VTT as an Innovation PartnerOECD Business Symposium on Open Innovation in Global Networks
Copenhagen, 25th Feb 2008Prof. Erkki KM Leppävuori, President & CEO
THE NEED TO INNOVATE
Knowledge and intellectual capital intensity increases especially in Western societies.Societies with high knowledge and intellectual capital intensity typically offer demanding markets.
Demanding market means competition.Competition makes innovation possible and, at the same time, necessary.
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THE ORIGINS OF INNOVATIONS
Innovation is mainly driven by researchBasic research on different technologies creates potential for applications.Development in one area opens new potential in other areas.
The number of interfaces drives the innovation probability
The more interfaces, the more innovations.Cross-cultural, cross-technological, multidisciplinary.
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THE DIFFERENCE BETWEEN RESEARCH AND INNOVATION[and creativity]
Research is the transformation of moneyinto :
• Knowledge new to the offering• Knowledge new to the company• Knowledge new to the industry• Knowledge new to the world
Innovation is the transformation of knowledge into money.
• The adaptation or adoption, by the organisation, of anything new that is being transformed or incorporated into:
• Products, services, processes, systems, structures, brands, IP, etc.
• i.e. into anything that the customer and/or consumer is willing to pay for or that reduces the cost of serving the customer/consumer.
Research
Innovation
Research
Innovation
Creativity
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R&D - INNOVATION - BUSINESS TRANSFORMATION
Is there any need to shift the focus of "a country's" innovation policy from its almost exclusive emphasis on expenditure on research and science, on the commercialisation of inventions or discoveries and on investment in frontier technologies?Equating innovation with science and research is at best an incomplete picture, which misrepresents where greatest benefit from innovation can be created and captured for "a country".An alternative view is that the smart application of knowledge to transform businessess is the key to achieving innovation, both for firms and for nations.The aim should not merely be increasing the supply of science and research, but bolstering the capacity of internationally competitive private firms resident in "a country" to absorb and use all sources of knowledge in a way that transforms their capabilities and business offerings to better meet market needs.
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WHY PUBLIC RESEARCH FUNDING
Areas where markets fail in socioeconomic problem solving: … areas with socio-economic importance in which markets function imperfectly (public / common goods, e.g. health care, environmental protection, defense, education, science and research, and…
…respective infrastructure areas: … socially important infrastructures and public good areas, such as transportation, energy, but also…
…science and innovation infrastructure: … creation, maintenance and financing of education and research infrastructure or “innovation system” supporting education, basic research, (re)training…
Areas requiring long time horizon of R&D: …areas of imperfect markets such as environmental protection...
Areas requiring critical R&D mass and expenses: …critical mass and big size of R&D facilities such as aeronautical and space research (e.g. ITER, CERN, EBML, ESA)…
…and more practical arguments like…Welfare through competitiveness: Government R&D funding can be justified for boosting economic growth in order to enhance national competitiveness and consequent improvements to economic and social welfare in through income and wealth creation, improved employment, etc…
R&D schemes for SMEs: … most companies are SMEs with limited R&D resources but important for economy and employment giving legitimacy to public R&D funding schemes
…and also…related government, system and sectoral failures.
