TEKES ANNUAL REVIEW

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1 TEKES ANNUAL REVIEW

2 Mission statement Tekes boosts the development of Finnish industry and the service sector by technological means and through innovation. This will renew the economy and increase added-value, productivity and exports, thereby creating employment and enhancing well-being. Contents Director General s review 3 Year 2007 in brief 4 Tekes Board: Strategic choices emphasised by the expansion of Finland s innovation policies 5 Activities in 2007 Highlights of Results achieved in Tekes invested 469 million euros in R&D and innovation 10 Programme activity stepped up 13 International activities Tekes is creating networks around the world 14 The Tekes organisation 16 Contacts 18 Editorial team: Soili Helminen, Sanna Karvonen, Pia Mörk, Anne Palkamo and Laura Peltonen Photos: Hannu Bask, Esko Koivisto, Tekes, Comstock, Ingram Publishing Graphic design: Oddball Graphics Oy Printed by Frenckellin Kirjapaino Oy, 2008

3 Director General s review THE YEAR 2007 was marked by preparation for major changes and launches for Tekes as well as in Finnish science, technology and innovation policies. Science and technology policies are becoming increasingly associated with the notion of a broadbased innovation policy. This is being concretised in the innovation strategy drawn up by the Ministry of Employment and the Economy as provided for by the Finnish Government Programme. The establishment of Finland s new Ministry of Employment and the Economy, the related reform of corporate steering and regional measures, the changes to EU framework legislation regarding issues including Tekes field of activities as well as the development of Tekes internal processes all placed a major workload on the personnel of Tekes and the Employment and Economic Development Centres during the year under review. Regardless of this, our personnel made a splendid effort and managed to achieve the performance targets set for our basic activities. Funding authority was restricted to high-quality R&D projects while the introduction of the funding instruments enabled by the new EU framework legislations was under preparation. The objectives set for the activation of new customers were reached while the concept creation for Tekes services and customer relationship management was being reformed. Programme launches and implementation proceeded as planned while the launch of the Strategic Centres for Science, Technology and Innovation was being prepared. Preparations for these changes had already been included in Tekes strategy, and the EU framework legislation reform offers the opportunity to implement the strategy. In addition to this, content reviews carried out every three years were emphasised in our strategic work. This interactive anticipation and selection process with our customers and partners will set out the content of our strategic choices for the coming years and provide strong support to a new, broad-based innovation policy with an emphasis on the customer and utilisation perspective and with an increasing prevalence of innovations such as business, market-driven, servicerelated and design or employment development innovations alongside technology innovations. The challenges of internationalisation could be seen at many levels, including in the launch of the EU s Seventh Research Framework Programme (FP7) with its new activities, the intensification of bilateral technology cooperation and preparations for the launches of international innovation centres. The stepping up of international cooperation was promoted by Tekes activation measures as well as the reform of the public funding criteria. The implementation of the changes and reforms prepared in 2007 will be a special challenge in the coming years, because the requirements set for increased productivity in the government s Productivity Programme are higher on Tekes than other government organisations: while funding authority is increased by four to five percent a year, our current numbers of personnel must remain unchanged. Such a boost to productivity will require the development of entirely new methods and policies while also calling for reductions in our activities. Nevertheless, our objective is to increase interactive customer and activation work, which for a long time has been our strength and for which there is obvious demand.

4 Year 2007 in brief Results of completed projects The year 2007 saw the completion of 1,940 projects 466 public research projects 957 corporate R&D projects 517 feasibility studies The completed projects resulted in 976 academic theses 2,072 publications 89 patent applications by research organisations 606 patent applications by companies 504 new or improved products 402 new or improved services 222 new production processes jobs, turnover and exports visible within 5 years Corporate customers In 2007, Tekes made new funding decisions for 1,332 companies gained 691 new corporate customers paid funding to 2,075 companies Funding decisions Tekes funding decisions in million euros, of which 284 million euros to corporate projects 185 million euros to university, research institute and polytechnic projects 2,120 R&D projects, of which 1,550 corporate projects 570 university, research institute and polytechnic projects Of corporate R&D project funding 57 per cent targeted SMEs 73 per cent targeted companies with less than 500 employees Tekes Board from the left: Chairman, Deputy Director General Petri Peltonen, Rector Aino Sallinen, Director Timo Kekkonen, Ombudsman for Children Maria Kaisa Aula, General Secretary Leila Kostiainen, Senior Adviser Eija Auranen, Executive Director Pentti Hyttinen, Director Kai Öistämö, Commercial Counsellor Eero Lehti and Director General Veli-Pekka Saarnivaara. 4 TEKES ANNUAL REVIEW 2007

