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Even if the current state of the Finnish innovation system is
good, it is not enough: While some of the panel's
proposals are laborious to implement, they are indeed needed to
meet Finland's future challenges. The survey conducted to support
the evaluation reveals that the actors of the Finnish innovation
system are optimistic about its future. They are
ready for, and even demand, major changes.
Premises
Both the new innovation strategy (Aho et al., 2008) and
the subsequent Government's Communication to the Parliament
(henceforth the two are collectively referred to as the Strategy)
call for a broad-based and systemic approach as well as demand- and
user-orientation in innovation policy. The Strategy highlights the
increasing role of information and knowledge in the society as well
as stresses the urgency in addressing the challenges induced by
globalization. The Strategy's basic choices constitute the premises
of this evaluation.
The Strategy warns against partial solutions in developing the
system. It rather calls for comprehensive renewal and structural
development requiring strategic management within the public
administration. It notes that individual and separate policy
measures will not suffice.
Reflections on the Strategy
The Strategy defines productivity improvement
as the main objective, implying a balanced consideration of
• Developments within existing units,
• Re-allocation between existing units,
• Entry of new units, and
• Exit of old units.
The last three re-allocative elements have previously been waved
aside. Second, the emphasis is on pioneering,
which suggests less (innovation policy) concern for individuals and
organizations that are not (seeking to be) at the global frontier.
The panel welcomes the ambitions of the Strategy but
challenges some of its key measures. Overall the panel finds the
Strategy vague, leaving room for misinterpretation.
The panel calls for caution on several accounts: broad-based
innovation policy can indeed be too broad. Demand and user
orientation should be interpreted as impartiality as to the source,
type, and application domain of innovation, not as
a shift to the other extreme from the current technology and
supply-side emphasis. Analysis reveals that the Finnish system is
less international than conventionally thought and that there are
signs that it is falling further behind; current ways of addressing
the issue are clearly not working.
The Finnish innovation system lacks explicit cross-ministerial
decision making and execution. The panel hesitates
with the Strategy's proposal to extend the Cabinet Committee on
Economic Policy to include innovation matters, even though it
is in line with the panel's proposal that the Ministry of
Finance and the Ministry of Employment and the
Economy should assume a joint responsibility for the
enterprise-side of innovation (and growth) policy. A broader and
stronger Research and Innovation Council is seen as an
alternative for renewing the Cabinet Committee.
A call for a systemic renewal
One consequence of weak coordination within the system is that
occasionally several organizations go after the same societal
problem (e.g., lacking growth entrepreneurship) with similar tools,
which leads to wasteful replication and adds to institutional
clutter. Current (public) aspects of the system are an outcome of
an evolution of several decades. The system has grown complex to
both access and administer. Thus, the evaluation calls for a reform
of the current research and innovation system, including its
rationales and goals as well as its organizations and
instruments.
The provided outline should not be taken as a
blueprint or an organization chart but rather as a guiding
principle. It is nevertheless the case that the desired outcome
cannot be reached without touching existing organizational
boundaries. Taken individually, most new policy measures are
consistent with the Strategy. Taken jointly, they appear
piecemeal solutions the Strategy warns against. The panel
calls for prescreening of new actions in order to prevent
duplication and overlaps.
Several sub-panels touch upon the issue of using tax incentives
and on the role of the Ministry of Finance more generally,
which in innovation policy has been tolerating but remote. The
panel urges for consideration of all possible
innovation policy tools: Knowledge and human capital as
well as enablers of innovative activity are important, but
incentives and ample rewards on success in risky endeavors
are needed as well.
Since the 1980s Finland has been in transition from an
investment-driven catching-up country towards an innovation-driven
and knowledge-based frontier economy. With this transition the
locus of Finnish innovation policy has to change towards more
experimentation, risk-taking, and acceptance of failure. Innovation
policy should mostly be concerned with the coming up with, and
employment of, truly novel ideas (new-to-the-world and
radical/disruptive innovations) with considerable societal
significance.
Due to changes in operating environment (e.g. globalization),
logic of innovation (e.g., democratization), and internal
developments in Finland (e.g., reaching the frontier), the work of
all six sub-panels points towards shifting innovation policy
emphasis from established incumbent companies and other
organizations towards individuals and their incentives.
Reforms
The panel takes a strong stance for the university reform and
encourages it to go further than what is currently being suggested.
The panel calls for a continuation of the higher education
reform:
- Polytechnics are important actors in the system with their
strong regional and applied role and emphasis on
bachelor-level education. In the course of the 2000s, however,
there seems to be an increasing tendency to make them more
like nationally- and globally orientated research universities. In
the panel's view this does not serve the interests of the system.
There should be a clear division of labor between universities and
polytechnics.
-The panel is cautiously optimistic about the national
Strategic Centres for Science, Technology and Innovations
(SHOKs) but suggests limiting public resources devoted to
them. In the panel's view SHOKs are mostly about
incrementally renewing larger incumbent companies in traditional
industries.
-The true reform of sectoral research (public research
organizations, PROs) remains in gridlock. Even if the PROs make a
worthy so cietal contribution as well as provide quality research
and services, the panel believes that they have considerable upside
potential that could be unleashed. The panel recommends moving
their academically-orientated research to universities and
organizing the remaining tasks into 4-5 units in accordance with
larger societal needs (as opposed to the ministries' administrative
boundaries).
-A long-term binding action plan is needed to implement the
reform. The panel calls for a clarification and
coordination of national, regional, and local
innovation policies as well as their links to
other (non-innovation) policies. Local and regional actors have
grown important also in innovation policy matters. They have, e.g.,
assumed similar tasks as TECentres.
Currently national innovation support has an 'unspoken' regional
bias. Primarily through the previously ignored re-allocative
elements, national direct support for private innovative activity
may have a negative overall impact in the relatively disadvantaged
regions.
While direct cost is not very large, the total cost becomes
considerable in terms of hampered regional development and foregone
growth. The panel's proposal is to make the system transparent and
not to make regional imbalances a concern for national direct
support of private innovative activity.
Final remark
The Finnish system is at a crossroads due to both internal and
external factors. Innovation (policy) is in turmoil worldwide.
While Finland is quite well-positioned to meet future challenges,
there is a unique opportunity for further reforms.
Furthermore, both structural challenges and the financial crisis
bring about a sense of urgency that should not be
wasted.