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СОМЕРЕН Тако К.Р. ван
Доктор наук, профессор, главный исполнительный директор
Ynnovate, Акация Парк, 45, Хилверсюм, Нидерланды, NL-1213LC
SOMEREN Taco C.R. van
Ph.D. in industrial organization, corporate strategy and innovation, professor, CEO Ynnovate, 45, Acaciapark, Hilversum, The Netherlands, NL-1213LC
tcrvansomeren@ynnovate. com
УДК 330.3 + 332.1
REGIONAL GROWTH AND DEVELOPMENT IN RUSSIA BY STRATEGIC INNOVATION
In this article it is demonstrated that the Russian economy is on a cross road and needs strategic innovation. One of the core aims of the Russian central government is to diversify the economy in order to be less dependent on natural resources industries. But increasingly, the world economy is changing rapidly and governing an economy by decree or command will become increasingly ineffective. Strategic innovations on the meso level (value chains, Triple Helix, industries and (cross border) regions) as well as micro level (organizations, cities and (local) regions) are necessary. Based on our theoretical research as of late 1980s combined with practical implementation of strategic innovations within single firms, network of organizations and regions, the methodology to apply strategic innovation is presented. An approach to use this methodology in stimulating strategic innovation in Russian innovative regions and a special case of cross border regional cooperation with China is discussed.
Innovation, technology, business, entrepreneurship, development, growth, region, Russia, China, policy
© Сомерен Т.К.Р. ван, 2015
РЕГИОНАЛЬНЫМ РОСТ И РАЗВИТИЕ В РОССИИ: ПУТЬ СТРАТЕГИЧЕСКИХ ИННОВАЦИЙ
В статье показано, что российская экономика находится на распутье и нуждается в стратегических инновациях. Одной из основных целей российского правительства является диверсификация экономики для снижения зависимости от ресурсных отраслей. Однако мировая экономика меняется всё быстрее, и командное управление экономикой будет становиться всё более неэффективным. Необходимы стратегические инновации как на мезоуровне (в цепочках ценности, «тройной спирали», отраслях и трансграничных регионах), так и на микроуровне (в организациях, городах и районах местного уровня). Представлена методология реализации стратегических инноваций, основанная на авторских теоретических исследованиях конца 1980-х гг., а также практике осуществления стратегических инноваций в рамках отдельных фирм, сети организаций и регионов. Обсуждается возможность использования этой методологии для стимулирования стратегических инноваций в российских регионах, в том числе в случае трансграничной региональной кооперации с Китаем.
Инновация, технология, бизнес, предпринимательство, развитие, рост, регион, Россия, Китай, политика
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From past to now: a dynamic view
The future global economy needs national and regional economies driven by creative entrepreneurship and strategic innovations in any industry. The future of the Russian economy is dependent on the ability to create new enterprises, to let them grow and to become innovative industrial powerhouses. In this respect, regional clustering is not an aim but a means to become more innovative by exploring and exploiting entrepreneurial competences to create products and services for local and global markets. Moreover, for both industrial leaders and policy makers a shift from a static view (e.g. SWOT analysis, competitive advantages, GDP output, R&D investment levels) to a dynamic view (time based, emulation by strategic innovation) on economic growth and development is necessary [7]. More importantly, based on our previous research and experience with clients, a dynamic view on developments throws its shadow to the future. This process of emulation gives insight into the mutual reinforcement of technical and non-technical innova-
.-■>."■-.-■ ... ./I ■ -i ¿m ■:■ 3 ■ tions, behavior of participants, its reaction patterns and the national culture of change in time.
It is our strong belief that the future cannot be created without knowing the past. Table 1 gives a very simplified but insightful overview of recent development of Russian economy.
The first three time periods from 1950s till now are based on any kind of application of technology. In this article it is stated that the success of Russian economy is dependent on strategic innovation which differs substantially from the focus of the past on technology. Strategic innovation is defined as any dynamic combination of technical and nontechnical innovation in time. For example, MacDonald's is a global multibillion dollar business entirely based on a unique combination of non-technical innovations such as standardized hamburger, premium brand and prime locations. Also creating a circular value chain in order to deal with sustainable development requires both technical solutions and new organizational forms. An example is Urban Food Systems© which aims at local re-
Table 1
Stages of Russian economic development
Characteristics Time period
1950-1990 1980-2010 2000-2020 2025
Key focus Plan economy for internal market Natural resource extraction for commodities trade Investment in resources and infrastructure for Russian development Strategic innovation for global market
Industry Heavy industry in arbitrary selected regions Oil & gas dependent on availability Start of industrial and regional diversification Growth and development
Innovation Existing non-state of the art technology Dependency on foreign technology Technology focus Non-technology innovation as key
Initiator Communist Party State enterprises and privatised corporations Russian MNEs driven by foreign investment and private newcomers Russian MNEs, SMEs by intrapreneurs and entrepreneurs
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gional food production around (mega)cities. Urban Food Systems© require both (bio)technical innovations combined with organizational innovations like alliances for closing material cycle and new distribution and transport systems [1, pp. 44-47; 10, pp. 159-164].
