Table Of ContentInnovations: from idea to implementation
1
AL-FARABI KAZAKH NATIONAL UNIVERSITY
Galym Mutanov
INNOVATIONS:
FROM IDEA TO
IMPLEMENTATION
Almaty
«Kazakh University»
2012
Galym Mutanov
2
UDK 004:001.895
M 88
Recommended for publishing by the Scienti(cid:2) c Council of the
Business & Economics School
and the Editorial-Publishing Board at Al-Farabi
Kazakh National University
Reviewers:
Academician of the National Academy of Sciences,
doctor of technical sciences, professor, head of the board of the
Scienti(cid:2) c-Technical Holding «Parasat» N.S. Bekturganov
Doctor of economics, professor, director of
«Innovation Economy» M.Z. Kazhyken
G.M. Mutanov.
Innovations: from idea to implementation. – Almaty: Kazakh
M 88
University, 2012. – (cid:3). 212.
ISBN 978-601-247-641-5
The book is devoted to the problems of creation and development of inno-
vations in the present-day economy. Based on the generalization of extensive
theoretical material and best foreign experience the author presents an integrated
vision of the innovation process in the context of its life cycles: from idea genera-
tion to its commercial implementation as a new product or service.
The book is intended for specialists, scientists and experts in economics, in-
novations and technologies as well as for post-graduates and master course stu-
dents interested in the problems of innovation development.
UDK 004:001.895
ISBN 978-601-247-641-5 © Mutanov G.M., 2012
© KazNU named al-Farabi, 2012
Innovations: from idea to implementation
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Content
INTRODUCTION .......................................................................................5
CHAPTER 1
SPECIFIC FEATURES of INNOVATION
GENERATION and DEVELOPMENT
1.1 Innovations: de(cid:2) nitions and types ....................................................9
1.2 The role of innovations in economic development .................................19
1.3 National Innovation System ....................................................................24
CHAPTER 2
INNOVATION LIFE CYCLE
2.1 Mechanisms of innovation development ..........................................36
2.2 Idea generation ........................................................................................42
2.3 Fundamental research and R & D ...........................................................51
2.3.1 Fundamental research ....................................................................52
2.3.2 Applied research .............................................................................57
2.3.3 Research & Development ..............................................................59
2.3.4 Pilot production ..............................................................................62
2.3.5 Commercial development and commercialization ........................63
2.4 New approaches to the development of innovative products .................70
CHAPTER 3
BASIC ELEMENTS OF INNOVATION INFRASTRUCTURE
3.1 University ...............................................................................................77
3.2 Business incubator ................................................................................91
3.3 Technology parks ..................................................................................99
3.4 Center for technology transfer ............................................................101
3.5 Center for technology commercialization .........................................103
3.6 Venture funds and business angels ....................................................106
3.7 High technology zones .........................................................................111
Galym Mutanov
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C H A P T E R 4
National Innovation Systems: International Experience
4.1 The European Union ................................................................................122
4.2 Germany ...................................................................................................129
4.3 France .......................................................................................................132
4.4 Great Britain .............................................................................................140
4.5 Finland ....................................................................................................146
4.6 USA ..........................................................................................................151
4.7 China ......................................................................................................162
4.8 South Korea ...........................................................................................167
4.9 Japan .......................................................................................................174
CHAPTER 5
CHALLENGES AND HORIZONS FOR
INNOVATION DEVELOPMENT IN THE
REPUBLIC OF KAZAKHSTAN
5.1 Present-day status of innovation development in Kazakhstan ...............187
5.2 Prospects of innovation development in Kazakhstan ..............................202
CONCLUSION ........................................................................................210
Innovations: from idea to implementation
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In the (cid:4)(cid:4)(cid:5) century the word «innovation» has
become synonymous with «progress»; this means
that success will belong to those that are most
responsive to change.
