Four Factors That Impede Innovation

Esko Akho, former prime minister of Finland who oversaw his country’s accession to the EU gave a talk to students on the new HSE Master’s in Governance of Science, Technology and Innovation programme. He spoke about the problems which can stop an entire country or an individual company from developing successfully.

Reactive rather than proactive. Professor Akho began with a question about football, 'Which match from the World Cup do you remember most?' 'Germany vs Brazil!” they cried in unison. 'For me, the most interesting was Ghana against Germany at the group stage.'The outcome, 2:2 was determined by a goal scored by Miroslav Klose just two minutes after he came on. He upset the way the Ghanaian team was playing with his unexpected lively start. A star player, Klose showed how he doesn’t follow the ball but anticipates where it is going to be next. And the trainer, having chosen to make a substitution which probably surprised the fans, showed that he was in control of the game, knowing which strengths to apply to bring about a victory. The same applies in business - you have to sense the mood of the market, calculate the consumers desire to move ahead and react in time so you are ready with a new product.

Fear of change. In modern times there are many examples of inventions that never became new products. It was mainly because their creators didn’t pick up the signals of change. Esko Akho recalled how although it was Kodak that invented the digital camera they didn’t put it on the market because in those good old days most of their sales were in film and they were afraid to lose a stable source of income. Another example is in multi-touch screen technology. the Finnish company Nokia while it flourished stuck to developing sensor technology with a conservative look (they were also thinking about elderly users) and clung on to their stylus models. Nokia’s designers thought they were easier to use with a sensor screen than fingers. But a person has 10 styluses (their fingers) so why not use all of them? But Nokia couldn’t make the leap, and Apple designers did it and made the first ever mass market multi-touch device, the iPhone. 

We can draw a number of conclusions from these cases:

• Not all inventions become new products but only those with a practical use. An invention is an accumulation of knowledge but innovation is the transfer of that knowledge into profit.
• Risk is an inseparable part of innovation. Without taking risky decisions, not fearing to propose something radically different, even making a mistake, you cannot come to the right idea. The opposite of innovation is imitation. It is tempting because it has no element of risk. It’s difficult to move towards new horizons, propose new standards, when the current situation is so good and familiar that we don’t want to change it.

• Something that seems unshakeable can change a lot and radically transform the structure of consumption.Luxury goods can become mass market products. The first mobile phones were very heavy and expensive. The Nokia Mobira Cityman - the first mobile model which Esko Akho used weighed 750 grams and cost several thousand marks (about 10,000 euros in today’s money). It was on that very model that Gorbachev telephoned the USSR Ministry of Communications from the hotel Kalastajatorppa in Helsinki in 1987. Modern mobile phones fit snugly into the breast pocket of your shirt and are easy for most of us to use.

Lack of trust between society and the state. Success in business depends enormously on the role the state plays in its development. The state is the main driver of innovation and designer of the innovation ecosystem. For effective state-private partnerships trust is essential. The state should not just be strictly controlling and planning, nor should business be allowed total freedom. The ideal format for their interaction is a sober compromise between top-down and bottom-up approaches.

The search for a special path (surprising as that may be). To round off his talk Esko Akho made a few suggestions for our country. People ask him so often that he even wrote a book about why Russia hasn’t achieved what Finland has although the countries have similar climates. His main advice is to diversify the economy and avoid excessive dependence on oil and gas prices. Also, Russia doesn’t need to try to invent its own regulatory system, it can just use the European model which works well enough.

Esko Akho was prime minister of Finland from 1990 - 1995. Today he heads the board of directors of the Representation of Finnish Industry East Office; he is on the board of directors of Terveystalo, the largest Finnish company which provides medical services and a senior research fellow at Harvard University. He is also a guest member of the Madrid Club (an independent organisation of former heads of state and governments which works to strengthen democracy).

As president of the Finnish innovation fund, Sitra (2004-2008) he played an active role in cooperating with Russia and initiated the Finnish-Russian economic strategy. In 2009 - 2012 he was acting vice-president of corporate relations and developing social responsibility at Nokia and was responsible for interacting with government bodies, the public, international organisations and directed the companies activities in sustainable development. 

Esko Akho is a Member of the Academic council for the HSE Master’s programme in Governance of Science, Technology and Innovation.  

By Maksim Kotsemir, specially for the HSE News Service website