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Model of the EntrepreneurshipModel of the EntrepreneurshipMotivation and InnovationMotivation and Innovation

Culture programmeCulture programme

22 March 2007

Valdis Avoti, Agnese Grievia, LIAA

Rene Tnnisson & Wolfgang Drechsler, Tartu


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New products and technologies

Risk capital scheme

Shared laboratories

Training, consultancies

2004-2006

Strand III support

Businessincubators

Pre-Seed

TTOs & LiOs

Competency Centres

Risk Capital

Qualified personnel

New product scheme

Innovation-System Created

Monitoring System

PPP Concept

Foresight

Operational Programme 2007-2013

Inno-Culture

Skills Centre

Techo-consultancies

TI VCF scheme

Need analysis

Riga NIP

Business Angel

networks

EU networks


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CultureUsually culture is understood as a diversity of values,norms and traditions which are reflected as common value

of tools and environment of creative process. Culturealways has been supposed as a result of peoples activity.It is fulfilling the role of societys social memory andprovides connection of centuries and continuity ofgenerations values.

In the economic aspect the term of culture is used quiterecently. First of all, as common understanding of industrialrelationships inside of collective economic subject(company). Its possible to describe the stable employees

relationships with the culture of business administration inthe company with the goal to elaborate and define thedecisions about effective use of limited resources in theproduction.


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Innovation Culture

An entrepreneurship and innovation culturemeans an environment where people canexplore and express their creative, innovativeand business acumen. It is an environment

whereby entrepreneurs and innovators arethe norm in society rather than an exception.

The management of Innovation culture is defined

by the elaboration of the Innovation strategy in thecompany together with access to all the necessary

analytical information.


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Innovation culture in the company Components which describes the innovation competence of

managers and are related to their professional knowledge and

experience during the innovation processes in the company; Motivation for value, which describes the motivating power of

innovatin culture common sense of demand factors, values,motives and stereotypes, which encourages the manager toimplement the particular model of behavoiur during the innovation inthe company. This level reflects the managers personal motivation.

Behaviour, which includes all practical managerial activities in allinnovation elaboration and implementation phases.

Its possible to divide the particular terms entrepreneur and intrapreneur. The

entrepreneur is a person who establishes and run the new private business

company, while the intrepreneur is a person who starts new activities in thecompany owned by others.


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1. INNOVATION AND1. INNOVATION ANDEXISTING CULTUREEXISTING CULTURE

(especially regional /(especially regional /

local) as it existslocal) as it exists

2. CULTURE FOR2. CULTURE FOR

INNOVATIONINNOVATION

in the sense of anin the sense of an

innovation conduciveinnovation conduciveclimate within a certainclimate within a certain

location (innovationlocation (innovation

milieu)milieu)3.3.INNOVATIONINNOVATION

CULTURECULTURE

in the sense ofin the sense of

an innovation-an innovation-conduciveconducive

habit orhabit or

system or bestsystem or best

practise withinpractise within

InnovatInnovationion&&

CultureCulture


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Market defficiences

Lack of a visible, open enterprise culture;

Lack of National and individual self-confidence; Lack of coherent, cohesive national vision in relation to

entrepreneurship, innovation, and enterprise culture;

Poor understanding of enterprise in civil and public sectors;

Low Risk taking; Low levels of R & D;

Training for enterprise not developed;

Emigration of youth and educated workforce to other

economies; Low levels of partnership


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Only external barriers

0% 25% 50% 75% 100%

To attract external experts

Diversification of existing products

Purchase of products / licences / technologies

Collaboration with other enterprises

Increase of market share in other markets

To increase ability to react on market changes

Increase of market share and/or detection of new markets in EC

Increase of technological competence

To increase competence inside the enterprise

Increase of internal production capacity

Development of new products

Optimisation of operations to decrease costs

Increase national market share and/or detection of new markets

nationally Latvia

Sweden


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Assimmmetry of information (308 firms

intervied)

0 20 40 60 80 100 120 140

University of Latvia

Riga Technical University

Latvia University of

Agriculture

Riga Stradina University

Service is known

Service used

I will use again

RIS Latvia, 2003


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Share of innovative firms, %, 2002-2004

14,1

27,2

53,6

0

10

20

30

40

50

60

10-49 50-249 >250

17,5% innovative firms gave 42,3% of

total turnover in 2004

Only 4,7% product innovative

Only 3,5% high-tech in manufacturing


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Competitive companies

4,0

6,85,6

10,29,8

5,0

13,3

19,1

2002 2003 2004 2005

Applied research Experimental development

R&D performance in business sector shows positive pace

Intramural R&D in business sector by research type, EUR mill.

Source: Central Statistics Bureau, 2006.


