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National Policy of Innovation
National Policyfor Innovation
Dr. Yehoshua (Shuki) GleitmanPrague 4/2015
National Policy of Innovation
Presentation Intakes
• Innovation Ecosystem• National Policy for Innovation Approach, Principles• Key Instruments• Some Cases
National Policy of Innovation
Innovation Critical Success Factor
Important and Sustainable “Tool” of Nations for: Job creation, GDP Growth
• Improve Productivity and Competence• Best Position in the World Competition• The Factor Behind the Success of Singapore, Finland, Chile, Israel and US!
National Policy of Innovation
…. So how can we generate innovation? Or, at least, influence its creation?
National Policy of Innovation
Why focusing on Innovation Ecosystems?
The linear model of innovation is dead!
National Policy of Innovation
Who are the Innovation Ecosystems’ principle actors?
• There are many essential ingredients or elements of innovation ecosystem
• The triple Helix: Government – Industry – Academia. In addition to fulfilling their traditional functions, each institutional sphere also “takes the role of the other”
Government
Industry Academia
National Policy of Innovation
• Efficient Way of “Job Creation”• High Return on The Investment• Building Modern Flexible Economy• Market Failure• Best way to establish National Advantage• Effective Spillover • Looks Good
Why spend tax payers money to support innovation?
National Policy of Innovation
Government Role
infrastructure
• Technology: education, basic/applied R&D• Financial: direct involvement, investment tools
• Business: ease of doing business
• Balanced Systems
• Risk Mitigation
National Policy of Innovation
Location of value added in the value chain
Source: Gary Gereffi, presentation at OECD workshop, September 2010.
National Policy of Innovation
Key Instruments
• First Step Support – Accelerators Incubation Centers
• Matching Grants, Mini Grants• Academic / Business Cooperation• Financial Instruments• International Cooperation
National Policy of Innovation
Some Issues
• Targeting / Neutrality• Intellectual Property• Level of Support• Government Equity • Large / SME• Ownership – local / foreign • IPO/Sell of the company out of country• National Agenda - less developed zones - minority groups
National Policy of Innovation
Practi cal Issues
• Due Diligence• Attitude• Time To Decision• Schedule of Payment• Royalties Payments/Loans/Tax Exemption• Reporting System• Impact Evaluation
National Policy of Innovation
The innovation ecosystem is complex
EntrepreneursResearchers
financing
Research Facilities
High skilled workers
IP Protection Laws
Industry
National Policy of Innovation
Government plays a key role in optimizing the ecosystem
Infrastructure Risk sharingSocial goals
National Policy of Innovation
Government should enable and nurture
• Actively encourage constant development of the ecosystem
• Provide conditions for continuous growth of companies
• Regulate and guard the “rules of the game”
• But! It is not the government’s role to replace the private sector or to predict the “next big thing”
National Policy of Innovation
Even the brightest minds failed to predict the future
“We do not have need of the futureelephone. We have
plenty of messenger boys." -- Sir William Preece , Chief engineer,
British Post Office
"There is no reason anyone would want a computer in
their home.” -- Ken Olson, president, chairman and
founder of Digital Equipment Corp. (DEC)
"No one will need more than 637KB of memory for a personal computer."
