Media echo

"Vision is the art of seeing things that are invisible, "said writer Jonathan Swift three hundred years ago.

Estonian President Lennart Meri has said, "A state, as well as a business, can not see itself as mere accounting numbers. Neither have a future without vision, mission and strategy, let alone the kind of future that shines". Where's vision, there's hope.

With the economic crisis today we face similar questions - to where from here, and how? Tartu university's economy professor Urmas Varblane admits that with or without crisis, due its simplicity our economy reaches its limit at the 2/3 productivity of European Union's average. Convergence allows us to get that far, but not far enough to join the successful. Hence, if we truly dream of joining Europe's most well-faring and nationally wealthy states, we need to think and act on a new level. We must have a realistic strategy to reach the high league. Unfortunately the signs show that our unskilled labour based, so called Southern-Finnish model, servicing the Scandinavia, is more likely to continue and we lack resources to become an equal partner.

We have a series of urgent questions in the way of success. For example, how and with whom we compensate for demographic decline and aging society. Today we have 4 working age individuals per pensioner, in 20 years we'll have three and in 40 years 1.8.

How to you invert an inside market oriented economy towards the outside world? Today majority of Estonia's export is produced by couple of hundred businesses, most of which are run by foreign capital. How can Estonian businessmen make foreign contacts, something the world competitors have already acquired while enrolled in international schools?

How to improve the quality of education and guarantee evenly good level of it in every region; using information technology maybe? What stops us deploying vocational education as a tool for retraining the unemployed? How to take the higher education to the world level? Who to school at home, who in the world and who pays? How can we change into a talent-attracting and tolerant country? Brains are valued and the competition for them is only heating up in the world.

 As a country we must ask, where to use our scant resources to change most effectively. How can we increase the competitiveness of different regions and rural areas? How to join the job market, education, science and development policies into a coherent whole? What changes should we make in our governing mechanisms to move from an administrating state to one more effective and innovative? Who are our role models and where are the next generation leaders to take Estonia to its next development jump.

These important, but nonetheless particular questions can not be answered until we have the direction to go to, inspiring as a vision and commonly felt.

In today's world there is nothing certain - there are only possibilities which arise and disappear faster and faster. The man and his nature have changed little over the time, but the cycle of principal changes in the world has shortened considerably. The rules of the game used to change after every 1000 years, then 300, 100 and after 25 years (in the 20th century). Today big changes take only 5 years to happen. We need to be keen, see opportunities in them and make them work for us. There are examples in the world of successful small countries who neighboured by unpredictable big countries have had to stay fit, in constant development and playing their part well.

Our world, more and more in change, shifting to Asia, aging and troubled by the lack of resources, will be like a roller coaster in the future. Our job is to understand the undeterminable as much as we can and increase our capability to succeed in the whirlpool of change. We must not let the crisis lower our self confidence and think ourselves small. Dutch or Danes have no more land than we do. Luxembourg's population is less than half of ours.

After the crisis we need to find in ourselves the will and ambition to increase the importance of our country - a mere self sufficiency as a measure is only half the truth. It is clear that post-crisis Estonia has to be more open to the world - in business as well as in values and in our understanding of the world in general. What's our part and ambition in the Nordic region, Europe and in the world at large? We have the presidency of the European Union at 2018 - what is our message to the Europe? In what lies that strength and uniqueness that would make us stand out in Europe and help us lead it forward? What is our vision of the Estonia that is globally competitive while remaining locally attractive? We must be equally open to all people who live here and who we welcome, who wish to live in our country and playing by our rules - go to school here, make business or marry.

A vision of a country is not just an adjective or sentence describing the future that anyone could shout out in their sleep. It is more of an inspiring and meaningful picture of the future, widely felt in the society. A kind of a bundle of dreams and hopes, moving towards which, we can agree on the important things - for a longer period than one election cycle and on a wider scale than one party's world view.

Here in the Development Fund we have analyzed growth opportunities of Estonia's economic sectors and we have an idea as of what to focus on. But when talking about the visions of the future we first need to discuss through more general goals we wish to reach. What kind of society are we aiming for, what kind of a value system we wish for? What are our ambitions in the educational sphere and our expectations of social and well-faring sphere? How open as a society we are and what kind of immigration policies are we ready to implement? How active and economic interests centred foreign politics are we ready for, etc. When we have reached mutual understanding in these things, we can continue discussing particular growth areas on which's development we should focus.

That is why we have initiated the discussion on Estonian Growth Vision 2018. This is the year when we celebrate the 100th birthday of our republic. By this year important changes need to be made, so that we would be ready to speak up in the high league. At the development forum "Estonia, Globally Competitive, Locally Attractive" we will hold the first public brain-storming on our way to the vision.