5 Tekes Board: Strategic choices emphasised by the expansion of Finland s innovation policies INNOVATION is increasingly affecting the Finnish national economy and society as a whole. Its impacts can be seen in more productive labour, new enterprises and the growth of competitiveness and enterprises. Innovation renews economic structures and increases wealth and regional vitality. Impacts can be seen in high employment, good environment and health and social wellbeing. Statistics Finland estimates that Finnish R&D investment reached around 6 billion euros in 2007 around 3.4 per cent of the Gross Domestic Product. Of this more than 70 per cent were R&D investments made by enterprises. Many international and Finnish studies have proven indisputably that public funding encourages enterprises to clearly increase their own R&D investments. Studies also show that public funding increases the level of challenge, risk-taking, cooperation and networking in enterprise R&D activity as well as the patenting of results. Activities based on broad-based innovation policies Recent years have seen a major broadening in the field of Tekes activities. R&D funding has been complemented with broadbased promotion of innovation, with an emphasis on business and service development. An example of a sector where the development of business competence and services are married is the software business, which enjoyed good prospects in Tekes applied new methods and policies towards the development of software enterprises business competence and the promotion of their growth and internationalisation. A new move by Tekes was the preparation of a programme focusing on promoting innovation in the social and health service system. Participating in programme preparation were a large group of ministries, government organisations and social and health sector actors. The programme aims to increase the efficiency of cooperation between the public sector, enterprises and the third sector and to improve service availability, effectiveness and quality. The year also saw preparations for the transfer of the Finnish Workplace Development Programme under Tekes' responsibility due in 2008, which will further expand Tekes range of activity into workplace innovations. In autumn 2007 the Finnish Ministry of Trade and Industry launched the preparation of a national innovation strategy. Tekes participated actively in this work, which is regarded as highly important by the Board. TEKES ANNUAL REVIEW

6 Strategic choices for future needs Strategic choices are vital for a nation like Finland. In Tekes field strategic choices are particularly visible in the Agency s policies and programmes as well as in the Strategic Centres for Science, Technology and Innovation. In 2007 Tekes carried out an in-depth process to reform the policies included in its strategy. The policies specify Tekes view on the most important research, development and innovation content choices for the next few years. Tekes worked on its policies in broad cooperation with industry, civil society organisations and public sector actors. The view of the Board of Directors is that Tekes managed to achieve the commitment of stakeholder groups and clients to action towards mutual objectives and choices. The policies formulated will be published in March Choices made in the policies will be seen in the programmes launched by Tekes. In the future some of the research carried out under programmes will be performed under Strategic Centres for Science, Technology and Innovation. The Centres will not, however, replace programmes as both will be needed. Tekes participated actively in the preparation of the Strategic Centres for Science, Technology and Innovation. They provide participating enterprises with a channel for targeting the work of research organisations and for speedy utilisation of results in their own innovation activities. Strategic Centres will be established in fields that best meet the needs of Finnish businesses and society. The first to start was Metsäklusteri Oy (a forest cluster innovation company) in March Four others were being prepared in Concrete incentives for international cooperation Internationalisation, international cooperation and networking are essential for Finland. In order to increase international cooperation in research, development and innovation, Tekes reformed its funding criteria to better encourage enterprises, universities and research institutions towards further internationalisation. Another concrete move towards research internationalisation was the Finland Distinguished Professor Programme (FiDiPro), a joint funding programme of the Academy of Finland and Tekes to recruit to Finland for a few years foreign top researchers or expatriate Finnish top researchers who have worked abroad for a long period. The first FiDiPro professors began their work at the beginning of The EU Seventh Research Framework Programme (FP7) was launched in Finns participated actively in the first calls for proposals, and approximately one in four applicants reached the agreement negotiations phase. Assigned by the Ministry of Trade and Industry, a strategy for Finnish innovation centres based abroad was created by Tekes, Finpro, the Academy of Finland, the Finnish Innovation Fund Sitra and VTT Technical Research Centre of Finland. According to the strategy, the task of the innovation centres is to ensure the correct targeting and effectiveness of public innovation funding with close links to international centres of innovation. The new innovation centres helped enterprises access local markets and marketed Finland as an interesting investment target. The first to launch were FinChi in Shanghai in 2005 and FinNode in California in Progress was made in the preparations of the St Petersburg and Tokyo centres during the year. The aim is to set up four to six Finnish innovation centres by the year A revamped offering in a new operating environment Tekes prepared a major revamp of its funding products in The aim is to make sure new products better meet enterprises growing development needs. The new products will be introduced in early Tekes has created a totally new funding product for young, innovative and growth-oriented enterprises that will allow them to develop their business in a more comprehensive manner. Many countries employ tax relief as incentives for enterprises to engage in R&D. Support in the form of tax incentives to venture capital investments by private persons would improve access of young growth-oriented enterprises to venture capital funding. Tekes also participated in the preparation of the reform of Enterprise Finland, with the objective of creating an operating model where public actors get together to offer a service entity that meets the individual requirements of each enterprise. The creation of Finland s new Ministry of Employment and the Economy was and will be in many ways reflected in Tekes field. Effects can be seen in issues such as the new ministry s wider sphere of responsibility, changes in corporate steering and in the technology development departments of the Employment and Economic Development Centres as well as the transfer of the Workplace Development Programme and programme staff from the now-discontinued Ministry of Labour to Tekes. A broader field, revamped products and closer cooperation with other actors provide Tekes with excellent opportunities to promote research, development and innovation for the benefit of enterprises, research institutions and Finnish economy and society as a whole. Tekes Board The Board decides on Tekes general policies and broad-reaching and significant issues such as technology programme launches. The Board decides on R&D project funding if funding by Tekes exceeds 2 million euros. The Board can also decide to make decisions on the funding of smaller projects. During 2007, the Board met 11 times. Members of the Tekes Board are appointed by the Finnish Government for a term of four years at a time. The current Board s term will end in summer Chairman Mr Petri Peltonen, Ministry of Trade and Industry (from 1 January 2008 Ministry of Employment and the Economy) Vice Chairman Mr Timo Kekkonen, Confederation of Finnish Industries, EK Members Ms Maria Kaisa Aula, Ombudsman for Children, Ministry of Social Affairs and Health Ms Eija Auranen, Senior Adviser, Tekes (personnel representative) Mr Pentti Hyttinen, Executive Director, Regional Council of North Karelia Ms Leila Kostiainen, General Secretary, Finnish Confederation of Salaried Employees (STTK) Mr Eero Lehti, Chairman, Commercial Counsellor, Federation of Finnish Enterprises Mr Veli-Pekka Saarnivaara, Director General, Tekes Ms Aino Sallinen, Rector, University of Jyväskylä Mr Kai Öistämö, Executive Vice President, Devices, Nokia Corporation 6 TEKES ANNUAL REVIEW 2007

