This document summarizes Dr. Kari Kankaala's presentation on structural transformation through cluster development policies in Tampere, Finland. 1) Tampere transformed from a manufacturing-based economy in the 1970s-1980s to a knowledge-based cluster focused on ICT and intelligent machinery due to abrupt changes from globalization and automation, as well as long-term planning around university research and industry collaboration. 2) Early investments in university research and the development of ICT clusters created competitive advantages that attracted Nokia's largest global R&D site to Tampere, largely by chance due to local expertise in signal processing. 3) Current paradigms around individual needs, ethics-driven

1. Technopolicy Network
Wageningen, Sept 23-25, 2009
By force, by plan, by luck
Random thoughts on structural transformation through cluster
development policies
Dr. Kari Kankaala, Director, Economic and Urban Development, City of Tampere, Finland

2. Content
2.Scaling factors
3.By force: abrupt structural changes
4.By plan: (at least in retrospect)
5.By luck: certain aspects of ICT
6.Some results
7.Paradigm lost?
2

3. Some scaling factors
• Region: 350 000 people
• GDP per capita 35 000€
• R&D investments per capita 2 100€ or 6% of GDP
• Most attractive city this decade in Finland (QoL)
• Economic history:
– Manufacturing (textiles, shoes, locomotives, metal…) prevailed until 1980’s
– Early on ICT development, since mid 1960’s
– Knowledge based cluster development strategy since early 1990’s, focus on ICT
and intelligent machinery
• Two universities, two polytechnics,
– 35 000 students

4. Manufacturing downturn 1970’s-80’s
• Increasing automation
• Increasing labor costs
• Increasing cost of energy
• Early globalization:
– Growth of imports
– Relocation of textile industry
• Collapse of Soviet trade

5. Labor force in Tampere 1880 – 2000
70000
Forestry and
agriculture
60000
Secondary
50000 production
Services
40000
30000
20000
10000
0
1880
1890
1900
1920
1950
1960
1970
1980
1990
2000
1910
1930
1940

6. A Drastic Downfall
Number of employees in the largest
industrial companies in Tampere 1964-1997
Aaltonen
25000
Finlayson
20000
Suomen Trikoo/
Asko-konserni
Tamfelt
15000
Metsä-Serla
10000 Rauma-konserni/
Nordberg-Lokomo
Sisu-konserni
5000
Valmet/ Valmet-
konserni
Tampella/Tamrock
0
1964 1970 1975 1981 1985 1989 1993 1995 1996 1997
Source: Olli Niemi, Hermia

7. Small country strategy
● Remote and scarcely populated
● Small domestic market
● Absolute volume of education & research limited
● From economies of scale to economies of scope
● Focus and synergy
● Active positioning
● Networking
● Internationalization
● Interfaces
Focus, select

8. Tampere strategy framework:
Drivers for Local Economic Development
Local Development
• Economy • Population
• Labour • Social welfare
Capacities Drivers Enablers
• Skills • Entrepreneurship • Governance
• Social • Innovation • Infrastructure &
capital • Learning environment
Hard policy instruments Soft policy instruments
• Incentives (e.g. finance) • Connecting actors
• Norms and regulations • Setting collective visions
• Information • Facilitating learning

9. Early investments in knowledge
• No universities in the 1950’s
• Intensive regional effort to get national
government to establish two
• Universities’ foci: one in social innovations, the
other on technological innovations and close
collaboration with industry
• First professorship in ICT in 1965
• Regions commitment (industry, local
governments) to universities in the long term has
created the competitive advantage that the
region has today locally and internationally

10. Ingredients for knowledge based
development in Tampere
• Strengthening the research and educational base
in the 70’s and 80’s
• Emergence of ICT industry in the early 80’s
• Enhancement of university – industry
collaboration since late 70’s through public
funding (now termed as triple helix)
• Enhancement of university tech transfer to
industry and public sector
– Establishment of VTT units in Tampere in the 70’s
– Hermia and Finn-Medi Science Parks (with content
developers!) in the 90’s

11. Small city solutions, I
● Our strategy was to build on the two strengths that
we had..
● mechanical engineering and automation
● ICT and wireless technologies
●… and to develop two emerging areas into growth
sectors …
● health care technology and certain life science areas
● media and content industry
●.. and further enhance the development of these four
also through
● knowledge intensive business services, tourism and
conference industry and other supporting activities

12. Small city solutions, II
Offering innovative environments in
two major science parks
– Hermia and Finn-Medi
Running major development
programmes
– Since early 1990’s
– City investments per program 1M€/a
– “ROI” 1:15 – 1:40 depending on the
program
– Centre of Expertise (1994- ), eTampere
(2000-2005), BioneXt (2003-2010) ,
Creative Tampere (2006-2011)

13. A well kept secret
• Nokia corporation has had its largest global R&D
site – of all possible locations - in Tampere
• Employing some 4000 engineers in R&D
• Recently surpassed by Bangalore India
• The lucky part
• University level ICT research since 1960’s
• First professorship in computer science 1965
• Systematic research on signal processing since late
1970’s
• Chance, luck: DSP just happened to be the basic
technology for mobile phones
• A handful of individuals who made it happen

14. Some ICT milestones achieved in Tampere
NOKIA MOBILE PHONES, TAMPERE , FIRST IN THE WORLD
2003 First mobile game deck using Series 60 interface
(N-Gage)
2001 First music phone with qwerty keyboard (Nokia
5510)
First GSM imaging phone (Nokia 7650)
1999 Nokia C110/C111 Wireless
LAN Card
1998 First second generation Communicator
(Nokia 9110)
1997 First GSM Card Phone 1999 WAP Server
First Data Suite 1999 Wireless LAN
2000 Wireless Mine (Tamrock)
1996 First Communicator
(Nokia 9000)
1994 First GSM Data Card (GSM 900)
1993 First analog data card in 1993
Source: J.-T. Eriksson, TUT 2003

16. Population growth and R&D investments in Turku and
Tampere regions – identical until early 1990’s
Source: Statistics Finland

17. But paradigms are shifting …
• Individual: customer, user, parent, citizen …
• Value driven economy: ethics vs. earnings
• Globalization: products vs. services
• Demogaphics: ageing, work force
• Services: where is the service industry lobby
• Universities: no longer a monopoly on
knowledge creation
… or are they?

18. • new firms
Plug'n'Play
• growth firms
Bus Dev • jobs
Protomo The Hub
IDEAS ENHANCED
CONCEPTS EXPERIENCES
Companies Citizens
SUGGESTIONS
Industries Communities
IDEAS
Trade PROTOS DEMOS NEEDS
Public
sector Demola Customo
The New Factory transforms needs and ideas
into prototypes and seeds for business both

19. A future
The best public and
envrionment for
private services for
businesses
(services, open solutions …)
citizens
ATTRACTING ATTRACTING
COMPANIES INDIVIDUALS
Business models Good services
Customer input Effective services
User experiences Private and public solutions
New Factory
New knowledge, innovation, business models

20. Thank you.
Contact info:
kari.kankaala
Tampere, FI
Our world is getting smaller,
our challenges are not