Regional service scheme: New tools in economic development

Background

The Jyväskylä region is a fast developing region, one of the growth centres in Finland. However, Jyväskylä is facing a new type of structural change. Within a short time frame a significant number of highly educated people in management, research and development, as well as production and process management, have lost their jobs and become available on the open job markets as a number of multinational companies transferred their operations in production and product development to other destinations. In addition to this, the number of new university graduates in the region is high. These people are also looking for jobs. There are also a number of highly educated people under the threat of redundancy. All this raises new challenges for public policy and economic development. Many of the highly educated people look for jobs in other regions, thus causing a brain drain for the Jyväskylä region. We need highly educated people to provide a knowledge base for local research and education institutions, development organizations and the economic life of the region. To meet these challenges, economic development practitioners in the region are implementing a new regional service scheme.

Operational scheme

The scheme began in 2009 when Nokia shut down its Jyväskylä unit. More than 300 Nokia workers were made redundant. The closure also had a considerable impact on the operations of subcontracting companies in the region’s information technology sector. The operational scheme was prepared to achieve the structural change in the Jyväskylä region’s economy. The aim of the scheme was, within a short period of time, to find new work opportunities within the region, and to support a new business formation to help the highly skilled and educated people with experience in technology, who were facing unemployment. To support this objective educational opportunities were created to improve commercial and technical skills, as well as improving access to postgraduate courses.

There was a need for new tools and approaches to achieve the objectives of the scheme effectively. However, it was very quickly apparent that there was no unifying direction of what was happening, in terms of both leadership and management, despite there being sufficient resources available to do the work. A common overview of services was missing. As often occurs in regional economic development schemes, especially those which are set up quickly in response to a crisis, the ownership of the process in which there were a number of organizations working was unclear. There were national organizations such as the employment service, as well as regional players with their own agendas. It was necessary for the regional development agency, Jykes, to take the initiative and coordinate the whole scheme. This proved to be a successful intervention, creating a shared vision and well-defined communication supporting it.

Our experience indicates that the first step in developing a successful regional service scheme is to have all the organizations involved committed to the common development processes. Resources have to be adequate and focused to achieve the objectives in the best possible way. Effective interaction between enterprises and development organizations must be ensured in all circumstances so that resources are put to the best possible use. In our case, the roles, responsibilities and main tasks of the regional actors to implement the service scheme were clearly defined. It was important to identify the responsible unit and person for each part of the scheme—strategic development, management of resources and finding new resources for the service scheme in cooperation with vital services providers —and to ensure that the responsibility was actually taken. This meant redirecting the existing operations and the tasks of the partners. It was crucial to recognize that the requirements of effective communication between the partners were fully met.

From the very beginning three main principles were established in the service scheme: market orientation, customer orientation and integrated solutions from existing services and support mechanisms. All initiatives were based on the demands of clients and they were developed in close cooperation with businesses in the region. The main activities now are developing new businesses, enhancing business growth, as well as attracting new domestic and foreign investments with the help of regional and business marketing. Joint service production is one of the key elements of the service scheme.

Financing of innovations

The provision of adequate finance is crucial in driving our economic development activities in the scheme. Funds from the European Union’s (EU) Regional Competitiveness and Employment objective programme under the EU’s regional funding régime make up the largest part of Jyväskylä’s allocation from the EU. The EU structural funds in Central Finland are chiefly used to promote regional innovation. Of European Regional Development Funds (ERDF) 85 percent is invested in supporting innovations either in commercial firms or research institutes and universities in Central Finland. Areas of innovation activity include the development of test and research laboratories. European Social Fund (ESF) financing is used to strengthen the competencies of employees in companies and to support schemes in the region to boost employment and employability. In addition, our Rural Development Programme makes it possible to support interventions in the field of bioenergy in the region (Eura2007.fi, 2011).

The regional service scheme also includes activities to encourage the organizations and companies to use other EU financial instruments. To help here a special project office, Projectia, was established in Jyväskylä in 2010. Projectia Professionals offers professional consulting in international project work as well as a wide and first-rate network of expertise to organizations and companies in the region. Projectia is owned jointly by the regional development agency, the city administration and universities in the region.

