Encouraging of Industry to R&D ”From expenditures to investments” Dr. Heikki Kotilainen S&T Balance ST Fortaleciendo la alianza público-privada en América Latina: Salir de la crisis mirando estratégicamente el futuro 3-4 noviembre 2009, Santiago de Chile

National R&D Policy and Strategy TopicQuestion to be answered Main responsibility PolicyWhy?Government, Ministries, Industry Confederations StrategyWhat? Priorities,choices Authorities,agencies, industry, universities + all stakeholders TacticsHow?National agencies for implementation (C) S&T Balance 2- 4 years 1- 2 years < 1 year Time frame

Characteristics, Concerns and Common Features of Different Cultures AdministrationCompanyClusterAcademic Main characteristics Working with rules Slow Motion Common understanding of business Competitiveness Innovation Scientific ambition Quality of research Slow Motion Time scale of actions 1-3 years 5-10 years General concern Policy frames economical/social/ regional Competition Legislative changes Productivity Networking Specialisation Productivity IPR Quality of resources Quality of research Attractivity of research Immediate concern Paperwork Deadline Fraud Sales Cash Client needs IPR Rivalry Demand conditions Market access Publications Continuity Finance Biggest fear Contractual failures Misuse of public money Confidentiality Product outdate Market collapse Rules and legislation (antitrust) Loss of competence and scientific excellence Peer failure Common ground Values of society Emloyment Working ”Triple Helix” Positive innovation atmosphere Supportive legislation Objectives of company Diamond model Triple Helix Key services, key suppliers Sufficient public and private funding Attractivity of knowledge Flexibility Quick decisions Fast moving Months Weeks (SME) Cultures © S&T Balance

Circulation of innovation policy Setting policy agenda Analysing policy Implementation Public interestPrivate interest National strategy Sector policies Implementation of strategies Instrument set-up Research Strategic intelligence Policy evaluation Impact evaluation Performance evaluation Policy circulation Source: Tekes (Council, audit) (Ministries, agencies, universities, industry) (Ministries, agencies, universities, industry,Evalution + outside experts) © S&T Balance

Guidelines and Prerequisites for Establishing Innovation Policy Main target: High return of R&D investment Do not copy – no directly adaptable features Environment is dynamic – create a continuous process Consider methodology – not single tasks. Single tasks can serve as concrete examples for the creation of process/methodology Iterative process- questions & answers – solutions Guarantee the implementation of the policy Statistical data Auditing the innovation infrastructure Guidelines © S&T Balance

Prerequisites for administration involvement in R&D Business and research understanding Genuine interest in facilitating development Trust by industrial community Trust by research community Money and funding opportunities Admini.involvement © S&T Balance

BALANCE BETWEEN THE SCIENCE, TECHNOLOGY AND SOCIAL DEVELOPMENT MAINTAIN CLEAR NATIONAL FOCUS MANAGE KEY DEMANDS PROACTIVE VISION (Science and University Community, Society) BOTTOM-UP REQUESTS ADAPTING TO CUSTOMERS (The Business Community, Society) NATIONAL POLICY National Authorities And Agencies © S&T Balance

Industry Ministries Agencies Patent offices, IPR Regional centres TE-centres Centres of Excellence Technology/Science Parks Knowledge Centres Sectorial Institutes Tech Transfer offices Institutes, labs The Triple Helix Universities Research institutes Government Industry Science & Technology Policy Council Confederations of Industry Banks Venture Capital Business angels EU Commission -state aid -regulations -FP Semiprivate SITRA Finvera Industrial Invest Clusters © S&T Balance

Definition of innovation RESEARCH, KNOWLEDGE, IDEA, TECHNOLOGY INVENTION INNOVATION IMITATION BUSINESS Innovation def.© S&T Balance ”If innovation is the commercial application of existing knowledge in a new context, technologically driven innovation is only one form of this. Innovation is distinct from research, which results in new knowledge and from the entrepreneurial function that spots market opportunities for products and services. It is the result of the interaction of these two functions” ”Innovate for a competitive Europe”, A new Action Plan for Innovation, European Commission, 2004 CUSTOMERS MARKETS BUSINESS MODELS

Innovation Trends User-based innovations Merger of manufacturing and service Mulitidisciplinary innovations E-Business Public and private sector innovations Globalisation of innovations Small firm innovations- large firm interventions Innov.trends

Key questions Are you going to compete tomorrow with yesterday’s technology ? Where are your competitors? What technology are they applying? Where are they located? Encouragement: National technology and innovation policy (C) S&T Balance

Change of mindset Don’t spend money on R&D! You have to invest in R&D! Consequences: You must expect return of the investment (ROI) You have to prioritize you investments You have to have your own technology strategy i.e. What are the core competencies related to your business and revenue creation? What is necessary to keep in house and what can be outsourced? What are the requirements for personnel? What kind of cooperation will be needed (clusters, networks, international cooperation, university relations etc.)? (C) S&T Balance

Technology strategy Preserving current positions Strategic renewal Decline Formation of strategic clusters Geographical strategy Global National Action strategy Defensive Offensive/proactive Tech.strat

CORE COMPETENCES Primary capabilities (Outsource, cooperate) Critical capabilities (cooperate) Core compentences (strengthen) Critical Support Related

