Russia’s state-sponsored R&D led to path-breaking scientific discovery and technology innovations. However, Russia failed to develop an innovation economy out of such advancements. On the other hand, Japan succeeded in creating high performing industrial economy out of the ideas of others. Hence, the failure of Russia in the innovation economy offers a valuable lesson for many aspiring developing countries.
Like 100 years ago, Russia still to date depends on natural resources to fuel its economic engine. Instead of ideas, Russia relies on trading oil, gas, and minerals to generate export revenue to fuel the domestic economy. However, unlike other natural resource-centric countries, Russia made scientific discoveries, invented key technologies, and innovated many early industrial products. Hence, the failure of Russia in the innovation economy is intriguing indeed. Why did Russia fail in the innovation economy could be a good lesson for countries for pursuing innovation through state intervention.
Failure of Russia in the innovation economy in retrospect
Starting from launching the first satellite to winning two Nobel Prizes in laser physics during the past century, Russia’s history is rich with remarkable performance in scientific discoveries and inventions of technologies. But, Russia could not leverage those accomplishments to build globally competitive innovation clusters–driving economic growth. On the other hand, the USA succeeded in developing Silicon Valley out of a single invention—the Transistor. Moreover, Japan succeeded in developing high performing innovation economy out of the basic ideas of others. Why Russia could not make it happen is often a question. It does not necessarily mean that Russia was not desperate to have it. Instead, upon losing so many opportunities, still, Russians are looking for the next big technology thing to modernize the economy out of innovations.
In retrospect, the failure of Russia in innovation economy gives us the lesson that getting hands-on technologies but rejecting the economic policies, technology and innovation management competence and political principles do not lead to the modernization of the economy. State-sponsored R&D in making scientific discoveries, inventing technologies, and rolling out initial innovations is not sufficient enough to produce economic outputs from the flow of ideas.
The disconnect between initial progress and profit-making competition for leveraging the passion in perfection underlies the failure of Russia in the innovation economy
Of course, scientific discoveries about natural principles create the foundation of technological inventions. Subsequently, invented technologies form the core of innovations for getting the job done better at less cost—creating surpluses. However, activities of scientific discovery and technological invention do not create wealth and drive economic growth alone. Instead, they consume resources– slowing down the economy. Downstream activities of innovating useful solutions around them–offering better quality products at less cost– create new wealth.
In retrospect, there is no natural correlation between scientific advancement, technological inventions, and innovations creating new wealth. In fact, technological inventions and initial ideas emerge in primitive forms. They need to be continuously refined through a flow of ideas in a competitive market. Hence, the pathway from taking technology inventions to innovations, fueling economic growth, requires risk-taking entrepreneurial initiatives and the long journey of incremental innovations. In the absence of this vital capability, the great potentials of science and technology often remain unrealized in creating economic value—through the redesign of products and processes.
Due to the lack of profit-making competition and passion for perfection, Russia’s strong science could not fuel economic growth out of innovation
As Russia is a highly natural resource-rich country, the money flowing from oil and minerals fuels the economy. In the last century, largely to meet weapon-driven political aspirations, Russia financed scientific research. Consequentially, Russia is empowered with a strong scientific community. Russian scientists and engineers have been the authors of some of the great discoveries and inventions of the past century. Such excellent scientific discoveries and technological inventions could have been leveraged for developing a technology innovation-driven economy. However, unfortunately, Russia failed in building an innovation economy out of them.
Why could not Russia’s economy benefit from an array of scientific discoveries to fuel economic growth–out of ideas–is an important question. It’s worth investigating indeed. The lesson could be quite valuable to many other countries. Particularly to those who are increasing investment in science with the hope that such investment would lead to prosperity through the creation of an innovation economy. By the way, there are already indications that many developing countries are failing to reflect their uprising in the Global Innovation Index into economic growth.
Examples of failure of Russia in innovation economy out of rich inventions
Despite Russia’s brilliant track record in scientific discoveries over the last century, inventions out of those discoveries had not been translated into technological innovations that sell widely in international markets. As a result, Russia has failed to contribute to the wealth out of those achievements. Consequentially, it also failed to contribute to the stability and sustained growth of the country. After succeeding in remarkable technological inventions, why is Russia still struggling to figure out how to
modernize the economy out of innovation is a question baffling the minds of many pundits. A review of some of the examples of Russia’s impressive scientific discoveries and inventions sheds light.
Optical scientific discovery and invention of Laser failed to develop innovation cluster
The winning of two Nobel Prizes for the invention of the Laser has seeded innovations around Laser. Around this scientific progress, Japnese, Europeans, and Americans have innovated an array of laser technology-based products. In fact, Laser technology-based innovations are used for varied applications. It starts from cutting objects to precision heating to the ultrafast measurement of distance (LIDAR). LaserFocusWorld’s estimation of revenue from the Laser in 2018 was $18 billion. Furthermore, laser devices are forming technology core to fuel many disruptive innovations such as 3D printing, material additive manufacturing, and self-driving cars.
In fact, it’s Laser, which is powering a global communication network. Scientific discovery for inventing Laser could have been enough to open the path of creating wealth out of ideas for Russians. Upon leveraging early lead, Russia could have developed an innovation cluster around the Nobel prize-winning scientific achievement and invention. Ironically, Instead of Russians, Japanese, American, and German companies are dominating the laser innovation market.
