(c) KSG SIA 2004 Iceland’s strategy and investments in R&D Dr. Jon Thorhallsson CECUA President KSG SIA Chairman Information Society 2004 Vilnius October 19, 2004 Can the example of Iceland be useful to other states in creating strategies?

(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 ,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% Útgj RoÞÞar af fyrirtRoÞ/VLFÁrsverk Millj kr FTE R&D/GDP R&D Personel ManyearsR&D/GDP R&D by firms Total R&D exp 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 Policy in 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 1 December 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 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?

(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?

(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 Conclusions Europe/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 Council New 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 – Find local partners

(c) KSG SIA 2004 Business cluster approach

(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 Copenhagen for Nordics Companies have partners Making revenue COPENHAGEN CLUSTER A SUCCESS

(c) KSG SIA 2004 Business Cluster Riga for Baltic States Copenhagen model and experience Companies found Latvian Partners Looking for Lithuanian and Estonian ones

(c) KSG SIA 2004 Cluster Network also for local companies Power of the network

(c) KSG SIA 2004 Questions?