Timetable correction wrong dates

Mon 1.12
Case Vaisala: Service business development in hightech organization, Sami Lehikoinen, Customer Commitment Manager, Vaisala

Wed 3.12.
Summary of course contents + Case Skype

Developing technology and business case Finland

Markku Tinnil Management of technology

Contents
The Nokia way success through technology development Finnish technology and business development structure- a success story? R&D spending
The role of Tekes Tekes technology programmes

Commercialization the sore point of technology management

Finland versus Israel

The Nokia way success through technology development

Background of the mobile success story

NMT was a Nordic invention Nordic mobile telephone
Finland had a significant part in development Closed home market monopoly in Scandinavia Driver: government organisations had no money to have their own networks driver for cooperation Big countries developed separate mobile systems for government sectors

Open minded attitude towards new innovations

Several developing companies SMS-the users misused the technology

State regulators actively increased competition At the same time, operators did co-operation in technological areas
Creation of network effect jointly, competition in services

The Nokia way from rubber boots to mobiles

Nokia should forget this nonsense about car phones, it will never be a business Focus on core competence, such as cables there is a market for them always It is impossible to manufacture in Finland anything that is smaller than a horse CEO of a large metal industry company

Its never safe to go for radical innovations

Background of the mobile success story

The key points in Nokia story

Technology
Nokia standardised many of its innovations others became followers Gaining dominant design position

Mobile penetration rised very quickly

Right timing Possible to copy the success??

Competition & co-operation between mobile operators People innovated new uses for technology themselves open innovation (Chesbrough)

Dominant design -repeated

Sets a benchmark and defines in peoples minds how the product should look, how its used, etc Satisficer for many instead of an optimizer for few compare with Benefon How does a dominant design occur? Nokias case

? + + +

Technological superiority Network externalities value depends on how many others have the same design Collateral assets image, brand, switching cost Industry regulation and government intervention Communication between producers and users what users want

Dominant design

R&D cooperation and networks

Maintaining global contacts to follow emerging technologies & businesses
Nokia R&D 20,000+ people
Internal development This year- next year

External development network

R&D Nokia Research Center 1,000+ people

3-5 years horizon >5 years

Universities & research institutes

International organizations

Large corporations

VC companies, SMEs

Networking in Nokias R&D projects funded by Tekes

%
100

80

Internat. projects

60

40

20

0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Total of networked projects SME partnerships Partnership with research institutes .
10

Part of technology programme International project

Nokias own research focuses on long term research

Focus on higher uncertainty and longer time scale Uncertainty Long term

Medium term Short term

Development of Scanning, concepts and exploration and knowledge build-up solutions

Product development

Expenditures
Nokia Research Center activities Business activities
11

Multimedia
Enriching peoples lives with connected, mobile multimedia experiences
Connected camera Mobile music Connected Mobile TV, gaming on Connected open enhancement platform s Home, Multipart

My Connected Life

Art ist s
Alanis Mo risse Beet hov en Brya n Ad am s Er ic C lapt on Lisa Lo eb Nor ah J es on O tio ns p
S p p o se d fo rm e ri n fa t u
1 . F nt R w ro o 2 . B ba a 3 . T an k U h 4 . A Y ou st l l ma d re i

Un d e ru g sw e t r p
1 . 21 T n gs hi 2 . Narci ssu s 3 . Han ds C ean l 4 . F i nch l 5 . S Un sexy o

Ba c k

2004

2005

2006

2007

2008
12

Nokia Morph
the Morph concept device is a bridge between highly advanced technologies and their potential benefits to end-users. This device concept showcases some revolutionary leaps being explored by Nokia Research Center (NRC) in collaboration with the Cambridge Nanoscience Centre (United Kingdom) Radical innovation
or just incremental?

Morph concept technologies might create fantastic opportunities for mobile devices:
Newly-enabled flexible and transparent materials blend more seamlessly with the way we live Devices become self-cleaning and self-preserving Transparent electronics offering an entirely new aesthetic dimension Built-in solar absorption might charge a device, whilst batteries become smaller, longer lasting and faster to charge Integrated sensors might allow us to learn more about the environment around us, empowering us to make better choices

13

Nokia as innovator
Long term research with Continuous short-term development Firms need a portfolio of radical and incremental innovation Nokia has managed to do it

Riding the two horses dilemma

(Tidd et al., 2001)
14

Finnish technology and business development structure - a success story?

