Taco C R van Someren and Shuhua van Someren-Wang Strategic Innovation in Russia Towards a Sustainable and Profitable National Innovation System Taco C R van Someren Ynnovate, Hilversum, The Netherlands Shuhua van Someren-Wang Ynnovate, Hilversum, The Netherlands ISBN 978-3-319-41080-7 e-ISBN 978-3-319-41081-4 DOI 10.1007/978-3-319-41081-4 Library of Congress Control Number: 2016950914 © Springer International Publishing Switzerland 2017 This Springer imprint is published by Springer Nature This work is subject to copyright All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Printed on acid-free paper The registered company is Springer International Publishing AG Switzerland Contents The Challenge:​ Renewal of the Russian Innovation System 1.​1 Strategic Innovation Replaces Technology 1.​2 The Relevance of Strategic Innovation for Russia 1.​2.​1 Not Diversification but Renewal of Domestic Industries Is Key 1.​2.​2 Future World Society 1.​2.​3 Sustainability 1.​2.​4 Geopolitical Power Shifts 1.​2.​5 Market Economy quo vadis?​! 1.​3 Russian Heroic but Unknown Innovation History 1.​4 Current Status of Innovation in the Russian Economy 1.​4.​1 Insufficient Innovation Performance 1.​4.​2 Insufficient Internationaliza​tion 1.​4.​3 Insufficient Entrepreneurial Activity 1.​4.​4 Insufficient Contribution of SMEs 1.​5 National Innovation System 1.​6 Milestones of Innovation 1.​7 The Strategy 1.​8 Bottlenecks 1.​9 Megatrends 1.​10 Russia Aims at the Technology Frontier 1.​11 Overview of This Book Literature The Solution:​ Strategic Innovation Money Maker Model Versus Technology Frontier Money Taker Model 2.​1 The Need for a New Big Picture 2.​1.​1 Macro level and Massive Outlook 2.​1.​2 Meso level and Major Renewal 2.​1.​3 Micro level and Mega Impact 2.​2 Major Developments Requiring Strategic Innovation 2.​2.​1 Sustainable Economy 2.​2.​2 Internet of Things and Industry 5.​0 2.​2.​3 New Dominant Regions 2.​2.​4 World Economy Replaces Globalization 2.​2.​5 Big Unknown 2.​2.​6 Common Denominator of Sustainability, Internet of Things, New Dominant Regions, World Economy and Big Unknown 2.​3 Consequences for Russia 2.​4 Growth Cycle Versus Technology Frontier:​ Money Maker Versus Money Taker 2.​5 Russia ’ s Position on the Growth Cycle Literature The Instrument:​ Strategic Innovation as a New Foundation for Russian Innovation System 3.​1 The Mind Shift from Technology to Future Earning Power Needs New Theory 3.​1.​1 Strategy Concepts Cannot Explain “What Happens Here?​” 3.​1.​2 Innovation Theories Cannot Explain “What Happens Here?​” 3.​1.​3 Strategy and Innovation Concepts Compared 3.​2 From Parrot-Economy to 24-Karat:​ From Technology Frontier Towards Strategic Innovation 3.​3 The Innovation Matryoshka 3.​4 The Six Pillars of Strategic Innovation Theory 3.​5 Entrepreneurial Function 3.​6 Growth Cycle Is More Than Disruption 3.​7 Non-technical Innovations 3.​7.​1 Scope of Non-technical Innovation 3.​7.​2 Impact of Non-technological Innovation 3.​7.​3 Non-technological Innovations Are Hard to Imitate 3.​7.​4 Implicit and Tacit Innovation 3.​8 Ultimate Power of Time 3.​8.​1 Time Is the Master of the Universe 3.​8.​2 The Basic but Unnoticed Role of Time 3.​8.​3 Tacit Knowledge Does not Exist, It Is the Time Factor 3.​8.​4 The Seven Time Dimensions 3.​8.​5 Time Culture:​ A Profound Hidden Force of Societal Development and Progress 3.​8.​6 Time Arrow:​ Future or Backwards Oriented Society 3.​8.​7 Time Control:​ Who Controls Time Owns Power 3.​8.​8 Timing:​ Multiplier of Profits and Losses 3.​8.​9 Time Duration:​ Creator and Destroyer of Wealth 3.​8.​10 Time Consumption:​ From Ubiquity to Scarcity 3.​8.​11 Time Intensity:​ Evolutionary, Revolutionary, Speedy and Risky Times 3.​8.​12 Wrap Up Seven Time Dimensions 3.​8.​13 Dynamic Production Function 3.​9 Dynamic Value 3.​9.​1 From Profit to Dynamic Value 3.​9.​2 Multiplier Time Effect and Exponential Growth 3.​9.​3 Dynamic Value as Modus Operandi of Strategic Innovation 3.​9.​4 Relevance of Dynamic Value for Russia 3.​10 Emulation as Endless Race of Outperforming and not of Disruption 3.​10.​1 Emulation Is Core of Progress and Prosperity 3.​10.​2 The 4I Emulation Scheme for Russia needs Tailor Made Approach 3.​11 Strategic Innovation Theory Elevates Russia in World Innovation League Literature The Management:​ Unleashing the Strategic Innovation Potential 4.​1 Growth Cycle and Strategic Innovation 4.​2 Growth Cycle Phases 4.​2.​1 Pre-seed and Seed:​ Lead or Bleed 4.​2.​2 Start-up Smart 4.​2.​3 Scale or Fail 4.​2.​4 Incumbents Defend or Expand 4.​2.​5 From Renewal to Future Crown Jewel 4.​3 Myth Busting the New Economy 4.​3.​1 Myth 1:​ Technology 4.​3.​2 Myth 2:​ Knowledge Economy 4.​3.​3 Myth 3:​ Disruption 4.​3.​4 Myth 4:​ Open Innovation 4.​3.​5 Myth 5:​ Cooperation 4.​3.​6 Myth 6:​ Network Firms 4.​3.​7 Myth 7:​ Sharing Economy 4.​3.​8 Myth 8:​ Tacit Knowledge 4.​3.​9 Myth 9:​ Costless Information 4.​3.​10 Myth 10:​ Obsolete Production Function 4.​4 Back to Basics for Russian Innovation System 4.​5 The Management Basics of Strategic Innovation 4.​6 Future Earnings:​ Creating Company of the Future 4.​7 Growth Phase Management 4.​7.​1 Aspire 4.​7.​2 Discover 4.​7.​3 Create 4.​7.​4 Select 4.​7.​5 Institutionalize​ 4.​7.​6 Expand 4.​7.​7 Exploit 4.​7.​8 Dominate 4.​7.​9 Reset 4.​7.​10 Emerge 4.