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Americas innovation forum march 30 april 2 2008 conrad resort punta del este uruguay l.jpg

S

T

AMERICAS INNOVATION FORUMMarch 30 – April 2, 2008Conrad Resort, Punta del EsteURUGUAY

S&T Balance

The Finnish Case

Dr. Heikki Kotilainen

S&T Balance


Americas innovation forum march 30 april 2 2008 conrad resort punta del este uruguay2 l.jpg

S

T

AMERICAS INNOVATION FORUMMarch 30 – April 2, 2008Conrad Resort, Punta del EsteURUGUAY

S&T Balance

  • The Finnish Case

  • Contents

  • Introduction, Finland as a country

  • Innovation policy and respective organizations

  • Funding principles

  • Funding of innovation and national programs

  • Conclusions


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S

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AMERICAS INNOVATION FORUMMarch 30 – April 2, 2008Conrad Resort, Punta del EsteURUGUAY

S&T Balance

  • The Finnish Case

  • Introduction, Finland as a country


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Finland in Figures *

Total Area: 338,000 sq km, this makes

Finland the seventh largest country in Europe

Neighbouring Countries: Sweden, Norway,

Russia, Estonia

Capital: Helsinki

Main Cities & Population: Helsinki

(555,000), Espoo (213,000), Tampere

(195,000), Vantaa (178,000), Turku (172,000) and Oulu (120,800). Approximately one million people live in the Helsinki Metropolitan Area.

Population: approx. 5,3 million

Population Density: 17 inhabitants per square kilometre, 62 % of the population lives in towns and cities.

Currency: Euro. Until 2002 markka, also known as the Finnish mark (FIM).

Languages: Finnish (93 %) and Swedish (6 %) are official languages. Sami (Lappish) is the mother tongue of about 1,700 people.

Climate: The climate of Finland is marked by distinctive seasonal variations. Winters are cold and summers relatively warm.

National Legislature: Finland has a unicameral parliament with 200 members.

Finland in the International Community:

Member of EU, UN, OECD and WTO, among others.

Major Exports: Electronic and electrical products, pulp and paper, machinery and equipment, metal products, transport vehicles, timber and wood, chemicals

GDP: $176.4 billion (2006)

GDP per capita (PPP): $33,700 (2006)

GDP real growth rate: 5.5% (2006)

GDP composition by sector (2006)

Agriculture: 2.7%

Industry: 30.3%

Services: 67%

Unemployment rate: 7% (2006)

ECLAC Finnish Report 2007


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THE POLICY DEVELOPMENTS IN FINLAND

WEALTH DRIVEN ?

  • TECHNOLOGY&

  • SOCIETY

  • POLICY FOR

  • SOCIAL SCIENCES

INVESTMENT DRIVEN

TECHNOLOGICAL

ADVANCEMENT

?

  • INTERNATIONAL

  • COMPETITION

  • TECHNOLOGY POLICY

  • TECHNOLOGY

  • SUBSIDIES

NATIONAL

COMPETITIVENESS

MARKET/INNOVATION DRIVEN

MANUFACTURING DRIVEN

  • INTERNATIONAL

  • COOPERATION

  • SKILLS AS COMPETITIVE

  • FACTOR

  • INTRODUCTION OF

  • NATIONAL INNOVATION

  • SYSTEM

  • PRECONDITIONS FOR

  • TECHNOLOGICAL&SOCIETAL

  • ADVANCEMENT

  • RISK/VENTURE

  • CAPITAL

  • RAW MATERIALS AS

  • COMPETITIVE FACTOR

  • GROWING NATIONAL

  • DEMAND

  • INVESTMENT

  • SUBSIDIES

SURVIVAL POLICY

  • LACK OF

  • CONSUMER GOODS

  • INDEPENDENT

  • INDUSTRIES

  • DOMESTIC

  • MARKET

1945

2000

Industrialization &

Construction of

welfare state

Export,

technology &

innovation

© S&T Balance


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Finnish Trade

Trade in High-Tech products, 1991-2006*

Export by Industry, 1996-2006*

High technology products accounted for 21.3 per cent of all Finnish exports in 2006

The biggest surpluses in Finland’s foreign trade in high technology were recorded in trade with:Russia (+ EUR 1.2 billion)United Kingdom (+ EUR 600 million)Saudi Arabia & United Arab Emirates (both+ EUR 615 million) Italy (+ 520 EUR million). The balance was the most negative for Finland in trade with China (- EUR 1.5 billion).