When applying this perspective of strategic innovation on Russia the following simplified picture emerges. On a macro scale, after the second world war, Russia revitalized its industrial structure by stimulating the mining industry, oil and gas sector, heavy industry, military industry and aerospace including space industry. It was an extrapolation of prewar activities and fitted into at that time political-economic regime of supply driven plan economy. In that respect, science and R&D has been set up to stimulate the top down chosen industries regarded to secure the future of Russia. But largely technology was not state of the art except for areas like space technology. Both innovation and coordination differ for each nation state, industry, and time period and require adaption and renewal to new circumstances. In Soviet times till the 1980s, the central planning system consists of design bureaus (OKBs, Опытное конструкторское бюро - Opytnoe Konstructorskoe Byu-ro) responsible for experimental designs and a large manufacturing industry responsible for achieving central output targets. Separate export organizations took care for selling outside the Soviet Union. Service industries or consumer and brand driven sectors, like in China, were largely neglected and not part of the economic system. Regional development was determined either by sources of natural resources or by «government by decree» driven locations.
It needed a crisis to spark a period of reforms and privatization in the 1990s leading to a concentration of economic activities and power into the hands of a few oligarchs and a few prosperous economic regional centers. The traditional oil and gas sector still could flourish and its importance and contribution to Russian GDP was even enhanced by rising
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prices for oil and gas. Other heavy industries like commercial aerospace manufacturing lost ground to global competitors like Boeing and later Airbus. The Russian aerospace industry missed the global market growth because of a failing growing home market, lack of tourism market, the uneven regional concentration of activity in Western part of Russia and the changing demand from global airliners for quality and ecological standards. The same could be seen in other industries like the automotive sector.
The command driven governance of the Russian economy and it reliance on heavy industries has led to the following situation. The current Russian economy is dominated by and dependent on the natural resources sector. Because of top down governance and missing global market trends, some regions with prosperous industries are now on the downturn. Some regions or even cities are dominated by one industry or even a single factory. Of course these regions are extremely vulnerable for structural and local market changes within industry and from customers. As a result, people lose confidence, fertility rates decrease, migration to larger cities starts, local GDP decreases and local regions lose attractiveness.
The Russian government signaled above developments and took action by several new strategies and trying to diversify the economy by means of top down strategic programs. Furthermore, other examples of the top down policies fostering technology platforms are the foundation of innovation region Skolkovo around Moscow, Nizhny Novgorod and the stimulation of the Far East region like Khabarovsk [6]. In this respect, on 21 May 2010 the AIRR (Association of Innovation Regions of Russia) has been founded with the aim to stimulate an innovative climate and fostering innovative projects in several Russian regions. These regions have an above average output on innovations in Russia and are regarded to be innovation leaders. In table 2 a few characteristics on macro, meso and micro level are presented.
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Table 2
Level Typical measures innovative regions of Russia
Macro Coordination by Association of innovation regions (since 21 May 2010). Support by Russian central government. Mission is «Promoting effective innovative development of the member regions based on the recognition of the existing models of their scientific and technological growth». Aim are: 1) Stimulating sharing of the accumulated experience on creating favourable legal, economic, social and creative atmosphere for developing innovations; 2) Organizing and promoting joint innovative, economic, scientific, technical and educational projects. Providing funding.
Meso Regional laws and resolutions fostering innovation and investments. Strategies, programs and pilots stimulating innovation. Innovation infrastructure (e.g. agencies, incubators, venture and support centers. Clusters.
Micro SMEs focus on technology and technical inventions.
Source: information presented on official web-site of AIRR (http://www.i-regions.org/en/).
