2.1 The Need for a New Big Picture

The Technology Frontier approach needs to be replaced by the Strategic Innovation Theory. Becoming a winner in the future innovation and technology race and creating a future earnings engine requires strategic innovation. Earning money, prosperity, growth and development in a continuously changing world requires more than best technologies. Human mankind is nowadays confronted with a flood of new developments requiring a new big picture. The world is changing all the time but in the past few years and the coming years you are the witness of profound changes. Randomly taken, examples are the smart phone as dominant technical daily device, discovery of exo-planets comparable with planet earth, Chinese as dominant and most influential diaspora, waning power of Europe, tourism, Shanghai as world’s biggest port, slow food as escape to the past, increasing scarcity of fresh water, transparency versus Big Brother is Watching you, robots taking over simple professional tasks and the increasing power of the individual. Do these developments show any consistency and connection or are they really at random? In our perspective they are connected and in fact they are the signs of consistent crucial world changes.

Several in first instance apparently independent revolutions will culminate in a new world order (Someren, 2015a, b; Someren & Someren-Wang, 2012, 2013a, b). There is a need for a new big picture to understand our new world. In this section we will elaborate on what is happening on a macro (world economy), meso (industry level) and micro level (individual organization). In all cases the growth cycle model will be the basic instrument of analysis because it can be applied on all levels. In fact, these different levels show the same developments only from a different perspective. However, it depends on your perspective what you want to see. For some, there are revolutions and sudden disruptions, for others there are continuous changes together adding up in time to a certain unstoppable movement. Our focus is on the jump from one growth curve to another. The core question each time is: “What happens here?”. The next step is, if we know what happened there, which generic principles are underlying these fundamental changes followed by how to apply them in future situations to create your own future. These answers lead to the idea of Strategic Innovation on the macro, meso and micro level.

2.1.1 Macro level and Massive Outlook

On a very big scale, world growth curves somehow cover developments over centuries which do show connectivity. In Fig. 2.1 the macro perspective on the past few hundred years of world economy is presented.Footnote 1

Fig. 2.1
figure 1

First, second and third industrial revolution. Source: based upon Someren (2005, table 2.1, p. 30), Someren and Someren-Wang (2012, table 1.5, p. 16)

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Since the medieval period, economic historians claim that three revolutions have been taking place. These macro waves or growth curves are very long, each covers 100–200 years which is much more than a generation. This succession of revolutions is a common and much appreciated or even accepted view on economic development. It makes analyses easy: technology is driving change. The first and second graph with macro waves do suggest a wave like development of our society based on technology. In our view, the contrary is true: there is a continuous innovation of different nature and not only technology (Someren, 1990, 1991b).

The first revolution is the Agricultural Revolution due to the introduction of new technologies and ways of organization. The second one is the Industrial Revolution based upon manufacturing and steam engine and replacing small scale hand labor by large scale machine power. The linear time perspective, based on the Christian Birth-Life-Death sequence, could be found back in industrial organization of value chains. Value chains start with R&D, design production, distribution, service and end at the landfill with waste. It ended up in global value chains enabled by cheap modes of transport like the container. The third one, Sustainability, has starting recently and is characterized by a circular economy instead of a linear economy of the Industrial Revolution. This circular economy fits to the circular interpretation of time of many Asiatic societies like in Buddhism. Besides the circular economy, local production and tailor made production are having a comeback. The use of 3D or 4D printing and agro food parks near to mega cities enable local production with shortened value chains.

On the macro level, answering the core question “What happens here?” lead to a few characteristically developments which return at each jump. In fact the macro changes are paradigm changes or shifts in which macro institutions change. For example new technologies, new lead countries, new political regimes, new political and societal changes, new norms and values and new organizational forms. For example, in Europe the power position of the church and feudal class was dwindling in favor of rich industrialists, tradesman, handicrafts workers and laborers. The rise of coal, steam power and manufacturing driven by the UK replaced trading countries like Portugal, Spain and The Netherlands. This description is a very brief summary of the techno-economic paradigm in which new technology is the driver of any other change (Someren, 2014b).

But the techno-economic paradigm does pay only minor attention to both non-technical innovations as well as the time factor. Paradigm shifts are caused by the emergence of new technologies. The causal consequences of these revolutionary new technologies are changes in accompanying and supporting organizations, new political systems and new social dimensions and relations. The main classic reasoning is as follows: technology leads to organizational changes or innovations. The other way round, organizational changes leading to new technology or non-technical innovations leading to other non-technical changes are mostly neglected (Someren, 1990, 1991a, b). For example, the assembly line together with labor division and standardization marked the mass manufacturing era. The emergence of a multidivisional structure introduced by General Motors focused on customer segments instead of a functional structure within enterprises fostered demand driven innovation. The supermarket revolutionized the retail sector. This is the reason it is better to speak of successive strategic innovations instead of technology alone.

The factor time does appear in many different ways. The agricultural society the dominant time perspective was driven by nature and religion. The weather and the calendar of the church determined daily life and activities. During the Industrial era, the linear clock time determined daily life. And currently, firstly, the circular economy is driven by recycle time determining input-output in manufacturing and secondly, instant smart phone messages determine daily life. Another appearance of time is the time an apparent technological revolution needs to enfold its impact on society. Within the macro perspective it is easy accepted to talk about revolutions. But actually it often takes years or even decades before the full impact is revolutionizing society. It took the steam engine many decades from prototype to full scale implementation. Apart from some apps, the ICT revolution started somewhere in the 1970s/1980s is now getting momentum and has not yet reached its full scale application and impact. On a macro scale, the replacement of coal fired plants by renewable wind and solar systems is taking decades. The replacement of the World Bank by Asian Infrastructure Investment Bank (AIIB) also takes many years. Other institutions like the dominance of the dollar and its substitution by the Renminbi or Bitcoin are slow moving processes. Therefore, the macro system is not changing very fast and the qualification of revolution (being a very fast turnaround of events) is more misleading than explaining. Moreover, there is not a single innovation (the steam engine or Internet) on a particular moment in time changing society. It is more continuously stream of smaller and bigger innovations from technological or non-technological origin changing society (Someren, 1991b).

Hence, the classical macro perspective does show the big picture of growth waves over centuries in which a certain cluster of technologies and its accompanying political, institutional, economic, social system is interpreted to be dominant. Even more, the current techno-economic paradigm is an American and Eurocentric dominated view on world developments. But Asia is catching up. In time of the Industrial Revolution, the Chinese economy was the biggest economy in the world but neglected because of Eurocentrism. Therefore, the macro picture from a world view is completely different from Eurocentric academic theories and management practices (Someren, 2005; Someren & Someren-Wang, 2012, 2013b). For our purpose, strategic innovation in Russia, this world perspective is extremely important because Russia’s growth and development is dependent on its relation with the West and the East. Furthermore, another big picture based on strategic innovation on the meso and micro level is necessary to really understand the fundamental process of renewal, growth and development.

