Finnish innovation policy and the role of Tekes -Some trends and challenges

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1 DM Finnish innovation policy and the role of Tekes -Some trends and challenges Christopher Palmberg, Ph.D. Programme Development Manager/Tekes

2 DM Structure 1. Recent developments in the Finnish economy 2. How is innovation policy adjusting? 3. The changing role of Tekes and some challenges 4. Towards innovation policy 2.0

3 DM Recent developments in the Finnish Economy

4 DM Industrial restructuring in Finland among the most dramatic in the EU During GDP declined by 10,3% points

5 DM

6 DM Finnish public debt is approaching 60% record level

R&D expenditures are declining especially in companies Billion 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 R&D expenditures by sector 2007-2014* 1,2 1,3 1,4 1,4 1,5 1,2 1,4 0,6 1,4 0,7 0,7 0,7 0,7 0,6 0,6

7 R&D expenditures are declining especially in companies Billion 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 R&D expenditures by sector * 1,2 1,3 1,4 1,4 1,5 1,2 1,4 0,6 1,4 0,7 0,7 0,7 0,7 0,6 0,6 0,6 5,1 4,5 4,8 4,9 5 4,7 4,6 4, * Yritykset Julkinen sektori Korkeakoulusektori Companies Public sector Universities % 3,8 3,7 3,6 3,5 3,4 3,3 3,2 3,1 3,0 2,9 2,8 R&D expenditures as a share of GDP 3,35 3,55 3,75 3,73 3,64 3,43 3,32 3, * Finland is among the most R&D intensive countries, but the R&D share of GDP is declining Lähde: Tilastokeskus, * ennakkotieto

Companies Public sector Universities % 3,8 3,7 3,6 3,5 3,4 3,3 3,2 3,1 3,0 2,9 2,8 R&D expenditures as a share of GDP 3,35 3,55 3,75 3,73 3,64 3,43 3,32 3,13

8 Finnish innovation performance has declined compared with the leaders Performance of innovation leader countries Source: EC; Innovation Union Scoreboard 2015

9 DM Declining impact of Nokia but also new opportunities!

10 DM How is innovation policy adjusting?

11 DM Public sector actors of R&D and innovation in Finland PARLIAMENT Research and Innovation Council Ministry of Education and Culture Academy of Finland Universities GOVERNMENT Ministry of Employment and the Economy Tekes VTT Other ministries and their institutes Finnvera plc, Finpro, Sitra, Finnish Industry Investment Ltd Regional ELY Centres

Universities GOVERNMENT Ministry of Employment and the Economy Tekes VTT Other ministries

12 DM Public funding actors in the Finnish innovation environment Ministry of Education and Culture Academy of Finland Tekes Finnish Industry Investment Regional ELY Centres Sitra Finnvera Finpro Basic research Applied research Business R&D Business development Marketing Internationalisation

Finnish Industry Investment Regional ELY Centres Sitra Finnvera Finpro

Universities and research institutes Basic research Strategic longterm collaboration Joint

13 Main Finnish innovation policy instruments Radical innovations Academy of Finland Strategic research openings SHOK Tekes program mes Sitra Tekes project funding INKA Incremental innovations Universities and research institutes Basic research Strategic longterm collaboration Joint Programmes Companyand researchprojects Tax incentives, ELY-center s development subsidy Demonstrations, Piloting

14 DM Recent trends in Finnish innovation policy Towards broad-based policies User- and demand driven innovation Intangibility Towards system-level and ecosystem promotion Bioeconomy, ICT, healthcare Cities as platforms From direct towards indirect RDI support R&D tax incentive experiment Cutbacks in Tekes, increasing emphasis on loans New funding instrument for strategic research Re-invention of industrial policy, towards innovation policy2.0 Ecosystems, experimentation etc Public RDI by sectors, Million Yliopistot Yliopistolliset keskussairaa lat Suomen Akatemia Tekes Valtion tutkimuslaito kset Muu rahoitus

increasing emphasis on loans New funding instrument for strategic research Re-invention of industrial policy, towards innovation policy2.

15 DM The changing role of Tekes and some challenges

16 We offer funding, expertise and networks Start-ups Growth companies Large companies Universities Research institutes Providers of public services Cities Hospital districts DM

17 DM The Tekes journey Industries Services Working life Fast experiments Technology Feelings EU Business Healthcare social services

DM 1231571 01- Tekes RDI funding in 2014* 60% R&D Funding includes 2 million from the EU

18 DM Tekes RDI funding in 2014* 60% R&D Funding includes 2 million from the EU Structural Funds. *Further cutbacks up to 138 Meuro have been announced by the new gvmt. from 2016

Tekes programmes Vitality of People BioIT 2012 2014 Bits of Health 2014 2018 Innovations in Social and Healthcare services 2008 2015 Learning Solutions 2011 2015 Skene Games Refueled 2012 2015