As demonstrated in table 2, all the textbook measures regarding policies, strategies, projects and infrastructure on macro and meso level have been taken. Reference policies of Kansas, Texas and Portland have been used for learning purposes1. However, from a strategic innovation point of view, R&D and technology dominate the innovation agenda thereby, although mentioned, largely disregarding the role of non-technical innovations and other important areas of strategic innovation. Moreover, innovations and scalable profitable businesses are in the end dependent on creative entrepreneurship and not on policies [7; 9]. This means that strategic innovation on both meso level (e.g. circular economy, cross border cooperation, cross industry cooperation) and integration of the micro level (innovative leadership, bottom up initiatives, innovation culture) is a very relevant key to success. Therefore, there still some missing links necessary to fulfill the aims.
1 http://www.i-regions.org/en/materials/international-ex perience/
Also on the national level, recently, President Putin announced in 2012 the wish to grow annually 6% in non-energy sector and premier Medvedev wants to revive the Russian wine industry [2; 6]. But how? An example provides the stimulation of Far East Russia region as summarized in table 3.
From table 3 we learn that focus on technology and investments by foreign parties is characterizing the Russia Far East. Moreover, the appliance of strategic innovation to overcome bottlenecks and create an innovative Russian Far East region is in its infancy. In the Far East, the regional Russian economy the risk of being outperformed by China is increasing. The Chinese outnumber the Russian side by number of entrepreneurs, volume of investments, number of enterprises, number of employees and local population. Principally, the Russian-Chinese cross border trade is based on an exchange of natural resources and land against cheap Chinese labor and capital. Furthermore, and more importantly, numerous alliances between Russian and
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A few highlights of economic stimulation program of Russian Far East
Table 3
Area Measures Bottleneck
Policies Focus on technology, investments in infrastructure Creating knowledge economy instead of innovative entrepreneurial economy
Industry Selection of (future) winners e.g. tourism, diamond, ... Bottom up change and founding fathers are missing
Cluster Top down, full scale, short term focus on technology Disappointing results because of neglecting non-technical innovations
Knowledge Education, research Lack of Russian entrepreneurs creating value and applied knowledge
Far East border economy Exchange between Russia and China of natural resources and land for capital and cheap labor China dominates measured in e.g. population, number of enterprises, entrepreneurs and investments
Chinese enterprises are being set up but the big question is who will be the winners over ten years [8]1. Therefore, the Russian Far East regional border economy requires strategic innovation to survive the coming decades. Two tremendous tasks for government and leaders of industry lie ahead: foster strategic innovation and profitable dealing with China.
In order to find a way out, it is now important to systematize the current situation in order to understand the underlying dynamics and to make clear what is needed in the future.
The current situation: Russia on a cross road
The past decades the world stood not still and the EU, US, the BRICS countries and other developing countries each followed their own path and timing. On average, the US and to a lesser extent the EU were able to maintain their position based on entrepreneur-ship and innovation but their share and influence is shrinking.
Especially the US was and is frontrun-
1 This was discussed by the author in his lecture «Strategic innovation for regions and development of cooperation with China» (the Far East Federal University, Russia, Vladivostok, 2014, September 26).
ner on shaping IT based industries. Although the financial center is still located in New York, the IT based industry is definitely located on the West coast. Because of its low market entry barriers, independency of natural resources and location IT based services can start up almost anywhere. Also Russia shows a growth in IT services but even then the existence of other industries enhances opportunities for growth and mutual reinforcement. Even old fashioned industries like oil and gas experienced a revival due to new technical innovations like fracking. The cheap shale gas even now stimulates a revival of especially energy dependent manufacturing. Consequently, other regions favorable for manufacturing become relevant. The outsourcing hype to cheap labor countries is reversed and a reindustrialization of the US is actually taking place. Within the automotive industry, electrical car producers such as Fisker and Tesla moved away from the traditional region of car manufacturing like Detroit and started their business in IT based California. This regional shift was not at random or a coincident but based on future competence based on IT and the stimulus of a regional sustainable economy pushed by the Californian governments. But it needed also individual creative entrepreneurs like Tusk, the founder of Tesla, to
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ignite the local electrical car industry.
The European countries showed mixed developments and bottom line results which became to surface during the financial crisis. Entrepreneurship and innovation are very differently distributed among the EU member states or even regions. The numerous attempts by both European Commission and member states to copy the Silicon Valley to stimulate regions showed only a few successes. In fact old naturally grown regional areas like Emi-lia-Romagna in Italy and Munich-area are originally based on private initiatives supported by local government. The big issues of energy policy, health, financial system and many others in the EU are not solved yet. New areas like Big Data are at their infancy.