2.1.2 Meso level and Major Renewal

From the industrial economic perspective, the meso level concerns the economics of the industries. The level of the industries includes for example the dynamics between competitors in industry, industry specific innovation, industry standards, mergers and acquisitions, regional clusters and cooperation between private enterprises, science and government. But also newcomers, innovative entrepreneurs, can shake up existing industries. In Fig. 2.2, the sequential wave of innovations on the meso level is presented.

Fig. 2.2
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Technology waves on industry and meso level. Source: based on Someren (1991a, b, 2005, table 2.1)

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The main message from Fig. 2.2 is that there are wave-like renewal periods at a sequence of about 70–90 years. In each period, certain new forms of energy, materials and dominant players appear in industry or create a new industry. The American Manufacturing System in the nineteenth century was characterized by the standardization of components in the weapons industry. This standardization became a principle in the coming decades. The Chinese Asian Mode of Production (AMP) was based on very large scale exploitation of cheap labor, concentration and government domination. Again, the techno-economic perspective is putting new technologies as driver number one. But also here, strategic innovation is offering a different perspective. This change in view is relevant for improving current Russian innovation performance.

When answering the core question “What happens here?” from the point of view of strategic innovations we come to some other insights. With regard to innovation, the meso level is in the tradition of the techno-economic paradigm and identical to a technology driven ideology. Often hype driven interpretations do dominate both ends of the spectrum scientific literature and popular newspapers. For example, because of the emergence of fast growing new companies like Uber or Airbnb the notion of disruption is the pop star of the innovation scene. When looking closer, Uber is not a high tech revolution but a simple other rental service at lower cost level than traditional cab services. But there is a price for the apparent lower cost level: Uber is circumventing regulations of the industry with regard to quality and safety regulations for both the vehicle and the driver. There is no free lunch, even not in the mobile app era. But there is more.

Indeed do Uber and Airbnb shake up industries but there is another side of the coin as well. The other side consists for example of the development of new medicines or commercializing space technologies into appliances for agro food services. These kinds of innovations do require a new infrastructure and organization in combination with proven technologies to become commercially successful. It was Siemens who inverted the R&D function in the nineteenth century. In the 1890s, R&D was mainly carried out by smaller independent labs in the market. Siemens was first to organize R&D function in house. This non-technical inversion fostered technological development on a revolutionary way and was the basis for its fast growth and development. At the same time, in Germany also institutions like Fraunhofer Institute and Helmholtz were established and they together with industry took care of basic and applied research. A German Innovation System between basic and applied research institutes and their close cooperation with industry sometimes supported by government was born.

Therefore, the classical division of meso waves distinguished by different technologies can easily be replaced by another taxonomy based on non-technical innovations (Someren, 1990). For example, the in-house R&D was soon copied by other enterprises and really sparked of large scale industrial innovations in every industry. In the same sense, the concept of a circular economy through closing material cycles replacing the linear value chains is another example. The concept of a circular economy is originally a non-technical innovation which can act as a spark for technical fireworks in the area of e.g. non-fossil energy and waste water treatment. Therefore, from the perspective of strategic innovation on the meso level, Fig. 2.2 can be drawn in many ways all presenting a certain economic truth but radically different from the techno-economic paradigm.

In Russia, on the meso level, there is not yet a Russian Innovation System. From Chap. 1 we learned that Russia implemented all kind of policies and programs but all together they do not yet function as a National Innovation System. It now becomes clear why. The top down dominated policies issued by ministries do lack innovative dynamics on the meso level which could mix and emerge as a National Innovation System. The existing Russian innovation infrastructure is not an innovation system because it has not yet a hidden flavor of organization and culture which makes it undeniable Russian.

Having a closer look when answering the question “What happens here?” demonstrates that strategic innovations are key and not technology alone. Like in the situation of the macro waves, on the meso level the creation of new industrial growth waves is much better described by the notion of strategic innovation than technology.

2.1.3 Micro level and Mega Impact

The micro level is the level of individual entrepreneurs or single organizations in private or state business or science. The economic basis of a product, service or enterprise is the growth cycle describing the founding, growth, improvement, renewal or disappearance. Figure 2.3 presents this basic principle.

Fig. 2.3
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S-Curve wave on micro level. Source: based on Someren (2005, Strategische Innovationen, Gabler Verlag, fig. 1.2, p. 21, fig. 2.3, p. 46)

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This growth cycle reflects the dynamics in market economy but also in planned economies or any other institutional form or economic-industrial organization. In fact, often the growth cycle starts with any kind of innovation but it depends on the ability of the founder to trigger growth and development. It also requires the development of many other aspects such as improvement of the original technology, quality management, human resources, market development, branding, distribution, client relations, merges and acquisitions, financing and pricing. Along the growth curve continuously strategic innovations are necessary.

Furthermore, from chapter one we know that the Russian scientists have proven to be able to do excellent basic research and creating ground-breaking inventions. In the current Russian situation, there are a few promising individual entrepreneurs such as Kaspersky but most of them lack the right conditions to make a rocket start. Russians outside of their mother country also show their excellent capacities to start business or act as excellent managers. Strategic innovations are necessary to create the favorable conditions within and outside of incumbent enterprises and organizations.

A special case is the jump from one growth curve to another growth curve. Examples of this situation are the supermarket replacing the mom and pop shop or the mobile phone replacing fixed phones.

Another special case is the creation of a new industry kicked off by a single entrepreneur or a spinoff of a multinational which is truly very innovative but not necessarily disruptive. For example, television, biotechnology or X-Rays did not disrupt any industry, they simple added complete new opportunities which could not be delivered by anything else. Sometimes, there is nothing to disrupt but only to create. Therefore, not disruption is the future but the creation of new growth curves.

As on the macro and meso level, also on the micro level the time factor becomes relevant. Growth cycles on the micro level have different time perspectives. The Internet based economy is featured by very short life cycles of new apps and hype driven goods and services. In case of new smart phone applications or Internet driven business, jumping the curves can be very frequent compared to old bricks economy. Internet undoubtedly increased the speed and access to global data and information leading to Internet based business like web shops and other new industries. But Internet does not speed up every innovation in every industry. For example, new pharmaceuticals, new food, nanotechnology, space programs requires long periods of time from R&D phase till market entrance can take 10 years. Here the time bottleneck is in the discovery and safety approval process and not in the demand-supply process. Of course IT by means of simulation programs can support the speeding up of discovery or parallel approval but this is independent of Internet. Sustainability is linked with an even longer time perspective. Sustainability has life cycles of years till decades or even centuries: very long life cycles e.g. recycling of capital goods like cars, long food chains and the build-up of non-fossil fuel energy networks and atomic waste requires management and control over centuries.

