Knowledge Economy Forum V, Prague, March 28-30, 2006 Ossi V. Lindqvist, Chair, Finnish Higher Education Evaluation Council (FINHEEC)

R&D for Innovation This is a short description of the case of Finland (pop. 5.2 million), its universities and innovation policies, that have contributed to its competitiveness in the world forum, so far. 20 universities and 30 polytechnics, and ca. 60% of the age class enters HE. (Over 300,000 students in all HEIs.) All universities are public, no private institutions. 16/1/19 Etunimi Sukunimi

In Finland, the universities and HEI’s at large are considered as core elements in the building of modern innovation society; this sets, however, new requirements for their strategies, functions and even structures. In Europe, firms and companies are often seen as key players in national innovation policies. - A bottom-up approach! Another approach, relatively more top-down, has been successful, at least in Finland, but also in other Nordic countries. 16/1/19 Etunimi Sukunimi

This approach involves a close cooperation between the public sector, including all pertinent ministries, several buffer organizations serving as liaison in technology transfer and financing, the industry and other public and private organizations, and the universities and polytechnics, as well as the national research institutes. So the innovation system works rather as a network than as a ‘one-way street’ from innovation to production. 16/1/19 Etunimi Sukunimi

It is important also to build a system that provides for financial and administrative continuity and incentives in the process from basic research to applied research and innovations, and then further on to risk financing and business generation. 16/1/19 Etunimi Sukunimi

Regional development as supported by R&D has gained special weight in recent years, which is also reflected in the respective amendments in the laws directing higher education institutions (HEIs), both the universities and the polytechnics. 16/1/19 Etunimi Sukunimi

Technology policy in Finland is the responsibility of the Ministry of Trade and Industry. The most important tool in executing and financing technological R&D is the National Technology Agency (TEKES) (www.tekes.fi). TEKES is an important support agency for applied research in both universities, polytechnics and research institutes, towards enhancement of technology-based enterprises and in creating new business opportunities. It also supports R&D activities in companies directly. 16/1/19 Etunimi Sukunimi

In most cases the universities’ collaboration with business enterprises goes with TEKES serving as buffer organisation; that is, both the company and TEKES provide the R&D financing needed, but TEKES also assumes good part of the risk. The TEKES money may be in the form of grant or loan to the company. This again should encourage and allow even for small and medium-sized companies (SMEs) to be engaged in R&D. In 2005, ca. €180 million was paid by TEKES through the universities, polytechnics and research institutes for R&D work with companies or towards creating new companies. 16/1/19 Etunimi Sukunimi

The current investment in R&D in Finland is ca. 3.6% of GNP, which percentage is second only to Sweden; this way only Sweden and Finland in Europe meet the so-called Lisbon target of 3.0% of GNP. About 70% of the total R&D expenditure in Finland is by private companies, and the rest is public money. The total national R&D expenditure annually is thus in excess of €5 billion. 16/1/19 Etunimi Sukunimi

Science policy is the responsibility of the Ministry of Education, and its principal research financing organisation is the Academy of Finland (www.aka.fi). The universities and research institutes are the key players in publicly funded research. The Academy of Finland provides annually over €200 million for (basic) research in universities and research institutes. 16/1/19 Etunimi Sukunimi

During the last two decades, funding for research (incl. basic research) has been substantially increased, also towards support of researcher training and research infrastructure, as well as career development of young scientists. Special measures have also been undertaken to engage more women in research careers. (Nearly 50% of the new PhDs are women!) 16/1/19 Etunimi Sukunimi

In the universities, some 30-50% of the total expenditure consists of ‘outside’ money, a good part of which is competitive research money, coming from the Academy of Finland, Tekes and industry, the European Union, the foundations, etc. For the universities this requires a tight contract system, with technology transfer offices and IPR services available, also in collaboration with local Technology Parks, etc. 16/1/19 Etunimi Sukunimi

The Science and Technology Policy Council of Finland is the main coordinating body in national science and technology policy. The Council is chaired by the Prime Minister, and the members include several other key ministers, representatives from industry, public sector, the universities, etc. The Council works towards strategic development and coordination of the national science and technology policy, and of the national innovation system at large. 16/1/19 Etunimi Sukunimi

