Post on 12-Jan-2016
The essence of a national innovation system
Dr. Heikki Kotilainen
Deputy Director General
Tekes, the National Technology Agency
Prague 30.11.2004
Dr. Heikki KotilainenDeputy Director General
Dr. tech. in mechanical engineering and physical metallurgy, studies in Germany and Austria
Work in business and research In Tekes since establishment 1983 Responsible for international
cooperation, national programmes, funding
Industrial councellor in Boston U.S. (1993-95)
Secretary General of EUREKA in Brussels (1999-2003)
Currently responsible for international innovation benchmarking and strategic planning
INNOVATION
SCIENCETECHNO
LOGY
PUBLIC FUNDING
The essence of a national innovation system
•Innovation system and policy•Operational aspects
•Impelementation of the policy•Finnish solution
•Conclusions
THE POLICY DEVELOPMENTS IN FINLAND
?
1945
•LACK OF CONSUMER GOODS
•INDEPENDENT INDUSTRIES•DOMESTIC
MARKET
•RAW MATERIALS ASCOMPETITIVE FACTOR•GROWING NATIONAL
DEMAND•INVESTMENT
SUBSIDIES
MANUFACTURING DRIVEN
•INTERNATIONAL COMPETITION
•TECHNOLOGY POLICY•TECHNOLOGY
SUBSIDIES
INVESTMENT DRIVEN
•INTERNATIONALCOOPERATION
•SKILLS AS COMPETITIVEFACTOR
•INTRODUCTION OFNATIONAL INNOVATION
SYSTEM•PRECONDITIONS FOR
TECHNOLOGICAL&SOCIETAL ADVANCEMENT•RISK/VENTURE
CAPITAL
MARKET/INNOVATION DRIVEN
•TECHNOLOGY&SOCIETY
•POLICY FORSOCIAL SCIENCES
SURVIVAL POLICY
WEALTH DRIVEN ?
2000
TTKK TM19/HK 2.3.1999
TECHNOLOGICAL ADVANCEMENT
NATIONAL COMPETITIVENESS
© S&T Balance
Key questions concerning public innovation system
Institutional structures what are the main organizations involved? what is their role and function in policy design and
implementation, and budget allocation? what are the linkages among these organizations?
Organizational structures what is the structure of individual organization? what is the legal set-up of the main organization? what are the funding instruments and how are they
implemented?
© S&T Balance Public innovation system
TE CENTRES
FINPRO
SCIENCE PARKS
POTENTIAL INNOVATIONSOCIAL & BUSINESS DEMAND
INNOVATION ROUTE THROUGH THE PUBLIC INNOVATION SYSTEM IN FINLAND
MARKET
MARKET ADAPTATIONINDUSTRIAL APPLICATION
R&D SUPPORT
•VTT•UNIVERSITIES
•POLYTECHNICS
PUBLIC FINANCING
•TEKES•ACADEMY OF FINLAND
•TEKES•ACADEMY OF FINLAND
PRIVATE/SEMIPRIVATEFINANCING
R&
D A
ND
IN
NO
VA
TIO
N
DE
VE
LO
PM
EN
T
MIN
IST
RIE
S A
ND
GO
VE
RN
ME
NT
AU
TH
OR
ITIE
S
PO
LIC
Y P
LA
NS
,R
EG
UL
AT
ION
S,S
TA
ND
AR
DS
,LA
WS
SCIENCE & TECHNOLOGY
POLICY COUNCIL
INNOROUTE3/HK 6.5.1999
•FINNISH INSTITUTEOF INVENTIONS
© S&T Balance
•SITRA•FINNVERA
•SITRA•FINNVERA
VENTURE CAPITAL
Planning and implementing of technologyand innovation policy
3 year outlines
Ministries(Education, Trade&Industry, Finance etc.)