​8 Longitudinal Management 4.​8.​1 Strategic Innovation Leadership 4.​8.​2 Institutional Innovation 4.​8.​3 Corporate Governance 4.​8.​4 Business Development 4.​8.​5 Business Model Formulation and Execution 4.​8.​6 Industrial Governance as Power 4.​8.​7 Cross Cultural Management 4.​8.​8 Dynamic Value 4.​9 Russian Volga Amur Model for Industrial Leadership Literature The Internationaliza​tion:​ Russian Cross-cultural Strategic Innovations 5.​1 Why Does Russia Have to Integrate Strategic Innovations Across the Border?​ 5.​1.​1 From Creativity to Russian Strategic Innovations 5.​1.​2 From Culture Diversity to Russian Strategic Innovation Context 5.​1.​3 From Trade Partners to Triple E of Russian Strategic Innovations 5.​2 From Lose-Lose to Win-Win, How Can Russia and China Cooperate in International Strategic Innovations?​ 5.​2.​1 The Lose-Lose History of Sino-Russia Relationship 5.​2.​2 The New Strategic Innovation Chances for China and Russia Looking for Win-Win 5.​2.​3 Huawei as an Example of the Chinese Strategic Innovations in Russia 5.​2.​4 How Should Russia Work with China?​ Literature The Cases:​ Potentials and Opportunities of Russian Strategic Innovations “Urbi, Orbi et Universum” 6.​1 Introduction 6.​2 Agrofood:​ Grain, Food Chain and Brain 6.​3 Aerospace:​ Heroic Past and Heroic Future?​ 6.​3.​1 Go-Around 6.​3.​2 Takeoff:​ Growing into the Sky 6.​3.​3 Beyond the Cloud:​ Space Race as Money Maker 6.​4 Far Eastern Federal University (FEFU):​ Vladivostok Valorization 6.​4.​1 Past Successes, Rankings and New Opportunities 6.​4.​2 Building Quadruple Helix 6.​4.​3 FEFU as Strategic Innovation Literature aircraft design The future economic development of the Russian Far East economic of fishing, shipbuilding, natural resources, agro food, aerospace and tourism require special purpose (regional) airports and maintenance The current more or less disconnected air industries are connected and integrated and together form a value circle as Fig 6.13 demonstrates Fig 6.13 Russian connected aerospace From a strategic innovation point of view, a few additional unique conditions are at work The physical-geographical characteristic of Russia determines its transport possibilities in which aircraft besides water and rail has a relatively dominant place Besides large airports many small airports are scattered around the country The distribution of current but more importantly future economicindustrial centers will determine the scale and scope of logistical demand of passenger and cargo In this respect, during the Presidential Address to the Federal Assembly in 2013, President Putin stressed the relevance to develop the non-extraction industry in Siberia and the Eastern part of Russia (Kremlin, 2013) Hence, three dimensions come together: new industrial activity, new locations and new forms of transport have different and new requirements for airplanes and airports The future Russian industrial geo-economic structure requires new solutions from aerospace organizations The Russian aerospace industry is a potential goldmine: the heritage, the large scale of the country, the geographical location of existing and future industrial areas, the specific circumstances requiring and offering the potential of tailor made solutions, the large technical knowledge base and the sense of urgency that new directions and ambitions are necessary to revitalize industry and regain lost positions In this case, Russian aerospace includes all value chains and involved participants from government, business and knowledge institutions in airplane industry, airports and airliners Generally, the success of an industry depends largely first, on the capacity to innovate within individual organizations, between organizations (private and public) and creating and renewing value chains, and second, the coordination mechanisms between the participants or the whole value chain But the driver for fundamental change can also come from within For example, Aeroflot can try to catch up and extend their international network by teaming up with additional alliance partners But this is more of the same and is identical strategic behavior as other airlines Another approach would be to be frontrunner on hypersonic flight offerings requiring the cooperation of aircraft manufacturers and specialized airfields These specialized airfields should not only be able to deal with suitable start and landing facilities, dedicated maintenance support but also with fast passenger transfers to, from and within the airport Otherwise the time gained will be consumed by check-in and check-out procedures and pre- and after transport With respect to the economic engine of the future aerospace industry, pricing and cost level control is relevant One of the issues is the inefficient system of state regulation of pricing in terms of State Defense Order (SDO) and budget financing in terms of Federal Target Programs Current policies in pricing within SDO and budget financing stimulates final integrators to build assets Additionally, component manufacturers are stimulated to produce according budgets and create windfall profits Lack of long-term SDO fosters irregularity of production loads and stimulates wide nomenclature of products in terms of small-scale production These are a few examples of Triple E (economies of scale, scope