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Two policies

Encouraging

phase

Birth phase Start phase After-start phase(upon 42 months)

Growth

management

phase

Entrepreneurship

policy

Promotion of new

innovative SMEs policy


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Division of business education in Education

system in Finland

Business values and attitude

Business related knowledge

Business and management knowledge

Pre-

schoolsHigh schools Universities Vocational education Life-long

learning


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LujoLujo BrentanoBrentano1844-19311844-1931


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When I climbed out of the boat that had

brought us back to Naples, and gave to

one of the boys lying on the pavement mybriefcase to carry, he shook his head with

the words: I have already eaten!(Brentano)


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WHAT ARE INNOVATIONS AND HOW DO THEYWHAT ARE INNOVATIONS AND HOW DO THEY

WORK?WORK?

because at least for a time, thebecause at least for a time, the

novelty that marks the innovationnovelty that marks the innovation

makes it impossible formakes it impossible for

competitors to get into the actioncompetitors to get into the action

The ENTREPRENEURThe ENTREPRENEUR

in search of a SHORT-TERMin search of a SHORT-TERM

MONOPOLY, which only anMONOPOLY, which only aninnovation - except if there areinnovation - except if there are

laws to the contrary - provideslaws to the contrary - provides

AND WHAT PROPELS INNOVATION?AND WHAT PROPELS INNOVATION?

INNOVATIONS ARE NOTINNOVATIONS ARE NOT

INVENTIONSINVENTIONS

innovation is an economic terminnovation is an economic term

innovation is lucrativeinnovation is lucrative

Innovations are new products,Innovations are new products,

processes, or distribution orprocesses, or distribution orfinancing mechanisms that arefinancing mechanisms that aresuccesfullysuccesfully brought into thebrought into theeconomic processeconomic process (market)(market)


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But this is just half of the story...But this is just half of the story...

There are innovations that are only goodfor the entrepreneur, and there are

innovations that are also good for state,

society, and economy. And while

entrepreneurship is nice as such, theinterest for the state side and regions

lies in promoting it in precisely those

areas that have a snowball effect to

produce a general increase in

production and wealth.


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not so much, or not only, about creating

an innovation-friendly culture,

but to create a set of innovation

incentives which are in line

with the existing culture!

Therefore, the question or challenge

implied in asking about regional

innovation culture is


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Regional culture can ATTRACT innovation:Regional culture can ATTRACT innovation:

During economic globalization, which is markedDuring economic globalization, which is markedby a divorce of value-addition and physicalby a divorce of value-addition and physical

product, life remains real and must be lived.product, life remains real and must be lived.

Thus, to attract innovative business, as orThus, to attract innovative business, as or

more important than tax advantages etc. maymore important than tax advantages etc. may

be LIVINGbe LIVING ENVIRONMENT and quality of lifeENVIRONMENT and quality of life

for the innovators and their familiesfor the innovators and their families

which are partially cultural, partiallywhich are partially cultural, partially

infrastructural, partially natural (landscape andinfrastructural, partially natural (landscape and

climateclimate), but they ARE promotable and should be a), but they ARE promotable and should be a

focus of any regional innovation strategy.focus of any regional innovation strategy.


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Tartu Software

Micro Cluster

There are about 50 software companies whoare employing about 1000 softwareengineers in Tartu

Skype thought that it is a good place torecruit new people

But people did not want to move so it wasforced to set up an software developementoffice in Tartu, which became catalyst formost succesful Cluster Initiative in Estonia


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ThereforeTherefore iit is actually one of the bestt is actually one of the beststrategies for a region that wants tostrategies for a region that wants to

attract innovative enterprises andattract innovative enterprises and

entrepreneurs to create an environmententrepreneurs to create an environmentin which those people feel happy andin which those people feel happy and

actually want to live.actually want to live.


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The basic description

7 years programme 2007 - 2013

The budget needed is 7 MEUR;

National programme

Part contracted out (50-70%)

Potential applicants universities, local

governments, NGOs, TTOs involvingprivate intermediates


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The main objectives

To increase local interest and involvement in Educationand Research as a source for innovation;

To promote conductive climate for innovation in Latvia;

To increase investment in R&D and Innovation at both

regional and national levels; To use available resources to support and attract young

highly skilled professionals to strengthen Latviasinnovative capacity;

To create a new and dynamic culture to existingcompanies.


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Short term goals

To promote an enterprise culture though educational

programmes and competitions at each of the three levelsof education;

To develop a greater understanding of the importance ofenterprise creation among public and civil servants;

To assist the formation and sustained development ofhigh potential start up businesses;

To put infrastructure in place to support enterprisecreation.