 Published in "Eesti Ekspress" in April 8th, 2010

HEI/Erik Aru: Nick Turner, CEO of consulting company Global Business Network that is helping the Estonian Development Fund to compile the Estonian Growth Vision, talked to HEI, how and why should you look into future.

Please describe, what it is you actually do?

Fundamentally we're about helping people make better decisions today in the light of future uncertainty. Our philosophy about thinking about strategy is based on the premise that human beings are really bad in thinking about the future, as we are not hardwired to do that very well. Because, usually we look at the current situation or the recent past and basically extrapolate it forward. And we tend to have somewhat linear forecasts - that's the way we think about the world

And that obviosly is bad?

Sadly the world very, very rarely actually evolves into that direction. Typically organizations, whether they are governments, third sector organizations or multinational corporations, tend to tie their strategies to a single future view. And there are some advantages to that - it gives clarity. But there are also some dangers, because when the future evolves in a very different way, if big discontinuities come along, it can upset your strategy. We have got cases where people have actually gone out of business because they have got things badly wrong.

And in last 2-3 years with the financial crisis, the whole concept that the future is uncertain is a big part of conversations. Although my concern is that people have very short time memories and as soon as better times are come back, they tend to forget the pain of the past and focus on the good times going forward

And what do you do in Estonia?

We are fortunate enough to have been chosen to partner with Development Fund to help them think about Estonian growth vision for the next ten years. That's why we're working here in Estonia, using scenarios initially to help Estonians think from "outside in" perspective how future will evolve.

Scenarios have been used in Estonia before. What do you do differently?

That's true. Criticism we heard from people who were involved, is that they were quite self-referential, quite internally focused rather than thinking broadly, more from macro angle, externally what might happen in the world, and were bit too narrow. We're big believers that you have to think divergently about what might happen before you think convergently what you should do. And we think that thinking like that allows you too have a very different conversation.

Typically when you're in a strategy meeting, you tend to begin your sentences with words "I know", "I believe" or "I predict". When we have scenario-based conversation, it starts with words "let's imagine", "what if" - it's a very different conversation. It gives you creativity and freedom to explore the unmentionable, the un-talked-about, and in many instances start to really understand a broader set of drivers and uncertainties. So you can start, instead of beginning from what you already know about past, to build in a set of future uncertainties, which can then lead to divergent, challenging, plausible stories about the future. They're not predictions, but stories - they can be quite data-rich - but they really are about helping you to rehearse the future.

And how many of these stories do you create?

Typically we develop four scenarios. If you do only one scenario, it's really a forecast. When you do two, it will be up-down, good-bad, it tends to lack dimensions. Three can be up-down-middle. If you have got four, it typically adds another dimension. But more than four gets quite confusing and hard to hold in your head.

And once you have your four scenarios, you take them one by one and think - if this was the future, why would we care? How would we successful? What are the threats? And start to think about the key implications. You can think about that in a macro perspective, in a national perspective, in an industry perspective, in an organizational perspective depending on your starting point in the strategy process

So, the scenarios are ready, what happens then?

If you have done the scenarios, the different futures, ultimately you have to take a view how you want to move forward. There are ways of plotting different strategies and different options against different scenarios, it's really about understanding risk. It doesn't free you from making difficult decisions but hopefully you make these decisions in a much more enlightened state of mind having thought through what might happen. Plus you can start developing contingency plans.

A very simple analogy is when you drive a car and see a sign saying "Children crossing". And when you drive a 100 yards a kid runs to the street, you are actually quicker to brake, because you've seen the sign, you've rehearsed that in your mind and then it actually happens - and hopefully you have slowed down, so it's not just a last minute panic reaction.

What we find is that the way human beings make decisions is looking at data, but also with intuition. So I think scenarios are really good for putting color around your data, informing your intuition and giving you the confidence to make difficult decisions. We often find in strategy making process that you may have a beautiful-looking document but it doesn't really affect people to change their behavior. In many ways when using scenarios we try to connect people also emotionally as well as intellectually.

But how do you do it?

The way we do it, is very much a co-creation process. We try to avoid the case where a group of consultants goes away and writes scenarios, come back and say - here they are! Because me showing you my scenarios is about as interesting as me showing you my holiday pictures - you weren't there, it doesn't resonate with you, it might hold your attention for a couple of seconds, but it's not like experiencing the whole process of creating scenarios.

There are several things I'd recommend to any organization doing scenarios. First thing is sponsorship. Really important is to get the right level sponsorship - somebody who actually has the power to make decisions, can make sure you get the right stakeholders. With the right sponsor you can get the right stakeholders involved.

What kind of stakeholders are the right ones?