–(attributed to) Bill Gates
National Policy of Innovation
Even the best technology companies failed to understand their areas of activity
IBMcomputers
NOKIAcellular
MOTOROLAcellular
National Policy of Innovation
Israel’s Approach
• Support System for All Innovation Stages:• Entrepreneur Level• Incubation • Growth stage • Generic pre competition
• Private Sector Financial Tools• International Cooperation
National Policy of Innovation
Generic R&D
Magnet
Magneton
Competitive R&D
IndustrialR&D
Nati
o na l
Pre-Seed
Tnufa
Nofar
TechnologicalIncubators
Cooperative R&D
Long-Range R&D
Seed Fund
Applied Academic Research Basic R&D Market Proximity
EUREKA
Bi-national Funds
ISERD(Europe FP)
Inte
rnati
onal
Global Enterprises R&D Cooperation
Bi-national Agreements
Galileo
OCS Government Support Programs
National Policy of Innovation
Israel is a global leader in research and innovation
Level of innovation
Qua
lity
of S
cien
tific
Rese
arch
Source: World economic forum, 2011
Israel
National Policy of Innovation
Israel is…• 1st in the world for scientific
research• 1st in the world for
entrepreneurship• 1st in the world for information
technology skills• 1st in the world for expenditure on
R&D (as % of GDP) • 2nd in the world for innovative
capacity• 2nd in the world for venture capital
IMD World Report 2011The Global Competitiveness Report 2010-2011 (World Economic Forum)
VC Investment, $ per capita
National Policy of Innovation
19751978
19791981
19831985
19871989
19911993
19951997
19992001
20032005
20072009
0
5
10
15
20
25
30
35
40
Billi
ons U
SD
Indu
stri
al E
xpor
ts
But this was not always the case
~25 B$ 10% of current
GDP
This change was led by the hi-tech sector
National Policy of Innovation
Jaffa Oranges vs. Software
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 20030
500
1000
1500
2000
2500
3000
3500
Citrus Software
Source: Dept. Economic & Planning Admin., Ministry Industry, Trade and Labor, State of Israel
Exports ($ millions)
National Policy of Innovation
Integrated Model – Total Returns to the Economy
Return OnGov. Money
TotalValue Added
Increment to the Economy
SpilloverEffect
DerivedOwnEffect
TechnologicalIntensity
473%28.617.710.9Hi-Tech751%42.625.317.3Mid-High Tech1323%71.232.838.4Mid-Low Tech828%46.47.339.1Low-Tech
National Policy of Innovation
Israel’s advantages
• Human Capital• Scientific Base • Excellence in - IT, Life science • Government Support• Disruptive Perception• Supportive Environment National DNA
National Policy of Innovation
Achievements
• High Tech - 35%+ of the Industrial Export• Start Up nation• 5X Direct Return on the Government Investment (5-7 years)• Major Tool of Job Creation• Substantial Additionality and Spill Over
National Policy of Innovation
Israel’s weak points
• Financial - VC major investment tool, No Equity Funds, Institutional Investors are out of the game
• Weak transition from Start Ups to Mature companies
• Academic Infrastructure• Technology Absorption
National Policy of Innovation
Serbia Case
• IF start operation 2011• Operational Budget – over 1M euro• Support Budget – 6M euro• Two operational Programs – Mini Grants - Matching Grants• IF Organs – Management, IC, Board, DD org.
National Policy of Innovation
Serbia Case (2)
• 100+ Applications at Last Call • Capacity Building• Positive Public Attitude
• Government Commitment• Future Budget• Fund Governance
Achievements
To be Corrected
Very Impressive Outcome
National Policy of Innovation
Serbia Case (3)
The agency was on hold for 5 months
Due to election and change of power – Late approval of Operational budget
National Policy of Innovation
Key Success Factors
• Education• Basic Science Infrastructure• National “DNA”• High In National Priorities• Well Balanced System• Execution !!!!!!!• Long Term Commitment
National Policy of Innovation
R&D Centers In Israel
Maps: Wikipedia
Haifa Region
Tel Aviv Region Jerusalem Region
Southern Region
Northern Region
Over 240 foreign companies have established R&D centers in Israel Over 50,000 personnel are employed in these R&D centers in Israel
National Policy of Innovation
What were the most important Bottlenecks for self discovering new exports activities?
What type of government intervention?
Horizontal Vertical• IP Protection• Bankrupsy
Laws• Contract• Enforcements • Ease of doing Business
• Sanitary Protection for fruit and meet sector
• Matching grants
• Tax Credit on R&D
• Subsidies on Training
• Proof of Concept
Labs For Specific Technology/sect• Technology Consortium in a sector/technology
Public or semi Public goods
StrongIntervention
AppropriationFailures Lead toHorizontal Interventions
Coordination Failures lead to Vertical Interventions
National Policy of Innovation
VC’s in Israel:from traditional banking to VC industry
1992
• The Israeli government understands that well-functioning venture capital markets are the key sources of finance for many innovative start-ups and therefore need to be developed
• 1 VC
National Policy of Innovation
Yozma (Initiative in Hebrew)
1993
• A governmental initiated program “Yozma” was established to encourage venture capital in Israel
• Began operation in 1993, privatized in
1997