Annual objectives and agreements
Institutions(Academy of Finland, Tekes, Universities
VTT, Sectoral Institutes)
GovernmentParliament
Science and technology policy council
Annual & semi-annualreports
and feedback
Planning
Implementingthe policy
Annual budget(law)
BALANCE BETWEEN THE SCIENCE, TECHNOLOGY AND SOCIAL DEVELOPMENT
MAINTAIN CLEAR NATIONAL FOCUS
MANAGE KEY DEMANDS
PROACTIVE VISION
(Science and University Community, Society)
BOTTOM-UP REQUESTS
ADAPTING TO CUSTOMERS
(The Business Community, Society)
Mukula 15/HK 2.6.1999
NATIONAL POLICY/STPC
National Authorities
© S&T Balance
The effectiveness of public R&D support
TH
E B
EN
EF
IT O
F S
OC
IET
Y
THE SPEED OF IMPACT
BASIC RESEARCH
NATIONAL PROGRAMMES
APPLIED RESEARCH
INDUSTRIAL R&D
DIRECT SUBSIDIES
SLO1/HK 7.4.1999
MATURITY OF THE SOCIETY
ALLOCATED PUBLIC MONEY
SCIENCE POLICY
TECHNOLOGY POLICY
INDUSTRIAL POLICY
© S&T Balance
INNOVATION POLICY
”Protection-Promotion-Policy”
BERD/GERD of Finland 1981 - 2003
50
55
60
65
70
75
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
%
Science Policy
Technology Policy
Innovation Policy
BERD/policies© S&T Balance
R&D/GDP in Finland 1981-2003
0
0,5
1
1,5
2
2,5
3
3,5
4
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
%
Science Policy
Technology Policy
Innovation Policy
R&D/GDP,policies
© S&T Balance
Guidelines and Prerequisites for Establishing Innovation Policy
•Main target: High return of R&D investment•Secure sufficient industrial R&D investment
•Do not copy – no directly adaptable features
•Environment is dynamic – create a continuous process
•Iterative process- questions & answers – solutions
•Consider methodology – not single tasks. Single tasks can serve as concrete examples for the creation
of process/methodology
•Statistical data
•Auditing the innovation infrastructure
Guidelines© S&T Balance
FACTORS IN THE DEVELOPMENT OF THE INNOVATION SYSTEM
•LARGE ENTITIES UNDER CONSIDERATION•UNIVERSITIES AND SECTORAL RESEARCH AS A PART OF THE INNOVATION SYSTEM (human resources)•CENTRES OF EXCELLENCE FOR RESEARCH AND EDUCATION
ORGANISATIONALCONSIDERATIONS
•SELECTIVE CHOICE AND PRIORISATION OF TOPICS•TECHNOLOGY PROGRAMMES FOR INDUSTRIAL CLUSTERS•MARKET ORIENTED RESEARCH (product development)•INTERNATIONAL COOPERATION•FOLLOW-UP AND EVALUATION
RESEARCHCONSIDERATIONS
•GOVERNANCE (norms, rules, regulations, laws)•NETWORKING BETWEEN THE ACTORS (vendor/ distribution channels)•LEGITIMATION (creation of trust)•IPR PROTECTION•VENTURE CAPITAL INVOLVEMENT
INSTITUTIONALCONSIDERATIONS
Pres/factors innovation system
© S&T Balance
SUMMARY
CHARACTERISTICS OF FINNISH INNOVATION POLICIES
Networking among all relevant actorsCooperation (triple helix)System approach, large entities (value chain)
e.g. clusters under considerationHighly targeted approach and clearly defined
goalsStrong technology orientationRegional aspects, not policy – networking
instead of subsidies
Vinnova årsmöte
Multiplication of public money in the innovation system
Short term investment
Long term investment
GovernmentParliamentMinistries
GovernmentParliamentMinistries
Funding agency•grants•loans
•equity funding
Funding agency•grants•loans
•equity funding
UniversitiesResearch institutes
UniversitiesResearch institutes
Cumulative tax
Public finance
New technology, knowledge, skills
Businesses, employment
Venturecapital
Pres/Multiplicatioon publicmoney(c)S&T Balance
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
Admini.involvement
State Incentives: The Business Perspective*
If the program is a grant, is the grant made directly to the company, or is it given to a locality, which in turn will pass along the incentive to the investor in some fashion?
