Oracle’s work in Central and Eastern Europe, combined with the findings of the Economist Intelligence Unit’s Report A Time for New Ideas: Innovation in Central-Eastern Europe, has prompted the creation of a list of recommendations to encourage and accelerate innovation as follows:
1. Give them a (tax) break. Introduce tax concessions for Young Innovative Companies (YICs)
New companies are often extremely financially challenged during the start-up phase. They must develop and market their products and hire talented staff before they start to realise revenues and profits. Introducing tax concessions on items such as social security contributions and employee stock options would greatly ease the start-up process and help get these innovative enterprises off the ground and into profitability far more quickly and easily. In some countries, corporate tax (tax on profits) is also off-puttingly high for those who might otherwise be interested in starting their own business. Lower rates of corporate tax for smaller businesses would encourage more new, innovative companies to be set up.
2. Quicker to market. Relax red tape associated with setting up a new company
‘If it is easy to set up a business, more businesses register,’ wrote the World Bank in its ‘Doing Business’ report for 2007. Nevertheless, the World Bank found that in 2007 it was easier to set up a business in Rwanda than it was to start one in Hungary, Slovakia, the Czech Republic, Ukraine, Slovenia or Poland. While a business can be set up in 7 days in Estonia and 14 in Romania, in Croatia it takes it takes 40 days and in Slovenia 60. Reform brings positive changes, though: since the process for starting and registering a business was simplified in Lithuania, the number of businesses being registered has increased by 25%.
3. You develop it, you own it. Protect innovation and intellectual property through rule of law
In its study A Time for New Ideas: Innovation in Central-Eastern Europe, the EIU reports that many CEE start-ups find it difficult to penetrate markets abroad because of an outdated perception that companies and products from the region are unreliable and of inferior quality. Lawmakers can improve the image and prospects of local companies by passing legislation that enforces high standards of quality and safety, and that protects the intellectual property of those who develop innovative products and services from those who seek to produce inferior imitations. More than half (51%) of the 370 respondents to the EIU’s survey said that better protection for intellectual property would lead to higher levels of innovation in their country.
4. More money, more results. Increase investment in domestic R&D
The Lisbon Strategy, the EU’s manifesto for maintaining the region’s economic competitiveness and growth, recommends that a total of 3% of GDP be invested in R&D, of which 1% should government and 2% from private funding. However, in its report Science, Technology and Innovation in Europe, 2007, the EU’s statistics department Eurostat found that Germany, France, the UK, Italy and Spain accounted for almost 80% of the total EU-25 government spend on R&D in 2005. Of the CEE countries, the Russian government is investing the most at 0.63% of GDP, and Poland the least at just 0.09% of GDP.
5. Let’s work together. Encourage closer working relationships between business and universities
Much of the scientific and technological expertise in CEE is currently bound up in postgraduate research projects at leading universities. Encouraging closer ties between academia and industry and allowing universities to commercialise the results of research projects will significantly boost the number and quality of innovative ideas and products entering the local economy. Additionally, by encouraging businesses to sponsor university students and provide vocational education, the levels of employability and skills in the region will increase significantly. Harnessed in this way, the expertise of foreign multinational companies (MNCs) can be more easily transferred to the local workforce.
6. Learn for tomorrow. Invest in 21st century skills education
In its 2007 policy brief The European Human Capital Index: The Challenge of Eastern Europe, the Lisbon Council identified a serious shortfall in human capital in almost all Eastern European countries, which threatens to undo much of the region’s recent growth. While other emerging markets are witnessing booming populations and a wealth of skilled graduates, Eastern Europe has falling birth-rates and migration of skilled workers to wealthier countries. Education in the region has historically been extremely strong, but it is now failing to invest in vital 21st century skills and this could have a serious impact on innovation and competitiveness. Investment in education will help restore and maintain high levels of science and technology expertise among students, graduates and post-graduates. Also, investment in business, management and languages education will ensure that innovative companies can find talented business managers and develop business in other geographical markets.
7. Put technology at the heart of economic development
Technology has been the stimulus and catalyst of much of the global economic advances over the last 20 years. Countries such as the US, Nordics, and India, that have put technology squarely at the centre of their strategy for progress have been outstandingly successful. Technology permeates every facet of our lives today – government, education and research, finance, health, travel, communications, manufacturing, social, leisure and entertainment. Technology can transform a society, and it is essential to build a knowledge economy that is competitive and flourishing.
8. Jobs to suit your lifestyle. Create a more flexible labour market
Governments can help to increase the size and quality of the workforce and keep inflation in check by creating a more flexible labour market. Measures might include reducing the cost and administrative burden of hiring and firing workers; encouraging more flexible working patterns and arrangements (e.g. flexi-time, teleworking, maternity/paternity leave, worker mobility); and enabling alternative methods of rewarding and remunerating staff (e.g. stock options and other benefits). Such approaches in other countries have demonstrably contributed to economic growth by tapping under-utilised skills pools (such as parents of young children and people in geographically remote locations) as well as helping to ensure rapid recovery after an economic downturn.
9. Back home, there’s a great job waiting. Encourage skilled migrant workers to return home
With the shortfall in skilled graduates and workers identified by the Lisbon Council, governments can encourage skilled workers who have departed in search of higher wages to return home and boost the local skills pool with a range of approaches such as specific financial/tax incentives.
10. Don’t leave it to chance: Innovation won’t happen accidentally. Put in place a structured innovation program
At Oracle, Innovation is a key driver and we have nurtured a culture of innovation and entrepreneurship as a natural aspect of our work. We have formal programs to both stimulate and reward innovation in our employees, and in our partners. · 33 countries from EMEA have submitted over 1,000 innovative initiatives (last 7 years) · 408 partners have participated by submitting 445 Innovations to our EMEA OPN Innovation Award program (last 4 years) Oracle also co-sponsors Innovation events with corporate customers, EU institutions and leading business schools. Innovation won’t happen accidentally. It won’t just occur. It needs to be driven. Every forward-thinking organisation needs to take a programmatic, structured approach to identify, nurture and support Innovation so that these great ideas can become real, value-add solutions for future success.