Highlights of Presentations and Discussions
National Research Council
We have considered a wide variety of technologies of commercial interest, from space communications systems to radioactive isotopes for health applications to food supplements. Also, we have considered different organizational forms of companies, management approaches, and marketing efforts. The experiences of technoparks that are not linked to Minatom facilities have helped broaden the discussion, and the geographical and historical differences in the cities that were represented have helped us appreciate the pitfalls inherent in making generalized statements about the reasons for successful and unsuccessful commercial activities.
I was very pleased by the broad interest in educational issues, in terms of both linking higher education facilities to industrial activities and establishing new types of curricula for the preparation of a new generation of scientific entrepreneurs. The youth are the managers of tomorrow, and there is a serious need for stimulating greater interest among young scientists and engineers in innovating for profit to help offset common tendencies for well-trained technical specialists to seek jobs as traders and bankers.
While efforts to create new job opportunities have apparently been modestly successful in the nuclear cities during the past two years, we were warned of likely large-scale unemployment during the next several years as Minatom begins implementing its plans for downsizing the weapons complex. Unemployment is in many ways the overriding challenge that should encourage greater attention to the creation and expansion of small innovative firms. At the same time, we learned that the Minatom
conversion program, which has funding of about $80 million annually, was having difficulty attracting good proposals from within the Minatom complex. Of special concern is the lack of attention to the development of long-term customer bases in parallel with the development of new or improved commercial technologies.
The overall status of the economy is obviously important in determining the likely success of small firms. In recent months the economic indicators for Russia show that the situation has stabilized and is indeed improving. Clearly, increased world prices for oil have been a major factor in this gradual turnaround. As to the future, there is no reason to believe now that the situation will soon deteriorate.
There was a consensus that technoparks can provide important pathways for marketing the products of research activities. While the position of each firm is rather unique, two general principles concerning technoparks emerged. First, technoparks should have the capacity to expand as new firms are born and old firms find new customers. Second, technoparks should only accept firms that have a reasonable chance for market success. While technoparks can provide secure space, communications infrastructure, and sometimes advisory services, they cannot change the basic technical capabilities and customer orientation of a firm.
Tensions that exist within Russia concerning privatization of technological activities that have roots in government facilities were apparent during the discussions. Many officials and managers within the Minatom complex seem to believe that technologies developed within a Minatom facility should be commercialized by the facility and not handed off to a private firm that has its own profit motivations. Others argue that only through privatization efforts will technologies be brought to the marketplace at an affordable cost without the benefit of government subsidies. Two approaches were cited in attempting to reduce this tension. In Sarov, the All-Russian Scientific-Research Institute of Experimental Physics (VNIIEF) has established a daughter company that serves as a holding company for several granddaughter companies, with VNIIEF retaining from 10 to 80 percent ownership interest in the latter firms. In Obninsk, the Institute for Physics and Power Engineering (IPPE) has spun off technologies to private firms with negotiated agreements concerning compensation to IPPE for its technological contributions. An assessment of the successes of these approaches would seem appropriate.
Another area of major concern was the almost exclusive focus of both the Russian research institutes and the Department of Energy programs on “technology push,” whereby technologies are developed and then customers are sought. No examples were cited of the research institutes responding to “market pull,” or indeed of even consulting with potential customers prior to developing technologies intended for the commercial marketplace. However, the three small innovative firms the Western
participants visited in Obninsk in connection with the workshop seemed well linked to potential customers, even though they had initiated their activities through a technology push orientation.
There is one final concern related to efforts to attract foreign partners in the nuclear cities. Zarechny scientists have had considerable success in this regard, widely marketing inert gases and related analytical technologies. As to foreign investment, only Obninsk has managed to attract Western partners that have made significant investments in Russia. While Russian institutes and firms in all of the cities have received grants and contracts from Western organizations, the economic impact of these arrangements beyond providing income for a limited number of participants is small. Only when investment leads to production in Russia, as is the case in Obninsk and Zarechny, will there be significant economic impact. Also of concern is the relatively short duration of grants and contracts from abroad, which does not augur well for sustainability.
The small business sector is still in its early stage in Russia. Nevertheless, there are a sufficient number of commercially viable innovative activities with production in Russia to indicate that this sector should play an ever-increasing role in accelerating economic growth on both a local and national basis.