New solutions and tools

When the circumstances are challenging and there is a crisis, there is always a possibility to build something totally new. Protomo is one such development, operated by the regional development agency. It is a business incubator offering new, revolutionary solutions for new businesses, concentrating on bringing new products and services to the market. It is connecting companies and highly educated, talented people and helping them to work together. Its offerings are planned to work quickly and easily across a wide range of disciplines. It is part of the strategy to help highly qualified and skilled people become economically active through entrepreneurship. It is very easy for clients to access Protomo’s services with its advisers covering both technical issues and financing. Thus for our client companies Protomo offers the expertise and support to further develop and commercialize their innovations. There may also be spin-off opportunities through linking an existing company with the original idea and the products developed within Protomo.

Developing business internationally is often very hard for many Finnish small and medium-sized companies. One of the benefits of Protomo is that it accelerates the internationalization of companies by providing support services and international networks. Protomo also acts as a Soft Landing Centrefor foreign direct investments to the region. The results of the Protomo operation are encouraging. Since it was set up in September 2009, and up to March 2011, more than 200 business ideas have been identified for further commercial development. Out of more than 80 projects taken on, 32new companies have already been established (Protomo.fi, 2011).

Forestry-based industries have long been an important and traditional part of the regional economy. This industry is now facing the effects of globalization. In the worldwide recession in 2008 Central Finland lost almost one-third of its export income, and most of this can be attributed to forestry and the associated machinery. Responding to this a new cluster programme was initiated in 2011 (Htclusters.com, 2011).

The cluster concept has been used as a tool in the regional economic development in Jyväskylä region for three years. There was a need to improve the efficiency of cluster initiatives in the region and a new cluster programme—Human Tech Centre Finland—was launched in June 2011. The added value through the cluster programme can be achieved by using the expertise in product and service development available through the national Centre of Expertise Programme, and combining this with the know-how of business operations in the cluster itself in the fields of machinery, construction and bioenergy. The main value is to apply the resources and know-how in new technologies, such as nanotechnology and information technology, to the needs and opportunities in traditional industries.

A region should be active in finding and introducing new business opportunities for economic development. In the Finnish forestry industry there are many such possibilities. Cross-sectional solutions in bioenergy and cleantech provide a new template for product development in the forestry industry. This potential is now used in the Jyväskylä region in a pilot project where 150 business concepts have been made available to companies to be developed further and for making businesses out of them. This action is enabled by Finnish Forestcluster Ltd and the Centre of Expertise Programme in the Jyväskylä region. By combining the local resources in economic development with the expertise in Forestcluster Ltd which is one of Finland's six Strategic Centres for science, technology and innovation, a joint project is now getting started. The local Protomo idea laboratory and incubator is again a forum for this shared effort (Forestcluster Ltd, 2011).

The knowledge base

The knowledge base is a vital part of the regional service scheme. It is essential to link research institutes and universities to the businesses in the region. This linkage is coordinated by the regional development agency. There are new recruiting models to be used. Focused training for expertise needed in the businesses is provided by the educational institutes. There are new job opportunities in applied research as well as in education and development. For individuals, high quality, competent advisory services for setting up a business are provided to help ensure good opportunities for potential entrepreneurs. On the education side a joint effort to start postgraduate level education in engineering at the university was one of the measures to strengthen the technical competency of the region. This programme started successfully in 2010 (Yliopistoallianssi, 2011).

The technology transfer staff at the University of Jyväskylä found that there was a need to more effectively exploit university-based research results and bring them into new products and services. The goal was to increase the number of publicized research and development results, and convince the staff of the importance and commercial potential of technology transfer. A big activation campaign was launched in November 2008 to meet the staff in their own environment at the university. The key partners in the project were the technology transfer staff of the university, the pre-incubator capability in Protomo, and small innovative knowledge-intensive service companies in the region. The results of this project were very promising. In 18 months, out of 130 proposed ideas, 75 cases were in the commercialization process and 8 were licensed during the project. This shows the potential for activation at universities in order to bring research results to the market (Reitzer and Teräväinen, 2011).

Conclusion

The cornerstones of regional economic life in the Jyväskylä region are based on good cooperation between municipalities, businesses and economic developers. Focusing on the regional key sectors of business thatare supported by strong educational unitsprovides a solid foundation for economicdevelopment. In addition the effective linking of partners in regional networks is needed to ensure success of the operations. The regional development company is the main agent for connecting partners in the region. As a result a stronger and more vibrant region is being developed in the aftermath of the recession.