What are the terms of the grant? Although the idea of a grant generally implies no responsibility to pay it back, there may be some that do expect payback.
What obligations does the grant carry for the firm, both financial, and non-financial?
If the incentive involves debt financing, how does the state view the debt in the hierarchy of corporate obligations?
If debt finance, who is the actual lender and who sets the terms? If a participation loan, what are the composite terms? Who sets uinderwriting criteria for the loan, and what are they? Does the incentive carry any matching requirements, and what are
they? For all types of incentives, what are the requirements in terms of job
creation, investment leveraging and/or tax revenue generation? What are the reporting requirements? What are the consequences if initial projections are not met?
* Directory of State Business Development Incentives, NASDA 2002
Acceptability of state aid and other incentives Acceptability of state aid and other incentives in the society in the society
COMPLIANCE with national and
international legislation
TRANSPARENCYof criteria and processes
EFFECTIVE Implementation
Speed is crucial!
FLEXIBLE adaptation to rapidly
changing environment
UNDERSTANDABLEand
PREDICTABLEoperation
WIDE ACCEPTANCE in the society
CONTINUOUS EVALUATIONof results and processes
CONTINUOUS EVALUATIONof results and processes
FEEDBACKFEEDBACK
DEFINITION OF INNOVATION
RESEARCH, KNOWLEDGE, IDEA,TECHNOLOGY
INVENTION
INNOVATION
IMITATION
BU
SIN
ES
S
Innovation def.© S&T Balance
”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 knowledgeand 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
CUSTOMERS
MARKETS
BUSINESSMODELS
RESEARCH AND INNOVATION
Scientific excellence Turnover/earnings
Growth and Employment
Meet R&I
Business modelsCustomer needs
New knowledgeCuriosity
R & DWORK
InnovationResearch
© S&T Balance
”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, 2004Linear model
RESEARCH PARADIGMS
Old paradigm (Linear model)
BASIC RESEARCH APPLIED RESEARCH DEVELOPMENT
New paradigm (Concurrent model)
DEMAND
SCIENTIFIC UNDERSTANDING
TECHNOLOGICAL SOLUTIONS
PROBLEMSOLVING
BUSINESS OPTIONS
MA
RK
ET
Basic research
Applied research
Development
SO
CIE
TA
L &
BU
SIN
ES
S
C
HA
LL
EN
GE
S
TTKK TM 15/HK 2.3.1999© S&T Balance
The Interface of Research and Industry
•CURIOSITY
•KNOWLEDGE CREATION
•SCIENTIFIC EXCELLENCE
•PUBLICATIONS
•CUSTOMER NEEDS•MARKET&MARKETABILITY
•STRATEGY•PRODUCT PORTFOLIO
•R&D PORTFOLIO•COMPETENCE
•MONEY&FINANCING•IPR
•REVENUES
RESEARCH INDUSTRY
TE
CH
NO
LO
GY
T
RA
NS
FE
R
R&I interface
PRIORITIES OF THE INNOVATION SYSTEMCase: Finland
RESEARCH FACILITATOR ENTERPRISES
QUALITY:APPROPRIATE
STANDARD
RELEVANCE
EFFECTIVENESS
PUBLIC FINANCE
NATIONALPROGRAMMES
VENTURE CAPITAL
IPR PROTECTION
ARTICULATION OF NEEDS
APPROPRIATETECHNOLOGY
ABSORB NEWTECHNOLOGIES
Pres/ priorit,innovation system
SUPPLY DEMAND
Technology programmes
#54280
Steering• enterprices
Tekes• preparing• co-ordi- nating• decision making
Grants
GrantsLoansCapital loans
Company R&D projects
Public research projects
SynergyNetworking
Concurrent developmentPart financing
Implementation of results of public research is basedon parallel execution and networking with company projects.
