“Finland’s competitive position is changing. The positive momentum we have achieved won’t be sustained without change,” said Mikko Alkio, state secretary at the Finnish ministry of employment and the economy at a conference moderated by Science Business.
A new definition of innovation
The strategy has a much broader definition of innovation than the one used in the past. Under the plan, to be adopted by the Finnish government in August, you won’t have to be an egg-head in a white lab coat to count. An innovator could come from the services sector: designers, marketers, and the like.
It also calls for even greater financial commitment to innovation from the government: greater overall spending on R&D as well as the creation of new tax incentives especially for risk-taking small firms. Under the plan, for example, up to €1 million of public money could be invested in a growth company through a new European young innovative company fund which, if approved in August, would be a radical step for Finland.
The plan also wants to create tax incentives for private investors investing in risky businesses, and to attract qualified people from abroad with lower income tax rates than they would normally expect from a high tax Nordic country like Finland.
But it's most important elements are the new focus on getting the private sector more involved in R&D, and the attempt to make Finland – a small country with a population of just over 5 million people – more connected with companies and researchers from abroad.
In a nutshell, the strategy has four broad strands: an international dimension to innovation; demand as well as user orientation of innovation; supporting innovative individuals and communities and finally broad management of change.
The strategy was largely inspired by a report prepared by Aho in 2006 for the EU, which urged creation of an innovation-friendly markets in which businesses can launch new products and services.
Finland already devotes 3.5 per cent of gross domestic product on R&D – a third of which is paid for by the government. The European average in 2006 was a paltry 1.8 per cent.
Under the new innovation strategy Finland aims to boost R&D spending even further, setting a 4 per cent target for the period up to 2011.
But it is the details of the new plan, rather than the headline target figure, that has really sparked interest, not only from other countries but also from the European Commission.
The emphasis is on broadening the scope of R&D investment beyond the IT domain, where Finland is so strong largely because of its greatest industrial crown jewel: Nokia.
In addition to IT, the new strategy aims to foster innovation in the service sector, branding and design, and in the public sector, said Petri Peltonen, head of the innovation department in Finland’s ministry of employment and the economy.
Another core objective of the new strategy is to build the “demand pull” side of the innovation equation. In other words, getting private companies more involved in the innovation process, rather than just pushing out research for the sake of it.
As Finland doesn’t have many innovative companies beyond Nokia this will require more international interaction, Peltonen said.
“In order to succeed, Finland must actively participate and exert influence and be internationally mobile and attractive,” he said.
Esko Aho, president of the Finnish Innovation Fund, Sitra, and former Finnish prime minister is a fan of the new strategy and he shares the sense of urgency expressed by Alkio.
He pointed out one area in which Finland must do better that has been ignored in the new strategy: higher education. “Finnish universities urgently need foreign teachers, researchers and students. We have to internationalise our universities and there isn't much time,” he said, pointing out that universities in countries, including India, are attracting raw talent as they improve their higher education infrastructure.
Riika Heikinheimo, executive director of Tekes, Finland’s innovation agency which was involved in drawing up the new innovation strategy, said university reform was excluded because it is generally praised for being among the best in Europe.
“We wanted to focus on things that need to change. The university system is going well; we don’t need to change it,” she said.
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