The European Commission recently released its 2016 edition of the Innovation Scoreboard that looked at countries' performance in innovation. Nordic countries are famous for supporting innovation and unsurprisingly, they have topped the ratings again, this year. Sweden is officially number one in Europe, with Denmark and Finland following in second and third. The strongest signal that Nordic countries care about innovation is that governments invest big in the sector, support research and development of new technologies, products and services, and impose policies to accelerate further growth.
It’s not only businesses and startups benefiting from innovation, it is seen as a public good that can support the economy and wellbeing of the nation. Once one country succeeds in producing new products and contributes to the technological progress, other countries tend to follow, but often not effectively enough. For Nordic countries, innovation remains of paramount importance as a support for the economy and one of the pillars of the region’s global influence.
Strong performance in innovation also depends on how much support a country provides for startups. On the global stage, Silicon Valley is undoubtedly the leader, but Sweden is the second most prolific tech-hub in the world on a per-capita basis. The country is also known as a 'unicorn factory', having one of the highest numbers of billion dollar startups in the world. Examples include Skype, Spotify, Minecraft and King - all achieved success globally. Their success is shaped by the governments' willingness to support innovation and their effective infrastructure planning that focuses on education, human, social and corporate aspects. According the Atomico, an international technology investment firm, Sweden is producing $6.3 billion companies per million capitas that also contribute to country’s GDP, compared to Silicon Valley's $8.1 billion.
The Startup Europe Partnership's SEP Monitor analyzed ICT scale up companies in the Nordic region and found that the 'scale up ecosystem' in the sector is very young. 60% of the scale up companies founded after 2010, though, they have already produced an average of $15 million each, including the capital raised through VC and the stock market. Sectors that shape innovation in Northern Europe include: gaming, digital media (in particular, music streaming), Fintech, and software, being the most 'crowded' sector, according to the SEP Monitor. The Nordic environment also provides the right conditions for successful M&A deals, with 40% performed by US companies, but surprisingly, another 40% were performed by local companies, indicating that aside from benefiting financially, Nordic countries are interested in retaining companies within its geographical area.
There is no universal formula for success, but countries that struggle to achieve growth through innovation, should reconsider their strategy towards essential policies. They should review their gross expenditure on R&D as a percentage of GDP and follow closely the number of patent applications submitted by residents, to track their innovation performance. Supporting the education sector is of paramount importance, in particular, the fields of science and technology. And finally, thinking of innovation as a culture, rather than a method of driving revenue, can significantly ease those processes.