Nursultan Nazarbayev
INTRODUCTION
Innovation is not only a passport to economic growth and
security for any country in today’s world, it is also the basis
for the development of a knowledge economy, which can
bring multibillion revenues. Modern countries must demonstrate
their economic and political viability, which is why today they are
restructuring their national economies with a view to harness their
intellectual potential and transform it into innovation. Commer-
cialization of innovation has become a kind of new religion for
many countries, corporations and individuals. This process is mul-
tifaceted and resource-intensive, since it is linked to a set of rather
complex phenomena, such as the ingenuity of a people, its research
pro(cid:2) ciency and its capacity for transforming research into commer-
cial product.
Although today many researchers are looking at the problem of
generation of ideas and their transformation into innovations, with
numerous publications devoted to the subject, only a few leading
countries have succeeded in building a knowledge economy.
Galym Mutanov
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To form a holistic view of the development of innovation pro-
cesses and advance recommendations for their ef(cid:2) cient application
in our country, this book seeks to systematize available scienti(cid:2) c
data on innovation processes and examine instances of successful
experience.
Today we know that innovation development has its own proper
lifecycle, composed of certain stages. Leading countries have not
only learned to adapt to the rigid conditions of global competition,
they have also evolved a uni(cid:2) ed national innovation system that
contributes to the continual innovative renewal of their economy.
The (cid:2) rst chapter of this book deals with the concept of innovation
– its de(cid:2) nitions and interpretations in a variety of sources. This
many-faceted phenomenon is variously de(cid:2) ned by researches as a
process, an investment into original ideas [???], or a result in the
form of a new product, service or technology. It would be useful,
therefore, to advance a clearer interpretation of the term innovation
and to systematize the categories used in this area of knowledge.
The second chapter uses a theoretical and methodological ap-
proach to examine the complete lifecycle of an innovation process
– from original idea to (cid:2) nal product – in order to identify qualita-
tive economic changes brought about by innovation. .
The example of the most developed countries demonstrates that
the level of innovation activity is correlated directly to the state
of national innovation infrastructure, which includes universities,
business incubators, technological parks, high-tech zones, and ven-
ture funds. Thus, the third chapter examines the role played by
these institutions in innovation development.
The fourth chapter describes the experience accumulated in
building national innovation systems in such countries as Ger-
many, France, UK, Finland, USA, China, South Korea and Japan.
An analysis of the progress made by these countries offers fruitful
ideas for building a national innovation model for Kazakhstan.
Innovation-related activity has always been and will remain one
Innovations: from idea to implementation
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of the major paths toward the diversi(cid:2) cation of Kazakhstan’s econ-
omy, because it will transform a nation that relies on a raw material
economy into one engaged in high-tech resource conservation and
knowledge-intensive production. In his annual Address to the Na-
tion, the President of the Republic of Kazakhstan N.A. Nazarbayev
has repeatedly emphasized the importance of industrial innovation
projects for the development of new sectors of the economy, which
translates into major social bene(cid:2) ts and jobs creation. The head of
the state has tasked the Government with streamlining the innova-
tion process by way of an increased involvement of business and
commercial ventures in national research and development proj-
ects, as outlined in the Business-and-Science-2020 roadmap.
Ongoing implementation of the Industrial Innovation Strategy
has already pioneered several innovation clusters in the Republic
of Kazakhstan. Innovation infrastructure is developing in the re-
gions, and many businesses have strengthened their innovation-
related activity. Despite the positive results of a number of initia-
tives, and numerous available studies and materials on innovation
development, no qualitative innovation breakthrough has yet been
observed in Kazakhstan. This is due to a number of organiza-
tional, legislative and economic reasons: e.g. a weak link between
research activities and producer market needs, the absence of the
commercialization phase to help transform applied research into
manufacturing application, weak incentives for innovators, lack
of venture (cid:2) nancing, etc.
The head of state, Mr. N.A. Nazarbayev, has repeatedly em-
phasized the importance of human resources to the development of
innovation projects. To this end, «(cid:2) rst of all, we will need to train
innovators – those who are passionately interested in innovation
and are capable of creative thinking. We must pool them, look for
them high and low. Personnel training, advanced vocational train-
ing and nurturing their creativity will be our main tasks, apart from
innovation per se.»
