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Vesa Harmaakorpi: Is Finnish innovation policy utilising 4% or 96% of Finnish innovation potential?

Innovation processes and environments are in a state of constant flux. The role of applying scientific findings and technologies in closed research and development environments is diminishing. According to the Innovation in Europe survey, only some four percent of innovations are based on academic research.


 Innovation processes and environments are in a state of constant flux. The role of applying scientific findings and technologies in closed research and development environments is diminishing. According to the Innovation in Europe survey, only some four percent of innovations are based on academic research.

The survey also shows that the most significant sources of innovation are customer contacts, company networks and the like. These produce 96% of innovations. So, if scientific research is the initiator for only a fraction of innovations, there is reason thoroughly to consider the birth mechanisms of innovations and what methods would work best in their promotion. Innovations usually evolve from a practical need, and they are developed in a context that is far removed from the environment where scientific innovations are produced.    


Innovations – where and how?  

Recent innovation research has focused on innovation environments and systems. An innovation system comprises innovative networks, which in turn involve various social networks. The structure of these social networks has an impact on the financial outcome, since the viability of the networks modify the fluency and quality of information. What is key is the concept of strong and weak links. Strong links are marked by shared norms and close involvement in the network’s activities. People engaged in strong networks usually have a common knowledge base, and these networks also tend to be quite conservative.  

Weak links in particular are needed for introducing new ideas. Innovations are most likely to emerge where there are structural gaps in an otherwise close-knit network. Those able to traverse a structural gap in the social network are more likely to come up with a workable idea: new ideas are born out of the new connections made at the gaps – that is, when groups and people with different backgrounds encounter each other.  

By definition, innovation systems have to subsystems: (i) the system creating and distributing new information, formed by universities, research institutes, technology centres etc., and (ii) the system applying and utilising knowledge that is formed by company networks. A dialogue based on praxis is a prerequisite for the shared and open innovation processes between the two subsystems. This dialogue is not easy to establish, however, since, even within one technological field, those engaged in basic research and those focusing on the practical applications may speak a very different language. The same is true for dialogue between disciplines. A research-focused party from one field and a praxis-oriented actor from another may still want to cross a structural gap for mutual benefit. A case in point is the relationship and interaction between basic research in nanotechnology and the practical innovation processes in the metal industry.      

Towards a new innovation policy  

The Finnish “innovation policy” has largely been an exercise in which winning solutions have been sought by creating competence clusters within a knowledge-creating and distributing sub-group. This has been done by means of science and technology policy and by building winning clusters based on the advantages of centralisation within a subsystem that applies and utilises knowledge by means of industrial policies. Special attention should now be paid to innovation potential in the grey area between the two subsystems, which could open up new development paths in addition to the existing ones. This would require a whole new approach to innovation policy: a “system approach”. Gerd Schienstock and Timo Hämäläinen set the path for adopting this approach as early as 2001 by introducing the concept of “network-facilitating innovation policy” in Sitra’s publication series. Practical examples of such a policy have, however, remained sporadic.  

The most important resource for innovation systems and the most central target of an innovation policy that serves networking is social capital. When social capital is discussed from the perspective of the innovation system, it is not only one resource among others, but is also at the very core of competence in innovation. It enables networks to use tangible, financial and intellectual resources in each regional system and between regional systems.  

An innovation system can be likened to a regional road network. As the volume of traffic increases, accidents are bound to increase although nobody will be able to predict when and where. The road network of an innovation system is made up of channels through which knowledge is transferred between actors. Like car accidents, innovations are often a result of a coincidence. The more traffic there is in the channels of an innovation network, the more collisions there will be, although it is impossible to predict where and when individual innovations will emerge.  

The local routes, or the strong links in the system, that are most heavily occupied by innovators in close and regular contact with each other, need to be impeccably paved with a social capital that creates cohesion and enforces existing links. And yet, because innovations are said to flourish on differences and complexities, the long-distance routes also need to be maintained, so that the two road grids can seamlessly function, and allow innovations to happen. This requires social capital that encourages diversity and builds bridges.  

From the perspective of innovation policy that promotes networking, there is particular reason to monitor the routes between subsystems: “connect and develop”, the open innovation model adopted by Procter & Gamble and well-documented in Harvard Business Review, requires a very different network of channels to the traditional “research and develop” model. Universities, for example, should take a fresh look into how they move in these networks, as the innovation environment is changing for the more open and practice-oriented. Network-based innovation policies aim at monitoring the condition of the routes (social capital and its various forms) and developing the necessary practical tools for improving network activities. This will enable the harnessing of millions of innovation kernels, which research has already produced, and which are waiting to be found merely through increased “intellectual cross-pollination” between the two subsystems. Finland is expecting such innovation policy to be introduced alongside the already implemented and, as such, quite viable science, technology and industrial policies.   
Vesa Harmaakorpi
Lappeenranta University of Technology, Lahti Unit    

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