Iceland’s strategy and investments in R&D

(c) KSG SIA 2004

Iceland’s strategy and investments in R&D

Dr. Jon ThorhallssonCECUA President

KSG SIA Chairman

Information Society 2004Vilnius October 19, 2004

Can the example of Iceland be useful to other states in creating strategies?

(c) KSG SIA 2004

(c) KSG SIA 2004

(c) KSG SIA 2004

Marel has a history that goes back to 1977 when two engineers at the University of

Iceland began to examine the possibility of developing and manufacturing scales for the

effective control of production in fish processing plants.

(c) KSG SIA 2004

Foreign Currency

(c) KSG SIA 2004

Software exports

(c) KSG SIA 2004

Resources for R&D in Iceland 1950-2001

0

2.500

5.000

7.500

10.000

12.500

15.000

17.500

20.000

22.500

25.000

1950 1955 1960 1965 1970 1980 1990 2000

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

Útgj RoÞ Þar af fyrirt RoÞ/VLF Ársverk

Millj kr FTE

2.500

2.250

2.000

1.750

1.500

1.250

1.000

750

500

250

0

R&D/GDP

R&D Personel

ManyearsR&D/GDPR&D by firms Total R&D exp

31 2 41 3 42

Major events

Important years:

OECD reviews

(c) KSG SIA 2004

The Key Role of S&T

• Scientific management of fisheries• Profitable national fisheries -compared to 40%

operating losses world wide• Hydropower -Geothermal energy development -

unique - Sustainable energy economy• Management of natural hazards – environment -

land erosion

• Emerging knowledge based industry: – Food processing machinery, software, biotech, medical

technology products, human genomics, bioinformatics

(c) KSG SIA 2004

The Problems of S&T Policyin Iceland

• Problems of scale and resources

• Total spectrum of modern societal needs

• We do everything other nations do!

• Dispersion of efforts

• Institutional fragmentation

• Small units-resource and management problems

(c) KSG SIA 2004

The S&T policy statement 1December 2003

1. To increase the share of competetive funding from public sources – Doubling over the next four years (government term)!

2. To strengthen the universities as research institutions!

3. To redefine the role of public research institutions and their relations to the universities and to industries (the economy)!

(c) KSG SIA 2004

S&T policy statement 2 Follow up actions! June 2004

1. To strengthen the role of competetive public funding • Linking funding to policy objectives – Better coordination between funds• Requesting a proposal for a new strategic funding program from the S&T

community 2. To strengthen the universities as research institutions.

• Redefine criteria for doctoral programmes – Role of the Graduate Research Fund• Flexibility in the division of academic staff time – Research vs Teaching• The evaluation of the quality as well as the relevance of university research

3. To redefine the role of public research institutions• Implementing (Prime Ministry Committe) recommendations on the reorganisation of

sectoral research institutions and their relation to the universities 4. Other policy issues

• Strong internationl participation – Nordic, EU, N-America, Arctic• Continuity of funding instruments – from science to innovation and social benefit!• Innovation support programmes to be coordinated• Equal gender opportunities improved • Promoting interest of students in primary and secondary schools in science and

technology.

(c) KSG SIA 2004

Innovation drives the economy

• 70 % from start ups• 9 out of 10 fail

Where does it come from?

What happens with it?

(c) KSG SIA 2004

European Start up Culture?Your Company?

Start up resources Europe

Development

Sales

0%

25%

50%

75%

100%

Start Prototype Domestic MarketValidation

Foreign MarketValidation

Foreign MarketSales

Stages of development

Res

ourc

es %

(c) KSG SIA 2004

European Start up Culture

• Technical perfection• Technically good product will sell• The product will sell itself• Money spent on sales is wasted

(c) KSG SIA 2004

USA Start up Culture Wouldn't this be better? Start up resources USA

Development

Sales

0%

25%

50%

75%

100%

Start Prototype DomesticMarket

Validation

Foreign MarketValdiation

Foreign MarketSales

Stages of development

Res

ourc

es %

(c) KSG SIA 2004

USA Start up Culture• Make money• What sells is good• Why develop if nobody buys?• Get marketing & sales assistance

(c) KSG SIA 2004

ConclusionsEurope/USA gap

• USA – Companies are there to make money – Risk takers– Failures are there to learn from

• Europe – Technical perfection – Risk avoiders– Failure and no second chances

(c) KSG SIA 2004

Icelandic Experiment

CLOSING THE EUROPE/USA GAP

Icelandic Trade CouncilNew Business Venture Fund

(c) KSG SIA 2004

Icelandic experiement set up

• Put 3-4 companies in a Business Cluster• Set up a local office• Hire an experienced marketing/sales mgr• Companies get local

– Business Address– Phone number– Email

• Find local partners

(c) KSG SIA 2004

Business cluster approach Icelandic experiment resources

Development

Sales

0%

25%

50%

75%

100%

Start Prototype Domestic MarketValidation

Foreign MarketValidation

Foreign MarketSales

Stages of development

Re

so

urc

es

%

Start up resources USA

Development

Sales

0%

25%50%

75%

100%

Start Prototype DomesticMarket

Validation

Foreign MarketValdiation

Foreign MarketSales

Stages of development

Re

so

urc

es

%

Start up resources Europe

Development

Sales

0%

25%

50%

75%

100%

Start Prototype Domestic MarketValidation

Foreign MarketValidation

Foreign MarketSales

Stages of development

Re

so

urc

es

%

(c) KSG SIA 2004

Company selection criteria

• Niche product• Home market penetration• Co-operative management

(c) KSG SIA 2004

Support

• Help the companies to help themselves

• 2 years financial support• Trade Council of Iceland

(c) KSG SIA 2004

Business Cluster Copenhagenfor Nordics

• Companies have partners• Making revenue

COPENHAGEN CLUSTER A SUCCESS

www.ecpint.com

(c) KSG SIA 2004

Business Cluster Riga for Baltic States

• Copenhagen model and experience• Companies found Latvian Partners• Looking for Lithuanian and Estonian ones

www.ksg.lv

(c) KSG SIA 2004

Cluster Network also for local companies

Power of the network

(c) KSG SIA 2004

Questions?