Mikko Kosonen, Sitra: No more hemming and hawing

Net 2/2015,  2015-11-12

Now is the time to make decisions if we want to make the best of digital technology. The rewards will be plentiful, says president Mikko Kosonen of Sitra: better health care at lower cost or economic growth without raw materials running out.

If we know how to put digital technology to proper use, many of the societal problems will be solved and economy will see an upturn. If we fail, what we will face is the mere downside of digitalization, and the disappearance of work and professions.

MikkoKosonen, Sitra

”Digital technology allows the automation and robotization of practically anything. Factory work was automated a long time ago. Now the same is happening at an immense speed with office work. Many middle-class jobs and professions are disappearing,” Kosonen points out.

”The professionals of digital technology and new lines of business will have jobs but will others? The increasing polarization in the labor market is a genuine threat, because everyone needs to have a role in the society.”

Despite the bleak scenarios, Kosonen says he’s more hopeful than concerned. ”If we invest now, we’ll have five hard years ahead, and the results will be reaped later. But if we lose this moment, we are in for twenty poor years.” 

Kosonen is trying to get across the message that we must no longer try to patch the old. ”We must together embark on creating something entirely new. We need to put all we’ve got into building the future.”

Old ways out the window

Kosonen emphasizes that digital transformation must never be approached as solely a technological phenomenon. It’s a much bigger question: major transformations of business, people’s behavior and the entire society.

Until this day the world has been filled with mutual inter-dependencies that have been beyond our control. For example, economic growth has always been followed by increased consumption of non-renewable resources, and the aging of population by the expansion of health care expenditure.

”Now we have a real opportunity to dismantle these dependencies,” Kosonen says.

Let’s begin with economic growth.

”Economic growth doesn’t necessarily have to be linked with the consumption of resources, because digital technology allows an entirely new, more sustainable economic paradigm,” Kosonen says.

”The aim is no longer for people to consume as much as possible but for them to have access to the services they need. Industrial added value no longer consists of the sales of new products. Instead, physical products serve as platforms for various digital services. ”

Next up, health care.

The Finnish population is aging second-fastest in the world, right after Japan. ”Even if IT was fully deployed in the production end of the health care sector, and the jungle of systems tidied up, we wouldn’t be able to solve the problem of aging. People need to proactively and independently start taking care of their own health using a variety of digital sensors.”

The world’s best health care statistics have traditionally been produced in Finland. In Kosonen’s opinion, we have use for them.

”We have health records from a long period of time but this data is buried in various databases. When the statistical data and the data gathered by people themselves is combined, we have a huge mass of information to utilize in application development. The more there is data the more diversified services can be created.”

When ICT expertise, medical knowledge and the world’s best statistics are combined, people get better care and thereby will arise a massive business opportunity. ”Finland can become the trailblazer market for health care. Our domestic market will serve as a reference in solving the problem of aging, which every country in the world will face.”

30 + 20 billion

Development cannot be triggered without public investments. Where could this money be taken from?

”Using the same amount of money as before but investing it differently,” says Kosonen.

This year, Finland will be using over 30 billion euros for a variety of public acquisitions.

”The majority of this sum will be allocated to specific old technologies. Going forward, the strategic public procurement expertise should be improved, and we should make sure that a much larger portion of the money will be spent in innovative projects. We should invite tenders for different solutions to find the one that will produce the desired effect. Meanwhile however, we must measure the operation to make sure that the desired transformation has actually taken place.”

20 billion euros is annually spent in health care. Some of this sum could also be spent in finding innovative solutions.

”By aiming to do things more smartly and proactively than before, we could improve the input-output relationship of that cost.”

In fact, Kosonen suggests that the social and health care reform also be approached from the perspective of digital transformation.”Then it would no longer be just expenditure, but a massive opportunity to solve the unemployment and growth problem.”

Interact and experiment

To make the best out of digital transformation, besides financing, we need a changed attitude and new modes of operation that will unite the public and private resources.

”One of our major problems is that we are the captives of the ways of the industrial era. We have confined ourselves to self-defending silos that have created their own structures to perform their task. Businesses have focused on producing a certain product. They are not seeing that the world has changed, and even if they did, they don’t want to change because it’s frightening,” Kosonen says.

What’s the solution? Kosonen proposes a three-stage model that consists of interaction, experimenting, and rolling out.

”To be able to get rid of the old rigid ideas, we need to bring the people of different fields together. New ideas spring exactly out of this sort of interaction.”

Once new ideas have been developed, they need to be experimented as swiftly as possible.

”Drawing up plans and strategies don’t take you very far in today’s world. After having established that an idea might work, it needs to be tested. And when testing produces an effective solution, it needs to be rolled out to the entire society. The economies of scale yield the desired benefits.”

Courage to politicians

Since, no matter what we do, the digitalization process will proceed rapidly, the innovation and industry policies should be reformed without delay.

”I understand that politicians are under immense pressure, as decisions need to be made between short-term results and long-term investments. In the worst case scenario, the innovation investments will be realized as regional and employment policy where the old structures will be retained and any creative destruction curbed,” Kosonen says.

”Competition has moved from enterprises to ecosystems. The public sector, research institutions and businesses must be brought to jointly create new concepts that will then be tested and spread out. More and more support is needed for various ecosystem projects. They are the means of building the future.”

Text Markku Rimpiläinen
Photos Miika Kainu
Translation Päivi Vuoriaro

 Mikko Kosonen, SitraMikko Kosonen

  • Born in Ontario, Canada in 1957
  • President of Sitra since 2008
  • Doctor of Science in Economics
  • Previous position at Nokia for more than 20 years as CSO and CIO.
  • Published numerous books and articles on strategic management.

Circular economy offers new business models

Sitra’s Circular economy program has brought forth the Smart & Clean project of Helsinki, Espoo and Vantaa, which comprises intelligent traffic, bioeconomics and distributed energy solutions. ”Businesses are participating because they get to showcase the possibilities of their technologies, get a new reference, and enter the export market,” Mikko Kosonen says.

More Information
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Published in the Net Magazine 2/2015,  2015-11-12

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