. The main task of the innovation center is creating favorable business environment and providing services on business operation and development that are demanded by innovation companies. Only those executives can cope with this task who have the experience in doing business, as they understand which particular services are requested, and how they should be rendered. If the state, directly or via its representatives, starts influencing too strongly on management of the innovation center, high risk exists of its transformation from a center rendering services to innovation business, working on the basis of a clear business model (client service provider), into a center for distributing the state subsidies. The task of the innovation center management company can not be the profit-making only. And just by that reason control bodies of the innovation center should possess autonomy not only from state authorities, but also from private investors and shareholders. 5

BRIEF VERSION ANNEX NO. 1 SOURCES OF EXPERIENCE The number of innovation centers and technological parks in the world, i.e., places of concentration of innovation business, now is approaching to a thousand. This index will be growing up further on: a number of people associate the exit from the present global economic crisis with a new technological wave. And, to conquer this wave, at least such infrastructure is necessary which adds to origin, establishment and expanded reproduction of innovation companies. That s why the interest is quite clear towards such places, where such infrastructure or, using professional slang, ecosystem», has been built. 1.1. The Biggest Innovation Centers of the World. Ratings of Innovation Centers From that incomplete thousand of presently existing innovation centers and technological parks, only few could prove their efficiency. Progressive advance (even if subject to some rises and falls) has become the first criteria of the rating of efficiency of innovation centers, which formed the base of the present Guide (See Table 1). Together with these criteria, the rating also considers the other ones: Contribution of the innovation center to the development of economy, notoriety and quotation, level and significance of the companies working in the centre; the scope of the innovation centre, accessibility of venture capital and availability of information. Innovation centers in the rating are not ranked (from the most efficient ones up to those with the lowest efficiency): that is simply senseless, as the source conditions of their foundation and the missions assigned to them are incommensurable. Neither particularities of financing of their current activity nor its relative scope are criteria for evaluation of efficiency of an innovation center. In this relation, efficiency of an innovation center in the offered rating is evaluated irrespective of their relative scopes, as well as of the form of their organization and financial selfsufficiency. 6

GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS Table 1. Efficiency Rating of Some Innovation Development Centers Country Year of foundation Scope Efficiency Scale scope* Self-sufficiency** Dynamics of development Assigned rating Staffing level together with companies Number of registered companies Overall volume of investments / Annual aggregate income of residents*** (million USD) Name of the innovation center 1 India Silicon Valley, Bangalore India 1990s 0,905 0,74 N.mkt Positive G.mkt5 20 000+ 130 2 Ideon Research Park Sweden 1983 0,955 0,8525 G.mkt Positive G.mkt5 3 000 260 3 Yokosuka Research Park Japan 1987 1,135 0,9925 G.mkt Positive G.mkt5 154 4 Kyoto Research Park Japan 1987 1,135 0,95 G.mkt Positive G.mkt5 250+ 5 Kendall Square, Massachusetts USA 1990s 0,91 0,725 N.mkt Positive G.mkt5 450+ 1 2 00 6 Hsinchu Science and Industrial Park Taiwan 1980 1,225 1 G.mkt Positive G.mkt5 139 416 440 38455 / 301* 7 Berlin Adlershof Technological Park Germany 1991-1992 1 0,9925 G.gov Positive G.gov5 7268 471 94 / 770 * 8 Technopolis Oulu Finland 1982 0,86 0,7325 N.mkt Positive G.mkt5 4500 215 9 Silicon Valley Palo Alto, San Diego, Sth San Francisco USA 1950s 1,225 0,72 N.mkt Stable G.mkt4 250 000+ 10 Silicon Wadi, Israel Israel 1990s 0,91 0,8225 G.mkt Stable G.mkt4 3 000+ 11 Tsukuba Science City Japan 1985 1 0,855 G.gov Stable G.gov4 120 12 Research Triangle Park North Carolina USA 1959 1,135 0,64 N.org Stable G.org3 170 13 Austin Silicon Hills (Texas) USA 1980s 1,135 0,7625 N.mkt Negative G.mkt3 150 725 14 Shanghai Zhangjiang hi-tech Park China 1992 0,86 0,495 N.gov Stable G.gov3 100 000 3600 15 Montpellier Agglomeration France 1986 0,5 0,77 N.gov Positive N.gov5 5 000 445 530* 7

