Resilient innovation: Finland’s example

Head of Innovation at the Finnish Ministry of Employment and the Economy Jaani Heinonen talks to Peter Cheney about how its small economy has thrived on meeting new challenges.

Throughout Finnish history, the country has found itself performing well when it faces difficulties, according to Jaani Heinonen. Despite having a larger land area than the British Isles, Finland has a relatively small population of 5.4 million. The start and end of the Cold War presented the Finnish economy with major problems but the country has risen above them each time.

Heinonen states that almost every policy area in Finland involves a genuine team effort between the public and private sectors, in a way perhaps not seen elsewhere in Europe. The 2009 Universities Act restructured universities into separate legal entities and “drove them from a really comfortable, steady funding stream” where staff worked for the state to “having to be more innovative by themselves in building up the funding.” Seeking funding from external sources “really pushes them out to the real world.”

That concept of public-private partnership is “forming the way we are acting” and bringing in businesspeople to university boards “gives a better understanding of what’s needed on both sides.”

Heinonen previously worked as the China Director for FinNode, the Finnish innovation network. FinNode is led in Finland by the Ministry of Employment and the Economy, the Ministry of Foreign Affairs, the international trade agency (FinPro) and the main R&D funding body (Tekes). In target countries, the lead organisations work as follows:

• Finnish embassies and consulates contribute to official networking and the Innovation Watch process (i.e. identifying short-term and long-term market signals and making sense of them for Finnish industry);

• Tekes finances R&D and innovation operations and the relevant professional services; and

• FinPro provides internationalisation for Finnish companies and promotes inward investment into Finland.

A ‘Team Finland’ approach combines all functions of government to promote a more internationalised economy, external trade and foreign direct investment. Similarly, the UK and Irish governments have tasked their embassies in emerging markets with supporting the Northern Ireland Executive’s overseas investment work.

At present, FinNode operates in China, Japan, India, Russia and the USA but it is “looking seriously” at expanding into Brazil, South Africa and more European countries.

Finland has a good track record in re-inventing its economy, moving from agriculture into heavy industry after the Second World War and then developing hi-tech industry (centred on Nokia) after the collapse of the USSR. The economy is currently in a transition from a hi-tech economy to one that is knowledge-intensive and service-based.

Heinonen points to Kone, the Finnish-based lift and escalator manufacturer. “Even if the core is the machinery, service is already the biggest part of it,” he comments. “You sell a lift only once. You service it, maybe in the best case for 50 years, so the service is really the theme that you should build around.”

Tourism and the creative economy are also playing a large part in that shift. Helsinki, for example, is the World Design Capital for 2012.

“I also see that we have a responsibility in trying to find new forms of growth, and sustainable growth,” Heinonen adds.

“I think that our close relationship to nature in Finland will help that: green growth [and] a green, sustainable economy will be a strong point.”

Finnish enterprises in the cleantech sector are benefitting from emerging markets in China, where they are helping clients solve environmental problems. Specific success stories include Forchem (biofuels), The Switch (wind) and Eniram (transport), all of which were finalists in this year’s Global Cleantech Awards.

Asked for his key message for Ireland’s decision-makers, Heinonen emphasises the importance of looking around and learning from others. “Try to find the different successful models and then adapt those models and try to put them into the local context,” he advises.

Boldness in making decisions is also a key factor and is an area in which Finland needs to improve. “If you don’t put things into practice, you never learn what’s happening,” Heinonen remarks. “I think we need to be more action-orientated and, by being action-orientated, we are testing things. And by being a small country, as we both are, we can actually ‘turn the ship’ quite quickly. If we find that the thing that we decided isn’t actually working, we can back up quite easily and I think that’s the advantage we should use as a small country: to be more flexible and agile.”

Promising opportunities

Finland’s structural crises, Heinonen identifies, are the difficulties affecting Nokia and related ICT companies and lower demand for newspapers and other printed material, in turn affecting paper and forestry production. That said, the Nokia Lumia phone has hit the market at the right time and the company’s development of iPhone touch screen technology gives it an added revenue stream.

Rovio Entertainment’s Angry Birds game is a good example of how a start-up company can quickly become a hub and a nearly global brand. A comprehensive app for Helsinki’s public transport systems was rapidly developed after the data were released last year. “We don’t have to create new data all the time,” Heinonen remarked. “We can also have a new, very innovative way of utilising and exploiting existing data.”