In terms of types of people you want to get involved, we talk about three types of people. One is key stakeholders - people like sponsor who are actually responsible for making decisions. Two is knowledge-holders - people who have specific expertise on the topic you're talking about. And the third group is what we call the creative and the curious - who are not necessarily holders of formal power, but they are people who perhaps think differently, are maybe younger, and really give a different perspective how they see the world evolving and the issues affecting a particular organization.
The other element that is very important is time, which is often the hardest element to achieve. Coming from investment banking, the scarcest resource there was time. And it takes time for peoples' perceptions about the future to change. So building in time for the process is also incredibly important. And that's where you start to get that sort of an emotional connection.

The best way to describe it might be as follows. Typically we are in a workshop environment, where you have people working in groups and occasionally it involves allocating a group to a specific scenario, and sometimes it creates a thing called scenario envy. People start saying - hang on, I don't want to work on that scenario! This one is much more positive, it's more likely to happen and so on. But when a group has worked for half an hour on a scenario, going through the details, the logic, they start to say - actually, this really might happen. And after a couple of hours they start saying - this is the one. Because it takes time for people to change their perspective and get the sense of the logic, and the flow, and the plausibility how the future may unfold in a different way. And that's where you start to get that emotional connection, not just the intellectual connection.

But where do you start? You come to a company, a country you know something about but not very much - where do you start?

The first part is to do some preliminary research to understand what really are the key drivers that shape the particular future you're focused on through things that are what we call predetermined - there are not many these days, but things like demographics that are pretty much preprogrammed for next x number of years. But also you're most interested in thinking about what are the key uncertainties - things that are really unclear how they are going to play out, but also have a really big impact on the topic in hand.

Typically we reach out to our network, to be able to get that exposure to their different thinking and the experience they have, as well as talking to internal experts, managers, to get a really good sense of the key issues that are at stake. We also use that as a input into the workshop process to co-create scenarios.

We have different methodologies to create scenarios. The one that we use most frequently is a deductive approach which we have kind of a reverse engineered out of the Shell experience. There are actually eight steps of thinking about scenarios to wound all the key uncertainties into a two by two framework, a matrix if you will, which is built around the key critical uncertainties. And based on those you have a logic of the future as defined by those adjacent axis. That is a really powerful methodology that allows you to think quite divergently about the future.

With whom have you been speaking in Estonia?

We have spoken to a number of our external experts but we've also spoken to a number of people that the Development Fund have hooked us up with. So from GBN perspective we use people like Peter Schwartz who is one of our founders, and very knowledgeable about working with different nations - for example he has a 20 year relationship with the government of Singapore. We've spoken to people like Crawford Beveridge, who is part of our network. He is a very senior executive for Sun Microsystems now but before he used to run Scottish Enterprise which is a regional development fund in Scotland. We've spoken to people like Eammon Kelly, who was my predecessor as CEO of GBN, also worked for Scottish Enterprise, but has also worked with countries around the world. Professor Peter Webber, who is professor of political economy at UC Berkeley, who works very closely with US government and also consults with us on Middle East. Mia de Kuijper, who works at Duisenburg School of Finance in Amsterdam, and has worked at Shell.

Within Estonia we have spoken to politicians and business leaders, academics, like Marju Lauristin, minister of defence Jaak Aaviksoo and Sten Tamkivi from Skype. A really interesting mix of people.

If you start building scenarios, it's probably possible to create something like 15-20 of those. How do you choose which ones make the final cut?

There are multiple ways. Shell would typically use what we call an inductive method where they would go to a country house and drink tea and start to coalesce around certain stories about future. That is actually quite hard to do, you have to be quite skilled at building scenarios to do that.

Then there's another method, where you identify what we call the official future. Every individual, every organization has an official future - it's basically the future you assume is going to happen. Sometimes it's sort of explicit and you can read it in strategy report or a plan, sometimes it's implicit, you have to reverse engineer it from an annual report. Typically that sort of plan or the model around it tends to work for a certain period of time, but when it fails, it fails big.

The first thing we do, is we try tell a story about the official future. You create that story which is familiar to the people in that organization because it's something with which they resonate. You then look within that story for key variables that can take the future into a different direction and you just start to create the scenarios based on diverging ways from the official future. This can be quite a productive way, but it takes a lot of skill and the chances of these being quite different are harder to achieve.
The way we often do, the deductive method, which is about making the framework - out of the hundred plus drivers we identify, we essentially boil it down to two most important uncertainties. That will give interesting third dimensions.

Can you give me an example?

In January 2008 I developed a framework to think about the world after the global financial crisis. One of the uncertainties was the nature of economic growth, the other one was the nature of globalization. We had the world as we know it, as it has been for the last 50 years - Washington consensus, US in the driving seat, they make the rules, free trade. And the world not as we know - multipolar, more countries and cultures set the rules, potentially there's more friction in the system, different way of globalization. And this gives you the 4 scenarios where you start to build interesting, plausible and challenging stories. The deductive framework is kind of easier for others to understand, to digest and to absorb the basic logic of how the scenarios are different.

And where is the world going now in this framework?