* Source:Tekes, 2006


Competitiveness comparison l.jpg

Population

Population

over20 mill.

over20 mill.

less than20 mill.

less than20 mil.

USA

Taiwan

Sweden

Japan

Switzerland

Denmark

Israel

Estonia

Canada

Norway

Germany

UK

Australia

1

3

4

5

7

8

9

10

11

13

14

16

19

1

2

4

5

6

11

7

14

8

10

12

15

9

1

4

6

23

24

12

26

8

2

7

15

10

5

1

24

9

7

6

13

8

-

14

29

5

17

23

2003

2003

2003

2003

Finland

2

3

3

2

2

-

3

4

-

-

18

-

8

12

11

7

9

-

-

2

-

3

8

11

25

-

14

-

-

-

-

-

4

-

6

5

8

19

-

10

-

-

-

1

3

6

Competitiveness comparison

Ranking by the science and technology factor

WEFTechnology

UNDP

IMD

Technology

Science

2003

2002

2001

2000

2001

1

-

6

-

9

-

-

-

-

2

-

4

8

3

1

-

5

-

2

-

-

-

-

6

-

3

7

9

Sources: The World Competitiveness Yearbook (IMD), The Global Competitiveness Report (WEF)And Human Development report (UNDP)

DM 36054

11-2003 Copyright © Tekes


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Technology index (WEF)

4.0 4.5 5.0 5.5 6.0 6.5

Source: The Global Competitiveness Report 2003,3/4 based on quantitive material, 1/4 on query

DM 36054

04-2004 Copyright © Tekes


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S

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AMERICAS INNOVATION FORUMMarch 30 – April 2, 2008Conrad Resort, Punta del EsteURUGUAY

S&T Balance

The Finnish Case

2. Innovation policy and respective organizations


Future orientation l.jpg

Future orientation

Motto:

”Prepare answers to questions, which will be asked after 5 years”

Future orientation


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The Innovation Policy of Finland

  • Education, science, technology and know-how have been a conscious focus of the industrial policy and the foundation of the Finnish economy and society for a very long time.

  • The results of the policy can be seen today: the transformation from a low-tech country to a knowledge based society.

  • Investments in innovations are important, but as important are a consistent long term focus on national facilitating conditions, as well as operational measures to build up a well-committed, co-operative, well balanced, confidential and dynamic innovation environment.

  • Regional development is a special challenge, because the birth of innovations is very centralized.

  • Small countries, like Finland too, have a lot of challenges in the future.

DM 88582

03-2004 Copyright © Tekes


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PARLIAMENT

Future committee

General

policy

Tasks in the Finnish Innovation System

Government

Science & Technology

Policy Council

MoE

MEE

S&T&I

policy

Sitra

S&T&Innovation

policy formulation,

implementation,

funding

Academy

of

Finland

Tekes

TE-centres

Foundation

of Inventions

Public

Universities

Research Institutes

Centers of Excellence

Private

Enterprises

Research labs

R&D

performing

Business

funding

Semiprivate

Finvera

Sitra/VC

Industrial Investment/VC

Private

Venture Capital

Banks

Research funds

© S&T Balance

Tasks innov.


The triple helix l.jpg

Confederations of

Industry

Industry

The Triple Helix

Industry

Industry

Industry

Industry

EU Commission

-state aid

-regulations

-FP

Banks

Venture Capital

Business angels

Clusters

Semiprivate

SITRA

Finvera

Industrial Invest

Science &

Technology

Policy Council

Centres of Excellence

Technology/Science

Parks

Knowledge Centres

Sectorial Institutes

Tech Transfer offices

Institutes, labs

Universities

Research

institutes

Government

Ministries

Agencies

Patent offices,

IPR

Regional centres

TE-centres

© S&T Balance


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Planning and implementing of technologyand innovation policy

Science and technology

policy council, STPC

Government

3 year outlines

Plans

Ministries

(Education, Employment & Economy, Finance etc.)

Annual & semi-

annual

reports

and

feedback

Annual objectives and agreements

Operations

Institutions

(Academy of Finland, Tekes, Universities

VTT, Sectoral Institutes)

© S&T Balance

Tech.plocy execution


R d gdp in finland l.jpg

R&D/GDP in Finland

SERVICE POLICY ?

