1. M·CAM – The Operating System for the Fusion Economy™ © 2007 Resilient Innovation for Economic Transformation Innovation: The Role of Business Incubation Hanoi University of Technology Hanoi, Vietnam October 3-5, 2007 Dr. David E. Martin, CEO M·CAM Batten Fellow, Darden Graduate School of Business Administration, University of Virginia

2. M·CAM – The Operating System for the Fusion Economy™ © 2007 Modern Innovation Paradigm  Russia’s Sputnik satellite (50 years ago) and Japan’s semiconductor market dominance (30 years ago) shook science & technology complacency of the West  1960’s – Vast nationalization of R&D funding  1980’s – Creation of intellectual property R&D trade barriers

3. M·CAM – The Operating System for the Fusion Economy™ © 2007 U.S. Bayh-Dole Act of 1980  Stimulated vast monopoly holdings in the form of patents and intellectual property  Triggered extensive equity speculation  Created huge stockpiles of “innovation” with NO market  Over 90% of all patents from publicly funded R&D never put to commercial use  Most IP&R from industry abandoned prior to expiration of patents

4. M·CAM – The Operating System for the Fusion Economy™ © 2007 Policies Lack Industry Reality  Majority of innovation succeeds by large enterprise merger & acquisition deployment – NOT THROUGH BUILDING LONG TERM BUSINESSES  Note: Countries without large legacy companies have little to gain from building small & medium sized technology companies for global market distribution  Compare investment flow  Seed capital into technology – US$ 2 billion  M&A capital into consolidation – US$ 8 trillion  Mature equity markets require investment returns prior to technology deployment life cycle

5. M·CAM – The Operating System for the Fusion Economy™ © 2007 What has worked?  Governments preferentially purchase from SME’s rather than invest in them  Sharp silicon solar photovoltaics in Japan  IBM – U.S. government purchaser  Oracle – launched from a CIA commercial project  Purchases are at or above global market rate but selected because of strategic industry incentive

6. M·CAM – The Operating System for the Fusion Economy™ © 2007 How does Asia-Pac compete?  Majority of trained scientists and engineers between Beijing and Delhi  Over-patenting in the West has created useless, anti-growth barriers which do not have foreign equivalents  Asia-Pac can exploit Global Innovation Commons filled with geographically limited IP&R  Linking researchers with collaboration platforms can put best ideas in hands of best collaborators for non-legacy economies

7. M·CAM – The Operating System for the Fusion Economy™ © 2007 Immediate Actions Immediate Actions  Governments and Agencies purchase rather than “invest”  $1 invested is $1 added to economy  $1 from purchase by a recognized customer can be leveraged to $3-5 in debt financing or $10 in equity  Buying from SMEs and SME networks builds economies, not just a single enterprise  Buyer networks can be facilitated by governments and NGOs

8. M·CAM – The Operating System for the Fusion Economy™ © 2007 Leverage 30 years of excess  Vietnamese Ministry of Education & Training could institute require reading of patents to teach how others solved technical challenges to learn successful solution frameworks  Asia-Pac governments can build laws encouraging trade networks built on innovation rather than building barriers such as anti-monopoly regulations  U.S. and European Anti-Trust Laws prohibit many patent pooling efforts – these laws are outdated due to excessive patenting activities on incremental innovations  Incubation can focus on Collaboration Networks and licensing pools rather than individual enterprise creation

9. M·CAM – The Operating System for the Fusion Economy™ © 2007 New Asia-Pac Era  Competing for the next scientific advance – not the lowest labor cost  Build networks of commercial interdependence rather than proprietary isolationism  Focus on global challenges – sustainable quality of life rather than material consumables:  Water, bio-energy, sustainable agriculture, distributed information networks, communication, education

10. M·CAM – The Operating System for the Fusion Economy™ © 2007 How does this work?

11. M·CAM – The Operating System for the Fusion Economy™ © 2007 Knowledge Network Local Knowledge Domestic Patents Domestic Patents Foreign Patents Foreign Patents Abandon IPR Abandon IPR Abandon IPR Abandon IPR Potential Partners Potential Partners Potential Partners Abandon IPR Potential Partners Competitor Agreement Competitor Agreement Foreign Patents Abandon IPR Abandon IPR Innovation Commons

12. M·CAM – The Operating System for the Fusion Economy™ © 2007 Global Innovation Commons Local Knowledge Domestic Patents Domestic Patents Foreign Patents Foreign Patents Abandon IPR Abandon IPR Abandon IPR Abandon IPR Potential Partners Potential Partners Potential Partners Abandon IPR Potential Partners Competitor Agreement Competitor Agreement Foreign Patents Abandon IPR Abandon IPR Innovation Commons 1.Qualify global position & market 2.Leverage existing knowledge networks 3.Identify affinity innovators & challenges 4.Seed “new” challenges to affinity innovators

13. M·CAM – The Operating System for the Fusion Economy™ © 2007 Case Study Wind Technology from Hanoi Vietnam Possible Commercial Partners Known Commercial Efforts

14. M·CAM – The Operating System for the Fusion Economy™ © 2007 Making Markets and Networks

15. M·CAM – The Operating System for the Fusion Economy™ © 2007 Instant Market Viability Assessment Third Party Research and Commercial Markets Here

16. M·CAM – The Operating System for the Fusion Economy™ © 2007 Fusion Networks  Grassroots synergy – no person is alone  Fusion networks built by proven capability to innovate  Improved by collaboration evidence (willing to share for a common good)  Grow using “guided innovation” where networks are united around common problems