I think what we will see, the nature of globalization is less unclear now. I think it is pretty much predetermined now that we will see a much more multipolar world. And that's very interesting to see how that evolves. It isn't about democracies it is now more about autocratic capitalism and government-sponsored capitalism than democratic capitalism driving the agenda. If you look at the economies that are successful now - it's India, it's China, it's the Middle East, Russia of course always has its' own particular challenges and issues - but they are very different governance models than we have in the West. Even in the US or UK we see government intervention has been made necessary by the crisis, and many banks are actually owned by the government which was unthinkable four-five years ago.

Where are you now with scenarios for Estonia?

There is a very interesting question that we have been discussing throughout this project which is - as a country of 1.3 million people, what is the realistic impact that Estonia can have on the world? How do the megatrends like rise of China really impact Estonia? The question was, what is most important - changes on the world level, changes in the Baltic RIM or relations with Russia like some thought. At the end we stayed with Baltic RIM, that I think influences Estonia more than developments in China - but of course these also have their influence.

And with Estonia being on the verge of euro, it has been of course a big part of our discussions here. Some economic policies are dominated by the need to meet the Maastricht criteria, so euro is seen like a magic bullet. In some audiences we spoke to, I think were unrealistic expectations what the euro can achieve. There is a danger that when it arrives it all falls flat, there is sort of a hangover as the realization comes that it isn't the answer. It doesn't alleviate the need to make difficult decisions. In some ways you already have the euro as your money has been so long tied to the euro, in some ways, psychological and reputational, you don't. In one or two scenarios there were some negative impacts of having the euro, particularly in some of the cost advantages that Estonia has had in the EU that may be equalled out as you get the euro and get more assimilated into EU economy.

How much use does such scenario creation usually have?

When done well, it can have quite a dramatic impact on an organization. How we use scenarios typically - one way is to help people to think about strategies from afresh. And right now we're very, very busy because of this big shock, this discontinuity in the economy. Those that are going to survive, they'll say "phew, I'm alive but I really don't want to go through that again." So they try to understand better how the world is evolving so they can be better prepared for these kinds of shocks going forward. And also, whether they can make their strategy more robust, more future-proof, if you will.

So one is the opportunities to actually create new strategies, and new ideas, and think creatively about how the world may unfold and what kind of opportunities and risks that offers to you. Two is taking existing strategies and testing them - kind of wind-tunnel my strategies through different scenarios and kind of see how my strategies perform in light of different circumstances. And what we find is that it does help to create alignment amongst decision-makers and management teams. It gives people confidence to actually make difficult decisions. It can actually unblock sometimes bureaucratic decision roadblocks. It also can start to make explicit things that are much more implicit or hidden. When thinking about economy, it also allows you to better understand what is cyclical and what is structural and that can be pretty useful too.

Nick Turner
Nick Turner is co-president of GBN and a partner of the Monitor Group. As well as runnig the company, he provides strategic consulting services to clients across Europe, the Middle East, and Asia, and runs GBN's operations globally. He joined GBN in 2007, prior to that he worked 11 years for Morgan Stanley where he was managing director and head of of strategy in Europe.

GBN was created in 1987 by workers of the strategy unit of Royal Dutch Shell. Shell is one of the most successful companies in the world when it comes to strategic planning. In December 2000 GBN merged with consulting company Monitor Group that was founded by Harvard Business School professor Michael Porter and his colleagues. By now the group employs 150 consultants in 23 offices in the world. GBN has also its' members' network that includes 150 people from different fields, from scientists to artists and musicians.

EPL/Holger Roonemaa: He is a noted man for his previous contribution as a Strategy Manager at Nokia and for his preaching of Finnish success. Now he is warning if the Finns don't make quick and radical innovations, the country will be met by the fate of Greece in five years already. Of cause there is a much preferable scenario also. Estonians have a lot to think about.

You have used an expression - Finns have become prisoners of their own success. What does it mean?

Finland has been really successful, but the success has poisonous side effects. We believe we have found the right recipe. We got too confident and now we think we know what's best for us. In this case one becomes narrow-minded and repeats all that brought success in the first place. There won't be any doubt if the way one acted earlier is the right way to act in the future. I like to say that the companies and organizations won't die because of their false actions. They die because of the continuing of the same actions for too long.

Secondly, they will enormously accentuate efficiency. Chasing the efficiency will divide the work into ever-smaller units. In time it will make the organization very stiff. Even if you want to change, it is impossible. Finally the organization turns political. It's difficult to bring freshness into this because people protect their positions very strongly.

The whole world glorifies us and it plays a big role for Finland. They praise our good work: excellent industrial indicators, exemplary innovation policy, we are ahead in all global standings. So it becomes easy to believe that we don't need to change, and we become prisoners of our own success. Yet we know that no system, firm or government can do the things the same way forever. Sometimes it just has to change.

