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The Finnish Innovation System

Tekes

Raine Hermans, PhD, Adj. Prof.

Director, Strategic Intelligence

tLinkages between academy and industry

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Competitiveness

Sources: WEF, The Global Competitiveness Report 2011-2012 and IMD World Competitiveness Yearbook 2011

09-2011DM 36054

Total ranking 2011-2012

IMDTotal

competitiveness2010

WEFGlobal

competitiveness2011

534

11014122620

1 768

2313

4

132

45896

12111013171914

123 56789

10111213141516

157

2011

SwitzerlandSingaporeSweden

USAGermanyNetherlandsDenmarkJapanGreat BritainHong KongCanadaTaiwanQatarBelgiumNorway

Finland

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Innovation and competitiveness

EU 25EU 15

AustriaGermany

IrelandFrance

BelgiumAustralia

JapanNetherlands

DenmarkCanada

Great BritainKorea

USASwedenFinland

Singapore

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75

Source: The Information Technology and InnovationFoundation ITIF; The Atlantic Century II, Benchmarking EU & US, Innovation and competitiveness

07-2011DM 36054

Finland was ranked second with R&D input and personnel, venture capital, productivity and trade indicators.

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Science and innovation profile of Finland

Source: OECD Science, Technology and Industry Outlook 2010.

01-2011DM 36054

GERD as % of GDP

BERD as % of GDP

Venture capitalas % of GDP

Triadic patentsper million pop.

Scientific articlesper million pop.

% of firms with new-to-market product innovations

% of firms undertaking non-technological innovation% of firmscollaborating

Patents withforeign co-inventors

% of GERDfinanced by abroad

Researchers per thousand total employment

Science and engineering degreesof all new degrees

HRST occupatons as % of total employment

0

50

100

FinlandOECD

Finland is a pioneer in many aspects of innovation activities.

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The figures represent the total extent of each organisation in million euros in 2008, those markedwith star are earlier. In parenthesis the share that is funded from the State budget.**includes polytechnics *** includes R&D costs of corporations foreign units

Priv

ate

Basic research Applied research Business R&D

Business developmentMarketingInternationalisation

R&Dat companies

4,179* BusinessAngels

Approx. 380*

Pub

lic

Finnvera468 (44)

Universities and

polytechnics**1,165 (482)

Academyof Finland297 (297)

Ministries,ELY Centres,

sectoral research413 (402)*

Tekes526 (526)

VTT245 (74)

From abroad407***

Innofin7 (5)

Finpro35 (21)

Venture capitalists:Private 364

Finnish Industry Investment: direct 19, venture capital funds 131,

seed funding 7

Sitra35

Resources in the innovation environment

01-2010

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Public sector activities of R&D in Finland

10-2010

PARLIAMENT

Academy ofFinland

Universities

Ministry ofEmployment

and theEconomy

VTT

Tekes

Otherministriesand theirinstitutes

SitraFinnvera plc

FinproFinnishIndustry

Investment Ltd

RegionalELY Centres

GOVERNMENTResearch andInnovation

CouncilMinistry of

Education andCulture

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Examples of various dimensions of Tekes role (based on innovation boundaries defined in energy and environmental technology programs) (VTT Sfinpact analysis, 2012)

Financial dimensionFunder & networker

R&D funding on condition customers in research & industrial communities will network mutually -- via this role several various roles

via different dimensions

Networking dimensionNetworker

In R&D funding schemes, also other ´add value´ networking

services (seminars, workshops, FiDiPro, etc.)

