Over the past 3 decades Finland has transformed it-self into a global innovation leader, in large part due to their focus on research and development. Back in 1981 Finland’s total R&D expenditures were just over 1% of gross domestic product (where New Brunswick’s are now) and half of global leaders the US, the UK, and Japan. Fast forward to 2010 and Finland leads the world with R&D expenditures of 3.9% of GDP – a third more than the US and Japan, and double the UK.
Today we’re going to look at one aspect of Finland’s innovation agenda, their strategic centres for science, technology and innovation, or as they are known over there, SHOKs.
SHOKs are not-for-profit research organizations targeted at specific sectors and “owned” by interested companies, universities and research institutes. There are SHOKs for forestry, metal products and mechanical engineering, built environments, energy and the environment, health and well-being, and information and communications technology (ICT)
SHOKs develop and implement programs focused on strategic, pre-commercial research. Projects are undertaken by a virtual organization consisting of interested owners and third-parties, including competitors. Participants are granted non-exclusive, global, and perpetual rights to the results. TIVIT, the ICT SHOK, has research programs focussed on the future internet, device and interoperability ecosystems, cloud software and “next” media. The Cloud Software program alone has 7 universities, 4 research institutes, and twenty companies participating, including CSC, Siemens, Nokia and Ericsson.
Each SHOK has an annual research budget in the $55-80M range, with over-head in the order of $1.1-1.6M. The companies are required to fund an average of 40% of the research conducted. The remaining 60% comes from the Finnish government through their funding agency for technology and innovation, Tekes (which sets the rules for the SHOKS) and the Academy of Finland. Additional funding also comes from European programs such as FP7.
Do they work? While encouraging, both an international evaluation panel requested by the Finnish Government, and the Finnish Research and Innovation Council concluded it’s too soon to tell. The panel did call for higher levels of investment from the private sector, and a need for better operating models. The Research and Innovation Council suggested “In the light of current information, it would not be appropriate to set up any new centres.”
Despite this lukewarm endorsement, there’s lots to like. Focusing R&D investment strategically increased collaboration, significant investment by both government and the private sector, and the owners shaping the research agenda.
Could it work here? It doesn’t look good for one simple reason –we lack scale. In ICT for example, we have 1 university in the Province doing doctoral work, 1 research institute, and 27 ICT firms with more than 50 employees. There is no Nokia, Siemens or Ericsson. And it’s not that different in other sectors. A small private sector combined with a government trying to get the deficit under control, would translate into SHOKs constantly scrabbling for survival and unable to make a difference because there’s not enough funding.
A pan-Atlantic initiative could hold more promise. A larger pool of companies would make it easier to find the private sector investors. More universities and research institutes to collaborate with would provide a deeper and more varied pool of researchers. Combining capital would enable Provincial governments to make a meaningful investment. All of this should translate into a more robust research agenda, along with something approaching critical mass in 5-6 key areas rather than none.
And while SHOK therapy is not likely the prescription we need the concepts behind it still make a lot of sense, provided we can generate scale and consolidate our efforts.