Excerpts from transcript of meeting of the Commission for Modernisation and Technological Development of Russia’s Economy 2010-12-14 14:00:00 Skolkovo, Moscow Region President of Russia Dmitry Medvedev: Good afternoon and welcome to everyone gathered here for the Go Russia! National Innovation Forum and the meeting of the Commission for Modernisation and Technological Development of Russia's Economy. I have spoken on numerous occasions about the tasks we have ahead over the coming years. We have been working hard this year too on developing our technology and laying the foundations for a new economy. It is probably not for us to judge how successful these efforts have been. Of course there are still plenty of problems that we need to sort out, organisational and financing problems, but overall, I stress that we did make a real effort. As far as the members of this Commission are concerned, we met very regularly, every month, to discuss the most relevant national development and economic modernisation issues, looking at things sector by sector, discussing ways to improve the laws, and examining various business development issues. We have made an effort to explain this work and keep people informed. The Go Russia! forum is taking place today here. I wish a warm welcome to all the participants, everyone here in this hall, and everyone in the other venues too. They are not far away, as I understand it, and can see us too, and so I congratulate all of you on the start of work. A big plenary meeting already took place yesterday. I saw part of the speeches on my way to work yesterday, and I think there was plenty of interest. I hope that today will be interesting too. Let me give the floor now to our colleagues who wish to speak. I will also give those present in the hall and those in touch with us from outside the chance to speak too. * * * We have been discussing the technical regulations issue with the business community and at Commission meetings. Actually, the Commission has devoted several meetings to this issue, and to introducing a new certification and standards system, over the last two years. This has enabled us to move faster than we initially thought would be possible to change our technical regulation laws. I would not call our laws ideal, and there are still things that need improving, but we have made some very relevant and important changes, including making it possible to use European Union technical standards in our country without having to specially pass them into domestic legislation. In other words, as the law stands now, these standards can be applied in Russia without having to be first made part of Russian law, and this is an important decision. By the way, and I say this to the Commission members present in the hall today (I think the Trade and Industry Minister is somewhere among you there too), I would like to receive information on these standards’ use, who is using them, to what extent, and whether there are any problems encountered. This way, we can come back to this issue at the next Commission meeting. This is a very important matter for our industry, after all, and for our business. * * * On the subject of foreign specialists and a few other matters, you are right in saying that we have made some progress. This does not mean that everything is in order now, but we have simplified some procedures. Our foreign partners have also noted this when I’ve met with them, and I hope that the foreign specialists who come here to work are feeling the benefits of these changes too. You spoke the memorable words that business does not need innovation purely for innovation’s sake. This is fair enough of course, but don’t forget that not all business is alike. In cases when business is not working in a competitive environment it never has any need for innovation. After all, if business is doing well as it is and people are buying the goods its produces, even if they are totally technologically outdated, it is never going to invest in innovation. This is not just a question of the internal motivations of the business itself, but also of the particular environment in which it works. * * * I think that it is better not to intervene in business in general. What is business all about? It is about people who decide at their own risk to enter a particular field of activity with the aim of ultimately making a profit. This is what risk activity is all about. Any business, not just innovative business, but even trading oil, surprisingly, is sometimes a risky business, though many might think otherwise. And so the less we intervene in business the better, and this is the recipe for achieving results, although there are cases involving particular national priorities, goals we have set, but here too, we are not talking about direct intervention. You are absolutely right in saying that innovative business cannot live on state support alone. People have been drawing attention lately to the state authorities’ new focus on this kind of business. You described this as a ‘quantum leap’ on our part towards this business. I don’t know if I would describe it that way, but it is certainly true that we have started working on this, working on it in concerted fashion. I hope, however, that no one among our entrepreneurs, whether in the public or private sectors, will get the impression that all of this development is going to be built primarily on state support, because this would only create a vicious circle in which we will never succeed in developing normal innovative business. Of course we will invest state funds in this work, but this cannot last forever. The aim of this investment after all is to build up totally private and freely operating systems that are not dependent on the state. Of course the state authorities will invest money in the most relevant and important research and programmes. The state authorities do this not just in Russia but in other countries too. When I spoke with the heads of Stanford, they said that 85 percent of the money for research programmes came from state funds. But that is understandable – this is research programmes we are talking about, not business. Business is something different and should be completely independent. You spoke about professional venture capitalists. I just want to add my support to your words, because these are generally absolutely professional people distinguished by their particular way of thinking. After all, as I said, business involves a set of risks, in some cases greater, in some cases lesser. But professional venture capitalists work with different risk constructions, and this no doubt gives them particular training and makes them into a special breed of people. You spoke about creating a suitable legal environment in our country and mentioned LP. If I understood correctly, you are talking about limited partnership. We have had endless debates at the Commission meetings on this point. As someone with a general legal education, I always took the line that our country does have an equivalent of limited partnership, 100 percent, if we take a