The conclusion so far is that on all levels a continuous process of mutual reinforcing technical and non-technical innovations in time, being strategic innovations, are the determinants of the growth curve on the macro, meso and micro level. In the next section, we shed a light on major developments of the future which will be opportunities for new growth curves.

2.2 Major Developments Requiring Strategic Innovation

There are four major developments which will determine the start and growth of growth curves on the macro, meso and micro level. These four major developments among others are: sustainability, Internet of Things and Industry 5.0, new dominant regions and world economy. All of these four major developments represent new growth cycle opportunities. Moreover, these issues do reinforce each other and together they create the world of tomorrow and beyond. Internet of Things can offer solutions contributing to solving the issue of sustainability whereas Industry 5.0 ensures resource access. Sustainability is a threat and opportunity and it depends on the reaction of nations and organizations whether this issue will be part of the future growth cycle and contribute to stay or become a dominant region or even superpower or turn into the downturn. The new emerging strong regions, the shift of dominant regions and its players will be accompanied by new set of norms and values and ways of doing business that will turn in a new industrial world organization and ultimately in a new world order (Someren, 2015a, b; Someren & Someren-Wang, 2012, 2013a, b).

2.2.1 Sustainable Economy

The vast, often empty and untouched territories of Russia are not the ideal trigger to stimulate thinking about the environment and a sustainable future. During a lecture (Someren, 2014a) on the future of the Russian aerospace industry, sustainability was one of the issues discussed, and got a lot of attention as a game changer. But also a remark by a course participant was made that sustainability is not an issue in Russia and is a typical European topic.Footnote 2 This kind of comments can sometimes also be heard in the USA and China. Hence, sustainability is still a controversial subject. However, sustainability is an idea that got momentum in Europe after the Report of Rome in the 1960s which paid attention to the dwindling or even shortage of resources. This was followed by the Brundtland report discussing some principles for a sustainable society and creating a sustainable trade-off between current economic growth and development and taking care of next generations.

The core issues of sustainability comprise CO2, climate change, energy assurance, natural resources and biodiversity. These core issues of sustainability will have a profound influence on the current market economy on macro, meso and micro level. In fact, the issue of sustainability is of greater relevance than the opportunities of digitalization for human mankind. We can live, if we have to, without Internet but mankind cannot live without moderate temperatures, fresh water and clean air. Sustainability requires the substitution of the profit principle by a trade-off between profit and social and ecological dimensions. Figure 2.4 expresses this relation between sustainability issues leading to the necessity of strategic innovations and a new top management agenda (Someren, 2010; Someren & Someren-Wang, 2012).Footnote 3

Fig. 2.4
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Sustainability puts strategic innovations on top management agenda. Source: based on Someren and Someren-Wang (2012, Fig. 2.4, p. 58)

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The integration of these sustainability core issues into policies, GDP calculations, innovations systems, corporate strategies and consumer behavior requires strategic innovations (Someren, 1995a, 1998a, b; Someren & Someren-Wang, 2012). The fossil fuel based industrial oil and gas economy has to be replaced by renewable sources of energy. Logistics and mobility systems have to be CO2 neutral and non-emitting of other detrimental substances as micro particles and NOx. Penta Helix business structures, integrating private business, science, government, finance and public to create these new industries and organizing our society will be necessary. Taken together an Ideal Sustainable Development Corporation is emerging (Someren, 1995a). The dark side of sustainability is for example depletion of resources like the Ogallala aquifer which provides water for US farming in the Midwest. Ogallala feeds one fifth of US production of corn, cotton, and wheat with water and by 2045 substantial parts of this aquifer will be dried up (Bjerga, 2015). It would need 6000 years to refill again (Braxton Little, 2009). The bright side of sustainability is the emergence of future new industries creating value and jobs. According to a study by UNEP (2011, p. 24) “…the annual financing demand to green the global economy was estimated to be in the range US$1.05–US$2.59 trillion. To place this demand in perspective, it is about one-tenth of total global investment per year…”. Strategic innovations will be at the core of these changes (Someren, 1995a, 1998a, b).

Sustainability offers great new opportunities and is certainly not a doom scenario. Therefore, sustainability is a huge future growth cycle for the next centuries (Someren, 1995a, 1998a, b, 2012). In Fig. 2.5 the great divide between an unsustainable and sustainable business is graphically presented.

Fig. 2.5
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Sustainable versus unsustainable world. Source: based on Someren (1995a, b, 1998a, b)

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Having a sustainable or unsustainable society is the ‘Great Divide’ in the development of human mankind. The current industrialized world based upon linear production and consumption is very unsustainable. The detrimental ecological and social effects of this system are obvious now. The frequency of traffic jams in Moscow, smog alarms in Beijing, fine dust in cities worldwide, limited access to fresh water, rising sea levels are only a few well known detrimental effects. A circular economy is necessary which will create Organizations of the Future and requiring strategic innovations (Someren, 1995a, 1997) dealing with seven new core business model opportunities such as new sustainable products, recycling or re-using materials, life extension of products and value circle service concepts. These core ideas have been introduced at Volkswagen, BMW and Shell in the 1990s but it needed more than a decade to become part of corporate strategy (Someren, 1995b, 1998a, b).

But sustainability is also about resources and getting access to resources. The western belief in markets and trading resources will in the new world economy be replaced by a power struggle for owning or having the power over accessibility to resources like rare earth materials, water and other basic substances. The EU believes in trading and markets, the US defends with military force oil resources and China vertically integrates resource markets with their enterprises supported by government. Therefore, sustainability is increasingly more becoming an issue about market power beyond becoming green (Someren & Someren-Wang, 2009, 2011).

2.2.2 Internet of Things and Industry 5.0

The Internet of Things is not yet defined and worked out clearly and is now indeed a neologism for everything Internet related issue. For some it is the notion of machine to machine (M2M) or smart industry (EU Commission) or Industry 4.0 (Germany). Here we will use the terminology of Internet of Things. The Internet of Things (IoT) is the connection between IT devices of any kind worldwide. The devices that will be connected include mobile phone, low cost sensors, robots, automation in production facilities, data storage, and vehicle computer systems. In a research by BI Intelligence (2015), it is expected that in 2020 around 34 billion devices will be connected to the internet by 2020, up from 10 billion in 2015. IoT devices will account for 24 billion, while traditional computing devices (e.g. smartphones, tablets, smartwatches, etc.) will comprise 10 billion. The market impact in 2025 is estimated at 11 % of worldwide GDP (Baily & Manyika, 2015).