and time) dimensions which need improvement and alternative motivations as Table 6.9 indicates Table 6.9 Triple E Aerospace Scale Number of airplanes, airports Scope Exploitation variety of available knowledge Time Time advantage first mover and accumulation space industry Focus on economies of scale instead of size Specialties arctic and space aircrafts Time zones as catalyst of commercial integrated network aerospace Developing home market Combining cross industry aircraft, defense and space technologies Time zones as catalyst of hypersonic aerospace Developing scale of space industry Combining cross industry earth and space mining First mover space mining technologies Developing sub systems industry The underlying current economics in Russian aerospace are based on budgets, costs and cost reduction whereas global markets ask for value for money The latter requires a complete different value proposition than current Russian offerings Simultaneously the traditional aircraft industry needs fast imitation-improvements schemes and new industries such as the space industry have to be stimulated In fact this strategic innovation approach should be used in all three sub-industries manufacturing, airlines and airports The growth potential of Russian home market offers the opportunity to introduce complete new solutions (Someren, 2014a) For example, airport design can be revolutionized by a revolving carrousel instead of fixed terminal or by new airplane design separating wings from fuselage Both ideas have great potential for increasing efficiency and safety but need degrees of freedom without being laughed away, braveness and strategic foresight to realize The economies of size approach should be supplemented by economies of scope and time by means of SME based innovative enterprises delivering innovative solutions to future aircraft industry Greenfield design enterprises, not being part of the conglomerates, could deliver game changing ideas Only then a value creating innovative Russian sub industry of components can come into existence A promising area is recycling of aircrafts and reselling certified higher value parts and components or even sub systems like engines Current world wide recycling technology is in its infancy and needs not only new reversed engineering and deconstruction but also new business models to create a new growth cycle This recycling business would be a welcome part of the traditional business transforming the value chain into a value circle At the same time, the development of the space industry is going into a new direction and economies of scope and time are reaching substantial levels As an intermediate step hypersonic flying, based on the time zones, can be developed in first instance as a home market for Russia Moreover, it is a logical intermediate step to connect the two subindustries of aerospace and space and create economies of scope advantages Hypersonic flying would crumble the existing worldwide hub structure when economies of scale lower fares The future Russian industrial geo-economic structure requires tailor made Russian aerospace industry Future world markets require the integration of additional strategic issues like sustainable solutions (energy efficient, low noise level, logistical IT based efficient network, mode of transport selection), high quality-low cost on time delivery, world connections without delay, new technology development (design, materials, new propulsion engines), strategic alliances (R&D, airport network, organizational and governance structures (integrating technologies, innovation leadership models, capturing international clients) enabling becoming world industrial leader 6.3.3 Beyond the Cloud: Space Race as Money Maker The space industry will become a Money Maker instead of a Money Taker growth engine of the economy Strategic innovations will transform the current predominantly satellite fired industry into a multisector growth pole It is not only about space tourism, there is much more to come A true new Space-Race towards a Solar System Economy could be ignited The economic exploration and exploitation of the universe is a true new industry which differentiates itself from all earth’s industrial activities Internet, Industry 5.0, Big Data, The Cloud are child’s play compared to the potential future space industry The Space Economy is an additional dimension to world economy A few examples of the future growth cycles are listed in Fig 6.14 Fig 6.14 Future growth cycles space industries Nowadays satellites are mostly used for military, navigation, weather forecasting, mapping and research purposes One of the main and most expensive activities in operations of satellites is launching The International Space Lab ISS is serviced by Russian cargo Progress freighter, the Japanese HTV cargo ship and three US suppliers In the US, incumbent firms like market leader partners Boeing and Lockheed Martin get competition from new entrants such as SpaceX, Orbital ATK and Sierra Nevada for acquiring NASA service flights to International Space Lab ISS (Clark, 2016; Handelsblatt, 2015) From 2018 till 2024, SpaceX, Orbital und Sierra Nevada will take care of these flights (Handelsblatt, 2016a) Besides this reshuffling of suppliers within the existing value chain, in near future, space based Big