BRIEF VERSION Continued of table 1 Country Year of foundation Scope Efficiency Scale scope* Self-sufficiency** Dynamics of development Assigned rating Staffing level together with companies Number of registered companies Overall volume of investments / Annual aggregate income of residents*** (million USD) Name of the innovation center 16 Cambridge Science Park 17 Leiden Bio Science Park Great Britain Netherlands 18 Techno Park Campinas Brazil 1970 0,505 0,7375 N.org Positive N.org5 5 000 100 1984 0,775 0,72 N.org Positive N.org5 3100 70 End of 1970s 0,725 0,7875 N.mkt Positive N.mkt5 5500 67 19 Technoparc Montrèal Canada 1987 0,635 0,735 N.org Positive N.org5 4849 34 2 000 20 Biopolis One-North Singapore 2003 0,545 0,4525 N.gov Positive N.gov4 5 500 21 Innovation Place Research Park Canada 1980 0,5 0,49 N.gov Positive N.gov4 5 000 192 36* 22 Hong Kong Science and Technology Park China 2002 0,635 0,6525 N.gov Positive N.gov4 80 23 Otaniemi Science Park Finland 1985 0,635 0,5675 N.mkt Positive N.mkt4 250 24 Symbion Scientific Park Denmark 1986 0,725 0,56 N.mkt Positive N.mkt4 180 25 Zhongguancun Science Park China 1988 0,635 0,345 R.mkt Positive N.mkt4 950 000 22 000 124 000* 26 Sophia Antipolis France 1984 0,775 0,9125 G.gov Stable N.gov4 31 000 1452 27 Technology Park Bentley Australia 1985 0,725 0,4375 N.gov Positive N.gov4 110 28 ZIRST Technological Park, Grenoble France 1972 0,775 0,8425 G.gov Stable N.gov4 10 000+ 320 29 Porto Digital Brazil 2000 0,635 0,68 N.mkt Positive N.mkt4 130 30 METU-Technopolis Turkey 1991 0,5 0,475 N.gov Stable N.gov3 3 300 240 31 Madrid Science Park Spain 2001 0,5 0,45 N.gov Stable N.gov3 250 8

GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS Of the table 1 Country Year of foundation Scope Efficiency Scale scope* Self-sufficiency** Dynamics of development Assigned rating Staffing level together with companies Number of registered companies Overall volume of investments / Annual aggregate income of residents*** (million USD) Name of the innovation center 32 National Technology Park Ireland 1984 0,635 0,52 N.gov Negative N.gov2 3 000+ 80 7 33 Oxford University Begbroke Science Park Great Britain 1990s 0,37 0,7 N.mkt Positive R.mkt4 40 34 Daedeok Innopolis Korea 1992 0,28 0,3925 R.gov Positive R.gov4 40 338 1006 35 Tomsk science and technology park Russia 1990 0,365 0,3075 R.gov Stable R.gov3 Innovation centre of international scale Innovation centre of national scale Innovation centre of regional scale * By scale, innovation centers are divided into groups: R Index, regional regional; «N» Index, «national» national; «G Index, global» international. ** By grade of their financial self-sufficiency, innovation centers are divided into groups:.org Index innovation centers having significant financial dependence on support of third organizations;.gov Index innovation centers having significant financial dependence on support of institutions of state and municipal authorities;.mkt Index financially self-sufficient and self-supporting innovation centers. *** Asterisk specifies the index of aggregate incomes of residents of an innovation center for the accounting period. 9

BRIEF VERSION 1.2. Top-30 of World Innovation Management The names of Bill Gates or Steve Jobs are known to everybody, but the stories of their success are not replicated they are unique. The other case is those persons, who managed to create the environment, «infusion broth», in which future gates and jobs could apply themselves. The names of these people, leading executives, scientists and officials, who managed to achieve the most success in creation of favorable conditions for implementation of innovations in various countries of the world, are much less known. Their very names formed the base of the present Guide. The criteria for inclusion into this list of innovation management gurus are quite simple (See Table 2, in alphabetic order): Quotations in the leading world business and scientific periodicals, evaluations of the leading experts and journalists, present popularity of the candidate (participation in state and corporate consultative authorities on development of innovation infrastructure), availability of own scientific and entrepreneurial experience, as well as of important prizes and awards. In course of formation of the list, more emphasis was also put on the contribution the persons on the list made into transformation of economy of a region of even of the whole country. Table 2. Top-30 of World Innovation Management Person (Name) Paulo Arruda Wang Yangyuan Joseph Vardi Peter Dobson Kazuo Inamori Philip Yeo John Kao Mervi Käki Mei Meng William Miller Nagavara Murti Countries where projects have been realized Brazil China Israel Great Britain Japan Singapore The USA, Finland, Singapore, Ireland, United Arab Emirates Finland, Poland, Cyprus, New Zealand, Russia China The USA, Singapore, Malaysia, South Korea, Japan India Merits Famous Brazilian innovative researcher and entrepreneur, pioneer in geneticscoordinated the establishment of Centre of Molecular Biology and Genetic Engineering in Unicamp, Brazil (University and Research Center in Campinas) Head of a number of research centers in the China, architect of innovation policies in microelectronics. The person who founded and continues to develop the microelectronic industry of the China More than 40 years of experience in semiconductor industry.director of the Microelectronics Research Center, Beijing University. The most successful venture investor in Israel, one of the chief innovative managers of the Israeli hi-tech industry, one of Israel s most prominent innovation entrepreneurs and venture capitalists. Initiator and director of Begbroke Science Park (Oxford), National advisor on nanotechnology to the Research Councils, the UK Founder of Kyocera, Kansai Cellular Telephone Co., KDDI Corporation and several venture companies Coordinator of Singapore government policy in the field of innovation development. Chairman of the board of directors of SPRING, Council for