Knowledge-based-innovation – are required prerequisites present?

Honoured guests, ladies and gentlemen, it’s a pleasure for me to be given the opportunity to - once again - open this important event: Oslo Innovation Week.

Let me start by praising the organisers of this event. You have worked out a very interesting programme, and I am certain that all participants will acquire new knowledge and fruitful ideas this week.

Globalisation – challenges and opportunities

We see turbulent times in the world today – a massive upheaval in the financial markets.  

And, even though the Norwegian economy is solid, we are highly affected by this development. Weaker growth impulses from abroad and weaker demand are expected to contribute to continued low growth and slightly higher unemployment. Since the beginning of the year, growth in the mainland economy has slowed up. 

Against this background, innovation plays a key role for Norway, as for many other countries. We have to innovate to remain competitive and sustain our welfare society. In other words - innovation performance is essential to our future welfare and employment.

So how do we achieve this? Especially when worldwide competition to attract research and innovation investment is growing and new competitors have emerged?

The Norwegian Government’s overall response and objective is to make Norway a leading, innovative, and knowledge-based economy, with special focus on sectors where we have a competitive edge. The organizers of this conference has asked me three questions, which I will be happy to respond to:  

Are we on the right track with the Government’s overall objective?

Creating and sharing

My answer is yes – and let me explain why:

A top priority for the Norwegian government is stimulating innovation. both in the private and public sector. We take an active role to achieve this aim. The core of our government’s innovation policy is based on the nexus between creating and sharing.

Innovation is about creating new products and services, which is a prerequisite for economic growth. The fruits of economic growth are then invested into our most valuable resource – the knowledge of our people.

The government’s aim is to develop an innovation policy that creates favourable framework conditions for innovation – among businesses in all sectors. We invest a lot of resources in measures to foster innovation:

• We are building an effective science and innovation system
• We are helping our leading sectors and businesses to maintain their position in the face of global Competition
• We are stimulating those sectors and businesses with the capacity to be among the best in the world to fulfil their potential
• We ensure that the emerging technologies of today become the growth sectors of tomorrow
• We combine these elements to make Norway even more attractive for investment by world-leading companies

Let me give you an example from just two weeks ago, which we are especially proud of.  Microsoft’s decision to localise their head quarters for search technology in Oslo is a huge acknowledgement of Norwegian knowledge. We are actually world leading – with an internationally leading industrial cluster in the important area of search technology.

Our government will work actively to make such developments custom – rather than rare occurrences!

While successful, one should also be realistic. There are many ways to more innovation. A successful policy in one sector doesn’t have to be successful in another. A successful policy today doesn’t need to be successful tomorrow.

Innovation policy is not a precise science

Research, development and innovation are vital. At the same time, their outcome is uncertain. We have to cope with this uncertainty in the best way possible. Let me give you some unresolved questions that exemplify this uncertainty:

• What kind of strategy and innovation policy will, with certainty, lead to value creation?
• Why have some regions and nations, such as Sweden, with significant R&D resources, lagged behind in creating more high-tech industries and even higher wealth? And why is it the other way around in Norway?
• Statistics show that Norway scores low on research. Some people criticise the statistics, and argue that they don’t capture R&D activity in the Norwegian oil sector.  
• Some argue that Norway is characterised by low innovation activity, other argue that we are one of the most innovative countries in Europe if we correlate to industrial structure.

In other words innovation policy is not a perfect or precise science. However, I am convinced that we need an active government with a clear vision, willingness to deliver, and a flexible strategy. Our government has all three.

Innovation is a day to day concern for this government. But we are also thinking long term.

This year we will present a Norwegian White Paper on innovation, with a policy foundation for sustainable wealth creation in a long-term perspective.

As innovation policy embraces several policy areas, we have involved all parts of the Government, as well as other interested parties and stakeholders, in a comprehensive process in our work on the White Paper.

Among the likely focus areas in the White Paper are:

• Innovation and sustainability
• Innovation within the Nordic model
• Innovation in the public sector 

And that brings me over to another question from the organizers:

What are the main challenges we face today?

Knowledge is our most important resource

Our main challenge is to maintain and develop our knowledge-based economy. Knowledge is the most important resource today, and learning the most important process. 

We know that in a knowledge-based economy, absorptive capacity is of strategic importance for creating and sustaining a knowledge-based economy. The absorptive capacity is highly dependent on the stock of human capital, thus emphasising the important role of education. 

We know that in a knowledge-based economy, the ability to produce, attract and retain highly skilled labour is crucial to our current and future prosperity.

Innovation – the answer to global challenges

In a world with environmental and technological challenges, an aging population et cetera – our only hope is highly skilled labour producing knowledge needed to solve those problems.  

With this background, the single most important message I want to convey is about the value of people, in other words human resources.

People make the difference. The way we design a wide range of policies will affect how we attract and stimulate creative people and consequently which innovative, knowledge-based economic activities we develop.

Investments in human resources are therefore the most important prerequisite for innovation. To succeed, it is our investment in human resources that is our biggest challenge.

The national budget

Investment in human resources is important for our government. If you look at the national budget we continue to develop the Norwegian welfare state, through investment in education and research.