7 Activities in 2007: Highlights of 2007 The first Strategic Centre for Science, Technology and Innovation opened The Strategic Centres for Science, Technology and Innovation being established in Finland offer top-level research units and enterprises making use of research results a new way to cooperate closely with each other. Tekes shares the responsibility for planning the Strategic Centres with the Academy of Finland. Finland's first Strategic Centre for Science, Technology and Innovation Forest Cluster Ltd became operational in spring It will launch and coordinate resources for research programmes by channelling private and public research funding towards them. In addition to enterprises, the most important funders of these research programmes are Tekes and the Academy of Finland. Research funding is also being applied for from funding sources under the EU Seventh Framework Programme. As well as Forest Cluster, Strategic Centres are being established in the first phase for the information and communications industries and services, energy and the environment, metal products and mechanical engineering as well as health and wellbeing. Preparations for the Strategic Centres for Science, Technology and Innovation in information and communications industries and the metals sector proceeded in January 2008 to a stage involving the setting up of companies that coordinate their activities. The Strategic Centres will provide enterprises with new types of opportunities for increased innovation. Enterprises will have the opportunity to define the Centres' research plans from their own application-driven perspectives. Research under the Centres takes place over a timespan of five to ten years. By co-funding the activities of the Strategic Centres, enterprises also gain access to longer-term public research and development funding. Tekes outlined the objectives and funding principles regarding the Strategic Centres during the year under review. The necessary changes will take place in 2008, with the Centres replacing some of the programme activity and altering the current programming entity. Focusing on combating climate change and promoting renewable energy sources Finland boasts expertise and technologies that can be employed to curb emissions and develop sustainable and reliable energy solutions nationally and in a fast-growing international market. The creation of better solutions can help boost enterprise competitiveness in the market, create new business and strengthen exports and employment. Tekes was actively involved in the implementation of national energy and climate policy objectives. The climate strategy has been taken specifically into consideration in Tekes funding principles, with combating climate change and other positive environmental impacts and the promotion of national energy solutions as positive criteria affecting funding decisions. Tekes also participated in several national cooperation groups in the field of climate strategy and sustainable development as well as in international technology cooperation related to energy and climate. There was a considerable increase in Tekes funding for energy technologies in This is due to increased interest among enterprises in investing in clean energy production, efficient energy use and tackling climate change. The largest growth took place in funding for energy end-use. Bioenergy was another sector that saw strong development activity, with biofuels for trans- port as one of the growth areas. Wind power also played an important role among investment targets. As well as renewable energy sources and energy-efficient technologies, Tekes also funded the development of other climate-friendly technologies. Focal areas included combustion and gasification, cogeneration and distribution of heat and power, and power plant and boiler technologies in general. The development of energy- and climate-related service businesses has also stepped up significantly in recent years. European technology collaboration strengthened by ARTEMIS The EU Competitiveness Council of Ministers decided in November 2007 on the establishment of the ARTEMIS Joint Undertaking to implement a Joint Technology Initiative (JTI) for Embedded Computing Systems. The objective of the ARTEMIS JTI is to boost the competitiveness of European industries by promoting the applicability of embedded systems on a broad basis in all industrial sectors. Finland was strongly involved in the preparation of the ARTEMIS JTI. Technology cooperation will take place through Tekes' Ubicom Embedded ICT Programme. This will advance the transfer of European top competence and expertise created under ARTEMIS for wide use by Finnish research institutions and enterprises. There is particular interest in Finland in software and hardware technologies and applications in areas such as telecommunications, traffic and transport, wellbeing equipment as well as automation and control systems. A key advantage of the ARTEMIS JTI is that it improves the coordination of international activities and speeds up the launch of projects. The first projects under ARTEMIS will be launched in 2008, and the last project decisions will be made in late Co-funding the overall budget of around 2.7 billion euros are the European Union, national funders and industry. Tekes is prepared to grant a total of 10 million euros of funding to Finnish projects under the initiative. The REACH Regulation a challenge and opportunity REACH (Registration, Evaluation and Authorisation of Chemicals) is a new European Community Regulation on chemicals and their TEKES ANNUAL REVIEW