Standards, Improved Efficiency and Innovations. International advisor BASF, Nike, Intel, Nissan, PricewaterhouseCoopers and others, as well as for governments of Finland, Singapore, Ireland, United Arab Emirates and the USA. A partner, managing director and chief advisor at InnoPraxis International Ltd. Former CEO of Technopolis Capital RegionFormer Member of the Board of Technopolis Ventures Business IncubatorPreviously held managing positions at Technopolis PLC. Founder and President of Tsinghua University Science Park (TusPark), Director of TusPark Development CentreChairman of TusPark Co. Ltd. Permanent Board Member of the Chinese Association of Universitybased Science Parks. One of the founding fathers of the Silicon Valley, advisor on innovation policy in South Korea, Singapore, Malaysia and Japan, co-director of Stanford Programme on Regions of Innovation and Entrepreneurship. One of the founding fathers of the IT cluster in Bangalore, prominent Indian innovative entrepreneur and software engineerco-founder and former CEO and currently Chairman Emeritus and Chief Mentor of Infosys, Bangalore, India. 10

GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS Person (Name) Shiv Nadar Nandan Nilekani Se-Jung Oh Gilbert Pastor Carlota Perez Fernando de Castro Reinach Masayoshi Son Tony Tan Anthony Tan Dov Frohman Julian Webb Chang-Gyu Hwang John Hennessey Countries where projects have been realized India India South Korea France Venezuela, China, Brazil, Netherlands, Spain Brazil Japan Singapore Hong Kong Israel Australia, New Zealand, China South Korea The USA Sven-Thore Holm Sweden, Russia, China Merits Continued of table 2 One of the founding fathers of the IT industry in India, founder and chairman of HCL Technologies, founder and chairman of the Shiv Nadar Foundation, founder of the Shiv Nadar University. Prominent Indian entrepreneur, head of the Government of India's technology committee, TAGUP,Cofounder and former Chairman and CEO of Infosys Technologies, a global IT services companyco-founder of India s National Association of Software and Service Companies (NASSCOM) and the Bangalore Chapter of The IndUS Entrepreneurs. President of the National Research Foundation of Korea, advisor to the Government of Korea on science and technology policies, Member of the Korean Academy of Science & Technology and the Presidential Advisory Council on Education, Science and Technology, Republic of Korea. Vice-president for Economy and Innovation at Montpellier Agglomeration, business and innovation center which is the first French business incubator and the 2007 Best Business Incubator that has created more than 470 companies, President Delegate to Economic Development and Employment, Montpellier, France. Venezuelan economist and expert on technology and socio-economic development, International consultant in innovation development to multilateral organizations, including the OECD, the UN Conference on Trade and Development, UNESCO, UN Industrial Development Organization, the UN Development Programme and the World Bank as well as to private companies. One of the founders of the biotechnology industry in Brazil, a well-known researcher and entrepreneur in biotechnologies and geneticsfamous venture capitalist Has coordinated a great number of research groups and labs. A leading Japanese innovative businessman, venture capitalist in ICT, founder and current CEO of SoftBank Capital, CEO of SoftBank Mobile, chairman of Yahoo Japan. Former Deputy Chairman of the Research, Innovation and Enterprise Council,Former Chairman of the National Research Foundation (2006-2011),Former Minister for Education, Minister-in-charge for NUS and Nanyang Technological Institute. Author of the One- North innovation business park. President of Singapore since 2011. CEO of Hong Kong Science and Technology Parks Corporation, About 40 years of experience managing and building large organizations in Asia-Pacific and globally for DuPont, covering product lines from chemicals to synthetic fabric and fibers like Tyvek and LycraUsed to work in R&D and production for DuPont in the US as well as to be involved in the development of new products/businesses in electronic imaging and medical products. Founding farther of Israel s high-tech, significantly influenced the computer memory industry, developer of EPROM. Founder, former Vice-President and first general manager of Intel Israel. Managing Director of CREEDA Projects Pty Ltd., a network of entrepreneurship, innovation and SME development consultants in Australia and internationally. Leader in the small business development and business incubation industries since the 1980s.Has established a big number of business incubators in Australia and internationally.asia Region Facilitator for the World Bank s infodev Incubator Initiative. National Chief Technology Officer and the Secretary General, the head of Office ofstrategic R&D Planning in Korea. Former advisor to Samsung Electronics on R&D of Samsung Electronics' future technologiesformer technical consultant at Intel and Hewlett Packard. President of Stanford University, pioneer in computer architecture, RISC (Reduced Instruction Set Computer) technology, member of executive bodies and a top manager for a number of internationally renowned hi-tech corporations (Google Inc. and other). General Director of Lundavision AB, founder of Ideon Research Park in the city of Lund (Sweden) where over 10,000 jobs have been created since 1984 11