These devices together with platforms, data analysis, IT systems and networks will form the IoT eco system. The Internet of Things will enable consumers, business and governments to connect to each other and get linked to industries like agro food systems, health care facilities and transport systems.

The Internet of Things is in its infancy and cannot be judged on its real potential to change the world. For some it is a hype for others it is the fourth industrial revolution as presented in Fig. 2.6.

Fig. 2.6
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Fourth industrial revolution

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In the latter perspective, the Internet of Things is a logical next successive step after the mechanization (first Industrial Revolution), electrification (second Industrial Revolution), and automatization (third Industrial Revolution). The added value of Internet of Things is that previous standalone devices like an electronic toothbrush will in future deliver medical analysis about health of our teeth. Or on a larger scale, while traveling in a smart city, all kind of suggestion for shopping opportunities based on your behavior and preferences are given on demand or instantly at your mobile phone.

Not only are boundaries between industries blurred but also new connections between before unrelated data bases are made and available to anyone who is interested. The expected business benefits are for example better operational efficiency, better customer service and intra-organizational collaboration (Business Intelligence, 2015).

The traditional markets will be substituted by e.g. exchange platforms taking care of demand and supply. The advantage for the customer is that in future tailor made demand and individualized demand will be fulfilled. Suppliers need to reorganize or even reinvent themselves in order to be able to generate these individualized offerings. This Internet of Things market place is presented in Fig. 2.7.

Fig. 2.7
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Internet of things market place

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The Internet of Things platforms consists of seven main components: the demand side of the individual customer, the supply side including service provider, the exchange platform, the IoT technology, the legal framework, the standardization and protocols and security and safety systems. These platforms can be used locally or on a global scale involving single entrepreneurs, tradesman, SMEs and MNEs/TNEs. A revival of seventeenth century local and global trade patterns on Internet but now 24/7 and instant. These trading platforms have the potential to circumvent trade protocols and create their own reality. Legislators and regulators will take their influence in an attempt to reclaim their position.

But the perfect market conditions will be distorted by incentives to concentrate power and monopolization tendencies. The traditional market place will be replaced by the exchange platform where both demand and supply are matched but also data analysis, data connection and behavioral prediction and forecast will be executed.

The Big Data operations are the most crucial ones because they create the power position in the whole IoT eco system. For example in health care industry, the insurance companies are now creating platforms of health care owned and run by themselves in which both the doctors and health care organizations as well as the patients have an decreasing power position. Based on their knowledge of medicine, quality performance of health care organizations, insurance costs and patient history and life style, the platforms of the insurance companies determine choice of hospitals, doctors, treatment and medicines.

However, the Internet of Things platform needs the proper technology to run the data, to make the data base easily accessible and above all to deliver adequate analysis and proposals. Also new legal framework is necessary to give answers on issues like who the owner of the data is. Standardization and protocols are necessary to make it work on a global basis and elevate it beyond a local standalone appliance. Because of the enormous number of devices and data involved, security and safety should provide and protect privacy of connected customer and users.

To fully benefit as a country or business from The Internet of Things requires to fulfill preconditions of possessing (or access to) a manufacturing basis, entrepreneurial spirit, public acceptance of Internet leading to full transparency. As China is the manufacturing base of the world and cheap labor is disappearing as competitive advantage, the Internet of Things is for China the right challenge on the right moment. In fact China is number one in Internet of Things. As of 2013, in the area of Internet of Things and Industry 4.0, Chinese inventors have filed over 2500 patents. In this respect, China emulates both the United States (1065 patents) as well as Germany (441 patents) (China Daily, 2015). But there is more than the manufacturing base and its painful transformation towards Industry 4.0. China is in fact simultaneously creating Industry 5.0 by worldwide vertical integration of natural resources areas and extraction enterprises (Someren, 2015b). It is about owning, getting access to and having the power over resources.

But Internet of Things has a dark side too. On the one hand, Internet increased accessibility to information and new business opportunities, but on the other hand, a power shift and market concentration towards a few firms has been taking place. The once open source of Wikipedia has changed into a controlled information supply. But nowadays nobody knows who is ultimately deciding and controlling contributions. Enterprises like Google, Facebook and Microsoft but also platforms and banks have almost a monopolistic ownership of consumer data and behavior. Facebook plans full control over the user by creating a platform for everything. Moreover, a new dark industry is worldwide cyber espionage fueled by connectivity of personal data, car data, and networks of R&D centers and so on. It is about owning and having power over the individual and not vice versa.

For Russia, it will be difficult but not impossible to play a relevant role in the field of Internet of Things because several preconditions are not fulfilled and hard to catch up fast. The manufacturing base is lagging behind the Chinese scale and American and European quality. Innovative entrepreneurship is required, a modern manufacturing including logistical basis and IT infrastructure would be helpful. For Russia space industry and its increasing relevance for other industries could be an opportunity.

The head start of China in the emerging business of the Internet of Things demonstrates that the ambition and capabilities are present in new dominant regions of the world. This is the next big game changer from a world perspective.

2.2.3 New Dominant Regions

After the Second World War, the traditional western regions such as the US and the EU and Japan as Asiatic country dominated the market economy. In the 1990s, the notion of the BRIC countries was introduced by Goldman Sachs to show that other regions were starting the rise in the global economy. But now some 20 years later, the bright future of the BRIC regions is less bright than thought. Becoming a top performing economic country proved to be a case of long term and not of sudden bursts of entrepreneurial or state stimulated growth. Not only Russia is struggling with establishing a modern or innovative country, also India, Brazil and other regions have to cope with difficulties and barriers to overcome.

Meanwhile, also other countries emerge and could have former BRIC status like South Africa, Indonesia, Mexico, Turkey (SIMT), or Nigeria Iran, Pakistan, Philippines (NIPP) and maybe some Arabian countries. For example, traditional big airport hubs in Europe such as Heathrow and Frankfurt are getting competition from Istanbul (planned terminal of 150 million passengers per year) and Dubai (120 million passengers per year). Local carriers from Gulf States like Emirates, Qatar Airways and Etihad are becoming top quality competitors. Also in the field of Internet of Things the Gulf region has set its ambitions. Dubai wants to become the smartest city of 2017. But also South Korea is investing heavily in the Internet of Things business.

The most dynamic regions however are the time zones of the Russian Far East. In this area including Russian Far East to India, China, South East Asia and other regions more people live outside these time zones. Moreover, economic dynamics also belong to the highest worldwide. This region, like centuries ago, will develop their own interconnected geo-economic relations. For Russia, and the Russian Far East in particular, enormous opportunities lie ahead. But to become partner with the Asians, Russia has to offer something to their time zone neighbors.