Coordination dimensionCoordinator

Of applied national S&T via technology programs and

other activities

Future dimensionForsighter & visioner of STI

Development, e.g. FINNSIGHT, NISTEP study, Megatrends, etc. (a lot of

potential, foresight used only in 16 % of technology programs

Geographical dimensions

Local, regional, national, global actor

Innovation process dimension

Various promoting roles in different stages of innovation processes

Enhancer of national S&T level Enhancer of applied STI level Via most programs, some of them

particularly intended to raise national scientific level (Biodiversity,

FINE)

Combination dimensionCreator and networker

of various new technology and expertise areas & related firms in order to create new combinations in frontier

areas of traditional S&T areas in technology programs and other

activities

Generic STI dimension- Penetrator and

acceleratorOf applications of new generic technologies to companies in

various industrial fields

Source: (VTT Sfinpact analysis, 2012)

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Finland is the leading country regarding innovation cooperation between companies and academia – Tekes plays a significant role in creating these partnerships

ItalyPortugal

GermanyFranceNorwaySweden

NetherlandsDenmarkBelgiumAustria

FINLAND

0 5 10 15 20 25 30

Universities

Research organisations

03-2012

%Share of innovating companies 2008–2010

Source: Eurostat, Community Innovation Survey

Innovation cooperation between companies, universities andresearch organisations

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Crossing boundaries: Tekes funding for large companies is channelled to research organisations and SMEs

Figures do not include funding of large companies through SHOKs.Research programmes of the Strategic Centres for Science, Technology and Innovation (SHOK) are joint programmes forresearch organisations and companies. DM 756052

Average funding flows in 2008-2010Funding flows, million euros

Tekes funding for large companies

Large companies projects buy researchservices from universities and researchinstitutes

Large companies projects use SMEs assubcontractors

Large companies co-finance publicresearch projects in universities andresearch institutes

Net flow

+ 58

- 28

- 19

- 10

+ 1

SMEs

58 mill. €

Tekes

University

Researchinstitute

Costs of projectsfunded by Tekes

167 mill. €19 mill. €

10mill. €

28 mill. €

Large companyover 500 employees

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Monetary Value Flows between Nokia and Public Sector in Finland

1995-2000 (in 2000 prices)

Source: Statistics Finland, Nokia, Ministry of Education, ETLA.

Nokia

Public sector• Corporate Taxes 2.9 billion €• Wage taxes 1.4 billion €• Social insurance fees 1.2 billion €• Taxes due to options 1.2 billion €

• Tekes 0.08 billion €•Public expenditure and income transfers without employment expenditure 1.6 billion €

Universities

• ”Replacement value” of the formal education 0.6 billion €

• Nokia’s investments in the universities 0.02 billion €

6.7 billion €1.7 billion €

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Nokia’s cooperation network in Tekes ETX and TLX Programmes

* The figure includes both company ventures and target research projects. Included are partners with minimum of 3 projects with Nokia. Information is based on the end reports of the ETX- and TLX- prog- rammes. The figure is interpreted so that the more projects the organization is involved in, the larger is its circle and the closer it is to the centre. The figure was drawn in the course of the "Evaluation of Finnish R&D Programmes in the Field of Electronics and Telecommunications (ETX, TLX and Teletronics I)" project.

Figure 3.2. Nokia's cooperation network in Tekes' ETX and TLX programmes.*

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Tekes R&D funding in 2011Total 610 million euros and 1,928 projects

Funding for SHOKresearch programmes81 million euros

The funding for R&D includes 18 million euros from EU Structural Funds.Research programmes of the Strategic Centres for Science, Technology and Innovation (SHOK) are joint programmes for research organisations and companies.

R&D grants to companies and

public organisations215 million euros

R&D loans to companies101 million euros

Research fundingfor universities,research institutesand polytechnics203 million euros

Grants in projects launched by municipalities, cooperatives,

societies and associations10 million euros

04-2012DM 940410

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About Tekes

Our services

Tekes offers risk funding for research and innovation projects.

For young (< 6 years) companies, funding is available for all aspects of business development.

Customers

Tekes funding is primarily targeted for forerunners and particularly challenging projects:

• Finnish companies and subsidiaries of multinational companies located in Finland – some 5,000 active customers.

• Universities & research institutes – most Finnish research teams in life sciences and engineering are Tekes customers.