Data can deliver information for e.g agro food production, mobility services, construction planning, resource extraction and catastrophe warning systems Providing commercial service will become the core of the business Another field is new materials engineering and other zero gravity related substances and processes The by far most intriguing new industry is asteroid mining The newly build Russian space base Vostochny in the Russian Far East could be the home of Russian pioneers in this field The construction of special tools, rockets, energy systems and satellites requires the alliance of new enterprises and the creation of new business models Is asteroid mining science fiction? Not anymore, it is becoming big business The global space economy grew by 4 % in 2013, reaching a new record of $314.17 billion (The Space Report, 2014, p 4) But this is peanuts compared to asteroid mining The calculations of space mining estimate the worth of a single asteroid on $100 trillion (Calandrelli, 2015) The basic economics are revealing (Accenture, 2015, p 2) Nowadays, launch costs are the biggest stake in space operations Transports to space labs are costly and require heavy loads of food, water, laboratorial facilities, repair materials and other equipment For the construction, maintenance and repair of future space platforms, satellites and rockets three resource categories are relevant; firstly, industrial metals (e.g iron, cobalt, nickel, titanium), platinum group metals (PGMs such as platinum, palladium, iridium, rhodium, ruthenium, and osmium) and volatiles (e.g water) By the way, PGMs are used in one of four manufactured products and they are scarce Water is abundant on most asteroids and can be used for fuel (oxygen and hydrogen) and human being usage The delivery of kg of material form earth’s surface to lunar orbit height or geosynchronous orbit (GSO) costs $100,000 With these cost and price levels, a system delivery of 2000 kg carrying a load from earth costs $50 million per ton whereas the same load with a 200 kg system delivery to a GSO from an asteroid only costs $100,000 A difference of 5000× Of course, missions to these celestial bodies for the retrieval of minerals and bringing them to earth are other opportunities With regard to water, the International Space Station on a yearly base consumes about t of water at a cost of a few hundred million dollars Like in the case of Arctic mining, a few countries are preparing for these space mining activities In the US, this time it is not Silicon Valley who is hosting the cluster of space mining companies but Seattle But also Washington on the East coast is preparing the future industry by answering the key question “Who is owning the Asteroid?” An international lawyer team prepared for the US Congress a special law, the H.R 1508, the ‘Space Resource Exploration and Utilization Act of 2015’ The purpose of Space Act (2015) is “to establish a legal framework to govern property rights of resources obtained from asteroids enabling this new industry and providing clarity for future entrepreneurs” (US Congress, 2015) In this Space Act, it is stated further that “Any asteroid resources obtained in outer space are the property of the entity that obtained such resources, which shall be entitled to all property rights thereto, consistent with applicable provisions of Federal law and existing international obligations.” (US Congress, 2015) The Space Act frees the way for private firms The legality and consequences of this Act are disputed but it shows the way of thinking and claims of world players (Simmons, 2016) The number of players in this field is increasing rapidly from around 100 companies in 2011 to about 700 in 2015 Not only well known entrepreneurs such as Elon Musk’s (SpaceX) and Sir Richard Branson’s (Virgin Galactic) but also Richard David (NewSpace Global) and Chris Lewicki (Planetary Resources) Some of these companies already started 20 years ago, so again not very disruptive Investor’s money into space mining ventures already totals to $10 billion and about 70 % of commercial space activity is privately held (Nordrum, 2015) Although this industry till now is only delivering promises, the outlook and potential are enormous It also shows that the initial fundamentals of this industry is changing as Table 6.10 shows Table 6.10 Inversion in space industry creating new opportunities From Money Taker To Money maker Niche market Core market Research driven Commercial activities Laboratories Products and services Earth production In orbit production Public driven Private driven Satellite launching Asteroid mining Big Data demander Big Data supplier All the fundamental principles are inverted which is a characteristic of strategic innovations These inversions move the points towards accelerating the growth cycle In this future industry there are no fast disruptions, on the contrary, there are very long timelines and learning curves Moreover, contrary to fast moving simple Internet based disruptive apps, space mining needs both complex software as well as specialized outer space reliable hardware In fact, these space activities are not disruptive at all, there is nothing to disrupt, they simply create complete new industries never seen before Russia has enormous opportunities in this industry But the