BRIEF VERSION Person (Name) Pertti Huuskonen Russell Hancock Herbert Chen Chin-Tay Shih Yigal Erlich Countries where projects have been realized Finland, Poland, Cyprus, New Zealand, Russia The USA, China, Taiwan, Great Britain, Spain China Taiwan Israel Merits Of the table 2 One of the ideologists of Finland s innovation policy and the country s first technoparks. One of the founders and chairman of the board of directors at Technopolis PLC. One of the founders, chairman and CEO of analytic center Joint Venture: Silicon Valley Network, international advisor on regional development, consultant to high tech companiesformer member of the Board of Directors of New California Network. Vice President of Tsinghua University Research Park (TusPark, Beijing), Deputy Director of the Tsinghua University Science Park Development Centre in Beijing,President of the Asian Pacific Division of the International Association of Science Park. Founding father and a pioneer of Taiwan innovation development. Advisor on science and technology to Taiwan s Executive Yuan. Former chief of the Taiwan Institute for Industrial Technology Research. Founding father of the Israeli venture capital industry and prominent Israeli venture investor Former Chairman of the Israel Venture Association. Vice-President of Israel National Council on R&D. 1.3. Factors of Success When Founding Innovation Centers The third (together with the rating of success of innovation centers and the list of their «gurus» founders) base of the Guide is survey among the most competent innovation managers about the recipes of their success and mistakes in their activities. This survey was of an open nature; in other words, respondents did not have any previously prepared set of answers. The survey helped determine a number of factors, which the respondents considered important for success of innovation centers: Efficient PR support, strong brand of an the innovation center; Political will and presence of long-term strategy of the innovation centre, which the state (or local authorities) are ready to implement systematically ( patient state ); Stable business model of the management company; capacity of the management company to ensure financial self-sufficiency and to generate profit; Independency of the management company from the founders of the innovation center (state or university) in decision making; formation of innovation center control bodies from professionals with business experience; Correct determination of competitive niche of the innovation center in relation to other innovation centers; Attraction of big high-tech corporations as a component of the innovation ecosystem and anchor investors; Correct determination of priority directions of activity (priority spheres of technological development), with consideration of local advantages and conditions. When answering the question about the factors hindering success of innovation centers, the experts named the following ones: Excessive attention to material infrastructure in the prejudice of immaterial services and attraction of strong staff and projects; Insufficient professional level of the specialists, attracted for working in the management company. In the opinion of the respondents, the most negative consequences are entailed by attraction for 12

GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS executive posts of sons of state structures and academic institutes without experience of work in business sphere; Insufficient attention to PR and to formation of strong brand of the innovation center; Insufficient attention to business training of researchers and students (insufficient involvement of scientific and university centers into enterprise); Adherence to the strategy of «pushing» technologies to the market; concentration of resource on the projects, which do not resolve specific consumers' problems. Excessive attention to development of R&D and technologies in the prejudice of development of business of resident companies and business environment; Mistakes when determining specialization and priorities of the innovation center; Creation of innovation infrastructure on the base of abstracted forecasts and not of real necessities of the existing and potential resident companies of the innovation centre; low adaptability of the infrastructure to the requirements of the specific company; Excessive influence of the state (local authorities), universities (as a rule, it is the question of state universities) and academic institutions on innovation center management. The survey has also helped reveal and summarize managerial practice and approaches of three main groups of innovation centers, which had proved their efficiency. These are: Big technological parks with the participation of private capital, possessing financial self-sufficiency and interest-bearing. As a rule, such innovation centers have been founded on the initiative of state or municipality as an institution of regional development. However, further on they passed into the ownership of private investors, and at present they combine the functions of development institutions (point of access to state, social and private-state programs of innovation development support) and