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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".