Is the imprisonment somewhat inevitable?

It is really very humane and almost inevitable. In one of Sitra's research we were looking for firms that have continually shown regeneration. Fortunately there are firms that can even manage to teach an elephant to dance. We are trying to institutionalize some of the management principles and policy rules through the successful firms. For example job rotation. Let's make so that every public sector employee can work on one job for a maximum of five years. After that you have to change for example to another ministry, private sector or where ever. In Singapore it works. You have to make people rotate and then they start to think differently. These are simple things but make a huge influence.

You even went so far as to say that in five to ten years Finland will probably become Greece. What kind of signs indicates that?

Of cause it won't happen overnight. Let's look at the facts: in Finland the public sector's loan ratio to GDP is 44% which is the lowest in Europe. In USA it's over 100 percent, in Greece 140. Finland is in a very good position compared to almost all other countries. But our manufacturing structure is very narrow and that puts us also somewhat into a more difficult situation. We have only two-three main manufacturing branches: forestry and metal manufacturing, and information communication technology aka Nokia. Compared to Sweden and many other countries, we are depending too much on these little branches. Besides the globalization has given a big blow to these industries - the markets are moving to Asia. We are losing producing jobs faster than any other country. At the same time our nation is getting older fast and we need lots of new health care workers quickly. When combined it means that we are not able to preserve our life standard and welfare society we have right now. Tax intake declines because the firms and jobs move away. Our public sector turns too big too quickly. We are in trouble if we don't use our IT much more wisely than right now.

We have 348 local governments in Finland that all offer public services independently: bookkeeping, personnel system etc. All have been managed separately: no transparency what so ever, the data isn't comparable. There is not one reason why every local government has to have a separate system. It should work as centralized system from one centre.

We have fortunately centralised our county governments' bookkeeping to one centre.

You have done a good job. We discussed with Raivo (Vare - Chairman of the Supervisory Board of the Estonian Development Fund - H.R.) that you would not do the all same mistakes as we did. It's very difficult for us to pull together for example the same local governments' work flow right now. By the way, the same process almost killed IBM. I believe your country has already done this job that we are yet starting to do. If we are successful and can manage to build a united platform for local governments' services, our economy would save 3 to 5 billion Euros within 5 years as the Sitra's analysis shows. This is only in costs of local governments and involves only one little part! These are incredible numbers. These are the problems that the Finland is facing. If we don't solve them, we are going to turn into the next Greece.

Finland has been a model for Estonia for nearly 20 years. We have learned a lot from you. Can it do a disservice to us?

We discussed the same thing with Raivo Vare. I recommend you to analyze this like we do in Finland. Also how we see our future. Wherever there is a chance to leap in front of us - do it. Skip a step. Don't build such manufacturing inheritance like we have. It's not necessary any more. You have to think by yourself, no need to copy everything. If you do then you'll create for example an innovation policy that is too complicated and which creates relatively primitive products that don't consider end-users. You don't have the resources to manage such a difficult system.

What is the exact place for such countries like Estonia and Finland in the new world that is being created now after the economic crisis?

I tend to think that our future is bright. I am forced to think so because of my job. But I really do believe that strategically quick countries find their place in the global fast-changing world. The world is full of possibilities: climate changes, energy efficiency, and sustainable use of nature resources. It's really good if you are able to unite your competence with other partners quickly. We are hoping to make Finland a market leader in some areas.

Like in which areas?

Like health care is an area that I believe we can do a lot in. There has to take place a transition from reactive health care to preventive well-being in all countries. People should take care from early on to live a healthy life. Here is a lot of room for consultation services that can be provided from an average person to an average person or from a professional to an average person through social media. When people get the right advice at the right time and listen to it, we can prevent the need to visit a health-care facility as long as we can. You have to be at the right time at the right place when there is a need for a real treatment. There is a real need to extend such technologies for people's health, well-being and health care expenses.

Mobile technology is the second area. Finland is already very highly developed in health care at the moment. If we could combine it with mobile technology, we could create new solutions that we can export to other countries. Microsoft was already really interested in some of the things that we are doing in Finland. They see that we are doing the whole job right here but there is a need for it on bigger markets of the world.

Are you talking about creating a new world model or is it a new approach for the whole society?

It's both. The new approach is to integrate the private and public sector more. It is impossible for example that the health care is only the public sector's service in the future and the private sector only competes with that at the best. Both sectors depend on each other much more. Public sector uses private sector for a certain services that they offer for free. But for some services you have to ask money. Platforms are increasingly often created cooperatively. In that sense we are dealing with a new social model and economic model together.

Or let's take for example a look at the social enterprise which is a growing worldwide field right now. Public services are being offered with business logic but more and more with social knowledge. No profit is made or it is being donated for doing something good. There isn't a greedy capitalist any more who would just abuse the system.