private developer projects. One may include into this group Ideon Research Park, located in the city of Lund (Sweden), as well as a network of technical parks managed by a Finnish company Technopolis Oy, including the oldest Finnish techno park in the city of Oulu. State innovation centers institutions of development; such centers have been founded on state initiative, and mostly thanks to state investments; their current activities is subsidized by state and, actually, they perform the functions of state development institutions. At the same time, influence of state authorities on operational management of such center may vary. For example, all the elements of innovation infrastructure of Montpellier Agglomeration (France), including Innovation business center (business incubation) and techno parks, belong to the municipality, and their employees are municipal officers. While state innovation center of Hong Kong is managed by a fund independent of state. Apart from the above innovation centers, this group includes Biopolis Techno Park (Singapore) and Daedeok scientific town (South Korea). Techno parks being profit centers of universities. The mission of such innovation centers is not only commercialization of university developments, but also sale of various services, which the university may offer to science-intensive companies (scientific-research infrastructure, joint R&D, networks of contacts), as well as efficient management of a part of real estate of the mother university (mainly, land plots, on which such techno park is located). From the number of innovation centers analyzed in this thesis, this group includes, in particular, Oxford University Begbroke Science Park, as well as TusPark scientific Park of Tsinghua University. 13

BRIEF VERSION ANNEX NO. 2 BASIC TECHNOLOGIES OF CREATING INNOVATION CENTERS Each innovation center, which experience was represented in the Guide, formed in its own unique conditions, and had to resolve a complex of, however, unique problems, peculiar only to the said country and to the said region; it has a unique management structure and a model of business processes organization. Nevertheless, just these differences emphasize universality of a number of managerial technologies, which to this or that extent are replicated in the overwhelming majority of the studied innovation centers. Here are the basic technologies of innovation management: 1. Business incubation; 2. Financing of projects; 3. Horizontal links between the participants of the innovation center; 4. Infrastructure of the technological park ; 5. Branding and PR; 6. Management. Each technology in its turn consists of a set of simpler ones. And, practically all more or less successful innovation centers are the result of combination of these elementary blocks. 2.1. Business Incubation The problem, which technological business incubators have to resolve, can be simply formulated as: Deficit of successful technological startups. The reasons, limiting the number of organized startups, or hindering development of already created ones, can be described with the following easy situations: The people, who potentially could create technological business, do not do that, as they do not know what to start with, or are afraid of beginning. The people, who will to create an enterprise and possess technologies and ideas necessary for that, do not know how to manage business. The starting companies can not find premises, comfortable and in the best way suitable for their kind of activity. Absence of necessary contacts. The people who create startup can not find other people, who would possess knowledge, skills and contacts necessary for their business. The basic modes of solution of two first problems are creation of a system of business education and transfer of business skills to the participants of innovation startups. Solution of two other problems is connected with organization of efficient business environment in business incubator, as well as with submission to innovation startups of such services and premises, which they really need. The main principles of organization of business education in incubators were developed in the first European innovation centers in 1970-80s, first of all, in English and Scandinavian ones, and afterwards this model, with various grade of success, was replicated both in most of developed and large developing countries. From the point of view of approach to business education, innovation centers may be nominally divided into two big groups. Business incubators belonging to the first group are mainly oriented at 14

GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS commercialization of technologies and elaborations, created in universities and research centers. The second group is mostly oriented at the projects, appearing at the open market, as well as at separated projects of already existing technological companies. The first group differs from the second first of all, by presence of pre-incubation stage, which foresees involving of business incubator to the project development at the earliest stage of its life, just before registration of the enterprise. The most important principles of business education in the incubators are its continuity, obligatoriness and individuality. Project team works with the coach from the first up to the last day of its stay in the incubator. Moreover, this education is obligatory. In essence, training is the main service rendered by the business incubator. If the project team needs no education, it does not need an incubator. Finally, the main form of education is work with the business coach, who is «assigned» to the project and is not substituted for the whole duration of its stay in business incubator. Training is the most important, but at the same time the most «untechnological» component of innovation startups incubation process. The task of the incubator is to transfer not only business skills, but also entrepreneurial culture. Just for that reason training may benefit, only if it is carried out in the format of permanent personal communication, and not of special courses, lectures and seminars. The coach should know in details the curated projects, have wide personal business and managerial experience and have absolute weight in the eyes of clients of business incubators. Just for that reason, search for good coaches is at the same time the most important and difficult task for creation of efficient business incubator: it is necessary to find successful entrepreneurs and managers prepared to train on the permanent basis. As the experience of successful business incubators show, efficient business coaches as a rule are recruited from three main sources: Businessmen, who have sold their business; professional topmanagers (as a rule, after the end of their career); professional coaches, who have acquired practical experience due to longstanding work with the projects of the said incubator. On the whole, one may state that business training is not only the most important, but also the hardest replicated managerial know-how in the field of support of the starting technological processes. How can the business incubator motivate such highly qualified specialists who are also self-fulfilled and successful people? Firstly, this work should be well-paid. Secondly, work in the business incubator gives the possibility to expand personal contacts with the participants of the innovation system, including investors and potential business partners, due to use of business incubator contacts. Thirdly, this is access to insider information and possibility of tracing technological novelties before their entrance to the market. Fourthly and finally, this work is prestigious. Coaches, who have come to the incubator from business, are perceived as a part of managerial elite entrusted with socially important mission. Contrary to the conventional opinion, the term «business incubator» has quite a rough relation to real estate object. The main function of business incubators is not providing startups with offices, but tackling other key tasks: teaching business skills, attracting financing and establishing horizontal links. Thus, the main accent should be made on creating a comfortable place for communication located in close proximity to university and private R&D centers. Another important principle of organizing a business incubator operation is the following: the emerging innovation enterprise should receive only the premises and services it really needs at the moment. In most the above studied innovation centers, rent price for office and laboratory premises is equal or exceeds the average market one, therefore such approach helps innovation enterprises save money without reducing the quality of services and comfort, as well as rationally use areas and resources available for the technological park or an incubator. 15

BRIEF VERSION 2.2. Attracting External Financing For Innovation Projects Continuing financial and economic crisis has entailed serious deterioration of the situation with attraction of private venture capital. To resolve the problem of attracting financial resources, technological parks are required to: Search for non-standard mechanisms of attracting external financing for innovation projects; Create the maximally comprehensive and friendly climate for the investor; Increase their proposal of projects which are promising from investor's viewpoint. The need for financial support of innovation projects by means of state programs in form of grants, shared financing and conditionally reimbursable loans is now recognized in practically all countries with the active innovation development policy. In the majority of countries where the studied innovation centers operate, the problem of financing innovation projects on pre-investment stage of their development has been successfully resolved due to nationwide state programs of financial support of the innovation business. Nevertheless in several cases, amounts and forms of such kinds of financing are insufficient, which creates a great problem for the heads of innovation centers: such kinds of questions are beyond the competence of both the management company and regional authorities and municipalities. In these conditions, regions and some innovation centers have to create their own instruments for financing their starting projects which could compensate deficit of financing from nationwide programs. In particular, such instruments include public-private funds which offer interest-free or conditionally reimbursable loans to investment projects. Other than enhancing their reputation, private investors who invest in such funds may also be