In brief

Founded in 2004 by merging the Norwegian Industrial and Regional Development Fund, the Norwegian Tourist Board, the Norwegian Trade Council and the Government Consultative Office for Inventors, Innovation Norway was created by mandate of the Norwegian Parliament with the mission of leading industrial development and promoting innovation in the country. In 2014 alone, Innovation Norway allocated more than NOK2.8 billion (USD0.3 billion) in funding to business development activities across the nation.

The challenge

Norway has long seen the need for a state institution that promotes and encourages industry. "An 'industry bank' (Den Norske Industribank) was established in 1936 for the purpose of stimulating the development of Norwegian industry by extending loans and credit to industrial enterprises, hydroelectric power companies and hotels. Serving those parts of the country that were not adequately covered by private banks was seen as particularly important."[1] It then gained in influence as the country needed increasing investment to reconstruct and increase employment after World War II.

During the 1960s and 1970s, three public funding schemes were started with the aim of developing and restructuring the Norwegian manufacturing, travel and tourism industries, setting up "an action fund ('Tiltaksfondet'), a development fund ('Utviklingsfondet') and a restructuring fund ('Omstillingsfondet'). These funds were merged into an industrial fund ('Industrifondet') in 1979."[2]

Later, in the 90s, Industribanken, Industrifondet and Distriktenes utbyggingsfond and Statens Landbruksbank, Statens Fiskarbank (the Norwegian fishermen's bank) and the county authorities' departments for trade and industry were merged to form the Norwegian Industrial and Regional Development Fund (SND). By 2003, there were several entities working in parallel towards the same purpose, making it difficult to coordinate efforts efficiently. The Norwegian government realised that there was a need for a single institution to lead the push for progress in the country from a focus on agriculture and fisheries towards industry and tourism.

The initiative

Innovation Norway was founded in 2004 through a merger of the country's Industrial and Regional Development Fund, the Norwegian Tourist Board, the Norwegian Trade Council and the Government Consultative Office for Inventors. With this, it aimed to be a 'single door' for businesses to get assistance and support, and currently it is described as "the Norwegian Government's most important instrument for innovation and development of Norwegian enterprises and industry".[3]

Its programmes and services are aimed at encouraging business development in the country, as well as supporting entrepreneurs and innovation. Its main activities consist of providing Norwegian enterprises access to a business support system along with sources of financing:

  • Innovation Norway provides competence, advisory services, promotional services and network services.
  • It is also concerned with marketing Norway as a tourist destination.
  • It is also the Norwegian government's official trade representative abroad, aiming to assist Norwegian businesses in growing and in finding new markets.

The public impact

Through the Innovation Norway Development Bank, the government invests heavily in the development of local businesses at home and abroad – and they have found a clear improvement in performance and growth of companies that have worked with the organisation. "Through Innovation Norway, the Storting (Parliament) and county councils allocated more than NOK2.8 billion (USD 0.3 billion) in funding to 'value-adding' business development activities all over Norway in 2014. The funds made available by the Storting and the county authorities, in combination with loan schemes, resulted in a total of more than NOK6 billion (USD0.7 billion) in business-related funding under the protection of Innovation Norway."[4]

The investment and support from Innovation Norway has had significant public impact:

  •  "Innovation Norway's support helped to trigger nearly twice that amount from business and industry. Nearly NOK 16 billion (USD1.9 billion) was invested in innovation activities in 2014, including the money from Innovation Norway.
  • "Enterprises that received support from Innovation Norway experienced 9.7 percentage points higher growth in turnover, 2.5 percentage points higher productivity growth and 0.3 percentage points higher return on capital compared with similar enterprises that did not receive such support.
  • "Startups that received support from Innovation Norway had 21% higher turnover in growth compared with enterprises that did not receive such support."[5]
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What did and didn't work

All cases in our Public Impact Observatory have been evaluated for performance against the elements of our Public Impact Fundamentals.

Legitimacy

Stakeholder Engagement Strong

Innovation Norway's strategy and monitoring combines the participation of a range of stakeholders, including state institutions, clients, associations, and internal staff. A Collaboration Forum has also been established to facilitate the communication between those running the operations and the ministries that act as clients. The Forum "is intended to facilitate the long-term strategic development of the company, among other things, by discussing overriding principles for the activities and the main content of the letters of assignment for the coming year. Innovation Norway receives annual letters of assignment from ministries, county authorities and county governors. Based on the national budget, the letters provide an overview of clients’ expectations and requirements of Innovation Norway’s activities. The letters also set out Innovation Norway’s allocation framework and strategic and operational guidelines relating to initiatives, programmes and services."[6]

Innovation Norway integrates strong principles of collaboration and social inclusion as part of its overall mission for innovation. Its CEO leads this discourse at public events and forums. In 2015, for example, the organisation invited different stakeholders from across Norway to support the ‘Dream Commitment’, "an open debate on how Norwegian industry can overcome challenges such as climate change and the post fossil fuel economy. The choice of applying crowdsourcing to the national innovation policy made by Anita Krohn-Traaseth, the new CEO of Innovation Norway, epitomises Norwegian ease with openness and equality."[7]

This initiative, and the strategy towards innovation that Norway is promoting, has been described as pioneering in the sense that "it sees welfare services not as costs but as fundamental investment for open innovation and growth. Innovation should not be an opportunity for the few only. It should be democratised and distributed so as to tackle the causes of growing inequality."[8]

Political Commitment Strong

Innovation Norway is owned by the state, and was established directly by mandate from the Norwegian Parliament. As such, "it is a government agency uniquely empowered to unleash entrepreneurship and cultivate a thriving culture of productive innovation".[9] It has been adapting and transforming its strategy, based on the priorities of the country's industry, but the commitment to development remains the core mission. "Although the policy instruments and needs have changed over the years, the overriding objective has remained the same throughout: to ensure that we are able, as a nation, to utilise all our resources, assets and ideas to generate growth and welfare throughout Norway."[10]