8 The year also saw an expansion in the duties of the Tekes office in Brussels. In addition to networking with the R&D Directorate General of the European Commission, the office promotes networking, particularly with the Directorates General for Enterprise and Industry and Competition and various stakeholder groups in Brussels. Tekes also influenced the development of EUlevel innovation policy by leading a project directing European strategic cooperation towards service innovation. safe use. The new law entered into force on 1 June 2007 and applies to chemicals produced within or imported into the EU and partly also to products containing chemicals. The REACH Regulation resulted in the establishment of the European Chemicals Agency (ECHA) in Helsinki. REACH brings a major change in the operating environment of enterprises manufacturing, importing and using chemicals, with responsibility for the assessment of the safety of chemicals and the production of all necessary information transferred from public authorities to the industry. REACH affects enterprises access to the market, product development, purchasing and manufacturing, strategic choices and even brands and corporate image. Enterprises registering chemical substances are faced with a lot of work, so there is great demand for solutions and services that can assist in this. In late 2007 Tekes invited REACH-related experts to jointly work on new service concepts. The objective is to create new business either in the form of new start-ups or through business expansion of existing enterprises. The project will organise a series of workshops with topics including service productisation, the different areas of business competence, and creation of service models in cooperation with industrial clients. The EU Seventh Framework Programme launched The Seventh Framework Programme (FP7) is the EU s chief instrument for guiding and funding European research and development activity. The aim is to develop the European Research Area (ERA) and promote Europe s competitiveness. The Seventh Framework Programme will run from 2007 to 2013 and provide funding for international R&D cooperation and networking of universities, research institutions and enterprises as well as researcher training and mobility. There were 1,654 Finnish participants to the first calls, with 419 of these shortlisted for the second round. The average success rate among Finnish participants was 25 per cent, meaning one in four were selected for contract negotiations. The projects were launched in early Operating under Tekes, the Finnish Secretariat for EU R&D provided information, activated those involved and gave extensive advice about the opportunities offered by the FP7. Debate about the European Research Area has been relaunched and will eventually lead into the formulation of the Eighth Framework Programme. The ERA initiative regarding the integration of European research systems entails progress in the right direction. Interaction between national and European-wide R&D frameworks and added value generated through cooperation are vital for the development of the international competitiveness of European science and technology. In its opinions about ERA, Tekes focused especially on European added value, a broader innovation perspective, utilisation of results and enforcement of cooperation between enterprises and research organisations. Tekes also promotes service and business competence development The development of services and service sectors is vital to the development of the Finnish economy as a whole. Both the expansion of service industries proper and the increasing prevalence of service businesses in traditionally non-service industries have continued. Enterprises participating in Tekes Serve Innovative Services Programme are developing internationally competitive business activity based on service innovations in their projects. The prerequisite for the development of innovative service concepts is a high level of competence and expertise, which under the Serve Programme is strengthened through extending funding to public research in service innovations and offering programme services that support enterprise service development. Focal areas include service concept creation and productisation competence, issues related to the protection of services, and internationalisation of service businesses. New solutions are also being sought for social and healthcare services and service systems. The division of duties between the private and public sectors is undergoing a transition, with new solutions and cooperation models being explored. Tekes is preparing a new programme for social and healthcare service system innovations. The programme aims to regenerate innovation in the sector, improve the availability, quality, efficiency and effectiveness of services that the public sector is responsible for providing and to increase enterprise business opportunities in the sector. Tools employed will include customer-oriented cooperation and operating models and e-services supporting these. Business competence and concepts as well as methods and policies play an important role in innovation generation. Therefore Tekes has increasingly emphasised these issues in both enterprise project funding and the creation of a new competence base. Enterprise business competence and public actor investment in this is important. There will be a growing need for marketing competence. Small enterprises lack competence particularly in business management and the management of profitable growth and internationalisation while large enterprises face development needs especially in terms of regeneration capability and business processes. Enterprises participating in Tekes Innovative Business Competence and Management Programme (Liito) are creating new business competence and operating models. A further aim of the programme is to increase cutting-edge applied business research in Finland that works in close cooperation with enterprises. 8 TEKES ANNUAL REVIEW 2007

9 Activities in 2007: Results achieved in 2007 Almost 2,000 research and development projects funded by Tekes were completed in Results achieved include strengthened competence, increased enterprise competitiveness and growth of the national economy. The projects resulted in more than 1,000 new or replacement products, services or production processes. They produced around 700 patent applications, almost 1,000 theses and more than 2,000 publications. Projects and programmes funded by Tekes considerably increase cooperation and networking between enterprises and public research organisations in Finland and internationally. Over the longer term, the impacts of research, development and innovation are manifested in new enterprises and business functions, enterprise growth and internationalisation as well as growth of the economy and competitiveness. Among issues evaluated regarding SME product development projects are the growth expectations of the turnover of products, services and production processes developed. In 2007 Tekes analysed 358 projects that ended during the year, which had received a total of 84 million euros in Tekes funding. According to the analysis, these projects can be anticipated to generate the enterprises more than 1.1 billion euros in turnover in Long-term enterprise research projects will not normally generate turnover until several years after their completion. Results of completed projects Completed projects Public research projects Corporate R&D projects Feasibility studies Completed projects in total 1,963 1,981 2,092 1,961 1,940 The completed projects generated Academic theses Publications 1,439 2,451 2,660 2,377 2,072 Patent applications by research organisations Patent applications by companies New or improved products New or improved services New production processes Expected turnover for business R&D projects by SMEs conducted in 2007 Expected new turnover, mill. euros 1, Technological and commercial success of projects Technological success of public research projects Technological success of corporate research projects Commercial success of R&D projects at companies % Very good, good or fair success No commercialisation yet Succeeded not as well as expected Failed The figures cover 409 business R&D projects conducted by SMEs, which Tekes financed with 88 million euros in Some of these are long-term projects that will not yet generate any turnover by Data from reports submitted on projects concluded in 2004 which assessed the results of individual projects three years after their conclusion, i.e. in TEKES ANNUAL REVIEW