1. R&D spending
2. The role of Tekes 3. Tekes technology programmes

1. R&D spending

R&D input in Finland

Lecture 1: Positive relationship between investments in technology and economic growth Technological innovation now the single most important driver of competitive success in many industries

Total 5.5 billion euros, 3.5 percent of the Gross Domestic Product (GDP) in 2005. Public sector
1.6 billion euros

Enterprises
3.9 billion euros

Esko Aho: Finland has been world champion in Technology development. Now its time to focus on using technology, i.e. Innovations
Sources: Statistics Finland and Tekes 16

1. R&D spending

Innovation environment in Finland - resources and funding

Private R&D at companies 3,880
Business Angels approx. 380* Venture capitalists: Private 268** Finnish Industry Investment:
direct 13, venture capital funds 42, seed funding 11

From abroad 169* VTT 225 (78)

Sitra 29 Academy of Finland 219 (219) Tekes 430 (430)

Innofin Ministries, 6 (5) TE-Centres, sectorial research 312 (221)*

Finnvera 406 (40)

Finpro 32 (20)

Public

Business development Marketing Basic research Applied research Business R&D Internationalisation
17

Universities 1,040 (454)*

Research strategy for innovation- the role of HSE

Research programs Academic basic research Scientific Rigor
The role of universitiesBasic and applied research

Synergies Research partners Companies Applied research

Practical Relevance

18

1. R&D spending

Evaluation of the Finnish science, technology and innovation environment

According to WEF, Finland was ranked second in competitiveness in 2006. Switzerland was ranked first, Sweden third and Denmark fourth. IMD ranks Finland 10th in overall competitiveness in 2006. The three most competitive countries were USA, Hong Kong and Singapore. Based on the Lisbon Review, Finland was the most competitive country in the EU in 2004, followed by Denmark and Sweden. The dimensions of the Lisbon diamond are information society, innovation and R&D, liberalisation, networked industries, financial services, enterprise environment, social inclusion and sustainable development. Based on the comparison of the European Commission in 2005, Finland was among the leading countries in investing into knowledge-based economy and performance of the economy.
DM 36054 and 218475 19 10-2006 Copyright Tekes

1. R&D spending

CompetitivenessTotal ranking 2005-2006 We are the winners? or are the measures wrong?
Infra, R&D, infosociety etc ok, but commerciali zation?
WEF WEF IMD Global Business Total compecompetitiveness competitiveness titiveness 2006 2005 2006 2006 Switzerland 4 4 8 1 Global Competitiveness Index rankings 2007 3 Finland 2 2 10 country/Economy Rank Score Sweden 7 14 3 United States 7 1 5.67 Denmark 5 3 5 4 Switzerland 2 5.62 Singapore 11 5 3 5 Denmark 3 5.55 USA 1 1 1 6 Sweden 4 5.54 Japan 9 10 17 7 Germany 5 5.51 Germany 2 6 26 8 Finland 6 5.49 Netherlands 6 11 15 9 Singapore 7 5.45 Great Britain 8 9 21 10 Japan 8 5.43 Hong Kong 10 14 2 11 United Kingdom 9 5.41 Norway 14 17 12 12 Netherlands 10 5.40 Taiwan 21 8 18 13 Iceland 13 16 4 14 Israel 19 23 25 15 Canada 15 13 7 16
Sources: IMD, The World Competitiveness Yearbook 2006 and WEF, The Global Competitiveness Report 2006-2007
20

Lecture 1

The succesful exploitation of new ideas

21

2. The role of Tekes

The role of Tekes - Tekes mission statement

Tekes Finnish Funding Agency for Technology and Innovation Similar structure in other countries Vinnova/Sweden, MITI/Japan, Darpa/USA

Tekes boosts the development of Finnish industry and the service sector by technological means and through innovation. This will renew the economy and increase added-value, productivity and exports, thereby creating employment and enhancing well-being.

Invention Technology

Innovation Business
22

2. The role of Tekes

Technology focus areas

Business competence and business development

New

Innovation activities Business renewal Growth companies and internationalisation

Customer-oriented approach Managing a networked business Knowledge management Service business

Been around for some time

Problem child

ICT

Biotechnology
Systems biology Bioprocess technology Combining biosciences with ICT

Mobility Broadband communications Software-intensive products and systems Knowledge and content management Test environments for new applications and services

Materials technology
Want to bet?

Nanotechnology

Innovative nanostructured materials New structures for nanoelectronics Nanosensors and actuators

Interdependencies between properties, structures and production Surface phenomena Materials design

Basic research and engineering

DM 129863 23 05-2005 Copyright Tekes

2. The role of Tekes

Case: Information and communications cluster

Internet technology increasingly Mobile common in networks and services products and services Communication getting mobile; service adaptation using location information

Seamless integration of wireless products and services with ubiquitous broadband systems
Personalised, context-aware broadband services available everywhere Converged networks and seamless access Semantic web - All content easily retrieved through any device

Telecommuni- Multimedia communications in wireless and broadband networks cation services

Content business

Software products

Knowledge and content management Multi-channel publishing and services Research & development New business models International business Sector-specific, market-oriented Open interfaces and product platforms Open source code Market-oriented research & development Work productivity International business networking

Seamlessly compatible, adaptable software

24

3. Tekes technology programmes

Tekes technology programmes forums for networking in sectors of the future

)

How innovations are supported?

www.tekes.fi/eng/programmes
25 DM 30256 11-2006 Copyright Tekes

3. Tekes technology programmes

What are the technology programmes?