Since the Second World War, the European Union has been developing as a new region but is struggling to become dominant. The ambition of the European Commission early 2000 (Lisbon Strategy) to become the most competitive and dynamic region in the world has failed completely (Someren, 2005; Someren & Someren-Wang, 2012). The outlook for the new and more or less identical ambition for 2020 (Horizon 2020) is not much better (see Someren & Someren-Wang, 2012, 2013a). The EU belongs to one the most rich and economic strong countries but is still on average underperforming with regard to innovation (see Someren, 2005; Someren & Someren-Wang, 2012, 2013a). The European Union and Russia from an economic perspective would be a very good match based on available resources, mutual needs, relatively shared cultural values and connected history. However, throughout history the relation between Russia and Western-Europe had their ups and downs and both regions never managed to have a real close long and reinforcing economic relation. However, in the future world economy, the business case for cooperation is getting stronger when looking at both positions related to US and China. With changing climate and new logistical opportunities, Russia’s geo-economic position is getting stronger due to the opening of the Arctic route and Siberian land route connecting US, Russia and Western-Europe opposed to the Chinese One Belt One Road initiative.

The Arabian countries also belong to the richest countries when measured as generated oil revenues. But most Arabian countries do not have alternative money makers. Saudi Arabia and other rich Arabian oil states have set up a large program to establish new industries. Strong economic countries as Turkey are ambiguous where to belong but still sometimes show the ambition to join the EU. In South America, Brazil is not only trying to become a prosperous country but has also ambitions to create a local strong region in their continent.

A special case as new dominant region is Russia’s neighbor China. It is not only relevant because of its size but more because of its entrepreneurial spirit, its ability to implement policies and plans, its ambitions to dominate as far as possible the future world and to emulate the old Western world. In Fig. 2.8 the Chinese Dream to surpass the West by catch up and emulate is made clear.

Fig. 2.8
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China’s biggest challenge. Source: based on Someren and Someren-Wang (2013a, b, Innovation China, Springer Verlag, Fig. 1.2, p. 13)

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China managed to catch up in many areas and to become the manufacturing place of the world. The next ambition of China is to become innovative and Technology leader in 2050 in many areas. For this purpose, a Chinese National Innovation System is under construction with the aim to become independent from Western technology (Someren & Someren-Wang, 2012, 2013a, b). Several major policies of central government support this Dream. The ‘Made in China’ policy aims at Industry 4.0 and new technologies. Furthermore, the last three Five Year plans emphasized homemade innovation (inclusive and endogenous innovation) and the green economy (circular economy). Consequently, the growing Chinese domestic market is able to develop own Chinese standards which would give Chinese manufacturers an extra advantage.

China has been working on this dream for over decades now. Behind this dream of becoming number One is a steady build-up of China’s economy. China followed a 4I scheme to gradually expand and develop its economy (Someren & Someren-Wang, 2013a, b). The 4I scheme is rather schematic but it does reflect the successive and sometimes parallel stages of imitation, improvement, innovation and internationalization as presented in Table 2.1.

Table 2.1 4I Development of China from 1950 till 2000
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The 4I scheme worked very well in the Chinese context and it enabled China to become a dominant regional power in Asia and opportunities to grow to a world super power (Someren & Someren-Wang, 2013a, b). But many barriers have to overcome and establishing a National Innovation System is one of the big challenges. This issue is not only a Chinese challenge, every region that wants to compete in the future world will need a National Innovation System fitting to its history, culture, needs and challenges to tackle.

In the Chinese context of history and entrepreneurial spirit, imitation and improvement can be planned as a blueprint. But innovation-internationalization cannot and need tailor made solutions. It will require non-technical innovations of all kinds fitting into Chinese culture that will be most difficult to discover and implement. To these non-technical innovations belong experimentation, freedom to act, organization of creativity and bottom up innovation process.

To our opinion, China is developing an Industry 5.0 model which adds on top of Internet of Things also the access to and assurance of natural resources on a worldwide scale (Someren, 2015a, b). During the period of 1988 and 2006, the increase of exports of raw materials from Africa to Europe increased by 139 %, to the USA by 402 % and to China by 2126 % (Marren, 2011). These numbers show the new dimensions.

China’s Industry 5.0 model is the forebode of future industrial governance which is lacking in Russia, the EU and USA. The USA is closest to the China Industry 5.0 model but is until now limited to securing oil reserves and not to other natural resources. On a micro level, Monsanto is trying to gain dominance by innovation and M&A in agro food industry and Google, Apple and Facebook are already dominant in customer Big Data sector. The EU has no natural resources securing policy at all and Russia possesses large quantities of natural resources but lacks an economic exploitation and development model beyond selling their stock. Russia is close to China with regard to close relation between industry and government in resources industry but only in home country and not abroad like China and US.

The ‘One Belt, One Road’ (OBOR) twenty-first century Maritime Silk Road initiative, China aims to create a modern trade route known as the Silk Road Economic Belt. The ancient powerful trading countries and cities along this route get a second chance to share in the wealth created by the Chinese ‘silk’.

China is dependent on natural resources to keep its economy on pace of the growth and development path. Although double digit growth is now officially replaced by a new normal of 6–7 % growth of GDP/year, this still represents a doubling of the economy every 10 years. The demand for energy and natural resources will maintain on an enormous high level and even increase. The Chinese idea of “One Belt One Road” (OBOR) is aiming at securing the trades of natural resources and goods, development of western parts of China and new cross border regions governed by China. Again Kazakhstan and other Central Asian countries on the South border of Russia, as before in history, will gain economic and political relevant. OBOR is in fact a geo-economical-political part of Industry 5.0.

Russia is for China an interesting partner to spread its interests and also a geographical strategic interesting location as a neighbor in the Far East. But China acts as a global player and spreads its interest among partners. Several trade agreements between Russia and China have been signed to stimulate trade and use each other’s strengths. But creating a win-win relation needs more than the traditional trade agreements and in this respect Russia needs to stimulate entrepreneurialism.

All the developments described until now bring us to radical changes in the globalized economy as we know it nowadays.