consequences of recent developments in this young industry should ring the alarm bells in the Kremlin It is not yet “Moscow, we have a problem” but the inversions show that strategic innovations are necessary The first mover advantages of the Sputnik space station Mir and the accumulation of knowledge in their space program has already partly evaporated due to other priorities and bureaucratic organizations Russia was one of the leading players in commercial launches, earning almost $759 million in 2013 from those launches till problems with their main rocket Proton interrupted the initial success (Mamontov, 2015) But if there is a country to play a Number One role it is Russia However, it needs strategic innovations to keep up with Chinese state investments and private business initiatives of worldwide entrepreneurs like in US Europe is lagging behind because their focus is still on classical space programs Russia has all the relevant industries (e.g ground station facilities, satellite construction, rockets, space labs, IT, natural resource mining) to play a front runner role but they need to be coordinated and they need a competitive environment to flourish and to contribute to future Russian space industry It will become increasingly difficult for governmental space agencies, even in a commercial disguise, to compete with innovative and dynamic value driven entrepreneurial enterprises Research shows that a reorganization of Russian space industry is necessary but no real answers are yet available (Edelkina, Karasev, & Velikanova, 2015) The top down organization and technology orientated Russian way of space industry structuring needs adaptation to the future Despite the growth of number of companies, the space industry is just taking off and is not yet well organized A new growth curve has to be defined and the creation of a dominant Russian player is still possible The growth curve of the space industry has the potential to become the Fourth Industrial Revolution overshadowing all other earth’s industrial activities1 Normally trees not grow to the sky but this growth curve grows beyond the Cloud 6.4 Far Eastern Federal University (FEFU): Vladivostok Valorization The literally meaning of Vladivostok is ‘the ruler of the East’ With the increasing relevance of the Asian Pacific region, the ruler of the East with regard to the discussion of an academic institution transforms into another dimension Whereas the agro food sector uses land as ‘terra’, the academic use of land is the ‘campus’ The Far Eastern Federal University (FEFU) is the first university in Russia which boasts the unique infrastructure in a single, modern campus on Russky Island (Ministry of Education and Science of the Russian Federation and the Far Eastern Federal University (FEFU), 2016) However, contrary to the agro food sector, valorization of the activities on many campuses worldwide is underdeveloped and a core issue of the future In this case we first set the context of both the Russian education system as well as the Triple Helix concept before the current and future role of Far Eastern Federal University (FEFU) will be discussed Before discussing FEFU some general trends in academic world is presented in Fig 6.15 Fig 6.15 Trends in academic world These trends have a general character and it can differ per discipline At least some of the trends such as valorization, intensifying competition, internationalization and creating favorable circumstances to attract researchers and teachers determine future academic industry The theoretical model of Triple Helix or Quadruple Helix shows in practice almost opposite worlds of academia and business world It requires a mutual understanding between academia and business leaders to balance education, research and practical results Only then financial parties are willingly to step in with investments in campus facilities and long term research 6.4.1 Past Successes, Rankings and New Opportunities Throughout history, Russia has an excellent track record in education With a score of 99.7 % (2015) for both male and female gender, Russia has one of the highest literacy rates of the world (UNESCO, 2015) Of course this is related to primary and secondary school education Also for higher educational levels, Russia has a tradition of good education On the university level, in general, Russia has to keep up a tradition in science and technology and basic research One of the reasons is the focus of Russian government on the so-called STEM-areas being science, technology, engineering, and mathematics However, in the past decades, due to several circumstances such as underperforming investments, continuation of old successful Soviet system, inefficient coordination of institutes and missing linkage with industrial sector, the once excellent position started to deteriorate In rankings, Russian universities lost ground on their international peers In fact, all signs pointed to a downward growth cycle of Russian science Russian government took measures and introduced a bunch of reforms to revive the lost position and to fight back Without being complete and comprehensive, a few recent reforms are the replacement of the former Soviet Academy of Sciences by the Russian Academy of Sciences (RAS) and the ‘5–100’ state program The goal of the 5–100 