TECHNOLOGY FIELD PRIORISATION Active Monitor Develop, if strategicActive Sell Active, license transfer Follower Equal Leader Mature Evolving Embryonic © S&T Balance

1. Business definition Vision/ Business target Vision/ Business target Driftwood alternative Where are we? Where should we get to? Where are we going? Capabilities? Commercial Technological Operational Financial How to reach to the target? Competitive idea Benefit to customer Benefit to the company Business environment Definition of objectives © BCD/S&T Balance Mission Development Program for Business & Technology Strategy

© Business Concept Development Oy/ S&T Balance Oy Work programme Company X Business 2Business 1Business 3 1. Business definition 1B Core competencies?1A. Business area? 2. Business environment 2.E Devlmnt of envirmnt 2.F Best practice’s SWOT 2.G SWOT of our own? 2.H Company values? 2.A Markets? 2.B Customer needs? 2.C Success factors? 2.D Trends? 3. Business target? 4. Competitive strategy? 4.B Competitive idea?4.A Competitive profile? 5. Way to operate? 5.D Organization? 5.A Marketing strategy? 5.B Product strategy? 6. Resources? 6.A Personnel? 6.B Financing? 6.C Space.location? M1 M2 M3 M0 5.C Key contacts Development Program for Business & Technology Strategy

10. Decision making rules 7.A Principles? 7.B Rules? 7.C Alloc. of resources? 11. Prioroties/actions? 12. Checking approval Tech. strategy 8.A Key issues? 8.B Action plan? 9.DCompetitive strategy? 9.E Follow up? 9.A Business definition? 9.B Business target? 9.C Description of IS M5 M6 7.Technology needs? M4 8. Importance of technologies? 8. Importance of technologies? 9. Technology sources? Supporting Technologies Auxiliary technologies Key technologies? Mark./serv.technologies Product technologies Manuf. technologies Administr. technologies Own R&D Cooperative partners Sub-suppliers Technology transfer Development Program for Business & Technology Strategy 4B 1A, 3 (C) BCD/S&T Balance

TECHNOLOGY APPLICABILITY CUSTOMER NEEDSCOMPETITIVE POSITIONTECHNOLOGY © S&T Balance

What is the innovation process? Projects typically proceed in three very distinct phases Market intelligence Customer intelligence Business Business intelligence intelligence Competitor intelligence Technology intelligence Product definition & specification Product conception &design Production preparation & engineering Explore… Pre-concept Choose/plan superbly … PlanningImplementation Product development & engineering Run like hell!!! Go decision Market ideas & wishes Technology ideas Concurrent conceptionConcurrent engineering Costs start to run Source: IMD TypicalGoodBetter

Process Character of Technology Transfer CURIOSITY KNOWLEDGE CREATION SCIENTIFIC EXCELLENCE PUBLICATIONS CUSTOMER NEEDS MARKET& MARKETABILITY STRATEGY PRODUCT PORTFOLIO R&D PORTFOLIO COMPETENCE MONEY& FINANCING IPR REVENUES RESEARCHINDUSTRY TECHNOLOGY TRANSFER Transfer process ADAPTATION OF SCIENTIFIC RESULTS FOR TECHNOLOGICAL USE ”Requirement for technological success” ADAPTATION OF TECHNOLOGICAL KNOWLEDGE FOR INDUSTRIAL USE ”Requirement for market success” Is it possible? Can we do it? How we do it? How we market it? © S&T Balance Cooperative research Product development

Formulation of a National Programme Case: Finland RESEARCHFACILITATORENTERPRISES QUALITY: APPROPRIATE STANDARD RELEVANCE EFFICACY PUBLIC FINANCE NATIONAL PROGRAMMES VENTURE CAPITAL IPR PROTECTION ARTICULATION OF NEEDS APPROPRIATE TECHNOLOGY ABSORB NEW TECHNOLOGIES Pres/ priorit,innovation system SUPPLYDEMAND

Technology programmes #54280 Steering enterprices Tekes preparing co-ordi- nating decision making Grants Loans Capital loans Company R&D projects Public research projects Synergy Networking Concurrent development Matching funds Implementation of results of public research is based on parallel execution and networking with company projects. 23 on-going programmes in 2004 with a total extent of EUR 1.2 billion a programme lasts typically 3–5 years annually 2000 company participations annually 800 research unit participations Tekes usually finances - 60–80 % of university projects - 25–50 % of company projects (C) Tekes

Technological success rate of enterprise research projects concluded in 2002 concluded 1145 projects 611 mio. € 905 projects 511 mio. € No information 240 projects, 100 mio. € Stopped or failed projects 37 projects, 17 mio. € Otherwise as expected, but late 188 projects 117 mio. € Success as expected or better 525 projects 278 mio. € 16 % 84 % 3 % 23 % 54 % Number and volume of projects Success less than satisfactory, 155 projects 99 mio. € 19 % 57305, Copyright © Tekes

SUCCESS FACTORS for FUTURE Curiosity Activity Cooperation ability Knowledge management Absorbing knowledge Application of knowledge Internationalisation Prepare answer for questions, which will be asked after 5 years!! © S&T Balance

Don’t forget creativity at all levels!!

Success comes before work only in a dictionary! (C) S&T Balance

Thank you for your kind attention! S&T Balance ST