Presentation about innovation system in Baltic countries, nothern alliance, new businesses, etc.

1. Has the science and innovation «the green light»?
European perspective inventions, «Apples» of LV, LT and EE.
New business ideas.
Dr.Andrius Jarzemskis Gints Turlajs
19 October 2012, Riga

2. Gints Turlajs
 PhD studies in business economics (2004-2010), degree candidate
 Master in Business Administration (2004)
 Studies in 4 universities: Stockholm School of Economics in Riga, University of
Southern Denmark, University of Latvia, Riga Technical University
 Some academic activites at SSE Riga, RTU
 Author of more than 12 scientific publications, regular speaker in conferences
 CEO of SIA Institute (2011-) (www.aci.lv, www.itinstitute.info)
 CEO of SIA Ekoterm (2012-) (www.siaekoterm.com)
 6 years in banking (SEB bank, Latvijas Banka)
 3 years in international institutions and government (European Commission,
Ministry of Economics of Latvia)
 Media experience: now columnist for business magazine Kapitals, blog, in
magazine «ir», previously biggest newspaper «Diena», etc.
 Currently board member of Economists Association of Latvia, Association of
Latvian Young Scientists (ex-president). Prevously president of Riga Ridzene
Rotary club, founding initiator and board member, president: ESN Riga, AEGEE
Riga, founder and member of many professional associations
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3. Andrius Jarzemskis
 Doctor in Transportation (2005)
 Master in Business Administration (2001)
 Associated Professor in International Business
School at Vilnius University
 7 years experience in university teaching
 Managing Partner at Smart Continent LT
consultancy (2005-2012)
 7 years experience in business as shareholder
 7 years experience in project management
 4 years experience as employee in various
companies (2001-2005)
 1 year experience in position of public advisor to
the Minister (2009)
 5 years experience in representing Lithuania in
European Bodies as national representative or
expert (2007-2012)
Pictures source: http://www.superchooha.com/
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4. Northern Europe, similar culturally, is different
in economics, «iron curtain» still exists...
Figures for 2011 Source: Eurostat
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5. Wannabees of North Eastern Europe
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6. Some Baltic young stars and Nordic counterparts
The iron curtain, mighty crack in the Baltic sea
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7. How can young Baltic «apples» compete?
In business, being young and smart might be an
advantage, especially in young industries,
however, much comes with time, history and
established customer base.
It is very hard for young enterprises from the
Baltic countries to conquer world markets,
especially given the very bad state of and
support for research and innovation.
Pictures source: http://www.superchooha.com/
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8. Triple Helix approach
Introduced by Henry Etzkowitz.
In essence – cooperation of university, industry
and government.
It is a synergy in knowledge spillovers among
universities, industry and the government.
Other researchers stress also on the importance
of the financial system as the 4th element of
innovation.
Pictures source: http://www.superchooha.com/
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9. Triple Helix – What we expect from the parts?
In the context of innovations:
Academia
Business Government
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10. Triple Helix – more explanatory illustration
developed by Gints
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11. Quadruple Helix approach: National innovation
system, suggested by Gints
Financial
Academia
system
Innovation
system
Business Government
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12. EU innovation performance, 2011
Innovation Union Scoreboard
Source: Innometrics, 2012
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13. The economist noticed development of EE startups
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14. Interim conclusions...
 Summary Innovation Index quite closely follows GDP figures.
 Estonia is somewhat ahead of other Baltic countries, especially in
innovation.
 The performance of Latvia is especially catastrophic in innovation
index.
 The Baltic Sea, it seems, has the deepest dividing crack on the
Earth – Latvia to the East is the last in the EU, Sweden just
nearby to the West is the first in the EU in innovation measures.
 Most of us intuitively understand the reasons, however, deeper
investigation is interesting.
Pictures source: http://www.superchooha.com/
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15. Innovations factors:
Source: Innovation Union Scoreboard 2011
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16. Innovation performance per dimension
Source: Innovation Union Scoreboard 2011
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17. Youth aged 20-40 having attained upper
secondary education
Source: Innovation Union Scoreboard 2011
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18. R&D expenditure in public sector as % of GDP
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19. R&D expenditure in business sector as % of GDP
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20. Thermometer of innovativeness ability
Innovations
ESA, NASA TPL
classification
Mass production and delivery
TRL9
Introducing pilot into market
TRL8
Experimental develoment
Manufacturing of pilot batch of product
TRL7
Demonstration of prototype
TRL6
Prototype manufacturing
TRL5
Testing model
TRL4
Preparing model of product
TRL3
Testing and validation of concept
TRL2
research
Conceptualization of product
Applied
TRL1
Formulation of idea for new product
Fundamental
research