The BRICS countries could not all fulfill the high expectations which are artificially being created by the acronym of BRICS. India and Brazil struggle with huge difficulties of insufficient reforms and ability to involve large parts of the population into the potential growth and development opportunities. South Africa is elevating itself in the African continent. But also other countries on the continent are taking their chances and free themselves from post-colonial governance and Western aid programs. Entrepreneurship is replacing European bad bargain of aid and development programs [11, pp. 106-107]. In this respect China comes into play. Of all BRICS countries only China showed a fast and incredible growth and development based on a combination of entrepreneurialism and governmental involvement. But the Chinese economic success had a price paid in huge ecological detrimental effects like smog and social tensions mainly based on income inequality. However, since the 1990s the concept of sustainability -trading off economic profit with social and ecological effects - gained momentum and gradually became highest priority of central government. This (too) short overview demonstrates that the world is changing fast with enormous potential for not only countries but regions as well.
In the light of these developments Rus-
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sia is on a cross road illustrated in figure 1.
The old economy is a result of the command economy, outdated technology, dependency on a single industry and the focus on heavy industry, absence of both large home markets and export markets and growth of regional focus points like Moscow and St. Petersburg. The growth curve has mainly been driven by rising commodity prices and expansion of natural resources market. But growth has slowed down and the position of Russia is on the top of the current growth curve or even already on its downward slope. Hard and weak signals for this position are relatively low GDP growth rates, insufficient innovation output, low productivity levels and withdrawal of investors. In a recent report, these signals lead to the risk of a fiscal gap [4, pp. 6-7]. In our perspective, these signals enhance the downturn movement of Russia along the current growth curve. Of course, even in the oil and gas sector there are still huge opportunities for improvement. These improvements not only encompass technology improvements but probably the highest potential is in moving up the value chain from exploration and mining towards higher added value products. The government of Indonesia has decided in 2014 not only to sell merely its natural resources but to create higher added value products. But even these improvements are insufficient to save the Russian economy shown by the arrow in figure 1. Besides the diversification of the economy also other hot issues or challenge driven issues like sustainability, Big Data, health can be driver of innovation policies.
Especially the new issues and challenges offer opportunities for new regional and local development. Contrary to natural resources and mining, many future industries are potentially independent of physical locations and more dependent on human resources.
Only strategic innovation is able to create a new growth curve and Russia needs this radical approach to prepare itself for the 21st Century. A new economy has to be
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2000 2010 Figure 1. Russia on a cross road requiring strategic innovation
Source: based upon [9].
created which requires action not only of government but Russian people as well. But government and entrepreneurs in particular have to take the initiative.
Case study: aircraft industry
This aerospace industrial complex has first, always been an important part of the Russian economy and, not less important, contributes to national safety. Aerospace industry is in that sense a strategic sector especially when looking at Russian geographical dimension and global political-industrial-
economic links. Nevertheless, in history, success and failure alternate frequently. Generally, the success of an industry depends largely first, on the capacity to innovate, and second, the coordination mechanisms between the participants or the whole value chain. But worldwide (mega)trends, industrial developments, client require strategic innovations. The up and down movement in the Russian aerospace industry is mainly caused by the absence of strategic innovations and sticking to rigid policies.
Till 1990, the world market share of the
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Soviet Union was 25% of the worldwide civilian aircraft production. After the disintegration of the Soviet Union, this industrial complex collapsed and around 2000 the civilian industry was in a deep crisis measured by number of manufactured airplanes. President Putin launched an industry consolidation program in which a new organization, the United Aircraft Corporation (UAC), was founded. The aims of the UAC were to restore central coordination of the airplane manufacturers enabling optimization, increasing efficiency and coordinated R&D, design manufacturing, sales and marketing. In 2008, from the total 106 aircraft enterprises 18 belonged to the United Aircraft Corporation. Other relevant state companies are Oboronprom (a diversified engineering and high technologies industrial and investment group) and Rostech RT (fostering development, manufacturing and export of high tech). Furthermore, several highlighted projects were initiated such as the Sukhoi Superjet 100 (already initiated in the 1990s) and Irkut MS-21, to regain lost ground. In December 2012, the state strategy «Development of the Aviation Industry for 2013-2025» was announced. Despite these efforts the Deputy Minister Rogozin on Wednesday 24 July 2013 declared: «The Russian aircraft industry must implement a new development strategy to conquer lost markets». To our opinion he is right. But he also declared: «These are such national drivers as Tupolev, Sukhoi, MiG, Yakovlev and other well-known brands, which for some inexplicable reasons have been pushed almost into oblivion...» [5]. The aircraft manufacturing is a good example how a highly innovative industry supports regional development. The rise of Airbus has shown that regional centers across Europe successfully cooperate in a network structure. In the remainder of this article we try to clarify some of the «inexplicable reasons» and how to overcome these bottlenecks.
