Reference no: EM132345728

NOKIA TO GIVE AWAY IDEAS AND INNOVATIONS

Nokia has decided to give away some of its unused ideas and innovations in a bid to see whether other companies can make worthwhile businesses out of them. The Finnish telecommunications giant will give away innovations in areas such asenvironmental and energy-related solutions, location-based services and advertising, near-?eld communication, mobile security, healthcare, and future Internet services, among others.

Nokia will work with Tekes, the government's innovation funding agency; Technopolis, a national chain of science parks; and several Finnish cities to comb through "thousands" of ideas to extract 100 of the most promising. The team, known as the Nokia Technopolis Innovation Mill, will then try to match each idea to a company that it believes could make good use of it.

Funding of up to $11.11 million for the three-year scheme, including up to $6.27 million of public money, will come from Tekes, six municipalities that each host at least one Technopolis facility, and the companies themselves. Technopolis will coordinate the initiative and provide business development services.

In part, the move is a response to the 2008-2009 ?nancial crisis, which has seen Nokia and other high-technology companies in Finland shed jobs. "Speeding up the economy calls for a new degree of openness," said Esko Aho, executive vice president, corporate relations and responsibility at Nokia. "We hope that the Nokia Technopolis Innovation Mill sets an example that companies across other sectors will follow. The current economic climate is just right for a critical evaluation of intellectual property portfolios and the release of innovations that are more suitable for others to exploit," Aho added.

Keith Silverang, CEO of Technopolis, said: "We have 1,200 customers as tenants on one or more of our campuses in Finland and St.Petersburg, Russia, as well 200 virtual clients for our business development services. We have enough critical mass in our existing client base to generate great cases but this is an open program so any company can apply, with one catch: because the program is funded by taxpayers and by six Finnish municipalities they'll want a domestic element. International organizations would have to engage through a subsidiary here that does product development."

What's in it for Nokia? There are two potential paybacks for the company. The ?rst comes if Nokia can get some of its unused ideas taken up externally, so that someone else makes a return. Because the ideas were developed within the context of Nokia's business, if third parties can make them work commercially then the company may be able to make money by providing supporting products or services. The second is the public relations value for the company at a challenging time for the global economy.

Nokia is also an extremely important company in the Finnish economy, so if it can release ideas that others can capitalize upon, it helps stimulate the Finnish economy. MarttiafHeurlin, deputy director general of Tekes, the funding agency, emphasized Nokia's place in Finland's innovation ecosystem: "Nokia's role in Finland is really important. One-third of innovation investment in Finland comes from Nokia, one-third from the public sector and one-third from other companies," he said. According to Heurlin, the ?nal evaluation of an idea's suitability for funding will remain with Tekes, which is building a special team of experts to do this evaluation work, drawing on Tekes' pool of 200 experts who together cover a wide range of knowledge areas. Four positive funding decisions have already been done. Information about the deals will be released by Technopolis in the near future.

According to Silverang, Nokia will give away its IP but maintain a parallel right to use it. He agrees that the program has excellent PR value, but feels there is more to it than that. "What they get out of it is a ‘good citizenship' coin, because they're downsizing at the moment. They're softening the blow by saying that despite reducing its workforce in one subsection of the economy, they're trying to increase it in another. It's very smart."Silverang speculated that Nokia may also be using the Innovation Mill process to try and identify a "second wave" of service providers and quali?ed subcontractors, in keeping with its strategy to diversify from devices into services, who will be much more service-oriented than today's suppliers.

Silverang sees the Innovation Mill as the beginning of something bigger: a reshaping of Finland's innovation landscape. "What we're after is to boost the Finnish innovation system using primarily private rather than public innovation entities," he said. "Our role as a chain of science parks in Finland, Russia and soon other countries puts us in a unique position to initiate this new kind of innovation system. The current innovation system is based heavily on creating research-based intellectual property rights and then using science parks to move them into commercialization. By linking our parks in Finland and abroad to each other and a global network of quali?ed risk ?nanciers, service providers and reference customers I believe we can accelerate the innovation process by using our anchor companies, SMEs and service providers to spin out and commercialize business ideas. You get much more rapid growth with this approach than by taking a team out of a university and trying to turn them into serial entrepreneurs. "With a virtual network of ?nanciers, distribution channels and experts we can source innovation wherever [we ?nd it] and as Technopolis grows we can bring new cases in from anywhere in the world. Our dream is to become a chain of global knowledge communities."

Silverang sees the Innovation Mill approach as something that could becopied and pasted. "We're going to replicate this right now. We are talking to other anchor companies and clusters about copying this, companies that are mature enough to be in?uential within their own niches," he said. MarttiafHeurlin agrees: "If it works well I see no problem in expanding this approach to other companies or even groups of companies."

Questions:

1. Do a SWOT analysis of the current situation from the Nokia perspective

2. Nokia uses the Innovation Mill to unite it with complementary resources it does not possess and to achieve socially responsible objectives. Which type of device (from Ch. 6) is the Innovation Mill?

a. Mergers & acquisitions

b. Vertical integration

c. Strategic alliance

3. What is the valuable "combination of resources" here sought by Nokia? In other words, who are the multiple stakeholders involved, what resources does each contribute, and how will this combination of resources add value to Nokia's unused innovations?

4. Describe how Nokia's strategy might neutralize its weaknesses and, at the same time, addresses both product diversification (profits) and socially-responsible (people) objectives.