How easy it is for people to accept that it can't go on like this anymore and something must be changed?

It is really difficult, of course. The more you consider your model successful, the harder it is to accept the fact that you have to give it up. On the one side there are people who lead their empire and don't want to give it up at no price whatsoever. On the other side there are trade unions that fight for the rights of their employees. Combining this we see that it's really painful and hard to make changes. I have said that in the long run the global economic crisis may be Finland's saviour. But only if it leads to changes. I did say it consciously this week that we are being threatened by the fate of Greece. I hope it brings people much closer to the seriousness of this matter. No one wants to end up like Greece; to lose their independence - have someone else is come in to manage your country.

Do you think your message gets through?

In the past 12 months I have fortunately noticed that the decision-makers have finally started to understand that there is a need for quick changes. Unfortunately we have elections next year and no one has the courage to make a decision. It's so easy to delay things until after elections. Right now Sitra is trying to convince the politicians. I have discussed this matter with the social-democrats in the parliament, next week I will meet the conservatives, the centre party. Within 4 week we are going through all parties and will discuss the changes of economic paradigm and what it takes to change the Finns' mentality. We are trying to influence the parties so that when they prepare for the election and think about their programme, they will come to a collective understanding: this subject is important and urgent. We are giving them a few thoughts on what to use. Hopefully they will utilize some of the ideas in their election platform and if we are completely successful, we don't need to worry about who is going to win. Whoever wins, the agenda has the right points.

If Estonia is looking for the Growth Vision 2018 at the moment, then Finland was recently searching for the Wellsprings of Finnish Vitality. What is the positive vision of Finland in the new economic society?

Our foresight's results are divided into 3 categories:

• First of all it is very important that we have now a logical story and matrix on how to create value and to name them. In contrast with industrial economy that is dominating right now, the name of the new matrix is human- and solution-based service economy. Now we can characterize why the old era doesn't nourish and why we need to cross over to the new one.  
• Secondly, we identify three areas to which we need to pay more attention: development of innovative management, supporting entrepreneurship, and redefining well-being. Well-being must have an idea so that people will contribute actively to it and aren't just passive users as they've been so far.
• Thirdly, we identified dozens of different initiatives and programs that are already working and taking us to the new economy. We are trying to make them more visible so that the decision-makers would see that: yes, it has a service-based logic, not manufacturing. Next we are trying to find more such projects, to boost and finance them. If our society gets governed by the manufacturing logic, then these projects are just going to be killed off and this would just be nonsense.

 If everything is going like you plan, what will the outcome of this be?

Good living is the main objective. It's one of our humble targets. Unfortunately it's subjective and difficult to measure. We will be satisfied if the well-being of the Finnish citizens is still high and they themselves consider living in Finland desirable. All other, including economic growth, will come after that. All other goals like being the leaders of Europe in innovation and education, let's say, are retrograded on the main targets. All in all they are just tools to get to the main goal. Obviously it's not easy to achieve.

While searching for the Wellsprings of Finnish Vitality you concentrated a lot on a subject called globalization 2.0. What does it mean?

There are some peculiarities between globalization 1.0 and 2.0. First of all the globalization has so far been USA- and European-centred, now it is Asian-centred. It means that Asia is no longer just a low-cost base but more and more innovation is emerging there. The market and the demand is rising, a huge part of the action comes from that region. We must have connection with such new innovation centres so that we wouldn't fall behind others. Also the companies' policy of creating value changes. Businesses are making only one little thing in the big value chain. You don't need to do it all by yourself from the beginning to the end. You must have the right contacts to get there. For such little countries like Estonia and Finland it is important to be in those chains at the right time. It doesn't have to have any kind of connection to your country; the clients don't have to be from Estonia or Finland.

Yet from what kind of areas should we look for the growth engines?

You could have one advantage over us. Build your own entrepreneurship. To me it seems like the Estonians have a lot of natural entrepreneurship. In this sense you seem to be more like Denmark than Finland. We have serious problems with entrepreneurship.

Actually we have problems with the entrepreneurship also.

Then support the people's entrepreneurship and growth companies. It's not for me to say in which areas. I would imagine that ICT could be one of them. One of the conclusions of our process is that the world has changed. The decisions don't come from above anymore that now we are behaving like that and for 5 years everybody is following the plan just like that. The world is so complicated and changing so quickly that you cannot make plans for 5 years. Companies must be ready for a lot of different developments and for that you need to be strategically quick: be able to react correctly at the right time. It may seem like we are small and focused only on one area according to the old industrial-age logic. It isn't so anymore. We should choose let's say 5 areas that we are interested in and then support the businesses that invest in them.

So basically the one with the fastest reaction wins?

Exactly! It applies more on the private sector but to a certain extent also on the government. The government especially in the small countries must have a quick sense of judgment. Let's look at Singapore, this country works like an exemplary global business. Thinks strategically, trains employees, employees rotate. The country is organized horizontally.