Resources

Budget: In 2012, €554 million from the state budget

Personnel: 370 in Finland and abroad (China, EU, Japan, USA)

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Tekes aims to

build a strong networked knowledge base

renew the economy and create new businesses

increase productivity in industries and service sector

enhance wellbeing in society and improve environmental sustainability

04-2012DM 940410

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Following up the Customers Results: Productivity of SMEs

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010100

110

120

130

140

Tekes-asiakkaatpopulaatiovertaisotos

Source: Etlatieto Oy (2012)

08-2012

Total development (weighted mean)

Firms funded by Tekes

Total population

Counterparts –no Tekes funding

Firms funded by Tekes in 2001 (2001 = 100)

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Growth companies are the most important target group for Tekes

Young, innovative companies which are involved in the Tekes funding programme and seek fast growth increased their turnover from 10 million euros to 250 million euros in four years during the recession.

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The start-up companies funded by Tekes grow fast and successfully

Wired Magazine ranked the hottest start-up companies in Europe in 2012. Tekes has provided funding for all the Finnish companies mentioned on the ranking list:• Ovelin• Kiosked • Tinkercad • Audiodraft • Grand Cru• Mendor • Powerkiss• Steam Republic• Thirdpresence• Grey Area (also ranked high in 2011)

43 out of the top 50 companies on the Deloitte Technology Fast 50 Finland ranking list have received funding from Tekes, among them the ten fastest growing companies:1. Confidex Oy (5,513 %)2. Snoobi Oy (4,652 %)

3. Analyse² (4,068 %)

4. Uoma Oy (3,015 %)5. Klikkicom Oy (2,308 %)6. Sympa Oy (2,177 %)7. OptoFidelity Oy (1,738 %) 8. Endero Oy (1,548 %)9. Netvisor Oy (1,532 %)10.Beneq Oy (1,090 %)

(in parentheses the increase in turnover over five years)

08-2012DM 928485

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Our approachTekes complements private financiers

we accept more risks than private financiers, if risks are comparable to business potential

we address market failure related to availability of private seed and start-up funding

we do not take equity in the companies that we finance

all intellectual property created in Tekes funded projects belongs to companies and research organizations that receive funding

our funding does not imply that the company receiving funding has to locate its manufacturing in Finland

Confidentiality

Tekes does not disclose business confidential information to third parties

applications from companies and research organizations are evaluated in-house by experts with first-hand business experience

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“Tekes has performed well and is among the world’s

leading innovation agencies”

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Finnish innovations, the VTT SFINNO database

Consists of about 4,900 innovations developed by Finnish companies, dating back to 1945.

Updated every other year by identifying innovations in field publications. This object-oriented approach is complemented by sending a questionnaire to the innovator.

Further information: http://www.vtt.fi/proj/sfinnoTekes Review 289/2012: Funder, activator, networker, investor Innovation Interstate

1 2

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Significance of Tekes funding for Finnish innovations, 1985-2007

Source: VTT Sfinno- database, questionnaire, n = 960

02-2012

Tekesin rahoituksella pieni rooli11%

Tekesin rahoitus

merkittävää51%

Ei Tekesin rahoitusta

38%

DM 915541

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Significance of Tekes funding for Finnish innovations that are new to global markets, 1985-2007

Source: VTT Sfinno- database, questionnaire, n=613

02-2012

Tekesin rahoituksella pieni rooli12%

Tekesin rahoitus

merkittävää57%

Ei Tekesin rahoitusta

31%

DM 915541

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Significance of Tekes funding for Finnish innovations based on scientific breakthroughs, 1985-2007

Source: VTT Sfinno- database, questionnaire, n=194

02-2012

Tekesin rahoituksella pieni rooli

6%

Tekesin rahoitus

merkittävää88%

Ei Tekesin rahoitusta6%

DM 915541

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Duration of innovation development and significance of Tekes funding

Lähde: VTT SFINNO™ -tietokanta, 1985 - 2007. Huomio: lukemat perustuvat kyselyvastauksiin.