10 Activities in 2007: Tekes invested 469 million euros in R&D and innovation Tekes invested 469 million euros in research, development and innovation projects of enterprises, universities and research institutions in These projects have a wide national impact on the economy and society. Tekes invested 469 million euros in research and development projects of enterprises, universities and research institutions in Combined with funding from other sources, the total budget for these projects exceeded 924 million euros. In all 284 million euros was targeted at enterprise R&D and innovation while 185 million euros went to public research activity by universities, polytechnics and research institutions. There was a fundamental increase in the demand for funding on the year Enterprises and public research institutions applied for more than 1.1 billion euros to fund almost 3,600 projects. The greatest increase in the demand for enterprise funding was seen in the energy and environment sectors, software and digital media development as well as the metals industry and mechanical engineering. The proportion of Tekes funding granted under Tekes programmes also increased, accounting for almost half the total. More than half of enterprise funding was received by SMEs, with more than one-fifth of enterprise project funding targeted at microenterprises employing less than 10 people while more than two-thirds went to enterprises with less than 500 employees. Funding granted to large enterprises was further channelled through purchased research services to universities and research institutions, and through subcontracting to SMEs. International cooperation also increased slightly, with around 40 per cent of Tekes-funded projects involving international cooperation. Project partners were found in almost 50 countries, with the USA, Germany, the UK, Sweden and France topping the list of partners. All public research projects and most enterprise projects were at least at top national level and most projects were at demanding international level in terms of the degree of challenge they entailed. Enterprise funding decisions made were targeted at 1,332 enterprises, with almost half of these employing less than 10 people. More than half of the enterprises were new customers to Tekes. Tekes paid funding for 2,075 enterprises on the basis of new and previous years decisions. A total of 21 enterprises that have received Tekes funding over the past five years were declared bankrupt during the year under review. Progress in funding services reform The new framework legislation for research, development and innovation adopted by the European Commission came into force at the beginning of This provides a good foundation for broader activity by Tekes in technology and innovation promotion. Tekes prepared the revamp on its funding services in The first new product is a funding instrument for young innovative companies, launched at the beginning of This is an entirely new type of funding option for young innovative companies that are growth-oriented, small in size, have operated for less than five years and are seeking access to the rapidly growing international market. The next new products to be launched are intended for enterprises seeking internationalisation and for those starting up R&D and innovation activity. These products will replace previous funding instruments that were smaller in scope. Tekes R&D funding granted Tekes funding million euros R&D loans to companies Capital loans for R&D to companies Start-up loans to companies R&D grants to companies Research funding to universities and research institutes Total Number of financed projects R&D projects at companies 1,395 1,464 1,389 1,428 1,550 Public research projects Total 2,196 2,242 2,134 2,157 2, TEKES ANNUAL REVIEW 2007

11 Tekes R&D funding in 2007 Tekes R&D funding by industry R&D loans to companies 78 million euros Research funding for universities, research institutes and polytechnics 185 million euros Start-up loans to new technology companies 3 million euros R&D grants to companies 203 million euros million euros A total of 469 million euros and 2,120 funded projects, 570 of which were research projects at universities, research institutes and polytechnics and 1,550 company R&D projects. Commitments made by the decisions will be paid during Business services Electronics and electrical industry Machine and metal industry Chemical industry Other branches Forest industry Food industry Construction Electricity, gas and water supply Funding granted to SMEs and companies with less than 500 employees Proportion of all corporate R&D funding granted by Tekes, % 80 Distribution of Tekes funding in R&D projects of companies in 2007 million euros Companies with less than 500 employees Tekes considers the financing of SMEs to be at an optimal level. It is important to also retain large companies in the network. 40 of which SMEs Share of Tekes funding compared with companies own R&D investments Tekes funding decisions in 2007 compared with companies own R&D investments in 2006, % Tekes funding of R&D projects in SMEs 161 million euros Tekes funding of R&D projects in large companies 123 million euros Total Tekes funding targeted at enterprise research and innovation 284 million euros Funding from large companies to public research projects funded by Tekes 13 million euros employees employees employees more than 500 employees Large companies subcontracting from universities and research institutes in their Tekes projects 69 million euros Large companies subcontracting from SMEs in their Tekes projects 54 million euros Tekes funding is heavily concentrated on R&D and innovation in small companies. Tekes funding covers more than one third of R&D in companies with less than 50 employees, but less than three per cent of R&D in companies with more than 500 employees. Sources: Statistics Finland and Tekes Large companies are co-funding R&D projects in universities, public research organisations and SMEs substantially more than Tekes is funding R&D projects in large companies. Division of company sizes according to EU classifications. TEKES ANNUAL REVIEW