Galym Mutanov
8
It is important for today’s Kazakhstan to proceed from ‘good
intentions’ to real work. Foreign analysis reports used in this book
are especially valuable, because they explain why Kazakhstan has
fallen behind in innovation development and offer recommenda-
tions for remedial actions.
This book can be of interest to specialists, experts and other
readers involved with the problems of innovation. In addition,
it can be used as a learning tool by students and young scientists
studying the basics of innovation management.
Innovations: from idea to implementation
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CHAPTER 1
SPECIFIC FEATURES of INNOVATION
GENERATION and DEVELOPMENT
1.1 Innovations: de(cid:2) nitions and types
A speci(cid:2) c feature of the modern world economy is the innovation
vector of its development. Understanding the very important role of in-
novations in the social and economic development of society, more and
more countries are developing and implementing innovation-oriented
economic policies. Under conditions of rapidly changing market de-
mands at the microeconomic level, enterprises and organizations are try-
ing to increase competitiveness and ef(cid:2) ciency through better innovation
performance. This is why the scienti(cid:2) c community shows great interest
in the phenomenon of «innovation» and other related phenomena. In spite
of the fact that the subject of «innovations» has been thoroughly studied,
scholars have not come to an agreement about a de(cid:2) nition of the term «in-
novation». For many years, scientists and engineers have been discussing
the essence of the term «innovation». The absence of a uni(cid:2) ed scienti(cid:2) c-
methodological approach hampers development of ef(cid:2) cient innovation
policy. The term innovation (cid:2) rst appeared in the XIX century and was
applied to changes in culture. This meaning of the term
is still used in ethnography. In V. Dahl’s dictionary, the word «in-
novation» also has a cultural meaning: «introduction of novelties, new
customs and traditions» [1].
Galym Mutanov
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At the beginning of the XX century, the term «innovation» came to be
used in the science of economics. In 1909, Werner Zombart, in his article
«A Capitalist Entrepreneur», justi(cid:2) ed the notion of «the entrepreneur» as
an innovator. Describing the careers of some of the pioneers of early capi-
talism, in particular, Siemens, Werner Zombart concluded that «the main
function of an entrepreneur is to bring to the market technical innovations
in order to get pro(cid:2) t, and it urges him not to enjoy getting something new
but to distribute it as far as he can» [2].
However, as an economic category, the notion of «innovation» was
(cid:2) rst used by an Austrian social scientist J. Schumpeter, the author of «The
Theory of Economic Development», published in 1934 [3]. As innova-
tions he meant the «realization of new combinations», namely:
(cid:2)(cid:3) Application of new techniques, technological processes or trade
methods.
(cid:2)(cid:3) Creation of new products.
(cid:2)(cid:3) Use of new raw materials.
(cid:2)(cid:3) Use of new methods of organization and support of production.
(cid:2)(cid:3) Creation of new markets.
J. Schumpeter also suggested a more general concept of innovative en-
trepreneurship. He paid attention to the fact that the entrepreneur invents
new combinations of production factors, which are the sources of the en-
trepreneur’s pro(cid:2) t. In the late 1930s, he introduced the classi(cid:2) cation of in-
novations: basic innovations and consequences of innovations, which was
an important step in the development of innovation theory [4].
Since then, many de(cid:2) nitions of the notion «innovation» have been
given. On the whole, two main approaches to the notion of «innovation»
can be identi(cid:2) ed:
1) Process (reproductive) approach. Innovations are considered as a
process of the realization of an idea and its transformation into a (cid:2) nished
product (foreign researchers B. Twiss, D. Tiss, T. Iord, V.N. Lapin, S.Yu.
Glazyev, V.G. Medynsky) or as separate stages of the process – implemen-
tation, commercialization, and application (B. Santo, J. Schumpeter, K. Fri-
man, H. Hartmann, S.V. Valdaytsev). In terms of this approach, innovation
is de(cid:2) ned as «change» (F. Valenta), or as a set of steps (F. Nikson).
