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New Standard for Designing Innovation Development Programmes Promotes Innovation in State-Owned Companies

On July 2, the Higher School of Economics hosted a public discussion of the new methodological guidelines for designing innovation development programmes (IDPs) of state-owned companies. These were prepared by the Russian Ministry of Economic Development together with the Open Government with the participation of HSE, and approved in April, 2015 by the Presidential Council for Economic Modernisation and Innovatiion Development’s Presidium. The updated methodology increases importance of corporate innovations and — through introduction of KPIs — strengthens top managers’ motivation.

The discussion was held under the aegis of the Russian Ministry of Economic Development and the Innovation and R&D Directors Club, and hosted by the Centre for Cooperation with Public Authorities, Development Institutes and Companies at the Institute for Statistical Studies and Economics of Knowledge (HSE ISSEK). Heads of relevant federal ministries’ departments, development institutes and divisions responsible for S&T and innovation development of major Russian companies such as Gazprom, Rostec, Rusatom, Zarubezhneft, Rostelecom, Rushydro, RZhD, ORKK, Aeroflot, Alrosa, RENOVA, etc. gathered at the round table.

   Presentations by the participants (in Russian):

   Artem Shadrin
   Mikhail Goland
   Evgeny Kuznetsov
   Alexander Kashirin
   Semen Musher
   Andrei Polozov-Yablonskiy

Video of the round table discussion, 3 hours 15 minutes (in Russian)

Do innovation development programmes really serve as a strategic planning and management tool for companies? That was the question the discussion moderator Leonid Gokhberg, first vice-rector and director of HSE ISSEK, opened the debates with. Summarised results of the analysis of innovation development programmes’ implementation since 2011, and the best practices of managing innovation activities at Russian state-owned companies will be presented in the joint analytical report by the Russian Ministry of Economic Development, Russian Venture Company (RVC) and the Higher School of Economics, to be published in a few months’ time.

Artem Shadrin, director of the Innovation Development Department at the Russian Ministry of Economic Development, commented on the main changes in the legislation regulating design and implementation of innovation development programmes. The new approach aims to strengthen the meaningful aspects of these programmes, companies’ role in the innovation ecosystem and in the whole economy. Many of state-owned companies used to treat IDPs rather formally. In particular, they included in these programmes overall economic development indicators actually unrelated to innovations, Artem Shadrin complained.

The new methodology obliges companies to take into account key national strategic documents when designing IDPs (in particular Russian Long-Term S&T Foresight 2030, the Russian Innovation Development Strategy 2020 (currently being updated), roadmaps for new industries approved by the Russian government in 2013, and the documents prepared in the framework of the National Technology Initiative (NTI)), and inbuilt their provisions into corporate management systems in coordination with long-term development programmes. The accent on project management is getting stronger, with investment priorities shifting towards Russian technologies and innovation products (through public procurement policy, offset deals, joint R&D projects with universities and research organisations, involving small and medium companies, etc.)

The new guidelines on IDP development are largely based on the research by the Higher School of Economics and development institutes, which identified bottlenecks in implementation of these programmes. According to Mikhail Goland, director of HSE ISSEK Centre for Cooperation with Public Authorities, Development Institutes and Companies, HSE survey of heads of companies’ innovation departments revealed that they see excessive demands for reports and information by public authorities as a major problem. The expert’s suggestion to adopt a new model for interaction between government agencies and state-owned companies’ innovation departments, with working groups established at the relevant ministries and other agencies concentrating on solving companies’ most acute problems hindering their efficient innovation-based development, was warmly welcomed by the audience.

The new methodology doesn’t impose strict requirements on companies, and is not going to worsen their situation, Artem Shadrin repeatedly stressed: “We always leave companies an opportunity, taking into account their particular field, to present good reasons why a specific aspect of the guidelines hasn’t been implemented”. However, he advised to strictly follow calendar-specific requirements. In particular, Artem Shadrin recommended that companies should complete their technological audits until November 15, 2015, without waiting for the guidance’s final approval (note that the deadline for their revising was postponed until April 1, 2016). As to approval of innovation KPIs for state-owned companies, the deadlines remain unchanged. 

Evgeny Kuznetsov, deputy general director and director of the RVC’s projects office, presented the results of the audit of IDP implementation at six state-owned companies conducted by development institutes, which revealed a systemic mismatch between the innovation contour and the companies’ mainline strategic development plans. Mr Kuznetsov said the “abyss” between Russian R&D products and companies’ demand for them was a major problem. State-owned corporations are not ready to adopt the “open innovations” model; they prefer the “in-house” one, or purchasing ready-made systemic integrated solutions developed elsewhere, usually in the West. The RVC’s set of recommendations to state-owned companies aimed at overcoming this “abyss”, among other things, included establishing corporate venture funds and own system integrators, and increasing efficiency of existing innovation promotion tools (such as clusters, technology platforms, accelerators, engineering centres). However, when such existing tools are applied, objectives are not always coordinated and integrated, and mutually relevant development priorities are not always set, noted Evgeny Kuznetsov. Speaking about the new tools for encouraging innovation activities, Igor Agamirzyan, general director and chairman of the board of the RVC, noted “drawing-out” projects and the National Technology Initiative. RVC managers (the company was appointed the NTI projects office) invited state-owned companies to actively participate in developing roadmaps in the NTI framework, as opposed to simply taking them into account in their innovation development programmes.

Another tool — the recently established Industry Development Fund  was presented by Semen Musher, its deputy director. As a “single window providing support to industrial companies”, the fund offers soft loans and consulting and information support, including on IDP implementation.

Andrey Zyuzin, managing director of the VEB Innovations Fund and chairman of the board of the Innovation and R&D Directors Club, raised the issue of supporting high-risk projects which frequently attract attention of overseeing government agencies. Grigory Senchenya, assistant to the Russian minister of agriculture, also noted that state-owned companies are afraid to include “unreliable” projects in their innovation development programmes.

Wouldn’t it be better, Leonid Gokhberg suggested, if IDPs were presented to public authorities not by heads of companies’ innovation departments but by deputy general directors? Possibly it could encourage top managers to get a more thorough understanding of innovation-related matters, and more accurately asses their importance. 

Alexander Kashirin, deputy chairman of the Rostec State Corporation’s S&T Council, proposed a relevant idea. He suggested holding a strategic session for heads of state-owned companies, to present to them the new approaches and trends in the innovation management sphere.

Companies’ representatives actively participated in the discussion of the new methodology for designing IDPs, sharing their experience of and problems with development and implementation of such programmes. They noted the need to protect “innovation budgets” (which are frequently among the first to be cut down), and that expert evaluation of innovation projects and IDPs shouldn’t be a burden for companies, but a mechanism for obtaining constructive feedback on their long-term strategic development. Mikhail Akim, strategic development director of ABB Russia, raised an important issue: What key competencies must companies’ innovation experts, as well as external experts commissioned by public authorities to assess the programmes, have? He noted that different staff members were usually responsible for markets and for technologies in state-owned companies.

During and after the round table discussion many of the participants shared their impressions in social media. There is a good summary is Facebook post by Andrei Ovchinnikov, area head of Rostelecom’s Innovation Management Department: “It was a direct and, in our opinion, efficient discussion! Colleagues, we should discuss innovation development issues in this manner more frequently!”

By Elena Gutaruk and Mikhail Gershman

Photo by Daria Klimasheva