program is to increase the competitiveness of national universities in the international arena and get at least five Russian universities into the global top 100 in international university rankings by 2020 (Vorotnikov, 2015) Only recently, Russian universities are climbing the ranks again (Grove, 2015) In one of the many indexes, the QS World University Rankings, 2015/2016, the highest ranked Russian university is the Lomonosov Moscow State University on No 108 (QS World University Rankings, 2015/2016) The top ten of this list are dominated by universities of USA (5) and UK (4) Another angle of looking at the performance level of academic institutions is presented in Table 6.11 Table 6.11 Benchmark academic institutions from a strategic innovation angle in Russia, USA and China Expenditure on education Russian Federationa USAa Chinaa 31.3 40.0 0.0 Researchers 37.0 47.7 12.8 Employment in knowledge-intensive services 73.5 63.9 11.4 University/industry research collaboration 43.9 80.9 56.7 Joint venture strategic alliance deals 9.2 53.9 9.2 Source data: The Global Innovation Index (2015) aRelative scores In Table 6.11 the scores based on expenditures on education, number of researchers, employment in knowledge intensive services, collaboration between university and industry and joint ventures or strategic alliance deals between firms are summed up and compared between Russia, the US and China It is obvious that the US is still outperforming both Russia and China in all areas Russia is ahead in the field of researchers and employment in knowledge intensive areas This demonstrates the affinity and deep interest of Russia in this area Apart from the expenditures and researchers, the numbers not give any insight into the efficiency and effectivity of the organization of researchers and investments From the perspective of strategic innovation, one has to be careful about these rankings due to the criteria used These rankings are usually based on criteria such as publications and citations in top magazines, reputation and student-faculty ratio Research and citations, especially in science and technology areas, are predominantly related to basic research Strategic innovation requires more than research in the pre-start up, R&D and invention phase New opportunities arise, among others, in firstly, research of other growth cycle phases, secondly, the role of non-technical innovation, thirdly, the international dimension such as Russian-Chinese cooperation 6.4.2 Building Quadruple Helix The creation of Triple/Quadruple Helix structures is one of the hypes or even myths of many current national innovation systems as demonstrated in Chap Table 6.1 shows the long way to create such structures which also have to be country specific The creation of industry and academic relations need time before truly mutual understanding is emerging and bottom line results are achieved From a strategic innovation point of view, it is better to introduce the concept of a Quadruple Helix structure instead of a Triple Helix structure The Quadruple Helix adds the financial dimension on top of the Triangle consisting of the private sector, public/governmental sector and academic sector In practice, the Triple Helix is a nice construction on paper till the question “Who is going to pay for what and for how long?” has to be answered Many Triple Helixes initiatives remain paperwork or coffee drinking networks due to inability to get the money on the table Moreover, in practice, many meetings between representatives of enterprises, public organizations and knowledge institutes are organized in which the central key figure is often not present This key figure is the entrepreneur In this respect, the cooperation between university and industry is one of the measures to create Triple Helix structures Here, the US leads and China is still far behind but catching up and Russia is following However, the equal low score on joint ventures and strategic alliance deals in both Russia and China compared to US shows the difference in industry structure on the supply side These different approaches and experiences with alliance building influence the development of Triple Helix structures There are two basic problems to overcome and we quote here the former rector Far Eastern Federal University FEFU Mr Miklushevsky: “Our country’s higher education faces two major problems: universities don’t know how to produce what business wants; and business isn’t very interested in innovative products,” (Zagorodnov, 2012) This holds not only for Russia but in the most of the Triple Helixes worldwide these are the fundamental issues they have to deal with although participants not always admit that The worlds of government, industry and academic institutions are completely different with regard to work, performance criteria, aims, behavior, organizational culture and time perceptions This is the reason that making a success of a Triple Helix is extremely difficult For Russia there are some specific additional issues such as the lack of demand of research questions form industry to academia, the focus of policies on Technology Frontier, the focus on R&D, invention phase of the growth curve which have to be tackled to become successful In the next section, the case of FEFU shows the ambition to revive the