• In order to ensure stable, long-term funding for research, the government proposes increasing the capital in the Research and Innovation Fund by 6 billion kroner.
• For 2009, a one-off allowance of 80 million kroner for research infrastructure is also proposed. Furthermore, the government proposes using 190 million kroner of the increased return on capital on scientific equipment starting in 2010.
• The government proposes creating over 200 new research positions, comprising a mixture of funded research posts, post-docs and company-sponsored PhDs.
• We propose a growth of about 20 percent of the User-driven Research based Innovation program (BIA).
• We propose 8 million more to the FORNY program - to strengthen the work of commercialization of research results.
• We propose  10 million more to the establishment of a new program that will stimulate design.
• We propose a significant increase for research on environmental technology.

In total the funding for research and development in the central government budget will increase by around NOK 1.6 billion to around NOK 19.7 billion. That represents a real-terms increase of around 4.4 percent in comparison to 2008. 

But this is not enough. In order to succeed we need cooperation between government, schools and parents.  Therefore I want to give a message to those of you who are parents.  If you don’t engage in your kids school work, you can’t just blame the teacher for poor results.

Growing investment in Norwegian research and education is one aim for this government as shown in the budget, but it is also extremely important for this government to broaden knowledge exchange between the research base and businesses.

No firm can expect to innovate in isolation from the rest of the world.

The question of how it is connected to the other knowledge institutions like other companies and universities becomes an issue of importance for technology and innovation policy and for our Government.

Match-maker

The public sector has an important role being a match maker between different organisations and institutions.

Governments can stimulate network development among actors both inside the nation and across institutional boundaries. Don’t forget that Innovation Norway has more than 100 offices abroad.

The Research Council of Norway has initiated Centres of Excellence. Their main purpose is to lift more Norwegian researchers and research groups up to the highest international standards.

Located in Tromsø, Trondheim, Bergen and the Oslo area, the Norwegian Centres of Excellence are affiliated with Norway's top universities and premier independent research institutes.

The purpose of the Centres for Research Based Innovation and the National Centres of expertise is to build up and strengthen Norwegian research groups that work in close collaboration with partners from innovative industry and innovative public enterprises. Our aim is to stimulate those sectors and businesses with the capacity to be amongst the best in the world to fulfil their potential.

Our government is also aware of the great business potential, which lies in a close cooperation between two parties with a common area of interest – to develop a unique new product or service.

Norwegian Industrial Research and Development Contracts (IFU/OFU) constitute a model for cooperation and a strategic tool to create a win-win situation for the parties involved.

Let me give you an example:

Medistim, an Oslo based company, develops, manufactures and distributes solutions for cardiac and vascular surgery.

With support from Innovation Norway it has developed into a company which sells medical equipment to more than 1000 hospitals in more than sixty countries.

Innovation Norway has cooperated with Medistim in three OFU projects and they were an essential partner in the growth of the company.  Numerous other examples exist.

Cooperation with the EU is another important aspect of Norwegian innovation policy, as exemplified by our participation in the Seventh Framework Programme for research and technological development and the Competitiveness and Innovation Framework Programme.

The overall objective of the Competitiveness and Innovation Programme is to improve competitiveness and sustainable growth in the EU, recognising the role of small and medium-sized enterprises. 

An important part in CIP is “The Enterprise Europe Network”. The network builds on the former Innovation Relay Centres and Euro Info Centres.

The new integrated network offers a “one-stop shop” to meet all the information needs of Small and medium sized companies in Europe. Innovation Norway is in charge for the network. So, if you do have EU-related questions like finding partners in the EU or starting businesses in a foreign market don’t forget that there exists a network you can contact.  

And that brings me over to the last question: Has the Government improved the premises for entrepreneurs?

The importance of entrepreneurship

The answer is once again yes.

The Norwegian Government continues to prioritize entrepreneurship in education at all levels.

Entrepreneurship in education fosters a culture for entrepreneurship and equips young people with entrepreneurship competence. In some years I`m sure this will increase entrepreneurship in business and trade in Norway.

In 2006 an action plan on entrepreneurship in education was issued. The plan was presented at a conference on Entrepreneurship Education in Oslo in October 2006. The strategy integrates entrepreneurship in the school plans and schemes.

Emphasis on entrepreneurship in education is a success. Research indicates that pupils and students who have taken part, in the program Junior Achievement Young Enterprise Norway, tend to establish businesses more than twice as often as the rest of the population.

The Ministry of Trade and Industry is investing 4 million kroner a year over a 4 year period to learn more about entrepreneurs. The Research Council of Norway administers the funds. This will provide us with more knowledge about entrepreneurs and hopefully we can target our entrepreneurship policy even better in the future.

Lastly, entrepreneurs need capital. In February 2008, Investinor, the government investment company was founded, with a total capital of NOK 2.2 billion for investments in equity. Innovation Norway manages the fund. The primary focus is the post-creation stage, with flexibility towards the expansion stage. This will increase the access to private equity for entrepreneurs with good projects.

But we have to keep in mind that not every entrepreneur should get support from the government. In our opinion only those entrepreneurs and projects that have a business potential should get support. We must be careful not to waste the tax-payers’ money.   

People who can make the difference

To sum up:

We are on the right track, we have challenges, but I have sent a message: “People make the difference”. The government invests a lot of money in research and education, but it can’t be alone in creating the human resources needed in a knowledge-based economy. As in many other situations there is need for collaboration.

We need cooperation between schools, parents, students, and the government. Only then we will be able to produce people who can make the difference.

I wish you all a successful and inspiring Oslo Innovation Week.

Thank you very much for your attention.