Dr. Dmitry Orlov, member of the RIA Novosti Expert Council, explains that Russia must become more than just an exporter of raw materials - it must become an energy superpower that is able to transform oil and gas resources into innovation. Below, he outlines a vision for building an innovation economy in Russia:

“Some experts describe the Russian economy as “an extended raw materials model”, while others claim Russia is “an energy superpower.” In my opinion, both definitions are true, but one describes the current economic structure, in which energy revenues are mostly accumulated and used, and only partly invested in long-term development. The other is an aspiration… An energy superpower differs from a raw materials supplier in that it turns oil and gas into innovation.

Russian President Vladimir Putin enthusiastically speaks about an innovation economy. In particular, he spoke about it in his spring 2006 state of the nation address. The issue is addressed even more frequently by the economic authorities, notably Economic Development and Trade Minister German Gref and IT and Communications Minister Leonid Reiman.

The priority national projects, which Putin initiated a year ago and entrusted to First Deputy Prime Minister Dmitry Medvedev, should pave the way to an innovation breakthrough. However, they are so far limited to roughly balanced state programs aimed at increasing allocations to social projects. The time has come to turn national projects into the main tool of the state’s industrial and infrastructure policy, or at least to add several innovation aspects to them.”

With that in mind, Orlov outlines various projects that could jump-start the innovation economy — such as establishing new business incubation and innovation zones, working to solve the “digital divide” in rural Russia, and helping the economy to become more energy-efficient. The goal is nothing less than an innovation revolution:

“When everyone has access to these communications and business zones, it will mean that we have achieved what Alvin Toffler described as a fast-paced economy, where any strategy must be agile and flexible. Mobility will become a fact of life, though young people will no longer want to move from rural areas to big cities. Just like the spread of electricity and roads in the 20th century, technology parks and the Internet can change the Russian landscape in the 21st century.”

[image: “You - have you signed up as a volunteer for the Revolution?”]

Booz Allen Hamilton examined R&D spending patterns at 1,000 global companies and found that less than 10% of them were deriving full value from money spent. Which leads, of course, to the inevitable question: Why do some high-tech companies get great bang for their R&D dollars while others seem to get very little?. Being a “big spender” may work on Broadway, but it is not necessarily the best way to go about innovation at America’s biggest and best companies. David Gardner of Information Week explains:

“Led by chief investigator Barry Jaruzelski, a Booz Allen VP, the team sought to find the key, if any, to the attributes that lead to innovation at companies. “We tortured the data,” says Jaruzelski, observing that 10,000 separate analyses were performed. “People think there are predictable black boxes out there. They think if you put money in, innovation comes out. If only it worked that way,” he says. While high-tech firms with winning innovation strategies approach R&D with different tactical methods, they employ a major standard that seems to work for all: a deep understanding of customer needs, says Jaruzelski. They also used an end-to-end multifunction process in developing products, he says.”

Using this methodology, Booz Allen found that Apple, eBay, Google, Research in Motion (makers of the Blackberry) and Yahoo! were among some of the “high leverage innovators.” Somewhat disturbingly, Ford Motor Company was the #1 spender on R&D in 2005 - and we all know how well that has gone…

[video clip: “Hey Big Spender”]