motivated by regional and municipal tax benefits. Expanding the range of potential sources of external financing is also possible by attracting funds of unqualified investors into venture projects. The term «unqualified investor in this context may refer to both big institutional and small private investors without experience of financing innovation projects. For example, in Hong Kong they managed to attract the of such investors to venture projects by establishing a special «package» investment mechanism aimed at big entrepreneurs, manufacturers of special equipment who had additional funds. The special investment mechanism allows reducing the level of investment risks by means of forming a pool of shares of startups specializing in developing a certain family of technologies. Instead of investing in a specific company the destiny of which is hardly predictable, the investor obtains the possibility of investing his funds into development of a whole park of companies working in this technological park on the same theme. It s worth noting that the technological park is a co-owner (not more than 5 percent of the charter capital) of all startups included in the investment pool; this provides the investors with an additional guarantee that of proper supervision and management of efficient use of investments. Efficient intermediation and establishment of communications between resident companies on the one side and venture investors and business angels on the other side is the mandatory condition for success of an innovation centre, and one of its most important functions. This intermediary may be fully successful under two conditions: a prepared demand for such investments (sufficient number of high-quality promising projects which have been properly designed and which are comprehensive for investors), and sufficient supply. The first task can be resolved by creating efficient business education and business training systems on the incubation stage, as well as having regular meetings and presentations for innovation centre residents and their potential investors. Confidence of investors in little-known projects is gained mostly through high quality of procedures used in the innovation centre for selecting the best projects, as well as through efficiency of the project preparation system. Essentially, business education programs and procedures for selecting projects and preparing such meetings are considered an instrument for reducing investment risks. On the whole, the following are key for the efficient projects presentation to investors: 16

GUIDE TO CREATING AND DEVELOPING INNOVATION CENTERS High-quality transparent procedures of projects selection for business incubators of the innovation centre, or significant competition between the projects (queues) for dislocation in the innovation centre, which helps choose the best ones; Meetings with investors; preparing presentations for these meetings, preparing business plans for projects is an integral part of business training programs at the incubation stage; Organization that facilitates these meetings guarantees that all projects admitted to presentations are properly prepared, with elaborated business plans comprehensive for potential investors, with functioning organizational structure, understanding their marketing strategy; and which understand their marketing strategy. The most important instrument for resolving of the second task is forming a stable pool of loyal investors around the innovation centre, those who d be willing to invest in the projects located in it. This informal pool strongly simplifies access to venture capital for the resident companies, as member investors are from the very beginning oriented at working with projects of this innovation centre, are loyal to it, have permanent informal contacts with the heads of both management company and single projects, are informed about development and perspectives of resident companies and are confident in procedures of projects selection and methods of their support used in the centre. Networks of venture investors and business angels, with the support of state development institutes, also play a significant role. Nevertheless, experience shows that it is hardly possible to create a stable pool of venture investors and business angels loyal to the innovation centre based only on the possibilities of such kinds of networks. Special role is played by personal contacts and contacts of the heads of management companies, as well as by contacts within the frames of communities of investors already formed in the region. On the whole, when heads of the innovation centre management company have a wide range of personal contacts among the chiefs of venture funds, operating and potential business angels, and a number of leading innovation centers, it s one of the key conditions for efficient work of these managers. 