Is Innovation a Turks' Game to Create New Wealth?

A. Mete ÇakmakcıHE Ambassador of Spain’s Residence in Istanbul

February 18th, 2010

Innovation Mercenaries

Source : Sak (2009) “Küreselleşmenin Türk KOBİ’lerine etkileri”, TEPAV

Catching up or Lagging Behind?

Source : European Innovation Scoreboard 2008

Turkey is labeled under “catching up with moderate growth”

Demographics

In 2009, 2,731,878 students were

registered in undergrad university

programs. 397,884 graduated from

undergrad programs.

28,681 master and 3,744 PhD degrees

were awarded.

Source : US Census Bureau, 2010

In 2009, 13,263 Turkish students were enrolled in the US universities, (10,2% increase from 2008 and 8th most populous group)

Many return with business ideas.

A Definition of Innovation

Often worshiped as a “myth” or “taboo” innovation still deserves a simple definition.

Creating new VALUE

using/utilizingexisting/available

KNOWLEDGE.

Innovation and Enterpreneurship

The who has the will, means and ways to manage the conversion of knowledge into value is an enterpreneur. Market is where value is converted into other forms of value.

Value is a perception and highly context dependent. Hence innovation is a dynamic process.

Innovation involves acquisition/processing of knowledge.Knowledge (not necessarily technical or scientific) is the main barrier to/frontier of innovation.

Innovation Cycle

OpportunityEquity

Value

Knowledge

Value

MARKET

INVESTMENT VISION

EXECUTION

Public Intervention Comfort Zone

Our Ecosystem of Innovation

KNOWLEDGE – RESEARCHERS : highly motivated to publish, low motivation for research projects, often on own devices to pursue business, lured to easy cash from consultancy (corporate researcher is a difficult carreer choice)

OPPORTUNITY – BUSINESS DEVELOPMENT : Almost always focused on immediate opportunity, more of a follower’s attitude

VALUE – DEVELOPMENT/PRODUCTION/SALES : Strongest component of the eco-system. Often top skills and top innovators around.

EQUITY – OWNERS, INVESTORS, BANKER : Strongly conservative, often orthodox non-believers in innovation, often believe what they see on paper in numbers.

Innovation Dynamics

Knowledge is GLOBAL, value is LOCAL

Innovation Dynamics

Intrapreneurial Company is the Future

Organizational skills to adopt new ideas

and diversity.

Intrapreneurship is underrated,

enterpreneurship is overrated.

High Value Add ≠ New Company

Value Pyramid

Cost

of I

nnov

ation

Barr

iers

for C

ompe

tition

Risk

of I

nnov

ation

Technical & Non-technical Innovation

Source : OECD STI Scoreboard, 2008

Systemic Linkages

Source : OECD STI Scoreboard, 2008

Firms collaborating on innovation with higher

education institutions by size, 2004-06

Firms collaborating on innovation with government institutions by size, 2004-06

Firms collaborating on innovation activities by size,

2004-06

Structural Performance

Source : OECD STI Scoreboard, 2008

Elements of design for R&D Structure :

Profile of researchers, performers and

Cross financing based on the

Characteristics of priority areas.

Converting High-Tech to Low-Tech

Source : TUSİAD, (2008) “Türkiye Sanayiine Sektörel Bakış”

Source : OECD STI Scoreboard, 2008

Capturing Value

Source : Linden, Kraemer, Dedrick (2007) “Who captures value in a global innovation system? The case of Apple’s iPod”

Cost of Innovation

Inno

vato

rVa

lue

Incr

ease

s

Cost of innovation (rather cost of

failed innovation) is probably the single

most important barrier to innovation.

Recent tax incentives had limited

additionality for various reasons.

In spite of “unlimited” supply of youth,

talent and skills are limited.

Investment in skills is extremely limited

and conservative.

A Map of Technological Innovation

A Regional Production Specialist

Source : The World Bank

Global Benchmarking

Source : www.worldbank.org/kam

European Benchmarking EU-27 Turkey Spain Poland

Life-long Learning 9,7 1,5 10,4 5,1

Pubic R&D Expenditures 0,65 0,37 0,55 0,38

Private Credit 1,31 0,29 1,83 0,4

Non-R&D Innovation Expenses 1,03 0,16 0,49 1,03

Public-private Co-Publications 31,4 0,3 10,6 1,3

EPO Patents 105,7 1 29,3 3

Technology Balance of Payments Flows 1,07 0,12 0,28 0,4

SMEs introducing product or process innovations 33,7 29,5 29,5 20,4

SMESs introducing marketing or organizational innovations 40 50,3 29,5 29,1

Employment in Medium-high & High-tech Manufacturing 6,69 3,6 4,47 5,5

Employment in knowledge-intensive services 14,51 5,53 14,22 10,33

Medium-tech and high-tech manufacturing exports 48,1 38 52,3 48,9

Knowledge-intensive Services Exports 48,7 12,9 27,9

New-to-market sales 8,6 4,65 7,37 4,56

New-to-firm sales 6,28 11,17 8,48 5,55

Source : European Innovation Scoreboard 2008

About Technoparks 37 Technology Development Zones are approved, 23 are operational

1,254 firms (of which 53 are foreign owned with a total investment of 450 M USD) are operating in the region with 8,708 R&D staff

3,403 projects are active, 297 patents received, 540 M USD in exports

Source : OECD STI Scoreboard, 2008

Cluster Development

Cluster Development

Outlook

New generation of young enterpreneurs (especially out of top universities) have the proper skills and high capacity to learn fast. They ask and learn.

Second/third generation is taking over in the family owned SMEs.

Investors and Banks are quickly adopting to finance innovation.

Big companies are still a big ?

Capacity on the demand side is developing faster than the suppy side of policy and programs. Civil initiatives are mobilizing.

Innovation and related buzzwords are still crowding out the agenda.

Buttom up processes is still a requirement.

Türkiye Teknoloji Geliştirme VakfıCyberpark, Cyberplaza B-Blok Kat : 6

Bilkent 06800, Ankara

www.ttgv.org.tr