Dear Reader

Business Development is a complex topic. In such case the questions raised are more important than potential answers. Therefore, this blog will focus on presenting questions. There will be answers, full or partial, to be supplamented by links presented when relevant. The answers from my experience will be clearer once the questions are clearer.

While this is not a discussion forum, readers are invited to comment, and the comments will help determine the topics and current issues to be explained in the future.


Thursday, January 27, 2011

National Innovation infrastructure

Last week I spent some time at the University of Algarve in Faro (Portugal). It was a Conference on Sustainable Innovation, and the presentations were most interesting. It was my first visit to Portugal in over five years, and I was most interested in two aspects – the current economic situation; and the Innovation atmosphere in the country.
One of the presentation dealt with the spin-off activity of the university research results. It was most interesting to compare the roles of the Technology Transfer unit in Portugal with that of a Technology Transfer Company in Israel. The unit in Portugal has to run a competition in order to stimulate ideas and to find ideas or technologies to be commercialized. It than trains the entrepreneurs and helps them raise the funds, hosts them (for a fee) and when ready lunches them into the world. The unit does not hold equity in the firms. Of course such close mentoring means that the number of firms that can be taken care off is limited.
The Israeli TTC gets the ideas reported by the scientists in the university, it has to filter them, if ready for spinning, than it recruits a team leader, let him raise the funds or helps the team get into a technology incubator. The TTC will hold equity, an if possible also license the technology to the firm it span-off. Theoretically the TTC can Spin-off as many firms as there are ideas.
Why do the two entities follow different models? The obvious answer has two parts: on the one hand the natural tendency to seek commercialization of research results or of ideas is probably higher in Israel; on the other hand the infrastructure is more diversified, the technology incubators, the VC sector and other assisting tools are more prevalent in Israel allowing the TTC to focus on its main function.
The natural tendency is misleading, it is only partly natural. A major part of it lies in the local culture and education. Encouraging individualism, free thinking and non conservative solutions has been dominant in Israeli culture. Admiring the ability to improvise rather than plan, to give all you have to reach a goal is a basic characteristic of the culture. Portugal has stressed conformism and order, accuracy and planning.
If one goes back in time to the late 1980's, Israel was not much different. Small number of entrepreneurs, little supportive infrastructure etc., that means that the transformation of the Portuguese current situation to one more resembling Israel's can be achieved. How?
I would suggest the following:
It is important to recall that creating an infrastructure requires enough potential projects in the pipeline otherwise a sense of misfit is felt, which could lead to negative results. If you create a 100 venture capital funds that will not have enough projects, the failure to return the investment would assure that it would take a long time for the venture capital market to recover. Therefore there is no need to copy entire systems but rather let them evolve. First create the demand, educate for innovation, encourage project creation, than invite the assistive "tools" or build them according to demand.
What type of education? How can it be done?
For that in the next post…….

Friday, January 7, 2011

Wikipedia and the moral issue

At the beginning of 2011 Wikipedia published (thank you letter) the results of its annual public fundraising (16 million US$). Unlike other internet service rendering - entities raising funds from public or private organizations via equity issue, Wikipedia raised funds from DONATIONS from the public. The only return the public received was the continued function of Wikipedia without commercials, or other forms of commercialization.
This may not seem innovative. Many non for profit organizations, operating for public benefit raise funds from donations (e.g. Rotary Bat-Hefer) at Gala events, active fund raising from donations, second hand sales raffles or even a direct approach for donations (anti cancer and similar).
However, a closer examination will revel some differences. The other organizations mentioned above and their donations are normally raised on a local or maximum national level per event, by active if not personal and evident physical approach. Furthermore they are targeted towards a specific local target community with specific interest. Wikipedia approached the entire world, raised its funds entirely on the web without physical approach, and allowed the whole world to join in. This is global fund raising on the net.
While so far we compared Wikipedia to non-for profit local organizations, another approach would be to compare it to other web-based service providers. As such Wikipedia could collect some payment for its services. True, as it also feeds on the input of its users the business model would need to take it into account. Potentially giving credit for writing as well as charging for getting information from it, even creating a scaled model based on the uploaded content extent and quality. Another possibility would have been to get funding by allowing commercials on its pages. This option would have allowed Wikipedia to generate real income that is not based on the good will of the public, rather it is based on the usage of the service. This would have made the founders of Wikipedia rich – see what is happening to successful social networks owners.
Social networks also use content provided by the users, the connections made by the users' sub-groups and classifications. The networks provide a public service, but unlike Wikipedia it comes with a price tag – the commercials, and other commercialization sections (e.g. paid games). This commercial activity gave the networks their market value and allowed its owners/operators to get rich.
Do we see an ethical dilemma between the two models of operation? It would seem that there should not be any problem by giving a free service to the public, and fund the infrastructure and operation by commercials (this has been going on in commercial TV for years). Do we consider a non-for –profit organization raising funds by donations from the public as more ethical than an organization not charging for the service but getting funded by commercials?
Is our response based on the vast economic value of the social networks? The power they exert over our live? Do we fear that just by being business oriented and representing vast capital and power that they may be open to abuse?
Are non-for-profit public donation fund raising organizations more moral? Can we be more trusting regarding their intentions?
We live in a capitalist world, driven by economic considerations, feeling confident that the "market forces" can assure proper service, long term quality. Do we not feel that there is a contradiction between that trust and questioning the morality of profit oriented bodies while feeling confident regarding the morals of non-for-profit organizations?
As mentioned in the opening to this blog the purpose here is to raise questions – answering them is another matter entirely.