Innovation Processes in Transition SMEs by Erkki Ormala

Innovation Processes in Transition; SMEs by Erkki Ormala Professor of Innovation Management Aalto University, Business School

Innovation processes in SMEs • Involves all the elements of innovation process • But is not formally organized • Informal dialogue with key persons • Close customer orientation

Framework Conditions for High Growth Innovative Companies (Horizon 2020) • Embrace an ambitious integrated approach to spur HGIEs growth • Formulate dedicated policies in which life cycle support and scalability are key: Firms need different support at different stages of their life cycle • Address weakest links and framework conditions that matter most • Co-shape and improve the functioning and resilience of entrepreneurial (eco-)systems • The EU has a key role to play, especially in the domain Market Conditions, and to a lesser extent also Regulatory Framework, Creation and Diffusion of Knowledge and Human Capital/ Entrepreneurial Capabilities • flow of talent and brain gain in favor of the EU • The most ambitious look beyond borders • http: //publications. europa. eu/resource/cellar/e 326 b 62 f-24 cd-11 e 7 -b 611 -01 aa 75 ed 71 a 1. 0001. 01/DOC_1

Elements of Favorable Innovation Environment; critical elements for SMEs Good understanding of the changing landscape Access to market; Cost efficiency Macro economic stability Access to VC funding and support Rich fabric of private partners; enabling vertical and horizontal integration 4 © NOKIA Access to top-level research and high quality experts Easy access to Broadband; ability to use ICT FIRM Access to raw materials Favourable regulatory environment; harmonized rules; IPR provisions; company statutes; taxation, etc

Building a VC market Public seed funding, risk sharing quarantees, education, exit market Partnership funding, matching service, risk sharing. education Public funding, education, incentives 1990 s 2000 s 2010 and beyond

Venture capital investments by country • • • • Million US dollars, 2014 or latest available year Greece 0. 26 Austria 81. 76 Australia 265. 92 Slovenia 3. 32 Denmark 87. 51 Sweden 376. 20 Estonia 5. 84 Ireland 119. 41 France 835. 84 Luxembourg 5. 86 Spain 132. 42 Korea 865. 51 Slovak Republic 6. 24 Belgium 151. 17 Germany 880. 69 Czech Republic 12. 03 Norway 157. 18 United Kingdom 1 112. 62 Poland 29. 21 Finland 163. 73 Israel 1 165. 00 Hungary 42. 65 South Africa (2013) 199. 38 Canada 1 464. 82 Italy 44. 77 Switzerland 224. 11 Japan (2013) 1 862. 79 New Zealand 46. 29 Netherlands 224. 56 Total Europe 4 793. 95 Portugal 65. 91 Russian Federation 250. 71 United States 49 532. 43 http: //dx. doi. org/10. 1787/888933231439

Small Business Investment Company in the US (SBIC) • • Established 1958 Direct investments in VC funds and quarantees Last year 4 billion US$ Profitable

Start. Up Health • Start. Up Health is 6 years into a 25 year mission. We're organizing and supporting a global Army of Health Transformers to achieve 10 Health Moonshots. Together we will improve the health and wellbeing of everyone in the world • 12 billion $ • Global game • First team outside US in Finland https: //www. startuphealth. com/

Plug and Play; Silicon Valley in a Box • • Private business incubator 300 companies Other locations: San Diego, Canada, Jordan, Singapore Weekly meetings with VC companies and experienced industry leaders • Big company sponsors • Ten times better than the current competitive offering • Transfluent

We. Xelarate Austria Vienna • A new business incubator • Foundation, Company driven and funded • Thriving startups; mentoring and partnering with leading companies, providing network of investors, joint office space; providing future visions, demo days and inspiring dinings https: //wexelerate. com/

Venture capital in Finland • TEKES: R&D, Organization and process development, Internationalization; Rapid growth; venture investements 200 k€->500 k€->1000 k€ • Vision+: new partnering model; a revenue shared business model without dilution http: //visionplus. fi/ • Tax incentive: private persons can deduct losses up to 200 k€ (terminated 2015)

Partnering • Partnering is a key to success for SMEs • Patnering can take many different forms: customers (Delfoi/Valmet), platform providers (Rovio, Supercell) , subcontractors, etc • IPR plays a significant role • Internationalization is a big step where a global partner can help a lot

Skill Shortage Twenty-seven per cent of businesses in Europe reported that they had left an entry-level vacancy open over the past year because no one with the right skills could be recruited. Only education providers were confident that the young people they trained had the skills they needed to equip them for work: 74 per cent believed their graduates were prepared for work but only 38 per cent of youth and 35 per cent of employers agreed. (Mc. Kinsey, FT 13 January, 2014)

e. Skills • Users must have the necessary digital skills. Many European citizens and enterprises currently do not use IT sufficiently. This results in a growing difficulty in filling digital jobs. In 2011, the European Union was faced with 300 000 unfilled vacancies in the ICT sector; if this trend is not checked, there could be as many as 900 000 unfilled vacancies by 2015. This skills mismatch is detrimental to our economic and social policy objectives. • (EUROPEA COUCIL 24/25 OCTOBER 2013; CONCLUSIOS)

Aalto University ecosystem Aalto Startup Center A GRID Energy Platform Digi Platform Aalto Ventures Program Startup Life Research and Innovation Services Living+ Platform Product Development Project Health Capital Helsinki Urban mill Health Factory Design Factory Add. Lab Fab. Lab Aalto Studios Fall. Up Startup Sauna Space EIT KIC Digital Impact Iglu Health Platform Kiuas – Team Up, Incubator, Accelerator Aalto Entrepreneurship Society Aalto Executive Education EIT KIC Climate Aalto University student activities Slush Startup Sauna Accelerator Program EIT KIC Raw Materials Aalto University activities Dash ESA BIC (2017) Aalto Univeristy Partner activities 15 = space or place

Entrepreur Ecosystem • 70 -100 new companies every year • 500 during the five first years • Half of all university startups in Finalnd come from Aalto • MIT has estimated that Aalto among the best five in the world Aalto. ES Univeristy Startups in Finland Aalto ACE Tampere UEF Turku ASUC Oulu Helsinki Startup Sauna * Graham, Ruth (2014) Creating university-based entrepreneurial ecosystems: Evidence from emerging world leaders. MIT-Skoltech Initiative, Massachusetts Institute of Technology, USA.

World class startup-event: • 17 500 participants • 1 000 live stream participants • 2 300 startup companies • 1 100 investors • 600 journalists from 120 countries • Organized by Startup. Sauna

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