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Regional innovation days

Innovation circus

PR campaign

Internet

Info News

Self Assessment tools,

handbook

Innovation Award:

-Best innovative firm

-Best innovative product

-Best article in mass media

~1.0 MEUR

(Regular monitoring)

Entrepreneurial education

schools

Students business trainings

Business plan competitions

Pre-seed pilot facility

Support to pre-incubators

Investment readiness for

researchers and engineers

Masterclass programme

Train trainers approach

~3.5 MEUR

(potential entrepreneurs surveys)

Creativity as a part of work

Learn technology approach

Best practices & championing

Empower employees to take

initiative

Promote investment in R&D

IPR legal platform

Promote training culture

Promote innovation bonus

systems in companies

Design pilot project

SAP promotion

~2.0 MEUR

(need analysis/ intrapreneurs

surveys)

Awareness

building

EntrepreneurshipExisting SME


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Outputs of the programmeNumber of

enterprise courses delivered, persons engaged in training and skills development

programmes(i.e. Investment readiness, Masterclass, Self-assessment tools & othershort studies)

promotional activities undertaken such as articles in newspapers, magazines,Interviews in TV, radio, presentations in relevant seminars, conferences, workshops

enterprise competitions organised (Competition on Innovation prize)

innovation awards organised, marketing plans of future entrepreneurs designed,business plans created, enterprises supported/created (Competition of Youthinnovative business ideas)

student firms created (Innovation and Marketing training for students)

enterprise awareness programmes for public and civil servants organised (Bestpractices)

Lean technology approach promoted (value concepts, productivity, efficiency, sales,new products introduced etc.)

MIDDLE term target: 200; FINAL target: 500 events

MIDDLE term target: 1000; FINAL target: 3000 enterprises approached


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Beneficiaries

Private sector: manufacturing companies and

the ones providing services

Public sector: governmental institutions, localauthorities, NGOs

Support infrastructure: business incubators,technology incubators, technology transfercontact points, universities etc.

Society: potential entrepreneurs


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Benefits from the programme

More innovative and high growth start-up businesses in knowledge andtechnological based industries

More innovation and creativity in existing industries

More intrapreneurs

More focus on Global market opportunities

More productive and competitive enterprises

More high value job opportunities for graduates

More spin-out enterprises from research projects

Closer linkages between

industry and Universities.


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Selection criteria

Need for financial support;

Value for money;

Ability to reach programme and measureobjectives;

Spillovers generated jump of high effectiveness; Cost effectiveness;

Potential to reposition of attitudes

Impact on Regional Development Skills and experience


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Pre-seed Facility

Programme Model

E l St Fi A il bilit i L t i


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Early Stage Finance Availability in LatviaThe early stage equity market for knowledge based start

ups in Latvia suffers from:

lack of investor ready projects

the dimension of the market, not big enough to allow proper

risk pooling

the perception of the risk/profit ratio by the operators, due to

the lack of specialization (and consequent asymmetry of

information) and to the dimension of the market

the difficulties of way out

Existing equity gap (valley of death)

between idea and investor ready business plan

Role of State in Early Stage


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Role of State in Early Stage

Public sector funding

Private sector funding

Commercial financingPre-commercial financing

Basic R&D Applied R&D Pre-seed Seed Start-upExpansion

Existing equity gap between ideaand investor ready business plan

Private investors not interested

State needs to interfere


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Role of Pre-seed Facility

Applied

and basic

R&D

Idea with

comm.

value

Entrepreneu

rship

education,

training

Idea

stimulation /

business idea

formulation Market

analysis

Product

Protection

Development

Value

Competition

cooperation

Business

plan

Dev. plans

Market plan

Organisation

plan

Financial plan

Prospect

Licensing

IPR

Commercial

protectionMarketing

Royalty

agreement

License to

existing

company

Forming new

start-up

Funding

Equity

registration

Incubator

company

Operational

company

Real estate

Incubator

Premises

Industrial networks

Basic daily services

Professional services

Asset management

Early stage

Seed capitalRisk capital

Competent

management

Technology Transfer System

Innovation Culture and

Entrepreneurship Motivation

Education

Outflow of

Master, PhD

Fiscal

incentive

environment

Business culture

Social attitudes

Understanding of

failures

Greenhouses

Business labs

Pre-analysis

IPS fund Seed fund

Business and Technology Incubators

Pre Seed fund


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Pre-seed Facility Model

Operated by private service management

company 6 year programme

Initially 3 year pilot phase

4 month x 300 EUR 1200 EUR On average 3000 EUROn average 1500 EUR

Fellowship andmentoring:

For researchers and

research groups For engineers in

companies

Expert consultation: Consultations with

selectedspecialists/experts

Voucher to participate: For participation in

training courses andseminars

Promotion and awareness building of the programme


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Innovation Culture is thus not about

having more technological innovations

b t it i b t th i ht ttit d d


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... but it is about the right attitude and

understanding how to make best out of

innovations in your specific situation


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Prses iela 2, Riga, LV 1442, Latvia

Phone: +371 7039410 Fax: +371 7039401

E-mail: [email protected]

htt // li l

Thank You for attention!

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