INNOVATION POLICY

%

%

TECHNOLOGY POLICY

OUTPUT ADDITIONALITY

BEHAVIOR ADDITIONALITY

COGNITIVE CAPACITY

INPUT ADDITIONALITY

SCIENCE POLICY

© S&T Balance


Circulation of innovation policy l.jpg

Circulation of innovation policy

Setting policy

agenda

Analysing policy

(Council, audit)

(Ministries, agencies, universities, industry,Evalution + outside experts)

Public interest

Private interest

Research

National strategy

Strategic intelligence

Sector policies

Policy evaluation

Implementation

(Ministries, agencies, universities, industry)

Implementation of strategies

Impact evaluation

Instrument set-up

Performance evaluation

Source: Tekes

© S&T Balance

Policy circulation


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BALANCE BETWEEN THE SCIENCE, TECHNOLOGY AND SOCIAL DEVELOPMENT

MAINTAIN CLEAR NATIONAL FOCUS

STPC

NATIONAL POLICY

Funding Agency for

Basic Research

ADAPTING TO

CUSTOMERS

(The Business Community, Society)

PROACTIVE VISION

(Science and University Community, Society)

Funding Agency

for Applied Research and Development

The Academy

Tekes

BOTTOM-UP REQUESTS

MANAGE KEY DEMANDS

BUSINESS & SOCIAL CHALLENGES

© Balance

S&T Balance


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S

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AMERICAS INNOVATION FORUMMarch 30 – April 2, 2008Conrad Resort, Punta del EsteURUGUAY

S&T Balance

The Finnish Case

3. Funding principles


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Prerequisites for administration involvement in R&D

  • Business and research understanding

  • Genuine interest in facilitating development

  • Trust by industrial community

  • Trust by research community

  • Money and funding opportunities

© S&T Balance

Admini.involvement


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Public funding of R&D and additionality

Source: Tekes publication 188/2006

© S&T Balance


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The Selection of Areas for R&D Funding

  • Administration

  • social needs

  • white spots on technology map

  • emerging technologies

  • globalisation challenges

  • emerging legislation

  • Industry

  • globalisation challenges

  • technology needs

  • clustering needs

  • new business models

  • Research

  • utilizing the strengths of research

  • improving the weaknesses of research

  • improving the industry cooperation

  • facilitating the technology transfer

  • improving the infrastructure of research

© S&T Balance

R&D fnding areas


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R&D Expenditures in Finland 20065789 M€; 3,45%/GDP

Private 4108 M€

71,0%

Public 1681 M€

29,0 %

Tekes

504,3M€

(30,0%)

Academy of

Finland

275,8 M€

(16,4%)

Universities

446,4 M€

(26,6%)

Research

institutes

282,0 M€

(16,8%)

Others

172,7M€

(10,2%)

Competitive funding

Institutional funding

© S&T Balance

Source: Statistics Finland


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R&D investments of public and private sectors 1999-2006 in Finland

R&D/GDP

3,45%

3,48%

3,46%

3,43%

3,35%

3,30%

3,34%

3,16%

1M €

68,2%

70,9%

71,1%

69,9%

710%

70,5%

70,1%

70,8%

Source: Statistics Finland

© S&T Balance


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S

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AMERICAS INNOVATION FORUMMarch 30 – April 2, 2008Conrad Resort, Punta del EsteURUGUAY

S&T Balance

The Finnish Case

4. Funding of innovations and national programs


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Multiplication of public money in the innovation system

Cumulative tax

Government

Parliament

Ministries

Short term investment

Public finance

Venture

capital

  • Funding agency

  • grants

  • loans

  • equity funding

Long term investment

Businesses, employment

Universities

Research institutes

New technology, knowledge, skills

© S&T Balance

Pres/Multiplicatioon publicmoney


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Innovation Trends

User-based innovations

Merger of manufacturing and service

Mulitidisciplinary innovations

Public and private sector innovations

Globalisation of innovations

Small firm innovations- large firm interventions

© S&T Balance

Innov.trends


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Research and Innovation

New knowledge

Curiosity

Business models

Customer needs

”If innovation is the commercial application of existing knowledge

in a new context, technologically

driven innovation is only one

form of this. Innovation is distinct

from research, which results in

new knowledge and from the

entrepreneurial function that spots

market opportunities for products

and services. It is the result of the interaction of these two functions”

”Innovate for a competitive

Europe”,

A new Action Plan for Innovation,

European Commission, 2004

Research

Innovation

R & D

WORK

Linear model

Scientific excellence

Turnover/earnings

Growth and Employment

Meet R&I

© S&T Balance


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RESEARCH PARADIGMS

Old paradigm (LINEAR MODEL)

BASIC RESEARCHAPPLIED RESEARCHDEVELOPMENT

New paradigm (CONCURRENT MODEL)