Role of Tekes Funding

1 year or less

2 years 3-4 years

5-6 years

7-20 years

>20 years

N

Significant 38,6 % 43,5 % 60,5 % 64,5 % 63,7 % 85,7 % 424 Minor significance 7,1 % 10,8 % 11,8 % 6,6 % 17,7 % 0,0 % 87 No funding at all 54,3 % 45,7 % 27,6 % 28,9 % 18,5 % 14,3 % 294 Total % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % 100,0 % Grand Total N 184 186 228 76 124 7 805

Source: VTT SFINNO™ -database, 1985 - 2007 (N = 852). Note: The figures are based on survey responses.

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Programmes: Tekes programmes that ended in 2010

Programmes published in the final and evaluation reports

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Radical innovations: breakthrough from local value chains to global value networks

Modified from: Kristian Möller, Aalto University School of Economics (2010)

Multidisciplinary competences of many kinds (enabling systemic changes)

Systemic innovation(modifying operational environment)

No cross-disciplinary competences

Plug & Play innovation Cost-benefit analyses of the entire systemRisk

and return in

crease along with

development of sy

stemic a

nd

multidisciplin

ary innovations w

hich

are facili

tated and supporte

d by

public funding

Portfolio of Incremental innovations, which are based on conventional value chains) managing projects

Portfolio of radical innovations which are based on systemic

changes in global value networks orchestrating

complex entities (incl. regulation)

Measuring cross-disciplinarity of competences

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© Copyright Tekes

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Signal sessions 2012+Foresight information for the needs of companies

Foresight signals predicting changes in global markets

Remote video conference workshop with 3 cases: ideas and actions

Entrepreneurs

Pirkanmaa/Tampere- Juhani Mattila- Pertti Keskitalo- Riitta Kettunen - Lasse Pöyhönen- Sari Salo

Pohjois-Pohjanmaa/ Oulu- Minna Tontti- Petteri Lahtela- Ritva Heikkinen

Keski-Suomi /Jyväskylä- Kari Ahlbom

Kainuu/Kajaani- Kimmo Kyhälä- Leena Penttinen- Ilpo Antikainen- Veli-Matti Karppinen- Jukka Kohonen- Aki Koivistoinen

Uusimaa/Helsinki & Tekes Pasila- Jari Keinänen- Tapani Lahti- Sinikka Mäki-Ullakko- Seppo Mäki-Ullakko- Piia Moilanen- Tapio Ala-Peijari- Anne Salminen- Polina Kivineimi- Riku Mäkelä- Heli Vähätiitto

Pohjois-Karjala/Joensuu- Mari Pykäläinen

FinPro Itävalta, Wien- Lili Lehtovuori

Etelä-Savo/Mikkeli- Maisa Häkkinen

Varsinais.Suomi/Turku- Maiju Hyvönen- Martti Huolila- Ann-Maarit Tuomi- Vesa Auvinen

Häme/Lahti- Jukka Ajo- Janne Eskola- Pekka Lerkkanen- Kalevi Gran- Nina Flaaming- Jari Ukkonen

Lappi/Kemi- Risto Mäkikyrö

15 Regional ELY-Centers

International offices

OSKE Choose the projects

Finpro

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signaalittiedotus

materiaalitkeskustelu

opastusilmoittautuminen

videot

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Signal sessions as a part of foresight system Technology Sessions based on Technology Bank

Finpro gathering processTekes gathering process

Sitra gathering process…

Cases of FinNode projects

Tekes Sence MakingFinNode Sence Making

Interaction between FinNode projects

Finpro trend identification…Finpro services

New ideas based on themes

Tekes services

…

OSKE services

Funding applications

New business, Better choices

Market entry

…

PartneringNew inititiatives

Signal sessions

Foresight

Insight

Strategy

Action