“Where are the Russian technology success stories?” As a foreigner, this question often sounds like an odd question. There are many Russian success stories in the IT sector, ranging from world-class software outsourcing companies like EPAM and Luxoft, to Russian software product companies that have international success, like Kaspersky Labs, Abbyy and Parallels. However, simply pointing to a few IT companies does not go to the heart of the question—the search for examples that illustrate potential for large-scale transformation of the Russian economy.
To show that models for success exist, I would like to highlight three that I encountered on a recent trip to the Perm Krai. These companies illustrate different routes to success for Russian technology companies – commercialization of university knowledge, transformation of a Soviet enterprise and entrepreneurial adaptation to the 2008 downturn through entering new technology sectors.
Prognoz
Among the pioneers of university-based commercialization is Prognoz, a developer and provider of business intelligence software solutions, analytical and forecasting systems and decision support systems in both Russian and international markets. Headquartered in Perm and founded in 1991 by Dmitriy L. Andrianov, a professor in the Economic Cybernetics Department of Perm State University, the company emerged from a university project at PSU.
Prognoz gradually found success in the Russian market, mainly through projects with Russian regional governments, then with Russian Federal Ministries and later with large Russian organizations like the Bank of Russia and Gazprom. Beginning foreign sales only in 2006, the company has grown so rapidly in international markets that it now makes a significant portion of its revenue from them. Prognoz customers include 3M, CNBC, Oxford Economics, U.S. Dept. of Agriculture, BASF, Bayer, Syngenta, AGCO and international agencies like the World Bank, IMF, OECD, the African Development Bank and the World Health Organization.
PNPPK
A different challenge for the Russian economy has been the transformation of Soviet-era enterprises into modern companies that both utilize and produce high-end technology. The prime example of successful transformation from old to new that should point the way for other similar former Soviet enterprises in Perm is the Perm Scientific-Industrial Instrument Making Company (PNPPK). PNPPK was founded in 1956 under the Ministry of Aviation as an instrument production facility for rocket and space technology. By 1960, it was a major producer of gyroscopes for missile flight control in military and space applications. The collapse of the central planning apparatus meant separation from the design bureaus that guided technical innovation in the Soviet period and led to difficult times for PNPPK.
In response, PNPPK had to create its own research and development capacity through recruiting former Soviet-era specialists from around the country and through close collaboration with Perm State Technical University and Perm State University in developing training programs for young specialists. The capacity developed through its own R&D facilities has resulted in new generations of navigations systems for civilian and military aeronautical, marine and terrestrial applications. While the majority of sales are in the Russian market, PNPPK has developed foreign sales and expects these to increase based on the growing strength of its R&D.
Silicon Perm
The creation of Silicon Perm illustrates adaptation by Russia entrepreneurs to the economic crisis of 2008 and to world-wide trends in technology. The company was formed by Perm entrepreneur Vyacheslav Potantin in response to the drop in orders for his electrical utility construction company Electrotechnical during the crisis. Partially financed by RUSNANO, Silicon Perm will begin production of microelectronic grade polysilicon by the first quarter of 2013. The polysilicon will be sold to customers inside Russia and in Taiwan, India and Saudi Arabia. Silicon Perm has had discussions with my company, Russia Innovation Collaborative, regarding U.S. market entry.
Silicon Perm is the anchor for development of an industrial park in the town of Dobryanka that will be called “SMART Perm.” The industrial park will include three industrial clusters: microelectronics – producing polycrystalline silicon, monocrystalline silicon ingots and silicon wafers; LED – producing sapphire wafers, super bright LEDs and LED lamps; and equipment for electrical and power sector – producing energy-efficient motors, Li-Ion batteries and superconductors.
The timeline of success
A few conclusions are obvious when examining these success stories. Neither Prognoz, nor PNPPK were overnight successes. Each required 10-15 years of sustained activity to reach the levels of success that they currently enjoy. It is too early to say about the success of Silicon Perm, but it is safe to say that it will also take some period of time to build a successful business and industrial park. In all three cases, strong leadership has been critical. Lastly, all three are market-oriented and look to both the Russian market and international markets for measuring the quality of their production and for potential customers.