The technology programmes of Tekes are complete packages of financing and expert services,
that are aimed at the most important targets in terms of the future of Finnish business and society in which Tekes finances research and development projects aimed at specified areas and provides programme services that support a programmes objectives which each last about 3 to 5 years through which about half of the financing granted by Tekes is channelled

26 DM 30256 11-2006 Copyright Tekes

3. Tekes technology programmes

Technology programmes are Tekes choices for the greatest impact of R&D funding
In 2006, 41% of the funding granted by Tekes was channelled via the technology programmes; this percentage will be increased in the next few years. The rest of Tekes funding is granted to projects that are outside the technology programmes. The focus areas of these projects are not generally restricted

41 % 59 %

27 DM 30256 11-2006 Copyright Tekes

3. Tekes technology programmes

Technology programmes key indicators

There were 23 programmes in progress at the end of 2006 Companies participate in about 2,500 projects every year and research units in about 1,500 The combined investment by Tekes, companies and research units in the programmes amounted to 380 million euros in 2006
Tekes finances programme coordination and about half the costs of a programmes projects The other half of the costs of a programmes projects are paid by the companies and research institutes participating in them Typical cost structure:
50% companies/50% Tekes Universities 20% companies/80% Tekes
28 DM 30256 11-2006 Copyright Tekes

3. Tekes technology programmes

Focus areas in Tekes strategy as the basis for technology programmes

Application focus areas
Renewing products and business concepts Environment and energy Health and well-being Services Security and safety Work and leisure

29 DM 30256 11-2006 Copyright Tekes

3. Tekes technology programmes

Winwind Oy
WinWinD has developed a new wind power plant concept, with rated output of 1 and 3 MW Better effective output than competing designs. The WWD concept has been created by combining
German innovation and expertise with Finnish know-how in energy production.

Low maintenance cost First plant in 2001 Excellent practical experiences have established the reliability of the concept Deliveries to Finland, Sweden, Estonia, France and Portugal www.winwind.fi Criteria: New tech, environment, market potential Clearly a win-win!

30 DM 32330 10-2007 Copyright Tekes

3. Tekes technology programmes

Funding criteria for company R&D projects

Tekes experts evaluate the project, the business, resources and the company from a holistic viewpoint

How to get funding for a project?

The key issues of the evaluation are

Business activity to be pursued- business case Technology, innovation, competence and know-how to be developed is it innovative? Resources available for the project street credibility Cooperation to be developed and utilised -network Direct affect on social, environmental and welfare aspects -other than business Impact of Tekes funding and expert work on project implementation -would you do it anyway?

Other funding applications and the indirect impacts of the project on other companies will be taken into account in the evaluation.
31 DM 42097 and 279135 04-2003 Copyright Tekes

3. Tekes technology programmes

Precision weather service

Vaisala Oy
Testbed, a project that is part of the AVALI Technology Programme The aim of the project is to create an experimental and development platform for observational instruments and systems, analysis and forecasting models, and services related to the weather and the environment The dense weather and measurement station network making use of wireless data transmission and including a database and web user interface, is provided by Vaisala The project generates precision weather data for organisations and private individuals, providing information on phenomena such as local showers, fog and ozone levels www.vaisala.fi and testbed.fmi.fi

32 DM 32330 06-2006 Copyright Tekes

3. Tekes technology programmes

Habbo Hotel expands internationally

Virtual online game world for teens (hotelli kultakala) Localised game world in eighteen countries One of the world's most popular youth sites in terms of visitor numbers Developer Sulake Corporation is participating in the Tekes Technology Programme FENIX -Interactive Computing Sulake has offices in 15 countries Sulake Corporation www.sulake.fi
Habbo is one the worlds largest and fastest growing virtual worlds and social networking services for teenagers. Localized Habbo communities all around the world are visited by millions of teenagers every week.

33

Commercialization the sore point of technology management

Finland versus Israel experiences from a study

A comparison of two countries R&D commercialisation

Based on a study by LTT Research ltd (Business Cycle
Effects on Start-Up Finance in Finland )

Both countries roughly similar in many R&D related aspects GDP, population, GDP/capita etc

35

R&D investments in some countries

Percentage of GDP
5.0 5,0 4.5 4,5 4.0 4,0 3.5 3,5 3.0 3,0 2.5 2,5 2.0 2,0 1.5 1,5 1.0 1,0 0.5 0,5 Israel Sweden FINLAND Japan Iceland South Korea USA Denmark Germany Austria OECD France Singapore Canada Great Britain Norway China

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Est.
36

Sources: OECD, Main Science and Technology Indicators and Statistics Finland

From invention to business

Israel excels in commercialisation of start ups The most distinctive characteristic about Israel is its culture of risk-taking characterized by a relatively young history of mostly immigrants from other countries along with its close ties to the U.S. Finnish innovations have occurred primarily in larger companies (namely Nokia) as opposed to start-ups. The Finnish venture capital (VC) industry is considerably smaller and less active.

37

Comparison of commercialization
Play it safe

Money is not the problem

Go to global markets
38

Summary
The Nokia way success through technology development and networking Finnish technology and business development structure- a success story? High R&D spending and good infra for info society
The role of Tekes central public money for R&D Tekes technology programmes as development tools

Commercialization the sore point of technology management

Finland versus Israel- not quite the success story.. Going to global markets still difficult, no culture for VC usage

39