Russians are absent in the electric light bulb and solid-state lighting—a hundred-billion-dollar industry
There is no denying that without having even a second thought, we recognize Edison for the invention of the light bulb and starting a new industry. But, Russians built electric light bulbs before Thomas Edison’s successes in roiling out light bulb innovations. Due to the lack of entrepreneurial capacity of Russians to pursue commercial prospects around the light bulb invention, Edison’s company GE took over the market. Virtually, GE faced no competition from Russian firms. Similarly, the modern light-emitting diode (LED) based solid-state bulbs has root in Russian science. Furthermore, a small Japanese company has taken the lead in LED in causing disruption to Edison’s filament bulbs and subsequent fluorescent ones.
In 1927, as part of crystal detector work for radio receivers, Russian scientist Oleg Losev constructed a light-emitting diode (LED). Among others, Losev was the first to investigate the effect of LED from the perspective of science. He proposed a theory of how it worked. He also envisioned practical applications. Furthermore, Losev patented the “Light Relay” and foresaw its use in telecommunications. However, Russians are absent in fiber optics-based communication. Despite such early advancement, Russian firms could not succeed to be known as suppliers of LED light bulbs and other similar innovations. Instead, Japanese and American makers are dominating this business.
Failure of Russia in the innovation economy by leveraging Radio waves, Artificial satellite, and Computer
Before Guglielmo Marconi’s achievement, on March 24, 1896, Mr. Popov demonstrated radio communication. He used radio waves to transmit a message between different campus buildings in St. Petersburg.
The former Soviet Union launched Sputnik into an elliptical low Earth orbit on 4 October 1957–starting the space age. However, Russia kept this early success limited to attaining military superiority. Among many other achievements, Russians also built the first digital electronic computer in Europe. Like many other great innovations, each of these achievements was at the very embryonic stage of the growth of a large industry. Continued refinement was needed in creating large-scale commercial success. In retrospect, profit-making competition and passion for perfection are at the core of pursuing continued refinement—through a series of incremental advancements. However, due to state-led endeavors, Russia missed this vital capability of pursuing a relentless journey of incremental innovations. Hence, despite making significant scientific contributions and demonstrating the potential of new possibilities, Russians could not succeed in turning those accomplishments into large-scale innovation success stories.
However, several countries in the world, including the USA and Japan, succeeded in developing large innovation clusters around each of them.
Upon missing many opportunities, Russia is still looking for the big thing in developing innovation economy
Upon losing so many opportunities, still to date, Russians are wondering about how to develop a Silicon Valley-type innovation cluster. During a recent visit of senior academic administrators of MIT, as stated by Prof. Loren Graham, Russians are still looking for the next big inventions for building an innovation economy. Over the last more than a century, already they created the beginning of many “big things”. Unfortunately, they could not turn those beginnings into innovation success stories. Hence they failed to drive economic growth out of scientific discoveries. It raises questions: What else is missing in Russian society? What do they need to turn scientific signs of progress and inventions into innovations creating new wealth for the society?
Passion for perfection, freedom, and urge of profit-making competition, and entrepreneurship
Russians Scientists and Engineers were bright. Obviously, they showed remarkable performance in discovering scientific principles and inventing technologies. However, they were performing all those great acts under state sponsorship as salaried employees. They dedicated themselves to scientific research in pushing the envelope of science and technology.
But, those accomplishments were not leading to innovating solutions to improve consumers’ lives. Particularly, those initial successes needed continued advancement through a passion for perfection and the urge of profit-making competition. Hence, turning scientific progress and technology inventions into economic success story need entrepreneurship, passion for perfection, and risk-taking investments in a globally competitive environment. In the absence of freedom, competition, and fairness, Russians failed to engineer the path of pursuing a relentless journey of incremental advancement for reaping the benefit from all those great opportunities.
Invariably technology inventions emerge as primitive products
Irrespective of the greatness of scientific discovery and technological invention, in an early stage, innovations around them emerge in primitive form. Unfortunately, such primitive innovations create little willingness to pay. Hence, in the beginning, they end up contributing very little to uplift the quality of living standards. Consequentially, in a competitive market, those primitive innovations produce a loss.
Thus, the urgency of turning this loss into profit begins a long journey of incremental innovations. The advancing as well as developing complementary technologies to support the addition and improvement of ideas in an incremental manner is the key. In each iteration, incremental progress is made in increasing reliability, delegating roles from electro-mechanical to electronics and software, reducing components, and increasing automation—among others. Of course, often, such exercise does not sound to be highly creative in drawing the interest of intellects. However, such activities are at the core of incremental improvement for creating commercial successes of innovations.
Failure of Russia in the innovation economy demands us to look into broader issues
From several observations, it appears that Russians are still looking for great next new technology to fulfill the dream of creating an innovation economy. In addition to acquiring an early edge in technology, they need to focus on transforming the governance pattern. It’s essential for fostering competition out of incremental progression. Most importantly, they need to nurture the unique technology and innovation management competence among large segments of people who matter to make continued refinement of ideas for ferreting out value from the market. Hence, the failure of Russia in the innovation economy gives us the lesson. Getting hands-on technologies is not sufficient for creating value out of ideas. To begin with, we must stop rejecting the necessity of economic policies. We should focus on technology and innovation management competence and conducive political principles. Such changes are a must for leading into the modernization of the economy out of innovation.