Revitalising Finnish Competitiveness. Arto Ranta-Eskola Ranta-Eskola Consulting Ilkka Sorsa Ruukki Construction

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1 Revitalising Finnish Competitiveness Arto Ranta-Eskola Ranta-Eskola Consulting Ilkka Sorsa Ruukki Construction

3 Cornerstones of industrial competitiveness Environment Globalization Climate change International conflicts R&D&I - collaboration platforms - public private partnerships - new business models - advanced materials - internet of things - public innovation support - etc. Systematic development - continuous improvement - Lean - Tacuchi - Kaizen - Six Sigma - LCA - etc. Foundation - country size - location - climate - population - natural resources - etc. Infrastructure - political stability - education system - standard of living - availability of funding - labour costs - energy price - transportation network - etc Operational efficiency - automation - robotics - production ecosystems - digitalization - 3D printing - quality systems - ERP - logistics - integration of design & mfg - etc.

Foundation - country size - location - climate - population - natural resources - etc.

4 Finnish view of Finland s location

5 Global view of Finland s location Finland. China.

6 Infrastructure - political stability - education system - standard of living - availability of funding - labour costs - energy price - transportation network - etc

8 The Government competitiveness leap program is necessary to revitalise Finnish economy. However, cutting public R&D&I funding has to be made carefully, as it may destroy the positive results achieved. Reduced funding must be focused to boost innovation.

However, cutting public R&D&I funding has to be made carefully,

9 Operational efficiency - automation - robotics - production ecosystems - digitalization - 3D printing - quality systems - ERP - logistics - integration of design & mfg - etc.

11 Integration of design and manufacturing Integration of design and manufacturing 11 date/month/year Firstname Lastname INTERNAL

12 Systematic development - continuous improvement - Lean - Tacuchi - Kaizen - Six Sigma - LCA - etc.

13 Continuous improvement (CI) is the solution to Finnish competitiveness problem Matti Alahuhta, Talouselämä Click to edit Master subtitle style Suomalainen työmies ja -nainen kykenevät ja haluavat antaa yrityksensä kehittämiseen huomattavasti enemmän kuin tänä päivänä näyttää olevan mahdollista. Siihen kannustaa huoli omasta työpaikasta ja lasten tulevaisuudesta 13

2014 Click to edit Master subtitle style Suomalainen työmies ja -nainen kykenevät ja haluavat

14 Roles change in CI management Traditional management CI management Top management Strategic steering => competitiveness => jobs Employee Assumes responsibility of company success and own learning Employee Is a loyal executor of the company stategy Top management Creates environment and atmosphere for renewal => continuous improvement => superior competitive advantage => the employee value grows 14

learning Employee Is a loyal executor of the company stategy Top management Creates environment and

15 CILean is the systematic execution model of CI 1. Selection of object 5. Execution 4. Targets, impacts 2. Analysis of current state 3. Brainstorming for targets 6. Implementation and follow-up

16 Germany CI not in use CI used partially CI used widely Producivity (value added / person), k Repair and rejections, 0,1% x Average time, min reset Impact of CI to performance

17 R&D&I - collaboration platforms - public private partnerships - new business models - advanced materials - internet of things - public innovation support - etc.

19 Steel Construction Excellence Center New Companies Ruukki New Companies HAMK, Tavastia RDI Projects TEKES RYM FIMECC TUT EAKR ESR RFCS EU Vocational Institute Tavastia HAMK Hämeenlinna city and Linna Business Development Seinäjoki Region TUT

TUT EAKR ESR RFCS EU Vocational Institute Tavastia HAMK

20 IDEA Resource allocation Is it possible? TECHNOLOGICAL UNCERTAINTY OVERHEAD Fear Faith GOAL 5-10 YEARS 10 % OF RESOURCES Is it attractive? is it practical? Is it desirable? How do we do it? STRATEGIC OPTIONS Assessment Selection GOAL 4-5 YEARS 30 % OF RESOURCES ROI Profit GOAL 1-3 YEARS 60 % OF RESOURCES Source: William H. Matthews RESOURCE ALLOCATION MARKETS

attractive? is it practical? Is it desirable? How do we do it?

21 Risk Curiosity research Academy of Finland programmes SHOK or CSTI Tekes programmes Tekes projects Research Applied research Operative NPD Market orientation

22 Risk Curiosity research Academy of Finland programmes Questions after termination of SHOK funding How to secure: - industry involvement in selection of research topics - effective transfer of research results into innovations SHOK or CSTI Tekes programmes Tekes projects Research Applied research Operative NPD Market orientation

23 The share of public funding out of the total R&D investments of companies is in Finland among the smallest in OECD countries

24 All the Apple s technologies were developed with public funding. Without private money, none of them would be in use. Marina Mazzucato Royal Society of Arts Journal, 2015 (RSA members e.g. Adam Smith & Karl Marx) Mazzucato, M. and Parris, S. (2014), Heterogeneity, R&D and growth: a quantile regression approach, Small Business Economics Journal, 43(1) Mazzucato, M. (2013) Debunking the market mechanism: a response to John Kay, Political Quarterly, 84 (4): Mazzucato, M. and Shipman, A. (2014), Accounting for productive investment and value creation, Industrial and Corporate Change, 23(1): 1-27 Lazonick, W., Mazzucato, M., and Tulum, O. (2013) Apple's Changing Business Model: What Should the World's Richest Company Do with All Those Profits? Accounting Forum. 37: Mazzucato, M. (2013), Finance, innovation and growth: finance for creative destruction vs. destructive creation, in special issue of Industrial and Corporate Change, M. Mazzucato (ed.), 22(4):

25 Summary The Government competitiveness leap program is necessary to revitalise Finnish economy. However, the reduced research funding must be used to effectively boost innovation. New types of collaboration ecosystems are needed to utilize the potential of digitalization and integration of design and manufacturing. Continuous improvement offers the fastest effective means to increase productivity. A national development program is required to fully utilize this potential. Industry - univeristy collaboration must be deepened. The model lost due to termination of SHOK funding has to be replaced in order to bridge the gap between research and commercialization.

26 Acknowledgement The authors wish to thank The Federation of Finnish Technology Industries and FIMECC Ltd. for providing material to this presentation

FIMECC Ltd. 15.6.2010

FIMECC Ltd. 15.6.2010 FIMECC Ltd. FIMECC Ltd. is private owned company that coordinates company driven research programs in the field of mechanical engineering and metals The platform that FIMECC implements is a national publicprivate