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PUBLIC DECISION MAKERS, FINANCIERS AND R&D PERFORMERS
Science and Technology
Policy Councilof Finland
UniversitiesUniversities
Ministry of Education
Ministry of Education
Ministryof Employment
and the Economy
Ministryof Employment
and the EconomyOther
ministriesOther
ministries
Parliament of FinlandParliament of Finland
Council of StateCouncil of State
Other researchinstitutes
Other researchinstitutes
TE-CentersTE-CentersCommitmentConsensus
The Finnish National Fund for Research and Development
The Finnish Funding Agencyfor Technology and Innovation
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VTT IN BRIEF 2007
7 Knowledge ClustersDigital Information SystemsTelecommunicationsMicrotechnologies and SensorsMaterials and BuildingIndustrial SystemsBiotechnologyEnergy and Pulp & Paper
46 Knowledge Centres2 740 employees 232 M€ turnover
9 Key Customer SectorsBiotechnology, pharmaceuticals and foodsElectronicsEnergyICTReal estate and constructionMachines and vehiclesTransport and logisticsPulp and paperProcess industry and environment
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TURNOVER 2007 (232,2 M€)
Public sector, domestic23 %
Income from abroad14 %
Private sector, domestic30 %Basic
governmental funding33 %
76,6 M€ 69,3 M€
53,8 M€
32,5 M€
COMPETITIVE INCOME
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VTT KNOWLEDGE CLUSTERS
Microtechnologies and sensors
7 knowledge centres
Materials and building
6 knowledge centres
Biotechnology6 knowledge centres
Energy and pulp & paper
7 knowledge centres
Digital information systems
6 knowledge centres
Telecommunications6 knowledge centres
Industrial systems8 knowledge centres
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EXPERT SERVICES PROVIDES PROBLEM SOLVING AND PERFORMANCE ASSESSMENT
CUSTOMER
Consultation Expert opinionsFailure analyses
Certification and product approval
Conformity assessment
CHARACTERISTICS
Customised services
Operational excellence
Experience based applications
Delivery on time
Good laboratory resources
AREAS OF ACTIVITY
• Buildings• Building materials• Building structures• Fire safety• Chemical analytics• Medical devices • Electronical products• Machines, boats,
vehicle equipments
Services offeredCopyright © VTT
VTT VENTURES - SPIN OFFS AND OTHERPORTFOLIO COMPANIES
Networking and risk management solutionsVergo Oy
Digital content protection software solutionsSplitstreem Oy
Networking solutions for smart environmentsElectrical coding technologyTechnology enabling high-throughput gene expression analysis
Mittadata OyNicanti OyPlexPress Oy
RFID technology solutionsFennoID Oy
Boron Neutron Capture Therapy for cancer treatmentThin-film electro responsive sensors and related electronics Energy and environmental analyses
Boneca OyEmfit OyEnas Oy
Biomagnetic sensorsAivon Oy
Metabolomics, bioinformatics, biomarkersZora Biosciences Oy
Ethanol production from waste *)ST1 Biofuels Oy
Discovery and production of plant based small molecules SoluCel Oy
*) Exit Nov 2007
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VTT’S MISSION
VTT produces research services that enhance the international competitiveness of companies, society and
other customers at the most important stages of their innovation process, and thereby creates the prerequisites
for growth, employment and wellbeing.
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VALUES GUIDING VTT’S ACTIVITIES
ETHICAL NORMS
impartiality reliabilityintegrityresponsibility
Science-based innovationGenuine collaboration
Customer and demand orientationEncouraging peak performance
14Copyright © VTT
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VISION 2012
VTT as the technology leader brings
success to its customers.
Internationally recognized, synergistic and flexible partner
An engine of technological development in Finland
Best investment option in the innovation environment
The preferred employer for experts who want to improve their knowledge and succeed
Customers Owner and finance providers Employees
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VTT IN TRANSFORMATION DURING THE STRATEGY PERIOD
20122005Technical research centre Technology-intensive
innovation organisation
Internationally recognized and desirable collaboration partner
Domestic market oriented
Focus on enhancing the competitiveness of customers through technology-driven development
Focus on technologies
Diverse offering of combined competencies
Numerous separate offerings
Networked organisationProfit-centre organisation
Broad technology-based competence
Multidisciplinary and internationally competitive competence
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IMPACT ASSESSMENT MODEL OF RTOs Beneficiaries
Impacts on competence and management
Impact on customer innovation process
Societal impacts
Enabling factors
Enabling factors
StrategicBusiness areas Political
decisionmakers
Public sector
Citizens
Industrialassociations
International corporations
National largecompanies
SMEs
RTOStrategic Actions
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CHALLENGES FOR RTOs IN THE FUTURE
GLOBAL -orientation
EU-orientation
National-orientation
?
?