2.2.4 World Economy Replaces Globalization

The glory days of a globalized world are over. The world economy will replace the global economy (Someren, 2015b; Someren & Someren-Wang, 2012, 2013a). Till now, the West dominated the industrialized world and particularly after the Second World War the acceleration of internationalization on full scale took off. Knowledge and innovation economists advocated loudly that manufacturing was regarded to add the smallest added value contribution of the whole value chain and could easily be missed and sourced out to low cost countries. Their short sighted vision of a Knowledge Economy or Network Economy followed by policy makers boiled down to ‘manufacturing jobs out, service jobs in’. Because of cheap labor and less restricting and costly regulations, manufacturing outside the Western world became the new expansion model. Transferring manufacturing activities and later on administrative, financial and after sales services to cheap labor countries became the new mantra. Many corporate leaders from almost every industry followed this corporate strategy of outsourcing. Globalization beyond trade was born. For many years and decades it was a successful way of creating worldwide linear value chains.

Western policy makers supported by economic science supported this globalization megatrend by formulating the so-called Knowledge Economy and/or Network Economy. In the view of Western governmental leaders, policy makers and their scientists living from Knowledge Economy innovation subsidies, the future of the West should be depending on creating knowledge and not on manufacturing. The West would keep high added value activities like R&D, technology development, design, branding, marketing and services. Manufacturing was regarded to be low quality, low knowledge, and low content with minor added value. Any warnings that this interpretation was short term, myopic and wrong were neglected (Someren, 1991b, 2005). Even worse, if you were against their Knowledge Economy, you were regarded to be outmoded and unable to foresee the new future.

The insight from the Strategic Innovation Theory, that globalization could only work in the short term and that the Knowledge Economy gave the wrong starting points of a future world economy were not seen or neglected. The dot.com wave around 2000 blindsided even more because many at that time thought that the dot.com wave was the ultimate new Knowledge Economy. New management principles were formulated and these new truths were undiscussable. To these new management mantras belonged for example open innovation contrary to old fashioned closed innovation, cooperation instead of old industry competition and network organization against integrated business organization. These notions still dominate nowadays discussions but do not reflect the future upcoming world economy (Someren, 2005, 2015b; Someren & Someren-Wang, 2013b).

The wave of globalization reinforced the emergence of China and strengthened Chinese businesses and potential contenders. Many manufacturing facilities were moved to China for two reasons. Firstly the cheap labor costs, the available land or sometimes Special Economic Zones, the in first instance relatively favorable (environmental) regulations, and secondly, the market opportunities of China itself. Both proved to be wrong. The cheap labor was indeed a short term advantage but relatively soon labor costs started to rise. Besides labor also costs of low quality and bad logistics were issues that sometimes were higher than the labor cost savings. The market opportunities were often less than hoped for due to the complexity and size of the country. Moreover, any sign of bigger success was immediately followed by Chinese competitors or worse alliance partner who turned into rivals.

In the previous sections we demonstrated that not only China is emerging but some other countries and regions outside of the traditional Western hemisphere as well. Moreover, we have shown that sustainability, Industry 4.0 and 5.0 and Internet of Things change our future world. A world economy is emerging completely different from the current globalized world. In Fig. 2.9 the shift from globalization towards a world economy and its strategic innovations is presented (Someren & Someren-Wang, 2012, 2013a; Someren, 2015b).

Fig. 2.9
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Switch from globalization to world economy requires strategic innovation. Source: based on Someren and Someren-Wang (2013a, b, table 3.8, p. 76)

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The world economy will not be characterized by technologies necessary for realizing sustainability or Internet of Things solutions. The far more relevant feature will be the gradually dominance of other than Western norms and values, ways of doing business and organizational principles. These non-Western norms and values and culture will have an enormous impact on (market) transactions and behavior of world players. Furthermore, the globalization era dominated by Western private enterprises will be substituted by a mix of private and state enterprises from many different countries and regions.

The world economy is a multiplayer field from different regions and not a Western globalized world anymore. Furthermore, the world economy is s mutual interaction between various dominant players from different regions instead of a one-direction world of Western players towards the non-Western world. In the world economy, the regions are much more connected to each other than in the globalized world. For example, Arabian, Mexican and Chinese invest in Western stock markets, buy Western state bonds, buy real estate and are active in corporate markets.

The industrial economy instead of free market or single transactions between a single supplier and client will be a substantial part of the world economy. Not cooperation in a networked world will dominate but intensified competition by innovative SMEs, platforms and (vertically) integrated private, public or government supported powerful multinational enterprises (MNEs) and transnational enterprises (TNEs) will be a substantial part of the way business is carried out. Often a symbiosis between private and the state will characterize business in the world economy.

These world players operate in a context of Entrepreneurial Economy instead of the Knowledge Economy (Someren, 2005). The Entrepreneurial Economy requires strategic innovation by innovative entrepreneurs and enterprises to find solutions to the issues of sustainability, Internet of Things and many other challenges of the future.

Institutionalized innovation, which is the ability to renew embedded innovation in and between organizations, will be the new norm. Because of the relevance of short term and long term time aspect due to the build-up of (Trans)National Innovation System, Internet of Things and sustainability, a dynamic value principle will replace the Triple P (People, Profit and Planet).

As a counterweight to the world economy the relevance of the local economy will increase. Nevertheless the world connectivity by Internet, people do not want to lose their roots or have a focal point of relative stability instead of continuous change. Local connectivity, neighborhood, local 3D printing and local food are manifestations of the worldwide cyber economy. Regional innovative clusters, sometimes relatively independent, will emerge and be the link between rural areas and mega cities.

But the upcoming economic regions discussed in previous section are approaching a cross road. Will they develop as regions and will the world economy consist of several strong mega-regions with local economies? Or will Internet of Things and Industry 5.0 lead to a true world economy with intensified cross world activities of many different parties from various nations, regions and cities? It is too early to call but we know two things for sure. Firstly, in any case Russia has to prepare for both contingencies, and secondly, whatever situation will emerge, strategic innovation is key to play a frontrunner role.

2.2.5 Big Unknown

The most important future development is the one we do not know yet but for which we should be prepared or even better the one we can create ourselves. There will always be unforeseen developments but foresight can be prepared by searching for weak and strong signals indicating threats or opportunities for existing or new business. There will always be surprises requiring flexibility and implementation power to cope with the real unforeseen events. More than most other countries, Russia has experiences coping with unforeseen developments which will be in the future world economy a big asset. Innovative entrepreneurs even have the aim to create the new Big Unknown and to surprise.

2.2.6 Common Denominator of Sustainability, Internet of Things, New Dominant Regions, World Economy and Big Unknown

The common denominator between sustainability, Internet of Things and Industry 5.0, new dominant regions and world economy is that the underlying major problems, challenges and developments cannot be tackled by technology alone. The future is not only shaped by technologies but by many other non-technical aspects as well which have at least an equal impact on our market structure, behavior, performance and time perception. Key issues are for example getting access to resources, becoming creative as an organization, innovation leader, cross cultural management, managing new enterprises and industries and mobilizing entrepreneurs.