Biography
Mikko Kosonen

Born January 22, 1957 in Ontario, Canada.

Works at Sitra since 2007, from November 2008 is the President of Sitra.

Before joining Sitra, he worked for over 20 years on many different positions at Nokia, including the Head of Strategy.

He has written a book called "Fast Strategy: How Strategic Agility Helps You Stay Ahead of the Game" with Yves Doz.

Mikko Kosonen presented at the Estonian Development Fund's Futures Forum 3 "Estonian Growth Vision 2018 - Globally Competitive, Locally Attractive".

Tigerprises.com TigerBriefs: Estonian start-up Fortumo, that offers possibilities to create your own mobile service in 5 minutes and earn money with it, is expanding rapidly.

Thus far the service has been very popular in Nordic countries, Eastern Europe and Asia. But now Fortumo “fever” is drifting towards Western Europe.

The company has entered French, Spanish and Portugese markets and promises to expand into neighbouring countries shortly. “France, Spain and Portugal are mobile-loving countries where SIM penetration exceeds population. At the same time, they are relatively well developed countries, creating good opportunities for internet businesses,” the Marketing Director of Fortumo, Martin Koppel says.

Reminding once again the fascinating qualities of Fortumo: no startup fee, no monthly fee, no need for any skills.

Over 65 000 SMS services has been created with Fortumo thus far and you can see from the following maps where.

Tigerprises.com: Estonian e-health software developer Raintree is anticipating what will be the outcome of Barack Obama’s plan to invest 17 billion dollars into electronic health information technology and records under the American Recovery and Reinvestment Act.

Raintree’s software is already related to over one million patients in US and used by over 14 000 medical doctors. The company is present in 49 US states and can rightfully call itself one of the market leaders.

Among market leaders

Contentedly said – the sales continue growing, Raintree is very well known among physiotherapists, but majority of the recent new customers are bariarics surgery clinics, that cure overweightness. Recently Raintree entered into oncology software market and now develops a tool for defining chemotherapy doses. 

“We can’t yet say that our sales are projecting Obama’s iniciatives, since the officials are specifying the terms regarding how the Act money will be allocated,” CEO of Raintree Estonia, Aleksei Udachny says.

“But it sure does make me proud if I enter a clinic in San Francisco or New York, Manhattan and see our software running in a computer!”

No marketing costs!

Meanwhile the company continues to work with existing and new clients and develop its software, presicely the patient’s web portal, automatic file administration and e-receipt solution. It’s kind of wonderful that Raintree doesn’t even have to bury money into marketing – one doctor advises another to buy the software, the product is are marketing itself. Believe it or not, but a study made last year showed that only about 4 percent of USA doctors use electronic patient databases, other 96 percent have adherenced themself to the old and already tried paper and pencil.

Terminator terminated the plan

In 2004 Raintree faced some bad luck when the “Terminator” bulldozered over their US ambitions. Raintree was about to have huge stake in the medicin system of California, after winning the procurement for building medicin insurance software that would cover 27 Californian counties. But Arnold Schwarzenegger acceded to become the Governor and conducted a sharp cutback in costs. As for result, Raintree’s mega deal was flushed down the toilet. “One political decision crossed out everything,” Udachny remembers.

Tigerprises.com TigerBriefs: Estonian start-up iComTV has launched it’s next Out-Of-Home (OOH) Media solution – iN-Store TV.

iN-Store TV channel is available in Swedbank offices across Estonia. Swedbank clients are entertained with specially created silent short movies, information and advertising clips. iComTV has provided the technical solution and manages the network and content updates.

Marco Rüütel, the Founder of iCom TV says that the widespread consumer use of digital video and photography has created a false impression that in-store TV could be easily created by regular office personnel. In reality making the right and cost effective choices regarding technical platform and video production requires plenty of professional expertise and experience. That’s the basis of iComTV products and services. “We don’t expect the client to invest into in-house know-how about OOH media and video, that really isn’t their main line of business,” he says.

Read more about iCom TV from this TigerPrises.com post.

BBN: Morningstar, Inc. aprovider of independent investment research, today launched a new Web site to bring free investment funddata and analysis to investors in Estonia, the company announced.

The new Web site, available at www.morningstarestonia.com, offers investors an unparalleled resource for data and analysis on more than 900 open-ended investment funds domiciled or
available for sale in Estonia. The site also includes access to quantitative and qualitative fund ratings assigned by a team of experienced Morningstar fund analysts, and a number of free online tools to make the searching and screening of funds for data and ratings easy and efficient.

“Our continued goal is to provide investors with the data and analysis they need to make betterinformed investment decisions,” said Ketil Myhrvold, chief executive officer for Morningstar Norway. “Our dynamic fund data, coupled with detailed funds analysis from Morningstar teams worldwide, deliver a real advantage to Estonian investors as they tackle their investment decisions. We trust investors will find the new site useful, and we invite their feedback at any time.”