Public Confidence Good

There is no specific evidence of the degree of public support for Innovation Norway. However, their campaigns and support for business have helped encourage entrepreneurial activities throughout the country (see Strength of evidence below for its "triggering effect". "We have seen a positive growth of privately initiated entrepreneur communities in several parts of the country during the past two years. Such environments help to create enthusiasm and an entrepreneurial culture in which it is attractive to take chances and live out one's dream of creating something of one's own. Innovation Norway has a positive collaboration with these environments and has supported several of their initiatives."[11]

Policy

Clear Objectives Strong

The organisation has a clear role in supporting the country's industry, society and small businesses. "Innovation Norway's main purpose is to trigger business development that is profitable from both a commercial and a socioeconomic perspective, and to help different regions to realise their potential for business development. This goal is to be achieved through the sub-goals of more successful entrepreneurs, more enterprises capable of growth, and more innovative business clusters."[12]

In defining its mission, Innovation Norway emphasises the following key priority areas:

  • "Promoting Norway as an attractive tourist destination
  • "Promoting Norwegian enterprises
  • "Securing development in rural areas
  • "Enhancing innovation in Norwegian enterprises and industry
  • "Building competitive Norwegian enterprises at both domestic and international markets
  • "Transforming ideas into successful business cases
  • "Promote interaction between enterprises, knowledge communities and R&D institutions."[13]

Evidence Strong

The organisation has put in place a methodology for evaluating its impact on enterprises and their view of the value that Innovation Norway adds. These "effect indicators confirm customers' own responses to the questions of whether their financial performance has improved as a result of Innovation Norway's contribution and whether the collaboration with Innovation Norway was decisive for implementation ('triggering'). The proportion of customers who reply that Innovation Norway had a triggering effect has been consistently high and increased somewhat during the period 2002–2013."[14]

Innovation Norway uses continuous surveys and research in order to make informed decisions and improve its service to the industries and clients it supports. "In order for Innovation Norway to be a clear adviser to the authorities, the advice we give should be based on financial, economic and social analyses, and on analyses of our own data and experience gained through close contact with customers in all counties in Norway and in more than 30 countries worldwide."[15]

One piece of evidence that the approach is succeeding is the level of customer satisfaction communicated on feedback surveys. These are extended to customers worldwide in order to get an idea of their perception of the company and its value, not only for financial support but also for advisory services – nine out of ten claim to be satisfied with the services received from Innovation Norway's international offices.

Feasibility Good

Innovation Norway is an institution owned by the Norwegian government, and set up with an annual budget and established legal framework to ensure performance incentives are kept in line with national priorities.  “The company is organised as an enterprise established by special legislation, whose Board of Directors has an independent responsibility for its activities and the results achieved.  Innovation Norway receives allocations and assignments in yearly assignment letters from the Ministry of Trade, Industry and Fisheries, the Ministry of Local Government and Modernisation, the Ministry of Agriculture and Food, the Ministry of Foreign Affairs, the county authorities, the county governors and other public bodies."[16]

Given the nature of its investments, the company deals with high levels of risk that it must take into account on it operations. For this purpose it uses a formal methodology, which is outlined in a document called 'Risk management in the government administration'. Similarly, risk factors are also integrated into the strategy.

Action

Management Strong

Innovation Norway has a Board of Directors, appointed by the central government, which is responsible for implementing the company's strategy and delivering results, as well as adapting to feedback, budget and newly-established priorities. In its annual report, the board is transparent on ongoing focus sectors and areas for improvement. "The national budget presented for 2015 makes more funds available to increase the focus on successful entrepreneurs and startups, growth enterprises and innovative business clusters. At the same time, the national budget signals a clear expectation that the company rationalise and restructure. This means that the organisation will be required to do more with fewer resources, which means that we must work in new and more efficient ways to deliver on our assignments for the government.”[17]

Measurement Strong

Innovation Norway has conducted continuous measurement of impact metrics and its financial investments in order to ensure it is delivering its results as efficiently and effectively as possible. The 2014 annual report explains the methodology:

  • "A control group is established, which is used to compare developments in turnover, profit and productivity. The comparison provides a good indication that the funds channelled through Innovation Norway have an effect.
  • "The analyses by Statistics Norway look at changes in outcome variables (such as turnover) in the same enterprises over time rather than statistical level differences between enterprises supported by Innovation Norway and the control group.
  • "Once a year, the Board of Directors reports on how the owners' expectations have been followed up, [and] current status and goal attainment are discussed in a meeting between the owners and the chair of the board."[18]

Alignment Good

Innovation Norway works closely with two other organisations to promote innovation in the country: the Research Council of Norway and the Industrial Development Corporation of Norway (SIVA). Although each has different objectives, they collaborate in policy implementation and achieving the country's objectives for business and industry. "Innovation Norway, the Research Council of Norway, and SIVA work separately and together to contribute efficiently to Norwegian business and industry's innovative power, internationalisation and value creation. The three agencies have different roles, responsibilities, expertise and tasks, and are intended to complement each other throughout the value chain, from the birth of an idea up until the product/service is launched on the market. Because of the differences in the way that these agencies work, they need to collaborate well at a strategic level. The management of all three organisations have invested considerable time in ensuring consistency and a clear division of roles between the three agencies in order to ensure that the public funds at our disposal can be utilised as effectively as possible."[19]

Innovation Norway is also aligned with its other stakeholders, such as the various departments of the Nowegian government, the Storting, and the enterprises that it funds and promotes (see Stakeholder engagement above).