2.3 Consequences for Russia

The consequences of sustainability, Internet of Things, Industry 5.0, regional new players, the world economy and the Big Unknown for Russia will be an enormous challenge. As we have seen, each of these developments is able to create a complete new world and we know that all four are at work now. Russia has to play on all fields in order to be a top player in the future. The short history of Russia and its future key challenges are summarized in Table 2.2.

Table 2.2 Stages of Russian economic development from 1950 till 2025
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From Table 2.2 we can derive that there is a logical development in growth and development and policies but that the current position and its nowadays policies are not sufficient for mastering the future challenges in a world economy setting (Van Someren, 2015b). Remarkably, the years 1998–2008, despite low innovation rate, were the boom years caused by both devaluated ruble fostering export and growth as well as higher oil and gas prices. The growth rate in this period was on average 6.4 % covering up the low innovation performance (European Parliament, 2015, p. 5).

The core message of Table 2.2 is that Russia is missing a 4I scheme of long term strategic economic development. Especially innovation and internationalization are on average lagging behind. The EU, the US and China have their own 4I scheme each with different views, content and results (Someren & Someren-Wang, 2013a, b). China’s 4I scheme exploited in the imitation and improvement phase their low cost advantage enabling to build up a manufacturing base and to prepare for innovation. The Chinese manufacturing base is now an excellent basis to go into the next phase of Industry 5.0. The US is surfing on the Silicon Valley based technology firms Apple, Google, Facebook in the IT sector, Tesla in automotive and aerospace sector and good old Monsanto and Cargill in agro food sector. These firms dominate their industry, are globally present and are even able to enter other industries. With regard to the 4I scheme development, the EU is lagging behind China and US. The European Commission is issuing Grand masterplans like Lisbon 2010 and Horizon 2020 to foster innovation and becoming a competitive region but lacks implementation power. The EU is dependent on private and sometimes state enterprises of the individual member states.

What about Russia? Is there a connected strategy or spontaneous organization of innovation in society? In Table 2.3 a 4I scheme for Russia is presented.

Table 2.3 4I Development Russia from 1950 till 2000
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Russia’s focus on technology catch-up and leadership strategy neglects the commercialization and internationalization dimensions. Russia lacks a Grand Plan or Masterplan for conquering the world economy. Both the long term technology aims as well as Strategy 2020 are limited to technology whereas the real battle is about market shares, market power and industrial dominance with powerhouses, innovation and renewal capacity. The successive 4I phases do even have little connection with each other. As in case of the US, or lesser extent the EU, this can be compensated by private initiatives or incumbent large enterprises. But when taking into account the central planned history of Russia, it is remarkable that in case of innovation no 4I strategy has been formulated.

From Chap. 1 we know that, firstly, contrary to popular opinions, the industrial structure of Russia is not completely resource dependent. Principally, Russia has a diversified economy but it needs reinvention to create innovative competitive products, services and brands, and secondly, due to low competitiveness and low global brands the exports are natural resources dominated.

For these reasons, the innovation and internationalization phases are largely absent and underdeveloped. Till now, as demonstrated in Chap. 1, Russia focused on building an infrastructure, formulating technology programs and restructuring academia on macro and meso level. But Russia largely neglected the micro level of individual entrepreneurship in and outside enterprises. On the micro level Russia also neglected to create favorable conditions for innovation at private and state firms. Currently, driven by the infrastructure, there are now several SMEs coming out of the incubators but far too less. The reason is that Russia is buying the necessary high technology or knowledge and a market for innovation is in Russia largely absent.

Consequently, the internationalization phase is even more underdeveloped. Only for basic research and academics some plans for better performance exists. But the aim to be an international technology leader is not supported by a strategic plan. Only a few like Rusnano are active. Internationally, Russia remains dependent on foreign knowledge. The way out by building alliances with Chinese partners in energy and aerospace industry is not sufficient to create own indigenous innovation and National Innovation System.

Currently, the majority of Russian enterprises and entrepreneurs are primarily focusing on their own home market. Apart from the oil and gas industry, there are only a few others on the world market. Of course the sanctions are not very helpful to foster a world orientation but it is also the lack of a Russia marketing or international city marketing to improve the outward looking attitude and behavior. There is a saying ‘unknown, unloved’. Cross border contacts are one of the instruments to foster innovation. However, as we will see, cross border cooperation requires a lot more preconditions fulfilled to become successful.

Russia needs to change their perspective and thinking and acting about the future. First, only strategic innovation is the way out for Russia and secondly a dynamic view on the future is necessary.

2.4 Growth Cycle Versus Technology Frontier: Money Maker Versus Money Taker

The Growth Cycle versus the Technology Frontier is the core of this book. In Chap. 1 it became clear that Russia’s innovation strategies and policies are in fact identical with aiming at the Technology Frontier. In this respect, Russia adopted both a catch up as well as a leader strategy. Huge sums of money have been invested into the creation and implementation of The Strategy and other policies and measurements. Russian government declared innovative development as the main political and economic priority with an investment of $1 trillion over 30 years (Russia, 2014). But as shown before, substantial bottom line results are not yet to be seen. The current Russian Technology Frontier Model is a real Money Taker Model.

At the same time, till now it has been demonstrated that strategic innovation is by far the better way of thinking about growth and development than the focus on technology. The mix and mutual reinforcement of technical and non-technical innovation is called strategic innovation. The process in time of mutual reinforcement of technical and non-technical innovation is called emulation. A radical switch of current innovation strategies is required. Strategic innovation as the main basis for creating the future Russian Innovation System should be adopted. Strategic Innovation is a potential Money Maker Model.

In fact it is about the battle between the Technology Frontier versus the Strategic Innovation as presented in Fig. 2.10.

Fig. 2.10
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Technology frontier versus growth curve or money taker model versus money taker model

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The Money Maker Model Strategic Innovation is addressing Russia’s biggest challenges of reinventing the economy and installing a Russian Innovation System by means of innovative entrepreneurship carried out by individuals and private and state enterprises. The Strategic Innovation with the growth cycle is a dynamic view and solution to the static SWOT analysis mentioned in Chap. 1.

The Money Taker Model Technology Frontier consumes large sums of money but as long as entrepreneurialism and reinvention by incumbents stay behind it will continue to be a loss situation. All policies are focused on R&D, laboratories, cutting edge technology, closing the innovation gap, regional innovation centers and international publications. The Money Taker Model stimulates grant seeking behavior of enterprises and academia for financing technology studies instead of market innovations and industrial development. Russia possesses basic research capabilities but lacks commercialization and internationalization competences. But now even basic research is lagging behind because among other worldwide regions China is catching up. The Russian top sectors are dominated by biotech, nanotech, high tech and IT-Tech in their chase for the Technology Frontier.