As a national target of development, emphasis is on the production of technological and social innovations, with an aim also into expansion of internationally successful businesses built on it. 16/1/19 Etunimi Sukunimi

The entire higher education sector is now facing global competition and global market for its services, which makes the entire innovation system to face totally new challenges. One consequence has been that the universities now require more autonomy, also financially, to be competive and successful in the new market situation. 16/1/19 Etunimi Sukunimi

The current Universities Act in Finland is not very detailed, and it leaves a good amount of autonomy to the universities themselves. For instance, there is little reference to the structure of the university; this issue is left to the universities themselves to be decided. The old academic disciplines are breaking down, and new ones created, often around some common major problems in the society or in the industry. The overall environment of the HEI’s is becoming even more dynamic! 16/1/19 Etunimi Sukunimi

The Finnish universities are undergoing a process of restructuring, partly in response to the new degree structure following the Bologna process, but also to be able to meet better the new external demands, e.g. concerning multidisciplinarity in both teaching and research. The new situation is also a serious challenge for the leadership and management of the universities, towards promoting a long-term strategy, strengthening societal interactions, especially with industry, enhancing technology transfer, and promoting internationalisation, etc. 16/1/19 Etunimi Sukunimi

In the Finnish universities, the lump-sum budgeting started in 1994, and now the basic financing of the universities is mostly based on the annual numbers of Master’s degrees and PhD’s graduated, based on an annual contract between the university and the Ministry of Education. (The contract usually covers a 3-year rolling plan.) The performance and management of universities is thus based on the results they achieve and on target-setting; an important open source of monitoring is also the KOTA database, which is updated semiannually. 16/1/19 Etunimi Sukunimi

Thus the universities have been moving towards an entrepreneurship mode in their overall activities. 16/1/19 Etunimi Sukunimi

As a (minor) example, if a teacher or staff member of a university wants to be engaged in entrepreneurial activities, based on his/her research, there are certain rules as to how much duty time, etc. he/she is allowed, but a clear contract with costings is required for the possible use of university’s premises, instruments, or other services. This kind of entrepreneurial activity is actually even encouraged, but usually it takes place through a special technology transfer office on the campus, or through the local Science Park, or through some other comparable measures. 16/1/19 Etunimi Sukunimi

The patent rights by the current IPR law basically belong to the professor/scientist working in the university, but the practice (and law) is changing towards, for instance, a multilateral and contract-based arrangement between the scientist, the university and the company. 16/1/19 Etunimi Sukunimi

The Universities Act requires that the universities shall evaluate their education, research and artistic activities and their effectiveness. The universities shall also take part in external evaluations of their activities, and all evaluations are mandated to be public. Currently all universities and polytechnics will be audited for the European Standards and Guidelines in Quality Assurance (QA), by the year 2010. The main external evaluation agency is the Finnish Higher Education Evaluation Council, FINHEEC (www.kka.fi) 16/1/19 Etunimi Sukunimi

The importance of researcher training in the universities is being recognised; it certainly should be part of the long-term development strategy of any university. The European Bologna process also calls for the new degree structure in universities, and the so-called third cycle or PhD training is getting new strength. Traditionally, researcher training was based on apprenticeship whereby a professor produced his/her successor over many years, and that was all! Last year 2005 in Finland, ca. 1400 new PhDs were graduated. 16/1/19 Etunimi Sukunimi

Thus the ‘new’ universities are facing challenges that differ from the traditions of their past. They are also becoming more and more accountable to the society and to the people they serve. The share of the age class that enters higher education is still increasing in most countries, which calls for a closer attendance to the needs of the labour market. The spectrum of activities the universities are engaged has widened, outside the traditional teaching and research. There is more pressure towards a research-based university in contrast to the mostly teaching institutions in the past. 16/1/19 Etunimi Sukunimi

The universities’ cooperative contacts with the society have increased dramatically, including R&D services towards the industry and business at large, life-long learning, and most importantly, meeting the demands for the build-up of the national human capital and human skills at large. These are all great challenges for the entire HE system, which also calls for more professionalismin in the universities’ leadership and management at large; their national and international environment is growing more complex, more competitive, and more challenging! 16/1/19 Etunimi Sukunimi

More details of the entire Finnish innovation system are available at: www.research.fi 16/1/19 Etunimi Sukunimi