19 Tekes programmes Vitality of People BioIT Bits of Health Innovations in Social and Healthcare services Learning Solutions Skene Games Refueled Working life Liideri Business, Productivity and Joy at Work Natural resources and sustainable economy Arctic Seas BEAM Business with Impact Green Growth Towards a Sustainable Future Green Mining Groove Growth from Fenewables DM Intelligent environments 5thGear EVE Electric Vehicle Systems Feelings Intangible Value Creation and Experienced Value Innovative Cities Industrial Internet Business Revolution Witty City Smart Procurement Built Environment Trial Environment for Cognitive Radio and Systems

Sustainable Future 2011 2015 Green Mining 2011 2016 Groove Growth from Fenewables 2010 2014 DM 1242635 Intelligent environments 5thGear 2014 2019 EVE Electric Vehicle Systems 2011 2015 Feelings

20 BEAM is a joint innovation programme between Tekes and Ministry of Foreign Affairs (MFA) Vision: Finnish companies and other actors are part of global ecosystems that create economic, environmental and societal impacts both in Finland and developing countries Mission: BEAM helps Finnish companies build succesful and sustainable businesses in Finland and developing countries through inclusive frugal nnovations for societal challenges Targets: SMEs and their Finnish and global partners (including NGOs) which aim to develop inclusive frugal innovations in various sectors for Sub-Saharan Africa, Latin American, South and Central Asian markets Duration and funding: for with total funding of 50 Meuro (50% public, 50% private sources), funding will cover grants and loans, challenge competitions and an impact fund as possible program services

frugal nnovations for societal challenges Targets: SMEs and their Finnish and global partners (including NGOs) which aim to develop inclusive frugal innovations in various sectors for Sub-Saharan

DM 1338694 12-2014 Tekes as a part of Team Finland

21 DM Tekes as a part of Team Finland network United States Washington, D.C. Palo Alto EU Brussels Germany Russia Moscow India China Beijing Shanghai Hong Kong Japan Tokyo Taiwan Taipei

22 There are also opportunities Start-up boom and SLUSH Demise of Nokia rise of new ICT entrepreneurship Intangible value creation Cleantech-Bioeconomy-circular economy Digitalisation for new services and efficiency - 5G, IoT, biodigi etc. - NMT2.0 a possibility e.g. in smart city, healthacare, education? Global challenges global opportunities DM

23 4. Towards innovation policy 2.0 DM

24 Joint direction Joint goal: Renewal of Finland s industry and economy Strengthen the renewal of Finland s industry and economy Academy of Finland VTT Finnvera Finpro Sitra Tekes

25 Focus areas of joint strategy Tekes as an active and visible playmaker in selected fields New business ecosystems Market access Bioeconomy Digitalisation Cleantech Intangibility and value creation Natural resources and resource efficiency Digitalisation renewing business and industry Wellbeing and health

26 Changing nature of competition Industries (1980s) Comparative advantage and specialization Clusters (1990s) The Porterian diamond Value chains and networks (2000s) Vertical integration outsourcing, strategic alliances Ecosystems (2010s ) Joint value creation, platforms, orchestration, PPPs

27 Role of the state towards an entrepreneurial state Please check TED talk for a quick glance: ernment_investor_risk_taker_innovator

28 Towards ecosystem policy old wine in new bottles or something different? Traditional sectoral cluster policy New business (eco)system based policy Rationale Economies of scale, market failures Spillovers, coordination-challenges, system-level and transition failures Ideation Instruments Implementation Impact monitoring Risks Reactivness, identification of growth industries, independant visions and strategies Funding, sectoral approaches, general development of overall innovation environment Steering, siloed, narrower policy mix, company specific, national Success of companies and sectors, ex-post evaluations Compromises with all stakeholders, lack of dynamism, path-dependency, avoidance of experimentation Proactiveness, identification of new operation modes, joint visions and strategies Facilitation, PPPs, cross-sectoral, context specific and tailored approaches Orchestration, experimentation, broadbased, network-ecosystem specific, international Success of companies and ecosystems, ex-ante + ex-post evaluation Clashes with some stakehodlers, chaos, public sector domination, discontinuing good projects

29 Summing-up 1. The Finnish economy is in dire straits, geopolitical situation is also challenging 2. Finnish innovation policy is adjusting through cutbacks but also new innovative openings ( innovation policy 2.0 ) 3. Tekes is undergoing large changes: focus on SMEs, intangible value creation and (eco)systematic innovations 4. A new strategy is being developed that hopefully will lead to system-smarter policies DM

30 Thanks! DM

Industry 4.0 & Industry renewal TAFTIE Expert Session 9.9.2015

Industry 4.0 & Industry renewal TAFTIE Expert Session 9.9.2015 Kari Penttinen Programme Manager Industrial Internet -programme Tekes the Finnish Funding Agency for Innovation kari.penttinen@tekes.fi Tekes