The catch up strategy is nothing else than becoming equal or converging with benchmark technologies. Only when a 4I strategy is integrated, like US or China did, the catch up strategy can be rewarding (Someren, 2005; Someren & Someren-Wang, 2013a, b). In all other cases it is running a race without a finish and no gold medals at all.

The focus of strategic innovation is, contrary to the Technology Frontier, on creating business and commercialization and not on technology development. The future of Russia and its position in the world economy is not only shaped by technologies but by many other non-technical aspects as well which have at least an equal impact on our market structure, behavior, performance and time perception.

Originally economic science is mainly about scarce resources but also about value creation. In the past centuries Technology has always been at the core of economic studies. Value creation not only by technology but by individuals, products, services, organizations, regions, countries and combination of countries. The growth cycle is at the core of this value creation. But it is also about the context of this growth cycle (political system, institutions), the content (products, services, business model) and creativity (renewal) (Someren, 2005).

The driving forces or pillars of strategic innovations are presented in Table 2.4.

Table 2.4 Pillars of strategic innovation
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The core elements of strategic innovation boil down to the growth cycle as the core of dynamic economics, non-technical innovation as the number One key issue of innovation, the dynamic approach involving time aspects and emulation as the driver of creating something new and surpassing others.

A more detailed confrontation between Strategic Innovation and the Technology Frontier gives Fig. 2.11.

Fig. 2.11
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Technology frontier versus strategic innovation

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The Technology Frontier is focusing on creation of cutting edge technology or basic research whereas strategic innovation focuses on growth curve and conquering markets. The science and technology focus of the Technology Frontier is in the Strategic Innovation context replaced by market and business focus. The long term focus of the Technology Frontier is summarized by the technology paradigm and trajectories and strategic innovation puts growth path and business development at the center (Someren, 2014b). Instead of breakthrough technologies, which are the core aims in the Technology Frontier approach, societal and market issues and challenges are pivotal in the Strategic Innovation approach. Within the Technology Frontier closing the gap or creating a new technology frontier is the highest goal, in Strategic Innovation realizing dreams and sustainable value is the highest aim. Often centralized and predefined goals characterize the goal definition in the Technology Frontier whereas self-defined goals are driving Strategic Innovation. The Technology Frontier is developed within the context of the National Innovation System and in case of Strategic Innovation the inner entrepreneurial drive is the context which shapes the National Innovation System. High tech requires high investments with high uncertain return and for Strategic Innovation relatively low budgets can already be sufficient for kick off. Of course in the Technology Frontier, the main players are (academic) technicians but in Strategic Innovation the creative entrepreneurs and partners are the main actors. In the Technology Frontier concept, organization follows technology and technology needs infrastructure. In the Strategic Innovation approach context and non-technical innovations are key for technology. Often in Technology Frontier settings, policies are result of power and lobbying favoring a certain field of technology without clear market perspective. In the Strategic Innovation approach for creating a context no policies are needed. In developing and chasing the Technology Frontier, often the state is involved but for strategic innovation the role of the state depends on the situation.

It is clear that Russia has followed the Technology Frontier approach. Taken together, following the Strategic Innovation concept gives a complete different attitude and behavior in society compared to Technology Frontier. This is made clear in a stylized process comparing the value creation by the Technology Frontier and the Strategic Innovation approach in Fig. 2.12.

Fig. 2.12
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Technology frontier process versus strategic innovation process

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The economic process based on the Technology Frontier approach in the left column of Fig. 2.12 comes close to the reality of innovation approach in Russia. The economic development within the context of Strategic Innovation in the right column in Fig. 2.12 follows substantially different steps with opposite and potentially better bottom line results.

2.5 Russia’s Position on the Growth Cycle

The dynamic view of Strategic Innovation is necessary to get insight in the current situation. Figure 2.13 shows the dynamic view on the Russian National Innovation System thereby using the aspects discussed in previous sections.

Fig. 2.13
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Russia on a cross road. Source: based on Someren (2015a, b, Regionalistica, p., 12, Fig. 1), Russia on a cross road requiring strategic innovation Someren (2005), Strategische Innovationen, Gabler Verlag

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In Fig. 2.13 the first growth curve represents the old economy and its characteristics (Someren, 2015a). On the top of the curve, the current growth curve is confronted with both the various bottlenecks as well as the new megatrends as discussed in Chap. 1. Both the carrot (megatrends) and the stick (bottlenecks) force leaders to act because in these kinds of circumstances something new is being created. The normal and classical reaction of any country or organization is to improve the existing situation. Improvement means to extend the life time current growth cycle. Improvement measures are for example local new strategies, central government new policies and technology stimulation programs. Many of the measures of Russian central government fit into the category of improvement. Moreover, its technology push and top down approach does not fit into becoming a contender in the future world economy.

The only way out is strategic innovation with the aim to create a new growth curve. The US and China are definitely trying to create this new growth curve. The US is jumping on the Internet of Things and greening industry growth curve whereas China tries to install a mass entrepreneurial, an innovative country, a green economy and Industry 5.0. The EU and its member states do not have a clear profile and try to do everything. And what about Russia?

Based on the statistics of Chap. 1 and the major developments described thus far in Chap. 2, it can be concluded that Russia is on the downturn area of the first growth curve. Russia’s current answer of The Strategy is insufficient because it largely neglects the aspects of strategic innovation and the accompanying growth cycle dynamics in which the time factor is crucial. Moreover, the recent other (innovation) policies fit into the category of improvement measures and positions Russia on the improvement curve. Action is needed. And a radical switch is needed.

This radical switch from the Technical Frontier Black Box to the Strategic Innovation White Box is graphically presented in Fig. 2.14 (Someren, 2005).

Fig. 2.14
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From black box innovation to white box strategic innovation. Source: based on Someren (2005, fig. 1.2, p. 21)

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The Technology Frontier box turns black non-transparent due to hard to manage huge programs and budgets, cascade of uncoordinated programs, pre-defined technology areas, grant seeking behavior instead of value creating, isolated issues without a big picture and technology driven without business perspective. A more transparent and manageable approach focused on creating the next growth curve and the future earning money is needed. The white box contains issues related to Context, Creativity and Content (Someren, 2005). All the aspects related to the white box mentioned under will be elaborated in next chapters.

It is time to turn to the pillars of strategic innovation to better understand the inner dynamics and potential contribution of the Russian economy in general and the National Innovation System in particular. In Chap. 3, the main six pillars of the Strategic Innovation Theory will be elaborated: non-technical innovation, entrepreneurial activity, time factors, growth cycle, emulation and the dynamic value conversion.