academic class level and contribution to industry 6.4.3 FEFU as Strategic Innovation The history of the FEFU took off in 1899 when the Eastern Institute was founded followed by the opening of some private institutions In 1920, some private institutes and the Eastern Institute merged into the new Far Eastern State University (FESU) It included three departments: the Eastern Faculty, the Faculty of History and Philology, and the Faculty of Social Sciences A decade later in 1930, out of the Vladivostok Higher Polytechnic Institute the Far Eastern Polytechnic Institute was established later transformed into the Far Eastern State Technical University (FESTU) After the Second World War, in 1954, the Ussuriysk State Pedagogical Institute (USPI) was erected based on the Ussuriysk Teacher’s Institute (established in 1909), later known under the name of Nickolsk-Ussuriysk women’s teaching seminary Two years later in 1956, The Far Eastern State University (FESU) was transformed in the Far Eastern National University (FENU) To the FENU belonged five academic departments: the Faculty of Physics and Mathematics, the Faculty of History and Philology, the Faculty of Biology, the Faculty of Medicine, and the Faculty of Romano-Germanic Philology The Vladivostok Branch of the Plekhanov Moscow Institute of the National Economy was founded in 1964 and years later it became an independent institution and after some name changes in the end Pacific State University of Economics (PSUE) Till now the historical development of the academic institutions is comparable to many other Russian universities But governmental leaders in Russia have always been thinking about making a strategic move with their literally rook piece Vladivostok After a visit to California in 1959, Nikita Khrushchev, at that time the leader of the Soviet Union, stimulated the inhabitants of Vladivostok to turn their town into a Russian San Francisco The residents had to wait till 2012 before a major international event took place in their hometown In 2012 Russia hosted 24th annual gathering of APEC leaders and they met on Russky Island, off the coast of Vladivostok Besides the renovation of the airport, the construction of two landmark bridges connecting Russky Island to the major city, the campus of the FEFU was established This APEC occasion was the ignition of a strategic innovation On December 17th, 2010 the Government of the Russian Federation approved the FEFU Development Program, to run through 2019 The FEFU development strategy is based on integrating the natural science knowledge of a classical university education with engineering and modern innovations in information technology On January 27th, 2011 the Russian Federation’s Minister of Education and Science signed an order uniting the four educational institutions of FENU, FESTU, PSUE and USPI into Far Eastern Federal University (FEFU) Here the historical focus of FEFU on Asia and their relation to Russia and Russian Far East in particular and the rise of Asian region came together In 2013 the Russian Ministry of Education has put FEFU on the list of 15 selected universities which receive funding to support their entry of the international university rankings Therefore, 2012 can be seen as the point of divergence for the world in the history of FEFU graphically represented in Fig 6.16 Fig 6.16 Strategic innovation Far Eastern Federal University (FEFU) The first growth curve is representing the short history described in the previous sections The establishment of the current FEFU is mainly driven by the trend of the rise of Asia and the growing strategic relevance of Russian Far East which requires top of the bill academic institutions But still some bottlenecks have to dealt with One of these stumble blocks is the attraction of current mega cities and growth poles like Moscow and Saint Petersburg Another one is the development of local industry in the Russian Far East and their linkage to FEFU Moreover, creating a win-win linkage with Asian corporations and academia is the international challenge The leaders of the FEFU are aware of these challenges and in order to prepare FEFU for the future they formulated a strategy This FEFU strategy is in accordance with state and local policies and demonstrate the search for a Russian Innovation System including methodologies and instruments on the level of the state, region, industries, corporation and individual In this respect the strategies and programs of the FEFU contribute to these federal state aims: FEFU top strategic objective is to become a leading scientific, educational and innovative center to provide Russia with territorial efficiency in the Asia-Pacific Region FEFU Development Program of the Federal State Autonomous Educational Institution of Higher Professional Education “Far Eastern Federal University” for 2010–2019 (2010) main aims are: – Establishment of the leading (world class) research and educational center in the region and in Russia – Integrating two models: a modern research university and an entrepreneurial university FEFU Program of Increasing the Competitiveness (2013) continues and supports the Development Program and stresses: – Cooperation and interaction between the universities of the Asia-Pacific Region, and communication networks between the companies of the