SCIENTIFIC UNDERSTANDING

PROBLEM

SOLVING

DEMAND

Basic research

MARKET

Appliedresearch

SOCIETAL & BUSINESS CHALLENGES

Development

TECHNOLOGICAL SOLUTIONS

© S&T Balance


The general objectives of the national technology programmes l.jpg

THE GENERAL OBJECTIVES OF THE NATIONAL TECHNOLOGY PROGRAMMES

  • To promote the industrial competitiveness to keep up with the global market change

  • To give input to the industrial innovation process

  • To create new knowledge to fulfil the needs of research,

  • Industry and society

  • To create the critical mass and centres of excellence in important technological areas

  • To enhance the co-operation between industry and universities and research institution

  • To promote international co-operation

  • To support research education and to educate internationally oriented research managers

  • To enhance the research and high-tech image of the country

© S&T Balance

Objectives natl progr


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The relation between the national technology programme and innovation

INNOVATIONS

Innovations

Company 5

Company 3

Company 4

Company 2

Development projects

Company 1

Technology programme, joint research with multiple participants

Research

© S&T Balance


Process character of technology transfer l.jpg

Process Character of Technology Transfer

RESEARCH (SUPPLY)

INDUSTRY (DEMAND)

CURIOSITY

KNOWLEDGE

CREATION

SCIENTIFIC

EXCELLENCE

PUBLICATIONS

ADAPTATION OF

SCIENTIFIC

RESULTS

FOR

TECHNOLOGICAL

USE

”Requirement for

technological success”

ADAPTATION

OF

TECHNOLOGICAL

KNOWLEDGE

FOR

INDUSTRIAL

USE

”Requirement for

market success”

  • CUSTOMER

  • NEEDS

  • MARKET&

  • MARKETABILITY

  • STRATEGY

  • PRODUCT

  • PORTFOLIO

  • R&D PORTFOLIO

  • COMPETENCE

  • MONEY&

  • FINANCING

  • IPR

  • REVENUES

TECHNOLOGY TRANSFER

Can we do it?

Can we market it?

Is it possible?

How we do it?

© S&T Balance

Transfer process


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Cooperation between companiesShare of cooperating companies of all innovating companies

%

Source: Towards a European Research Area - Key Figures, Special Edition. EU 2001


Unique features of finnish innovation system l.jpg

Unique features of Finnish innovation system

  • Simultaneous implementation of following issues:

  • Genuine and voluntary cooperation within Triple Helix

  • High degree of concensus and implementation

  • Funding simultaneously universities, research insititutes and

  • industry to couple basic, applied research to development

  • High degree of freedom for decision making

  • In-house assessment of projects (Tekes)

  • System for national technology programmes

  • Genuine, holistic and simple system (few actors: Tekes, Academy)

  • Clear share of labour: Tekes for applied research and development

  • The Academy for basic research)

© S&T Balance

Uniqueness of FI system


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Technological success rate of enterprise research projects concluded in 2002

concluded

1145 projects

611 mio. €

No information

240 projects, 100 mio. €

16 %

84 %

Stopped or failed projects

37 projects, 17 mio. €

905 projects

511 mio. €

3 %

Success less than

satisfactory, 155 projects

99 mio. €

19 %

54 %

23 %

Success as

expected or

better

525 projects

278 mio. €

Otherwise as expected,

but late 188 projects

117 mio. €

Number and volume of projects

57305,

04-2003 Copyright © Tekes


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S

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AMERICAS INNOVATION FORUMMarch 30 – April 2, 2008Conrad Resort, Punta del EsteURUGUAY

S&T Balance

  • The Finnish Case

  • 5. Conclusions


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Acceptability of State Aid and Other Incentives in the Society

COMPLIANCE

with national and

international legislation

TRANSPARENCY

of criteria and processes

EFFECTIVE

Implementation

Speed is crucial!

UNDERSTANDABLE

and

PREDICTABLE

operation

FLEXIBLE

adaptation to rapidly

changing environment

CONTINUOUS EVALUATION

of results and processes

FEEDBACK

WIDE ACCEPTANCE

in the society

© S&T Balance


Lessons learned from the finnish case l.jpg

Lessons learned from the Finnish Case

Invest in people

Consistency in policies

Clear national strategy i.e. right choices

Long term investments in R&D; Government as facilitator and investor

Co-operation within the ”triple helix”

Strong national agencies with freedom to act and implement the policies

Balanced development of basic research and industrial R&D

Continuous evaluation of the organizations, operations and programmes and quick feedback to decision makers

Benchmark the best performers, don’t copy any of them

© S&T Balance


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Thank you for your kind attention!

S&T Balance


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