12 Funding for public research projects Tekes funding million euros Universities and research institutes Helsinki University of Technology Tampere University of Technology University of Oulu University of Helsinki Lappeenranta University of Technology Åbo Akademi University of Jyväskylä University of Turku University of Kuopio University of Tampere Polytechnics Other universities Research institutes VTT Other research institutes Participation fees for European Space Agency programmes Other research funding Total Number of projects In many research projects there are participants from several universities and research institutes. The figures include 5 10 million euros in R&D grants for research projects run by polytechnics run as limited companies and by non-profit research institutions and state and municipal organisations. Networking in corporate R&D projects funded by Tekes Share of networked projects, % 80 Corporate customers Number of corporate customers 2, , ,500 1, Large company subcontracting from SMEs Subcontracting from universities and research institutes Part of a Tekes programme International cooperation Funding decisions New customers Funding paid Almost all projects funded by Tekes in large companies and about two thirds of all R&D projects in SMEs are networked. The figures include corporate R&D projects, but not smaller feasibility studies. A company is a new customer if it has not received R&D funding from Tekes during the last five years. For more detailed information on projects and funding: 12 TEKES ANNUAL REVIEW 2007

13 Activities in 2007: Programme activity stepped up IN 2007 there were 27 technology programmes underway, with nine new programmes launched and five programmes ended during the year. The number of programmes increased by three on the year before, and twice as many new programmes were launched than in Programme funding by Tekes, enterprises and research institutions totalled 444 million euros, with Tekes contributing 224 million euros of the total. This accounts for 48 per cent of all funding granted by Tekes. In all 657 R&D projects were funded under the technology programmes. All funding sources included, programme investment grew by 62 million euros, with Tekes' funding contribution increasing by 28 million euros on the year before. The share of technology programmes in Tekes' total funding was up 6 percentage points. The average annual budget of the technology programmes was 16.4 million euros and average duration 5.5 years. SME projects accounted for 64 per cent of enterprise projects included in the programmes. There was no change from the year before in their average annual budget and share of the total of enterprise projects. The average duration increased by six months. At year-end 2007, six new programmes were being prepared. Programme preparation does not necessarily always result in a programme launch. For example, in 2007 preparations for packaging technology and media programmes resulted in the launch of the Futupack Network and Enhanced Media project instead of programmes. Two in three participating enterprises were SMEs Ongoing programmes in 2007 had 2,721 instances of enterprise participation, with those enterprises with their own projects or taking part in university or research institution projects regarded as participating. Around two in three of these enterprises were SMEs. Instances of enterprise participation increased by 242 on the year before. There was a considerable increase in the number of microenterprise and SME projects accepted onto the programmes, with microenterprise projects totalling 152, up almost 40 year on year. Small enterprise projects accepted increased by 30 to 100 projects, and the number of projects by mediumsized enterprises remained almost unchanged at almost 40. Large enterprise projects went up by almost 30 to a total of a little under 170. Research institution participation totalled 1,136, down by 38 on the year before. Almost one in two projects involved international cooperation Tekes technology programme activity has a long-term approach to creating international R&D contacts in order to transfer new knowledge and expertise to Finnish businesses. International programme cooperation helps market Finland as a competent research and product development location and a target country for research and product development. In 2007 a total of 47 per cent of projects funded under Tekes technology programmes involved international cooperation that is, organised international exchange or acquisition of information, researcher mobility to or from Finland, purchase of intellectual property rights or joint projects with foreign partners. There was international cooperation mainly with European countries, with the biggest numbers of partners in Germany, Sweden and the UK. Outside Europe, technology programme projects cooperated mainly with US and Japanese partners. Programmes tried out different approaches to internationalisation, with the most significant of these being European programme cooperation experiments under the ERA-NET scheme, European joint programmes and the launch of programme cooperation with Chinese partners. Tekes participated in 18 learning projects where cooperation between European, national and regional programmes is practised (ERA-NET or corresponding). Three of these Wood- Wisdom.net on wood material science, ERABUILD on construction and MATERA on material science and technology were also coordinated by Tekes. Evaluations providing information to support programme activity Programme evaluations are a valuable source of information for programme development. The year 2007 saw the completion of four evaluations of programmes and programme activity. Final programme evaluations were carried out on the technology programmes FENIX and COMBIO. A two-phase mid-term evaluation by an external expert consortium on the FinnWell programme was also performed. The most extensive of all evaluations was the one on strategy work and management related to technology programmes. It analysed strategy work and management on around 60 technology programmes implemented in and assessed the impact of different programme measures on programme success. The diverse use of a variety of measures supporting strategy work and programme implementation appeared to have a clear connection to programme performance. The single most significant factor for programme success was the commitment of the programme steering group to programme implementation. Technology programmes renamed Tekes programmes Tekes has been implementing technology programmes throughout its existence. With Tekes activities expanding, programmes have also changed over the years from researchbased and highly technology-focused programmes more and more to the development of other fields of expertise. Because of this expansion, a decision was made in 2007 to start calling technology programmes Tekes programmes. TEKES ANNUAL REVIEW