DEVELOPMENT OF AN INVOLVING INTERACTION CULTURE• Researcher networks of knowledge portals• Technology themes• Key technology actions• Key partners and strategic allies• Official and unofficial multidisciplinary peer
groups and networks• Prediction of technology and market development
trends
• Core processes, support processes• Projects and teams• Sharing and combining expertise and the creation
of new knowledge in projects and processes
• VTT's operating units (line organisation)• Allocation of financial resources• Predicting, acquiring and developing expertise• Strategic planning and reporting structureI level
III level
II level
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CUSTOMERS AND OTHER INTEREST GROUPS
RESEARCH AND DEVELOPMENT
ProjectsCompetence management
VENTURESCommercialisation of
research output,venture activities
and spin-offs
EXPERTSERVICES
Consulting services, testing, certification
MANAGEMENT,SUPPORT PROCESSES
QUALITY MANAGEMENT, INFROMATION SERVICE
STR
ATE
GIC
RES
EAR
CH
Man
agem
ent o
f the
self-
finan
ced
and
join
tly-fu
nded
rese
arch
BUSINESS SOLUTIONSManagement of the contract research
Advisory boards
THE OPERATIONS MODEL AND THE STRUCTURE
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International Research Netw
orks
VTT’S INNOVATION PARTNERSHIP MODEL
VTTIndustrial Innovation
Management
Business and HTI competence
Technologycompetence
Global markets and Business environment
Integration of different R&D competencies
(Partnerships)
Management and fostering of technology-based innovations
Integration of competencies
VTT’scustomers
R&D financiers
Customer’scustomers
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FORESIGHTS AND BUSINESS INTELLIGENCE AS A PART OF VTT'S STRATEGY PROCESS
Foresight of business environmentChanges in different customer sectorsCompetitive situationFinancial aspects
Technology foresight and roadmappingThe development and implementation of technologies New rising technologies and their possibilitiesNew innovative combinations of different technologies and knowledges, multidisciplinarity
Business intelligenceChallenges in our customers businessesCustomers needsNew market opportunities
The knowledge management of VTT
Services and offeringStrategy and processes
Technology focusand
investments
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THE NETWORK OF GLOBAL AND LOCAL PLAYERSNew technology policy must look for global competitiveness, specialising and
networking
High level global player
Networkedlocal player
Networkedlocal player
Networkedlocal playerInternational
network
Networked local players clustered around global players
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MA
NA
GEM
ENT
SER
VIC
ES
Technology programme –concept combines academic research projects and corporate R&D
Steering groupenterprises
TekesGrants
Company R&D projects
preparationcoordinationdecisionmaking
Research projects of research institutes and universities
SynergyNetworking
Part financing
GrantsLoans
Capital loans
Pictures: © ESA, Okmetic, Stora EnsoSource: Tekes
Strategic Centres for Science, Technology and Innovation
Internationalpartner
Cluster Ltd.CompaniesUniversities
Researchinstitutes
Cluster Ltd.CompaniesUniversities
Researchinstitutes
Virtualresearch organisation
Virtualresearch organisation
Technologytransfer
Technologytransfer
R&D andinnovation
program 1, 2of centreCentre A, B
CooperatingcompaniesUniversitiesResearchorganisations
CooperatingcompaniesUniversitiesResearchorganisations
StrategicpartnersStrategicpartners
DM 24983412-2006 Copyright © Tekes
CompanyCompany CompanyCompany
Researchinstitute
Researchinstitute
INTERNATIONAL RESEARCH COLLABORATION
European research collaboration is vital: EU’s 7 Framework Programme and Technology Platforms, Eureka, ERANET and COST. Active and selective participation in EU research programmes on the basis of VTT's Technology Focus.
VTT is active in developing European research and innovation structures.
Active networking with the leading technology countries, such as the United States and Japan.
The activities of business enterprises will be supported in emerging economies, particularly in China, South Korea and India.
VTT will make its research collaboration more intensive with selected strategic research partners.
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GLOBAL RESEARCH ALLIANCE GRA: PARTNERS
CSIR / South Africa
DTI / Denmark
Battelle / the US
Fraunhofer / GermanyCSIR / India
CSIRO / Australia
TNO / the Netherlands
SIRIM / Malesia
VTT / Finland
Combined knowledge of nine
top-level innovation intensive
technology organisations
Guiding principles and focus areas for the Global Research Alliance
Undertaking large-impact projects for the benefit of society.
Creating synergy by pooling the energies, skills and facilities of participants.
Promoting projects with high innovation content.
Developing global knowledge networks for industry and industrialsectors to enhance their competitiveness.