2.3. Establishing Horizontal Links Forming horizontal links between the participants of innovation system such as researchers, innovation entrepreneurs, venture investors and institutions supporting innovation business, is the key and indispensable condition for founding a successful innovation centre. Mechanisms stimulating origin of horizontal links help form and accumulate the social capital, i.e. raise the level of trust and awareness of each other among the players of an innovation system, which results in reducing the collaboration issues. For young innovation centers, the main task is catching-up development; these links compensate drawbacks of the institutional environment and are required first of all to increase the level of mutual confidence between the participants of an innovation ecosystem. In mature innovation centers, network and horizontal links allow saving time and financial expenses for establishing business collaboration, and are catalysts for innovation business development. On the whole, instruments and managerial technologies used for stimulating creation of horizontal links have the mission of resoling four basic problems: Deficit of information between the participants of an innovation system on each other, as well as on the situation on the respective market, and trends in technologies development; Absence of mechanisms and permanent sites for establishing personal and business contacts; Deficit of confidence between participants of an innovation system; 17

BRIEF VERSION Status problem: an unknown manager of a staring technological enterprise, which potentially could be interesting for a big corporation or a grand venture investor, often has no idea how to draw attention of the seniors. The simplest and the most obvious way of stimulating formation of horizontal links between various participants of an innovation system is to gather them under the same roof. Creating comfortable areas for communication where various participants of an innovation system (university researchers, employees of R&D subdivisions of big companies, participants of science-intensive startups, representatives of service companies offering services to technological business) could regularly intersect in day-to-day operations, get to know each other, share ideas and establish partner relations, is the most important task of business incubators and technological parks. Apart from its function as a site for communication, an innovation center should play the referential role for companies located in it. The great majority of surveyed experts emphasize the importance of constant personal contacts between supervisors of innovation center management companies and all significant participants of the regional innovation system. First of all, this means universities, research centers, large corporations, venture investors and state agencies dealing with support of innovation business. These contacts should be maintained not only and not so much with top managers but directly with those who may turn to be useful for a starting innovation enterprise. Use of such links widely expands the possibilities not only of the innovation center itself, but also of startups located in it. The innovation center and its managers share their personal contacts and reputation with the emerging businessmen. The possibility of obtaining a recommendation and of direct connection with the necessary person or organization is often more important than financial or consultative support. Another important instrument of creating horizontal links between the participants of an innovation system in a great number of successful innovation centers is autonomous network organizations (specialized networks). As a rule, network structures of such kind are established around one or another base institution, particularly, universities, technological parks, as well as regional state and municipal agencies responsible for the innovation policy. One of the most illustrative examples of such specialized network organizations that unite and render services to the participants of an innovation system is the Connect network which operates in the region of San-Diego, South California. Largely thanks to Connect, recently San-Diego has started to win the competition over its neighbor, the Silicon Valley. The network offers services in a number of spheres: help in creating and developing technological enterprises, raising the investment quality of small technological companies, establishing horizontal links between investors and innovation companies, help in forming clusters of high-technology companies, GR, strategic research, lobbying and participation in forming the national innovation policy, promoting regional technological companies on national and international levels, professional education, sharing experience, and popularizing technological enterprise in the society, providing legal and consultative advice in establishing professional unions. Another great example of an autonomous network organization oriented at rendering services to participants of an innovation system is the Association of graduates of Tsinghua University, which plays a significant role in forming the innovation ecosystem in TusPark technological park, and to great extent levels drawbacks of the institutional environment, which hinders development of innovation enterprise in China. In spite of material differences between the above listed successful autonomous network organizations, one may trace a number of factors, which have eventually ensured their efficiency and popularity among participants of regional innovation systems: Instruments and services offered by the network should satisfy consumers needs at the right time at the right place; Strong brand and good reputation among all the participants of IC; 18