The Russian aerospace industry is on the downward slope of the first growth curve shown in figure 1. The improvements in man-
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ufacturing and initiatives with the Sukhoi Superjet 100 to jump to a new growth curve were insufficient. Not only the demand and criteria for airliners in recent decade has changed radically but also technical and nontechnical innovations revolutionized markets. Technical innovations are related to materials (e.g. composite materials) and electronic systems (fly by wire, design for noise reduction, fuel efficiency, recycling). On the nontechnical side, issues like top quality, managing and integrating technology, efficient on time manufacturing and delivery, and sustainable management principles changed the game. Even current dominating top players like Boeing and Airbus are wrestling with these new challenges but Russian aerospace missed especially the non-technical issues. The Russian manufacturing industry needs strategic innovations, in particular the nontechnical innovations. Moreover, new competitors like the Chinese COMAC are preparing to enter and conquer first domestic followed by global markets.
It is not only the Russian aircraft manufacturing industry but also the academic aerospace centers located in cities like Moscow, St Petersburg, Ufa and Krasnoyarsk contributing with new technical knowledge to the sector. But these regional centers each with their specialized areas of competence, even after the academic reforms in 2014, need coordination and integration of output. Otherwise the true potential of each region will not be exploited and growth will be absent.
Besides manufacturing, the Russian airport industry shows a very uneven distribution of capacity and development. On a national level, the function and role of an airport industry is dependent on regional industrial activity and its organizational-geographical connections (e.g. manufacturing, distribution, national hub function, tourism). On a national level the Russian airports and especially regional airports have a large potential to grow. On an international level, airports fulfill the same functions but some of them are able to outgrow their local regional role and func-
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tions. Moreover, the attractiveness of these airports is not only their hub location but also their role as retail center adding travel experiences and emotions. Examples are Schiphol Amsterdam and recently airports in Arabian Gulf states supported by fast growing airliners like Emirates. It is expected that the global passenger market will double in 2030 and there is a need for additional (regional) airports. European airports have difficulties to grow and consequently giving away opportunities to others. Russian airports located throughout the country have huge opportunities but it will need entrepreneurs to explore and exploit the needs and opportunities.
From a regional development perspective, this aerospace case shows that regional growth and development is much more dependent on strategic innovations than merely on top down policies stimulating regions. In the next section, the contribution of strategic innovation to regional growth and development is explained.
Tomorrow and beyond: creating the future by strategic innovation
Creating the industries of the future is the only way to regional growth and development. The necessity of strategic innovation is not only required in the aerospace industry but in every other industry as well such as mining, agro food, automotive, energy, ICT, fast train technology, (petro)chemicals and service industries.
All of these industries have the potential to stimulate growth in regional and national economies. In research, innovation and regional success are explained by expenses on technical innovations, number of innovative firms and the number of connections between organizations (see for example [3]). Although these kinds of analyses are not wrong and give insight ex post (with hindsight), they do not explain and are not helpful to create ex ante (foresight). Creating innovative organizations and regions require insight into the dynamics of strategic innovation.
ill.
In this respect, strategic Innovation can be defined and implemented along different lines. For this article the approach of the 4 Cs is used [11, p. 124ff]: Conditions, Context, Creativity and Content represented in figure 2.
In the section below, each of the 4 Cs will be illustrated by a few highlights (for an extended elaboration please see [9; 11, p. 124ff]).
1. Conditions
Strategic innovations require favorable conditions within single organizations, between organizations, in regions and between (cross) border regions. Within the market economy both top managers and governments have the task to create favorable conditions. Within the Russian economy this implies that government has the task to propose and carry out reforms (e.g. labor market, tax regime), create an attractive business climate to attract for example foreign investments and stimulating entrepreneurship. Business leaders have the task to identify and create a new growth curve which requires a clear vision about the future. Together governmental and business leaders have the task to create an entrepreneurial economy which fits into national Russian culture. The latter is referring to the historical and essential role of government which should not be abandoned by restructured into the direction of supporting entrepreneurs and business initiatives. Therefore, the long term aim of government must be focused on creating industries of the future requiring short term reforms and stimulating private initiatives.