Tigerprises.com: Last week I talk to the founders of Smartdust Solutions - an Estonian technology company that specializes in wireless sensor networks.

Jaanus Tamm, Jürgo Preden and Tauri Tuubel founded the company in 2006 and have worked the it up from a startup to a stabile business.

"Smart dust motes" (one is pictured above) are the building blocks of a wireless sensor network - a network of small devices that can communicate with each other through wireless medium and that may have one or more sensors for measuring physical phenomenon.

These can include temperature, humidity, pressure or movement. With a network of such units you can measure processes in a factory, measure road conditions, build burglar alarms for large areas. The possible list of applications is long.

Growing business

They say their business is growing. Seven engineers employed today and are looking for more. So if you are an embedded systems engineer looking for a job then they are hiring!

The company has built a number of solutions and has many customers. The most interesting one is probably the Estonian Border Guard with whom they are building a border monitoring system.

Until now Smartdust has concentrated on developing, building and installing customer specific solutions. This involves both hardware integration and software development. Smardust Solutions is developing their own networking platform - a loosely synchronized sensor network superior to what the competition can offer.

No big "IBM"s

This would pave the way for a breakthrough in the whole industry as today the industry can be best described to be like the computer industry in the 70s - not standardized, a lot of hardware and software is in the experimental phase and there are no big "IBM-s" offering "smartdust in a box". So a standardized turnkey solution would be an improvement like an Ethernet network or a standardized PC in the beginning of 80-s.

One of the most challenging problems to work on in the smartdust industry is the energy efficiency of the network units - the motes. As a future networks can consists of tens, hundreds or even thousands of units that cover a big area then changing their batteries is not something you want to do on daily basis.

Some experience to share

SmartDust guys are giving us a piece of advice.

If you plan to develop a technology product then do get experience with real-life solutions. Building real-world customer specific solutions and getting the experience is a must before you are able to make products that will be useful for the end-customers and that actually also work. So it is wise to start as a project based business, gain experience from customer needs and address the technical problems before beginning to develop your own product.

Smartdust has a principle of talking AFTER they have accomplished something.  This is actually quite unusual in the technology sector and might be sometimes even boring for the general public, but makes a reliable image for the customers.

On the other hand beware that most technology and IT companies of the world do not follow this principle and advertise their products that are still in the testing phase. So if you plan to use cutting edge technology don't believe the media, but rather test it thoroughly.

And lastly - to be successful you have to work hard and learn a lot.

Märt Ridala is a new Author in TigerPrises.com

Arctic Startup: Edicy, the Estonian startup that enables people to create their own websites without knowing any technical issues affiliated with website design. I first met Tõnu Runnel in Le Web Paris last year and interviewed them regarding the product. He was also pitching their company in the startup track among other European startups.

At the end of July, Edicy turned one years old. Back in December in the decent weather of Paris, I was somewhat doubtful if the world needed another homepage company. After all, there are a lot of them. I’m glad to say that since then they have grown immensely, globally and now celebrate their birthday with the 85 000 sites that have been created with their service. They have a map tool showing where the 50 recent sites have been created from and it confirms that they are global. Interestingly enough there are no new sites from North nor South America.

Since December, Edicy has also added some ways of cashing in on the service. They have added a pro plan, where you can get your own domain name (as opposed to one of their default ones). For this you have to pay anywhere fro 6€ to 10€ a month depending on the length of the contract. According to Tõnu in one of his blog posts, more and more people are signing up for the paid plan. What I’d like to see in the commercial version is some other advantages as well. Perhaps some more designs or simple e-commerce possibilities. Through these I’d believe more people would sign-up for the paid version, furthermore Edicy could partner with an e-commerce solution provider to tackle this.

The Baltic Course: The minister of economic affairs and communications of Estonia Juhan Parts signed the regulation that will increase the amount paid as subsidies for start-up and growing enterprises, expending the range of activities to be supported and expenses eligible for aid and will decrease the amount of own financing required, writes Postimees Online/LETA.

The maximum amount of start-up subsidies will grow from 50,000 kroons to 100,000 kroons and the rate of required own financing will fall from 25% to 20%.

The maximum amount of expansion subsidies will be 500,000 kroons instead of 200,000 kroons and the own financing rate fall to 35% from 50%.

For the first time, enterprises registered in Tallinn can also apply for start-up and development subsidies.

The change in the regulation was caused by the changed economic environment where measures that have been developed earlier for supporting business needed to be simplified and supplemented to improve the access of entrepreneurs to additional capital.

The budget planned for the measure during the budgetary perspective of 2007-2013 is 117.6 million kroons. The changes will make it easier to faster direct EU structural funds' resources to the business sector.