14 International activities: Tekes is creating networks around the world INTERNATIONALISATION provides enterprises with momentum for growth and development. Tekes shares risks related to international cooperation through funding and offers channels for Finnish enterprises to find excellent partners around the world. The Tekes strategy emphasises the significance of global research and development activity and the competence necessary for international business activity as well as European research and development work and Finland's attractiveness as an appealing innovation country that foreign enterprises and top researchers are interested in. Active international cooperation continued throughout 2007 International cooperation in Tekes-funded projects increased slightly in 2007, with around 40 per cent of projects funded by Tekes involving international cooperation. Finns also participated actively in the first calls for applications under the EU Seventh Framework Programme for Research. In 2007 Tekes offered enterprises, research institutions and universities funding for internationalisation. In this context international cooperation may include exchange of information, joint R&D projects or researcher and expert mobility to and from Finland. In 2007 around 80 per cent of all university and research institution projects funded by Tekes were international. In all 30 per cent of enterprise projects involved international cooperation. The main countries where Finnish projects had partners were the USA, Germany, France, the UK and Sweden. Globally networked Tekes programmes Tekes programmes help establish international contacts. They provide participating enterprises and research organisations access to information about global development trends and markets in the field of innovation. Tekes programmes accelerate launches of international R&D projects by creating contacts with foreign research organisations and funders. The year 2007 saw cooperation with countries with Tekes units based outside Finland (Japan, China, USA) as well as Israel, Korea and Singapore. An example of this is the agreement signed by Tekes FinNano programme in 2007 on cooperation in nanotechnology with China. Tekes Chinese partners include the Ministry of Science and Technology of the People s Republic of China (MOST), the technology authorities of Beijing, Shanghai, Jiangsu and Shenzhen, and Tsinghua University. In 2007 more than a half of projects implemented under Tekes programmes involved international cooperation. Tekes also participates in ERA-NET projects, which deepen cooperation between European research and technology programmes. At the moment Tekes is coordinating two and participating in almost twenty ERA-NET projects. Services to internationalising enterprises Tekes and partnering Finnish Employment and Economic Development Centres have helped enterprises with international technology transfer projects from the early stages of technology needs assessments to the signing of cooperation agree- International cooperation projects funded by Tekes by country group Number of international projects International cooperation projects funded by Tekes by nature of cooperation Number of international projects EU 25 and ETA the USA Other countries Japan China Exchange and gathering of information Joint project Researchers from Finland Researchers to Finland Other Industrial property rights Almost 40 percent, equal to 832 projects funded by Tekes were internationally networked in Tekes funded the projects with 277 million euros. Any project can contain several forms of cooperation. Almost 40 percent, equal to 832 projects funded by Tekes were internationally networked in Tekes funded the projects with 277 million euros. Any project can contain several forms of cooperation. 14 TEKES ANNUAL REVIEW 2007

15 The Tekes global network brings together world-class technology companies, universities and research organisations with their Finnish counterparts. To promote international R&D cooperation Tekes funds collaborative research and development projects and facilitates researcher mobility. Tekes is also actively building partnerships with R&D financiers in Europe, Asia and North America. ments. In April 2008 such technology transfer services will be transferred under the Enterprise Europe Network. Coordinated by the Finnish Ministry of Employment and the Economy, this new network offers internationalisation and innovation services in cooperation with more than 40 countries. Tekes helped eight Finnish enterprises participate in the Global Access Programme (GAP) of University of California Los Angeles (UCLA) where enterprises are drawn up an international business strategy. In 2007 Tekes also launched cooperation with Invest in Finland to attract foreign investments to Finland. During the year under review this cooperation resulted in decisions by three foreign enterprises to enter Finland, and Tekes has offered its expertise and services to several foreign enterprises interested in Finland. The Finnish FinNode innovation centre was opened in Silicon Valley, California in FinNode has launched MobileRules, a business plan competition aimed at Finnish enterprises and entrepreneurs with the aim of encouraging growth businesses towards internationalisation. Tekes is also a partner in the Shanghai-based Finnish-Chinese innovation centre FinChi. Innovation centres facilitate enterprise access to the market and promote international R&D cooperation. Tekes is responsible for operational guidance of the innovation centre network under the steering group of participating organisations, Finpro, the Academy of Finland, the Finnish Innovation Fund Sitra, VTT Technical Research Centre of Finland and Tekes. In Japan Tekes has participated extensively in the development of cooperation in the wellbeing and health sector between Finnish and Japanese partners. The year 2007 also saw preparations for a Finnish innovation centre, which is due to open in Japan in early Tekes also participates in Eurostars, a joint funding programme of 27 countries and the EU. The programme stimulates SMEs involved in R&D to lead international collaborative research and innovation projects and turn project results into new business activity. The Finland Distinguished Professor Programme (FiDiPro), a joint programme of Tekes and the Academy of Finland, attracts international top experts to Finland. Two calls for proposals took place in 2007, and the work of four top researchers in Finnish universities and research institutes was funded during the year. In all 28 FiDiPro professors are currently working at universities and research institutions around Finland. TEKES ANNUAL REVIEW

16 The Tekes organisation BOARD see page 6 STRATEGIC MANAGEMENT Director General Dr Veli-Pekka Saarnivaara Core Processes Deputy Director General Dr Martti af Heurlin Management Support Functions Strategy Mr Hannu Kemppainen, Executive Director Customerships Dr Jari Romanainen, Executive Director Programmes Dr Jussi Kivikoski, Executive Director Funding Mr Hannu Järvinen, Executive Director Technology and Research Areas Dr Riikka Heikinheimo, Executive Director Industrial Branches and Support for Core Processes Mr Martti Äijälä, Executive Director International and Regional Networks Dr Ari Ahonen, Executive Director Finance and Administration Mr Harry Karlqvist, Executive Director 16 TEKES ANNUAL REVIEW 2007

