Sanctions have forced Russians to build things themselves, rather than buying everything from abroad. Fortunately, Russia possesses deep wells of creativity and ingenuity. Even the Economist Intelligence Unit once admitted that, “it’s a defensible statement that Russian human resources are the best in the world1”.
Russians have pioneered many technologies often attributed to the West: steam engines (Cherapanov vs. Watt), lightbulbs (Lodygin vs. Edison), radio (Popov vs. Marconi), transistors (Losev vs. Bell labs), lasers (Basov and Prokhorov vs. Maiman), and even computers (Lebedev over Babbage or Turing).
In his excellent book, Lonely Ideas2, MIT professor Loren Graham acknowledges that Russians, “have legitimate claims to being pioneers in the development of all these technologies”. But he also raised two critical questions: When was the last time you bought something ‘Made In Russia?’ And, where are all the Russian commercial powerhouses in these industries they were pioneers in?
Communism may explain why Russia didn’t develop thriving commercial industries in the past. But the question today is: will it be different this time?
Russians have invented the first covid vaccine (Sputnik V3), made breakthroughs in mRNA vaccines for cancer4, developed hydrogen powered vessels (Ecobalt5) and space microscopes (SMM-2000S6). But will these breakthroughs translate into lasting economic benefits, or will Russia be outcompeted globally again?
Russia excels at breakthrough inventions, but struggles to capture their economic value, in other words, innovation that transforms industries. This requires expertise in commercialisation, not just invention. Although Russia boasts Europe’s equivalents of Google, Facebook and Amazon (Yandex, VK, and Wildberries) — suggesting serious technical/commercial expertise — these are arguably exceptions, not the rule.
The question then is: Which factors prevent Russian businesses from becoming global powerhouses?
To explore this, we’ll use a Wardley Map — an open source tool for visualising a business landscape and identifying better strategic moves. If you’re unfamiliar with Wardley Maps, we recommend watching this short video first: Wardley Mapping In Under Five Minutes.
Ready to dive in? Let’s map out the steps in Russia’s journey from invention to innovation and try to identify what’s missing.
Mapping the Journey from Invention to Innovation
This map focused on ‘Russia Inc.’ — the Russian business ecosystem — that needs to build ‘powerhouse industries’ in order to be competitive globally.
What we’re going to show is how to do that.
First. Russia Inc. needs the kind of breakthrough inventions that it excels in. Breakthroughs provide an initial advantage that can be capitalised on — such as Henry Ford’s moving assembly line, which powered the rise of Ford and the US automobile industry; or Apple’s iPhone, which launched the smartphone revolution and accelerated the dominance of Silicon Valley. Therefore, we place ‘breakthrough inventions’ (1) in the ‘uncharted’ space on our map, representing activities new to the world, that could be exciting as a potential source of future value, but remain highly-uncertain.
Research centres, often linked to universities, are essential to breakthroughs. We’ve placed ‘universities and research centres’ (2) in the ‘transitional’ stage on our map to show that there is more certainty about these, but they still vary in effectiveness. However, unless inventions become innovations that capture economic value, they risk becoming just more ‘lonely ideas’ that went nowhere.
Therefore, Russia Inc. needs to refine how it ‘goes to market’ (3) to capture the value from its breakthroughs as universities and research centres lack this capability. Something else is needed. Learning from others, suggests that a vibrant ‘venture capital (VC) ecosystem’ (4) needs to be developed: business people who can recognise the commercial potential of a new breakthrough and can even ‘put their money where their mouth is’: providing the capital and know-how needed to take breakthroughs out of the laboratory and into the market-place. Developing a vibrant VC ecosystem needs many things — and we could map this out in a detailed sub-map. But to keep everything high-level for now, we’re going to put just one component it needs — strong ‘property protections’ (5) to assure investors they will reap returns from any investments they make.
Once a breakthrough has proven viable domestically, the next step is to deliver ‘global sales’ (6) if it hopes to develop into an industrial powerhouse. This demands effective ‘sales and distribution channels’ (7) to get products to international markets, alongside rigorous ‘quality control (QC)’ (8) to ensure they meet the standards of. Therefore, some kind of ‘monitoring standard’ (9) is also needed, which can help raise the perception of goods in international eyes. For example, ‘Made in China’ used to be synonymous with cheap, inferior goods but a clear strategy to move up the value chain and produce high quality technology is changing this perception — the same way Japan did half a century earlier.
Finally, ‘scaled manufacturing’ (10) is critical for meeting the international demand the previous steps have created. This requires effective ‘manufacturing processes’ (11), which will need to be integrated with the the ‘quality control’ and effective ‘monitoring’ systems discussed above.
Of course, many other activities will need to be performed, but this high-level map outlines the key components Russia Inc. needs to execute in order to turn breakthrough inventions into value-creating innovations that build global powerhouse industries.
In Part 2 of this series, we’ll explore where ‘Russia Inc.’ is falling short today and what it needs to change to overcome these obstacles.
Note: Mapping allows us to make our assumptions explicit, so others can see and challenge them. This is how we improve our situational awareness — our ability to anticipate what is going to happen and act strategically to shape it our advantage. So if you see something here that’s missing, or wrong, drop a comment under this post on our telegram channel t.me/wardleymapping and let’s make a better map that improves our strategic insight together. And don’t forget to join the channel so you don’t miss part 2 of ‘The Innovation Gap: What Holds Russian Business Back from Global Success?’
1 Human resources in Russia: The greatest opportunity, the greatest challenge. Economist Intelligence Unit (2007)