economic sectors in the macro region (Asian-Pacific Economic Cooperation Forum) are to become particular qualities of the FEFU Program of Increasing the Competitiveness These strategic objectives and programs are the start of a new growth curve and the integration of FEFU into the Asian-Pacific region During the Eastern Economic Forum 2015, several participants from industry and high ranked Russian officials even made remarks that this part of the world wants to concentrate on their own region and that cooperation with countries like Sweden is not first priority Strategic innovation will ultimately contribute to the growth and development of the Russian Far East and Russian economy as a whole As other cases in this chapter show, the current Russian situation and especially Far East needs strategic innovation for four reasons which are relevant for the future activities of the FEFU Firstly, the Russian Far East needs the creation of new innovative regions, new industries and new firms Secondly, the focus on interaction between technology and non-technical innovations for a successful integration of alliances with the diversity of the region Thirdly, an increase of innovation capability at individual enterprises (private and state owned) in the Russian Far East is necessary Fourthly, the integration and cooperation with Asia and China in particular requires strategic innovation in relation between government, enterprises and research institutes In Table 6.12 the potential Triple E (economies of scale, scope and time) for FEFU are summarized Table 6.12 Triple E Appearances FEFU Scale Number of students Scope Variety of disciplines Time Asian Pacific Time Zone Number of top staff members Number of alliances world academic institutes Cross disciplinary teams speeding up R&D and technology delivery time Role in Quadruple Helix structures Number of alliances with enterprises Russian Asian Learning System Global Number Center Russian/Western —Asian studies Specialization on Asian Pacific region Accumulation of knowledge and experience of Asian ways of working Number of strategic innovation cases Focus on strategic innovation From follower to first mover Already now, the FEFU is trying to increase their scale and scope by attracting students, domestic and foreign professors and links with industries Geo-strategically, the FEFU is the only Western university in the center of the Asian Pacific region There is no other Western region or university so close to Chinese, Japanese and Korean borders Leaders in the EU and USA not have this on the radar When I told my European and American clients, business partners and friends in academia that I was appointed at the FEFU they congratulated me but most of them made also remarks that it is too far away from Moscow the pivotal point of Russia Some laughed and made even remarks that in former times it was a punishment to live there and convicted people were send there When I told them that this world region has the potential to become the most prosperous of the whole world they started thinking and became aware of their short sighted views Within only a few time zones around Vladivostok about one third of the world population is living But on the longer term, the FEFU has the potential to become number in the area of understanding Western-Asian alliances Based on the unique location and the opportunity to understand both worlds by theoretical and practical experience with a wide variety of Asian countries, universities and enterprises the FEFU can go for becoming the Number One FEFU will not be the ruler of the East but they can play a pivotal role in the field of strategic innovation within Russian/Western—Asian Pacific growth cycle development FEFU is in the center of future new agro food systems, cross border cooperation with Asian partners, exploration and exploitation of both the Arctic as well as the Universe and many other promising industries and regions Strategic innovation and new growth cycles belong there Literature Accenture (2015) Courage or capital The final obstacles for sustainable asteroid mining Aeronewstv.com (2014) The military driven Russian aviation industry, Published on 12/11/2014 05:00 Airbus (2015) Global market forecast 2015–2034 Airline Leader 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Accessed February 6, 2016, from http://​www.​ telegraph.​co.​uk/​sponsored/​rbth/​features/​9238219/​Vladivostok-preparation-Apec-Summit-2012.​html Footnotes This demonstrates that the succession of industrial revolutions is subjective as discussed in Chap The Space Growth Curve would be a clear distinction between earth bound and space activities leading another taxonomy of economic waves (Someren, 1991, 2005) ...Taco C R van Someren and Shuhua van Someren-Wang Strategic Innovation in Russia Towards a Sustainable and Profitable National Innovation System Taco C R van Someren Ynnovate, Hilversum,... non-technical innovation is branding and creating world brand names In Table 1.5 the top world brand names are listed including all Russian brand names and values in the top 500 ranking positions Table... of Sino -Russia Relationship 5.​2.​2 The New Strategic Innovation Chances for China and Russia Looking for Win-Win 5.​2.​3 Huawei as an Example of the Chinese Strategic Innovations in Russia 5.​2.​4