17 MANAGEMENT SUPPORT FUNCTIONS Foresight Ms Pirjo Kyläkoski, Foresight Manager Impact Analysis Dr Markus Koskenlinna, Executive Director Communications Ms Anne Palkamo, Executive Director Internal Audit N.N., Chief Audit Executive INDUSTRIAL BRANCHES Mr Martti Äijälä, Executive Director Telecommunications and Electronics Dr Kari Tilli, Director Software and Digital Media Industries Mr Risto Setälä, Director Forest and Chemical Industries N.N., Director Mechanical Engineering Industry Mr Lauri Ala-Opas, Director Energy and Environment Industries Ms Teija Lahti-Nuuttila, Director Life Science Industries Mr Ari Grönroos, Director Services and Well-being Industries Ms Pia Harju-Autti, Director Real Estate and Construction Industries Mr Reijo Kangas, Director SUPPORT FOR CORE PROCESSES Process Development Mr Heikki Uusi-Honko, Director Mr Martti Äijälä, Executive Director Process Support Ms Tarja-Liisa Perttala, Head of Unit Business Economics Mr Ilkka Koivumäki, Director TECHNOLOGY AND RESEARCH AREAS Dr Riikka Heikinheimo, Executive Director Software and Telecommunications Dr Eero Silvennoinen, Director Embedded Systems Mr Marko Heikkinen, Director Business, Industrial Design and Content Management Competence Mr Janne Viemerö, Director Chemical Technology Dr Mika Aalto, Director Process Technology Mr Jarmo E. Heinonen, Director Products, Production Systems and Manufacturing Technologies Mr Rauli Hulkkonen, Director Materials Technology Mr Reijo Munther, Director Bio- and Health Technologies Dr Merja Hiltunen, Director Built Environment, Safety and Security Mr Mika Lautanala, Director Service Innovation Ms Tiina Tanninen-Ahonen, Director Space Technology Mr Kimmo Kanto, Director INTERNATIONAL AND REGIONAL NETWORKS REGIONAL OPERATIONS Dr Raine Hermans, Director Technology Development Departments at regional Employment and Economic Development Centres Joensuu Mr Pekka Jeskanen Jyväskylä Mr Jyrki Saarivaara Kajaani Mr Juhani Pietikäinen Kuopio Ms Ritva Saarelainen Lahti Mr Jarmo Paukku Lappeenranta Dr Vesa Karvonen Dr Ari Ahonen, Executive Director Mikkeli Ms Kirsi Kosunen Oulu Ms Maritta Perälä-Heape Pori Mr Markku Jokela Rovaniemi Ms Eija Virtasalo Seinäjoki Mr Kari Rintala Tampere Mr Kenneth Nyholm Turku Mr Esa Lindqvist Vaasa Mr Vesa Kojola EUROPEAN OPERATIONS Ms Marja-Leena Tolonen, Director Finnish Liaison Office for EU R&D, Brussels Ms Riitta Varpe GLOBAL OPERATIONS Mr Kari Komulainen, Director Tokyo Dr Jukka Viitanen Beijing Mr Juho Rissanen Shanghai Mr Jaani Heinonen Silicon Valley Mr Jukka Salminiitty Washington, D.C. Mr Peter Westerstråhle FINANCE AND ADMINISTRATION Mr Harry Karlqvist, Executive Director Human Resources Ms Ritva Parhamaa, Director Legal Affairs Mr Ari Suomela, Chief Legal Counsel Finance Ms Tuula Vieru, Director IT Mr Harri Eskola, Chief Information Officer Premise Services Mr Väinö Tuupanen, Head of Unit TEKES ANNUAL REVIEW

18 Contacts Tekes, the Finnish Funding Agency for Technology and Innovation Headquarters Tel Fax Postal address: P.O. Box 69 FIN Helsinki, Finland addresses at Tekes: Director General Dr Veli-Pekka Saarnivaara Tel Deputy Director General Dr Martti af Heurlin Tel International and Regional Networks Executive Director Dr Ari Ahonen Tel Communications Executive Director Ms Anne Palkamo Tel Regional network Technology Development Departments at regional Employment and Economic Development Centres Overseas Offices Belgium, Brussels Finnish Liaison Office for EU R&D, FiLi Embassy of Finland Avenue des Arts 58, 5th floor B-1000 Brussels, Belgium Tel Fax China, Beijing Tekes Embassy of Finland Kerry Center, South Tower, Level 14 1 Guanghua Road, Chaoyang District Beijing , P.R. China Tel Fax China, Shanghai Tekes Consulate General of Finland Finland-China Innovation Center Rm 402, Bldg BiBo Rd Zhangjiang Hi-Tech Park Shanghai, P.R. China Tel Fax Japan, Tokyo Tekes Tengenji Square 6F , Minami-Azabu, Minato-ku Tokyo, Japan Tel Fax USA, Silicon Valley Tekes FinNode innovation center 3945 Freedom Circle, Santa Clara CA 95054, USA Tel USA, Washington, D.C. Tekes Embassy of Finland 3301 Massachusetts Avenue NW Washington D.C , USA Tel TEKES ANNUAL REVIEW 2007

19 Success Stories Companies, universities and research institutes carry out about 2,200 R&D projects annually with the help of funding and expert services from Tekes. The success story archive on Tekes website contains examples of Tekes-funded innovations. Online Annual Report 2007 You can find more extensive annual report on the Internet:

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