Finland ‘niet goed genoeg’

De excutive summary van het rapport leest u hier.

Even if the current state of the Finnish innovation system isgood, it is not enough: While some of the panel’sproposals are laborious to implement, they are indeed needed tomeet Finland’s future challenges. The survey conducted to supportthe evaluation reveals that the actors of the Finnish innovationsystem are optimistic about its future. They areready for, and even demand, major changes.

Premises

Both the new innovation strategy (Aho et al., 2008) andthe 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- anduser-orientation in innovation policy. The Strategy highlights theincreasing role of information and knowledge in the society as wellas stresses the urgency in addressing the challenges induced byglobalization. The Strategy’s basic choices constitute the premisesof this evaluation.

The Strategy warns against partial solutions in developing thesystem. It rather calls for comprehensive renewal and structuraldevelopment requiring strategic management within the publicadministration. It notes that individual and separate policymeasures will not suffice.

Reflections on the Strategy

The Strategy defines productivity improvementas 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 wavedaside. Second, the emphasis is on pioneering,which suggests less (innovation policy) concern for individuals andorganizations that are not (seeking to be) at the global frontier.The panel welcomes the ambitions of the Strategy butchallenges some of its key measures. Overall the panel finds theStrategy vague, leaving room for misinterpretation.

The panel calls for caution on several accounts: broad-basedinnovation policy can indeed be too broad. Demand and userorientation should be interpreted as impartiality as to the source,type, and application domain of innovation, not asa shift to the other extreme from the current technology andsupply-side emphasis. Analysis reveals that the Finnish system isless international than conventionally thought and that there aresigns that it is falling further behind; current ways of addressingthe issue are clearly not working.

The Finnish innovation system lacks explicit cross-ministerialdecision making and execution. The panel hesitateswith the Strategy’s proposal to extend the Cabinet Committee onEconomic Policy to include innovation matters, even though itis in line with the panel’s proposal that the Ministry ofFinance and the Ministry of Employment and theEconomy should assume a joint responsibility for theenterprise-side of innovation (and growth) policy. A broader andstronger Research and Innovation Council is seen as analternative for renewing the Cabinet Committee.

A call for a systemic renewal

One consequence of weak coordination within the system is thatoccasionally several organizations go after the same societalproblem (e.g., lacking growth entrepreneurship) with similar tools,which leads to wasteful replication and adds to institutionalclutter. Current (public) aspects of the system are an outcome ofan evolution of several decades. The system has grown complex toboth access and administer. Thus, the evaluation calls for a reformof the current research and innovation system, including itsrationales and goals as well as its organizations andinstruments.

The provided outline should not be taken as ablueprint or an organization chart but rather as a guidingprinciple. It is nevertheless the case that the desired outcomecannot be reached without touching existing organizationalboundaries. Taken individually, most new policy measures areconsistent with the Strategy. Taken jointly, they appearpiecemeal solutions the Strategy warns against. The panelcalls for prescreening of new actions in order to preventduplication and overlaps.

Several sub-panels touch upon the issue of using tax incentivesand on the role of the Ministry of Finance more generally,which in innovation policy has been tolerating but remote. Thepanel urges for consideration of all possibleinnovation policy tools: Knowledge and human capital aswell as enablers of innovative activity are important, butincentives and ample rewards on success in risky endeavorsare needed as well.

Since the 1980s Finland has been in transition from aninvestment-driven catching-up country towards an innovation-drivenand knowledge-based frontier economy. With this transition thelocus of Finnish innovation policy has to change towards moreexperimentation, risk-taking, and acceptance of failure. Innovationpolicy should mostly be concerned with the coming up with, andemployment of, truly novel ideas (new-to-the-world andradical/disruptive innovations) with considerable societalsignificance.

Due to changes in operating environment (e.g. globalization),logic of innovation (e.g., democratization), and internaldevelopments in Finland (e.g., reaching the frontier), the work ofall six sub-panels points towards shifting innovation policyemphasis from established incumbent companies and otherorganizations towards individuals and their incentives.

Reforms

The panel takes a strong stance for the university reform andencourages it to go further than what is currently being suggested.The panel calls for a continuation of the higher educationreform:

– Polytechnics are important actors in the system with theirstrong regional and applied role and emphasis onbachelor-level education. In the course of the 2000s, however,there seems to be an increasing  tendency to make them morelike nationally- and globally orientated research universities. Inthe panel’s view this does not serve the interests of the system.There should be a clear division of labor between universities andpolytechnics.

-The panel is cautiously optimistic about the nationalStrategic Centres for Science, Technology and Innovations(SHOKs) but suggests limiting public resources devoted tothem. In the panel’s view SHOKs are mostly aboutincrementally renewing larger incumbent companies in traditionalindustries.

-The true reform of sectoral research (public researchorganizations, PROs) remains in gridlock. Even if the PROs make aworthy so cietal contribution as well as provide quality researchand services, the panel believes that they have considerable upsidepotential that could be unleashed. The panel recommends movingtheir academically-orientated research to universities andorganizing the remaining tasks into 4-5 units in accordance withlarger societal needs (as opposed to the ministries’ administrativeboundaries).

-A long-term binding action plan is needed to implement thereform. The panel calls for a clarification andcoordination of national, regional, and localinnovation policies as well as their links toother (non-innovation) policies. Local and regional actors havegrown important also in innovation policy matters. They have, e.g.,assumed similar tasks as TECentres.

Currently national innovation support has an ‘unspoken’ regionalbias. Primarily through the previously ignored re-allocativeelements, national direct support for private innovative activitymay have a negative overall impact in the relatively disadvantagedregions.

While direct cost is not very large, the total cost becomesconsiderable in terms of hampered regional development and foregonegrowth. The panel’s proposal is to make the system transparent andnot to make regional imbalances a concern for national directsupport of private innovative activity.

Final remark

The Finnish system is at a crossroads due to both internal andexternal 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 crisisbring about a sense of urgency that should not bewasted.