WaterEnergyHealthDigital FuturesIndigenous KnowledgeInnovation Systems
Global Knowledge for Global Good
VTT- UNIVERSITY CO-OPERATION PARTNERS OUTSIDE THE EU
USAUniversity of California at Berkeley (also other campuses) Massachusetts Institute of Technology (MIT)Stanford UniversityArizona University
JAPANOsaka UniversityTokyo UniversityKeio UniversityOkayama University
CHINADalian University of TechnologySouth China University of TechnologyFuzhou University
RUSSIAPetrozavodsk State UniversityRostov State University of Civil Engineering
VTT, VTT, FINLANDFINLAND
KOREAKonkuk University, SeoulThe Seoul National UniversityKorea UniversityHanyang University
CHILEUniversity of Conception of Chile (UDEC)
AUSTRALIAQueensland University of
TechnologyCopyright © VTT
VTT IS A WELL KNOWN PARTNER IN EU RESEARCH PROGRAMMES
• Framework programmes are the EU’smain ways of funding research and development in Europe.
• Now we are working on FrameworkProgramme 6, with about 150 projects.
• The seventh framework programme (FP7) will run from 2007 to 2013.
• Mainly collaborative joint research.• Many research areas are covered.
• These include ICT, nanotechnology, transport and energy.
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VTT’S PARTICIPATION IN INTERNATIONAL PUBLIC RESEARCH PROJECTS
118125 119
139 144
7790 89
112 113
133
0
50
100
150
2001 2002 2003 2004 2005 2006
EU
R m
illion
TotalEU
Cooperation apart from EU-funding: EUREKA, ESA, COST, Nordic cooperation, OECD, IEA, IAEA, bilateral cooperation etc.
Number of projects
490317
481346
460340
439335
388287
370283
VTT’s total volume
161
TRIP™, Tekes R&D International Program - a new economic development model
Exploiting Finland’s R&D competitive advantage.Developing broader range of R&D activities.Four segments:
- attracting first time R&D activities (institutes, company activities, contracted out)- encourage local multinational subsidiaries (LMS) with existing Finnish operations to integrate- joint ventures with Finnish companies, especially SMEs- new streams of business with existing R&D partners.
Value added activities (e.g.), - clinical trials in pharma, bio,- wellness / functional food ingredients- engineering sourcing- chemical industry.
The purpose of the concept is to agree an international marketing project aimed at attracting multinational companies to establish research and development and other knowledge and technology-based activities in Finland.
Detection of international R&D projects which match the capabilities of VTT as primary national partner.
Validate the TRIP concept of encouraging local multinational subsidiaries to undertake R&D in Finland using VTT as a partner by a combination of Tekes support and tax deductions.
Funded 50 % by TEKES (National Funding Organization).
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SOME CHALLENGES FOR THE INNOVATION ECOSYSTEM (1/2)The linkage of companies to the international economy takes place not only through new markets but also through the renewal of business models. With globalisation both production and product development are being dispersed over a wider area geographically, i.e. to places where resources and expertise are best available to companies. Different nations and regions compete with their innovation ecosystems to persuade enterprises and skills globally. Underachievers will loose the game.
Networking is important not only in production factors but also in R&D and services. Networking is an essential part of the knowledge and innovation environment's development. The aims of networking are mainly the improvement of productivity and competitiveness, but also the opening up of new business opportunities through the combination of different competencies.
The success of companies, networks, clusters and other larger economic and regional entities will in future be based more on new ways of working and the ability to create and apply new knowledge in an effective way. It is evident that competition is chaninging from inter-company to inter-network competition.
The development of an innovation from idea to commercial success is a multi-staged process. Innovation management is actually network management. Most innovations are based on already existing knowledge. The introduction and exploitation of innovation are often also a social process. Technology is only one of several factors involved in innovation activity as a whole. Innovations can also be services, processes, organisational structures, business models, brands, marketing channels, and so on.
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SOME CHALLENGES FOR THE INNOVATION ECOSYSTEM (2/2)• What are the most important challenges facing the innovation ecosystem in the EU?
Ageing population, growing importance of the Pacific Rim, growing innovation gap between the EU and the US, fast digitalisation of the whole society, ecological problems, revolution in biological knowledge, productivity and quality, ….
• Research alone is not enough to ensure competitiveness. Research results must be brought to market more quickly and more efficiently - both in industry and public and private sector services.
• More DUI (Do, Use, Interact) instead of R&D???
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IT’S ALL ABOUT THIS!
Finland’s future is in innovations (open networking - global markets - services).
New competitiveness based on innovations is the key to our customers’ success.
VTT’s objective is to boost continuously the competitiveness of the customer by utilisingits expertise, innovations and networks.
Our new operating model and new structure will help us to achieve this goal!
Business from technology!Business from technology!