2. Context
The current national and regional innovation policies should be maintained but enforced by innovative leadership in state and private enterprises. Most leaders worldwide are not educated and trained in organizing and creating innovative enterprises. Here a huge
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New growth curves
Leadership
1. Conditions
2. Context
Governance
3. Creativity
Inversion Knowledge
4. Content
Business model
Paradox synthesis Organized freedom
Business development
Institutional innovation
Time dimensions
Dynamic Value Conversion
National culture
Figure 2. 4 Cs of strategic innovation
Source: [11, p. 124].
opportunity lies ahead for those countries and individual firms who try to focus on this dimension. It will spark and ignite regional growth development. The main task of the leader is not creating short term profit but creating institutionalized innovation process within or between organizations. Only then future streams of innovations can be expected. But innovations require an adequate (international) business development including basics like brands, quality management, customer orientation and knowledge of regional circumstances and markets. In this respect, business and government can cooperate adapted to their national culture and generate a Russian governance model for industrial and regional development. A transition from command to a supportive government could be a promising path to explore.
3. Creativity
Creating a new growth curve is depending on the ability to mobilize and apply creativity within government, knowledge institutions and enterprises. Successful creativity is
not based on a process of maximum idea generating but on an organized process taking into account national culture resulting in new products, processes, services and business models. Creativity processes in Japan, China, Germany and US are different and a Russian way (and a firm specific) should be created as well.
4. Content
In recent years, creating new business models has become a hype. A business model defines the way a firm is earning its money in which among others the product, process, competences, distribution and clients are linked uniquely together. But as demonstrated above, it is much more important to organize and implement strategic innovation which created a true innovative organization enable to renew the current business model. Consequently, an emulation cycle of exploration, renewal and exploitation in time emerges [7, pp. 53-119]. Hence, strategic innovation is beyond creating a new business model. Furthermore, content also includes the required
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organization and performance indicators.
Taken together, the 4 Cs represent important non-technological issues which are the real determinants of successful innovation. Contrary to technology, these areas of non-technological innovations are in act the sources of sustainable competitive advantages. Technology can be taken apart and copied in a relatively short period of time whereas copying non-technological innovations is often useless because tailor made solutions are necessary.
In order to get the 4 Cs identified, created and aligned the methodology of the Strategic Innovation Cycle© [7, pp. 53-118; 9, pp. 271-301] is being applied as shown in figure 3.
The appliance of the Strategic Innovation Cycle© always leads to unique innovative solutions and outcomes for clients.
In the next section a case of strategic innovation applied at one of our clients to create a technological top region is presented to demonstrate the power of strategic innovation.
Using Strategic Innovation method to create a cross border Technological Top Region1
A cross border cooperation is a special case of regional development with many additional dimensions influencing the cooperation structure, the process and behaviour of participants. The Technological Top Region case is a summary of a project carried out for our client The Government of Limburg (The Netherlands) to support the formation of a technological region. Since several decades, the southern part of the Netherlands, the Province of Limburg, is declining as an economic region. The original coal mines were the traditional economic basis of Limburg but in the 1970s these mines were successively closed and unemployment rate increased. The region
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1 Based on [11, p. 181-184].
was not able to turn this trend. An exception was the creation of a chemical company DSM which was the corporation exploiting the former coal mines. In first instance, DSM focused on bulk products but with increasing competition from low cost producers outside Europe this strategy had to be replaced by a higher added value strategy. For a second time, around 2000, corporate strategy was moving to transforming the chemical company into a life science and materials company. Bulk facilities were largely sold to SABIC. This strategy tries to address three key global societal trends: global shifts towards other high growth regions, climate and energy and health and wellness. Some plants of DSM, together with bulk producer SABIC, are located in an industrial area Chemelot which gives home to other companies outside of chemical industry as well. During 2011 Shell started a pilot plant for «green plastics» based on biomass resulting in a new polyester PEF replacing the oil based PET. Besides chemical industry, Limburg has a tradition in manufacturing. Furthermore, Limburg has EU member states Belgium and the Germany as neighbors. Relevant cities very close to the capital of Limburg, Maastricht, are in the Netherlands the region Eindhoven including the small villages Helmond and Veldhoven, in Belgium Leuven, Hasselt and Luik and Aachen in Germany. By the way, in 2011 the Intelligent Community Forum has chosen Eindhoven as the world's most smart region. But it should be kept in mind that Eindhoven region is not a success because of smart policies but initially started as spin-offs of the Philips strategy to outsource R&D activities. Together, these cities offer a lot of research and knowledge carried out in their universities, institutes and new business areas. However, cross border cooperation between the regions in The Netherlands, Belgium and Germany was on a rather low level. Given this context, research revealed that compared to other regions the TTR-region has a high technology potential in some industries but this potential is not commercially exploited in the form of added value
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Figure 3. Strategic Innovation Cycle©
Sowrce; [9, p. 280; 10, p. 224].