literal logic. I asked my colleagues to look into this and we gave the instruction to see if there are any rules concerning this kind of partnership in our country that are not fully adapted to innovative business’ needs and aims, and if there are, we can fix them. I remind the Presidential Executive Office that I did give this instruction. Now the results need to be produced. After all, we need to work out whether or not changes need to be made to the laws or not. This is not the first time we have discussed this matter. Now I hear again that we need an equivalent of limited partnership, but we already have this concept. So, the question is what amendments are needed to our laws to make it work. Regarding the assertion that state funds use non-market management mechanisms, this is nothing surprising, but the real question is the balance between use of these mechanisms and market mechanisms. This is a question of preference and preparation. On the matter of venture funds and angel investment, these are certainly very important things. Of course we need to create these conditions in the long term. These are not conditions developed for just six months or a year, but need to be conditions forecast by business from a taxation point of view, and also in terms of organisation rules. The final point, I think you said something extremely important for our country, perhaps more important here than anywhere else: our system needs to learn how to pardon failures. I think this is absolutely right, because, when it comes to work and research of this sort we have a particular perception that you could call an administration and prosecutor’s way of thinking. Any negative result or failure to reach particular targets is perceived as not just an individual failure, which it probably is in part, but often as a breach of state discipline that leads to various penalties, including criminal liability. I think that our laws and judicial system do indeed need to learn how to be much more flexible than in the past in their response to these kinds of things. I think this is legal aspect we have to address. * * * On the subject of information support for our modernisation drive and information support for innovation, you are absolutely right of course. What is interesting and entertaining always catches our attention in general, and whether young or not so young, we have little time for things dull and boring, and so there is a need for new products. But they do need to be cleverly done and not completely juvenile. I agree that people looking for information often find the sites providing this information rather dull. In this respect, the idea of using comics as a technique is interesting. I’m not sure, true, that I could turn my own site into a comic strip. I don’t think that would be for the best. Actually, the presidential site does use comic strip technique too. We use it to present information on the President’s work and the state institutions on the site specially aimed at children. Using illustrations is a good way to make this information easier to understand. But this is an exception of course. It is true that a lot of information is rather boring and dull and fails to achieve its effect, and so we probably do need to think about using new forms of presenting information. As for television and various creative products, you are right here too. If you think back to our common homeland that was the Soviet Union, we used to produce a lot of films about scientists, inventors, engineers, and this was a very prestigious subject, especially in the 1960s, but then it went out of fashion. I agree that we need positive examples of people who have achieved success through their own hard work, investment and activeness. It is important in general to have examples of success. We need success stories of people in innovative business, people involved in modernisation. Some of the colleagues who spoke suggested that we establish new television channels, science channels. I will think about this, all the more some proposals on this matter exist already, including from VGTRK [National State Television and Radio Company]. We will come back to this matter very soon. The same goes for results. I agree with you completely that we need to inform about results too, otherwise we end up with the feeling of being in a constant search, running up against the same problems over and over, not succeeding in anything, and being losers who are never going to achieve anything. We talk about how we have this problem and that problem, not enough money here, not enough state effort there, bureaucrats getting in the way. All of this is real, but we need to talk not just about this, but about the results achieved too, otherwise people will just give up. The people working on the kind of research we are discussing today, people in innovative business, are people with a good dose of optimism, otherwise they would not go into this business and would have perhaps chosen some other path. On the subject of the brain drain, the problem is real of course, and we are all very much aware of it. The only way to combat this is to create competitive conditions for work and development. That is the first task. Second, we need to treat this seriously, but at the same time, we should not be afraid, and should not lament that, ”everyone has left and it's a disaster“. If we make our country competitive people will come back. Of course this requires effort on our part. We cannot lower an iron curtain or use some other means of preventing this brain drain. This is not possible. In my [Presidential] Address [to the Federal Assembly] I spoke about creating special funds for supporting talented youth and developing specific programmes and standards for supporting talented children and students. * * * Skolkovo’s aim is to develop people and create new opportunities for them to open up their potential. If they cannot find these opportunities in other places they should come to Skolkovo. There is nothing to fear here. Skolkovo is not a sinecure, not a place for life. A talented person with achievements to their name is not going to get to come here to work for the next 30 years. This is absolutely not what Skolkovo is about. Come here to work, do research, give lectures, stay for 2–3 years, and then leave again. What we want is to have a flow of people coming through, an exchange of people trained here in Russia, people who are professionals in their area. This is essential. There is therefore no need to fear Skolkovo. On the contrary, you should be happy to let people come here to work. But at the same time, we need to establish normal conditions in other places too of course. As for the idea of setting up various branches of Skolkovo, I have spoken about this before and think it is perfectly possible. We need to build this main platform and get it running first. I have already received dozens of proposals from regional governors and universities suggesting that they open relevant branches of Skolkovo. This is all possible, but let’s first get the main site up and running.