23 on-going programmes in 2004 with a total extent of EUR 1.2 billion a programme lasts typically 3–5 years annually 2000 company participations annually 800 research unit participations Tekes usually finances - 60–80 % of university projects - 25–50 % of company projects
Funding flows of Tekes funded R&D projects betweenlarge companies, research organisations and SMEs
DM 5877405-2003 Copyright © Tekes
Large companies (more than 5 000 employees) receive 8 % of Tekes total funding and 13 % of Tekesbusiness R&D funding. Large companies co-finance Tekes R&D projects in universities, public researchcentres and SMEs more than Tekes finances their projects.
This system is managed by Tekes funding criteria. The system increases the quality of R&D projects andhas important externalities in:
• knowledge transfer between large companies and research organisations
• development of SMEs as subcontractors and strategic partners of large companies
Annual average 2000 - 2002Million euros
Universities
Public research centres
SMEs
Large companies
30
Projectvolume
17 6
11
Tekes
90
Funding flows to/from large companies
• Tekes funding to R&D projectsof large companies
• Large companies projects buyresearch services from researchorganisations
• Large companies projects useSMEs as subcontractors
• Large companies co-financepublic research projects
• Net flow
+ 30
- 17
- 6
- 11
- 4
Networking in corporate R&D projects funded by Tekes
Share of networked projects, %
DM 58620 08-2003 Copyright © Tekes
0
20
40
60
80
100
1999 2000 2001 2002
Part of technologyprogramme
Subcontractingfrom researchinstitutes
Internationalcooperation
Large companysubcontractingfrom SMEs
Total corporateR&D projects
The Main Factors of Operations by theNational Innovation Agency
• Speed and Efficacy (concurrent development)
• Trust (independent, centralized decision making)
• Expertise (human resources)
Innoagency
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
•System for national technology programmes
•Genuine, holistic and simple system (few actors)
Uniqueness of FI system
CONCLUSIONS
•GOVERNMENT IS A FACILITATOR - NOT AN OPERATIVE ACTOR
•TECHNOLOGY MUST NOT DEPART FROM THE SOCIETAL DEVELOPMENT- OBJECTIVES FOR THE SOCIAL RESEARCH
- UTILISATION OF TECHNOLOGY IN SOCIAL AND SECTORIAL SCIENCES
•R&D FUNDING MORE FOCUSED ON- GOAL ORIENTED BASIC RESEARCH-MARKET ORIENTED DEVELOPMENT
-NETWORKING
•SECURING THE QUALITY AND QUANTITY OF RESEARCH RESOURSES- FOCUS ON EDUCATION
- RESEARCHER CAREER AS A RELEVANT OPTION
•CONSCIOUS ACTIONS REGARDING “CONCURRENT DEVELOPMENT”
•INTERNATIONAL COOPERATION AS A PRACTICAL TOOL - NOT AS A HOBBY
•GOVERNMENT IS A FACILITATOR - NOT AN OPERATIVE ACTOR
•TECHNOLOGY MUST NOT DEPART FROM THE SOCIETAL DEVELOPMENT- OBJECTIVES FOR THE SOCIAL RESEARCH
- UTILISATION OF TECHNOLOGY IN SOCIAL AND SECTORIAL SCIENCES
•R&D FUNDING MORE FOCUSED ON- GOAL ORIENTED BASIC RESEARCH-MARKET ORIENTED DEVELOPMENT
-NETWORKING
•SECURING THE QUALITY AND QUANTITY OF RESEARCH RESOURSES- FOCUS ON EDUCATION
- RESEARCHER CAREER AS A RELEVANT OPTION
•CONSCIOUS ACTIONS REGARDING “CONCURRENT DEVELOPMENT”
•INTERNATIONAL COOPERATION AS A PRACTICAL TOOL - NOT AS A HOBBY
Pres/conclus policy© S&T Balance
Thank you for your kind attention!
www.tekes.fi
Dr. Heikki Kotilainen