creation. Compared to other European regions, three industries in the TTR regions scored above average: Chemicals & Advanced Materials, High Tech Systems (engineering) en Health Sciences. Moreover, complementarities between the regions are existent. As a reaction, in 2008, the local governments of all regions issued a letter of intent to stimulate cross border cooperation and to create a European Technological Top Region - Elat, later called TTR-Elat1. A cross border governmental working group including the connected regions of The Netherlands (e.g. Limburg and Eindhoven), Belgium (e.g. Luik, Leuven, Hasselt) and Germany (e.g. Aachen in North Rhine Westphalia) under technical presidency of Ynnovate had the task to work
1 Communiqué van Luik. Intentieverklaring. Luik, 2008. November 3.
out a strategic vision and a business plan. Within the context of strategic innovation, this project can be visualized as a start of a new growth curve as shown in figure 4.
The business plan had to show existing but not connected initiatives, new opportunities, organization, financing and legal and institutional bottlenecks.
These activities were divided into three linked core strategic lines: strategic networking, entrepreneurship and institutional development (see figure 5).
For each industry, already several network groups have been established. However, these networks differed in their generation of output and results. A crucial issue is what the opinion is of the role of government in creating new business in relation to entrepreneur-ship. Extremely said, should it be top down or
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bottom up. In a Western context, normally a bottom up approach requiring entrepreneurial activity is favoured. But when results are behind expectations national governments and e.g. European Union start to formulate innovation policies. Then a mix between bottom up and top downs exists. But in case of European Union no difference is made between national history and cultures ending in a very ineffective approach. The case of the Lisbon Strategy of 2000 which stated that the European Union should be the most competitive regions in the world by means of investing 3% of GDP in R&D has by far not met expectations [9, p. 17]. It shows the difficulty of mixing top down and bottom up. Only tailor
made solutions for individual organizations and or regions and clusters work. From a business perspective, the business development role is the most important one but the most difficult one to stimulate or organize top down. One cannot make business development managers or innovative entrepreneurs as new materials in a laboratory. Innovative and entrepreneurial activities need a seed bed and a context in which they will emerge. This brings us to the third strategic line of institutional development. Here, some examples illustrate institutional development. One is the opening of a political debate to allow national funding for cross border projects and flagship projects. Another refers to foster an interna-
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1. Strategic networking
Networking, Triple Helix, mapping, marketing, seminars and lobbying
2. Innovative entrepreneurship
Initiation, business case & model, business plan, incorporation, growth path
3. Institutional development
Institutional harmonization, creating favorable conditions, business support, building infrastructure, education
Figure 5. Three core interlinked processes in developing industrial cross border growth Source: Ynnovate, Province of Limburg, TTR-Elat Business Plan. Maastricht, April, 2009.
tional labour market mobility requiring aligning of regulations and laws. A last example is a joint cross border IPR framework. The biggest hurdle to overcome all these obstacles is time. In a European context it takes a lot of time due to discussions and finding consensus before even the most simple topics are arranged. Not a very inviting prospect for attracting innovative entrepreneurs. The current biggest challenge of TTR-Elat is the business development implementation in the different industries and regions.
This case shows that similar macro and meso measures have been taken to stimulate this region as in case of AIRR in Russia. But also here, the success depends on nontechnical aspects of strategic innovation. Besides the necessity of innovative entrepre-neurship and the creation of an outstanding USP of the region, may be the most important issue for these regions is cross cultural management and alignment of policies and commitment of the involved governments.
How to use strategic innovation to stimulate regional innovation centres
To explain how to apply strategic innovation approaches in Russia, the special case of Russian Chinese cooperation in Far East Russia is used. The Russian Far East and the Northern part of China increasingly stimulate cross border initiatives within several industries. The differences in history, recent economic development, political system, innovation system, short & long term aims and many others will have an influence on any cross border cooperation project between the two nations. In this kind of cooperation, often the focus is on for example developing a future strategic technological field and exchanging technology for markets. From a strategic innovation point of view, the identification, development and prototyping of technologies by both sides is usually not the problem. The key to success are the non-technological dimensions of the Russian Chinese cross border cooperation as shown in figure 6.
The key areas of strategic innovations are leadership, institutionalized innovation,
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Leadership Institutionalized innovation
- strong and approachable leader - educational reform and HRM
- clear and honest hierarchy renewal
- competitive and harmonious - top down with organized bottom up organization - stimulated and guided
- servants and entrepreneurs entrepreneurship etc. etc.