21. Proposition by Gints: Enhanced Porter’s diamond
Natural endowment
Factor
conditions
Business Business
Related & development,
development, Demand supporting
market size, conditions market size,
industries openness
openness Firm
strategy,
Bargaining power
structure &
of customers
rivalry
Bargaining power
Product needed by Competitiveness of of suppliers
consumers individual enterprise
Threat of entrants
Attractive
price Effective marketing Threat of substitutes
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22. The path from basic research to innovation
Research and experimental development Innovations
Research Experimental
development
Fundamental Applied
(basic) (industrial) Introducing new
research research products in
manufacturing
Application of knowledge
Producing of knowledge
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23. R&D in GDP, %
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
LT, % GDP, State Expenditures in R&D
LT, % GDP, Private Expenditures in R&D
EU27, % GDP, Private Expenditures in R&D
EU27, % GDP, State Expenditures in R&D
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24. How the companies look like in Lithuania? Scale:
1 000 and more employees 55
65
500–999 employees 106
138
250–499 employees 294
323
150–249 employees 432
570
100–149 employees 807
933
50–99 employees 2727
2803
20–49 employees 5890
6259
10–19 employees 7821
7586
5–9 employees 14865
12226
0–4 employees 50627
42441
0 10000 20000 30000 40000 50000 60000
2012 2006
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25. Changes in GDP content (Lithuania)
Financial and Insurance activity
Healtcare and social work
Electricit, gas suply
Profesional, scientific and technical…
Food production
Information and Communication
Rent of housing
agriculture, fishery
Education
Real estate operations
Public administration and State defence
Construction
Transportation and warehousing
Wholsale and retail
Manufacturing
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%
2010 2006
Source: Survey, Smartcontinent, 2012
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26. Things relevant to Lithuanian companies:
before, during and after crisis
Funding of R&D projects
Searching of foreign partners
Construction and reconstruction of new
production infrastructures
Instaliation of new IT
New management systems and methods
Increasing number of staff
Increasing of qualification of staff and
trainings
Purchaising and medernisation of
equipment
Increasing export
Production of new products
Increasing labour productivity
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00%
now 2008-2011 until 2007
Source: Survey, Smartcontinent, 2012
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27. Things that companies expect from Government:
before, during and after crisis
Subsidies for non-material assests (licences)
VAT privilegies
Subsidies for credits interest rates reduction
Subsidies for consultation and trainings.
Subsidies for R&D activities funding (except
infrastructure)
Subsidies for IT infrastructure
Profit tax privilegies
Subsidies for participation in exhibitions
Subsidies for new work places
Subsidies for salaries
Subsidies for manufacturing infrastructure
and equipment
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
now 2007-2011 until 2007
Source: Survey, Smartcontinent, 2012
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28. Capacities of production lines
80%
70%
60%
50%
40%
30%
20%
10%
0%
2004 2005 2006 2007 2008 2009 2010 2011
More than necesary Enough Not enough
Source: Survey, Smartcontinent, 2012
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29. New business ideas
Foresight exercise is an important tool in the
development of national direction and creation
of new businesses in it, excellently used
historically in Finland, but now also everywhere
else.
Wayne Gretzky approach: «I am an average
player, but I concentrate on where the puck will
be in 10 seconds instead of on where it is now»!
Meet the future today, create blue ocean! Good
luck with it!
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30. Innovation process or cycle
Source: Turlajs, Riiaschenko (2011)
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31. Some good examples of industrial policy in past
Finland – SITRA (www.sitra.fi), Estonia –
Arengufond (www.arengufond.ee), government
initiated investment funds doing foresight and
seed/venture investment.
Taiwan – common foreign marketing of
taiwanese brands abroad financed by the state.
Japan in the 60s-80s: very influential Ministry of
Trade and Industry subordinating other tasks
under export development.
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32. Suggestion by Gints: industrial policy 3.0 is
needed!
Education policy is very important and its
connection with industry.
Promotion of sophisticated industries and
production of goods and tradeable services.
Direct cash subsidies without specifying purpose
not effective, more catalisation.
Promotion of knowledge and information society
helps all sophisticated industries.
All elements of the innovation system have to be
in place.
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33. A new northern alliance
We believe a new Northern alliance is
possible, let this presentation be a proof of it!
&
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34. Conclusions
The light for science and innovation is rather
red in Lithuania, and especially in Latvia. Estonia
is somewhat ahead.
However, some young and perspective
companies manage to struggle to conquer world
markets despite the difficulties.
Urgent action is needed to improve the
situation. We hope the future is bright!
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35. We believe in innovation progress in the Baltic countries!
Do you?
Please contact:
Andrius Jaržemskis Gints Turlajs
lt@smartcontinent.com gints@aci.lv
Tel: +371 29409509
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