Russian Chinese cross border cooperation
- grasping opportunities (maximizing economies of scope) and risk awareness
- short term tactics and long term vision
- bottom line and sky line etc.
Business development
- top down and bottom up governance
- legal and social control
- competition and cooperation
- prevent gambling and promote risk taking
etc.
Governance
Figure 6. Key factors of strategic innovation in Russian Chinese cooperation Source: based upon [11, p. 218].
business development and governance [10, p. 90; 11, p. 218]. A few relevant examples show the relevance of these four dimensions.
Compared to Western leadership, Russian and Chinese leadership is much more characterized by top down decision making. Hence, in joint innovation projects, it should be clear how the leadership roles are divided and organized. In this context, when establishing institutionalized innovation structures and behavior within the involved organizations, bottom up entrepreneurial activities get a different role. Furthermore, in the phase of commercialization and business development it is very important to define and know each other's mutual interest. Within an international context, it is always extremely difficult to adapt mutual interests to changing circumstances and successfully exploit bottom line results. In this respect, cross cultural management is a necessary tool which should be applied from start to end to avoid misunderstandings, overcome difficulties and support the exploitation of the cooperation.
These aspects strategic innovation are often neglected whereas they make or break the cross border cooperation.
Conclusion
Stimulating growth and development of regions by means of innovations requires much more than technology. The nontechnical components of strategic innovation are by far the most important determinants of innovation success and development of innovative regions. In case of cross border cooperation as a special case of regional development, the non-technological dimensions of strategic innovations are becoming even more complex and multi-dimensional. Both policy makers and business leaders often disregard these issues when formulating and implementing their policies and corporate strategies. Strategic innovations and not technology should beat the core of (cross border) regional development.
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Список литературы
1. Сомерен Т.С.Р. ван, Сомерен-Ванг Ш. ван. Создание новых бизнес-моделей для устойчивого роста и развития // Пространственная экономика. 2011. № 3. С. 40-55.
2. d'Amora D. Medvedev Plans Wine Industry Revival // The St. Petersburg Times. 2014. № 22. June 4. P. 6.
3. Gaifutdinova O.S. The Characteristics of the Innovative Development in the Regions of Russia // World Applied Sciences Journal. 2012. Vol. 20. № 10. Pp.1361-1365.
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West. Heidelberg: Springer-Verlag, 2012. 236 p. 11. Someren T.C.R. van, Someren-Wang S. van. Innovative China. Innovation Race between East and West. Heidelberg: Springer-Verlag, 2013. 267 p.
References
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2. d'Amora D. Medvedev Plans Wine Industry Revival. The St. Petersburg Times. 2014. No. 22. June 4. P. 6.
3. Gaifutdinova O.S. The Characteristics of the Innovative Development in the Regions of Russia. World Applied Sciences Journal. 2012. Vol. 20. Issue 10. Pp. 1361-1365.
4. Goryunov E. et al. Russia's Fiscal Gap. NBER Working Paper No. 19608. Cambridge, MA: NBER, 2013.
5. Russian Aircraft Makers Need New Recovery Strategy - Deputy PM. Available at: http://sputniknews.com/business/20130724/18239 6521.html (accessed 20 October 2014).
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8. Someren T.C.R. van. Strategic Innovation Theory as an Alternative for the Paradigm of Technological Innovations. In: Modern Information Society Formation. Problems, Perspectives, Innovation Approaches. Proceedings of International forum. Vol. 2. S.-Petersburg, 2014.
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9. Someren T.C.R. van. Strategic Innovation. How to Make Your Organization Unique. Wiesbaden: Gabler Verlag, 2005. 343 p. (In German)
10. Someren T.C.R. van, Someren-Wang S. van. Green China. Sustainable Growth in East and West. Heidelberg: Springer-Verlag, 2012. 236 p.
11. Someren T.C.R. van, Someren-Wang S. van. Innovative China. Innovation Race between East and West. Heidelberg: Springer-Verlag, 2013. 267 p.
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DOI: 10.14530/reg.2015.1
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Для цитирования:
Сомерен Т.К.Р. ван. Regional Growth and Development in Russia by Strategic Innovation (Региональный рост и развитие в России: путь стратегических инноваций) // Ре-гионалистика. 2015. Т. 2. № 1. С. 6-22. For citing:
Someren T.C.R. van. Regional Growth and Development in Russia by Strategic Innovation. Regionalistica [Regionalistics]. 2015. Vol. 2. No. 1. Pp. 6-22.
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