Towards Smart Specialisation - The Lahti Region

By Vesa Harmaakorpi and Tomi Tura

The Lahti Region was hit hard by the collapse of trade to the Soviet Union at the beginning of the 1990s. Until then a vigorous industrial region, it soon fell into decline and was troubled by the disintegration of business life. Growth was pursued through a cluster strategy; however, this was felt to restrict and isolate the activities too much. After tackling the issue of its diffuse innovation environment, the region is now one of the fastest growing in Finland. One of the main drivers of this change has been a strategic approach that could be characterised as Smart Specialisation.

Declining industrial region and low level of R&D input

Lahti is the largest Finnish region in terms of number of inhabitants. It has no university of its own, which is clearly reflected in the low level of education relative to national standards, and in part explains its low level of scientific research. Research & Development (R&D) input in the Lahti region is scarce, amounting to only approximately 250 euros/resident, in contrast to 3300 euros/resident in the Oulu region where R&D input is the highest in the country. The low level of R&D activity is one of the main reasons for the region's slow development.

The starting point for Lahti was its strong industrial background, mainly in traditional industries. Although the city region of Lahti is quite large (the seventh largest in Finland), innovation was still scarce and unco-ordinated. When the industrial sector suffered a blow in the 1990s, the region was lost and unaware of its own strengths. Lahti was considered too large and centrally located for traditional regional policy; moreover, the traditional innovation system model of large university regions was ineffective. In short, the region had no clear vision of its place or profile.

The "great turn"

For the region to develop, something had to change, and during the early 2000s a change started slowly. First came the realisation that the absence of a university and low R&D input were not necessarily a disadvantage. Instead, there was a chance to turn this weakness into a strength by using the region's uniqueness. This provided the opportunity to create an entirely new way to implement university policy through network-like operating models, focusing specifically on research transfer, a key factor in this region. Collaboration between the City of Lahti and four universities (the University of Helsinki, Aalto University, Tampere University of Technology and Lappeenranta University of Technology) ensures tailored university expertise that focuses specifically on the needs of the region without fragmenting the university sector. It can be tailored precisely to the needs of current business life without requiring the entire university sector to change.

Then, a practice-based way of thinking was introduced. Instead of innovation stemming from research, attention was directed to an innovation model fed by the interaction between companies and users. The practice-based innovation model is characterised by market-led thinking, company-driven challenges as triggers of innovation and practice-based innovation tools. This was a perfect time to venture into a more practice-based system and take advantage of the review of Lahti's innovation system.

The third revolutionary idea was a need for specialisation. Without a clear profile and focus, there is a risk that activities will become scattered and therefore ineffective.

Priority areas of expertise

Three lines of expertise were selected by the bodies in the Lahti region as priority areas of regional expertise: environment/clean tech, design and practice-based innovation.

Environment/Clean tech
The second most important environmental business centre in Finland operates in the Lahti region, and focuses on sustainable, environmentally efficient solutions and the recycling business, comprising utilisation of the energy content of waste. Major industries utilising environmental technology include mechatronics and the housing industry. The most important university-level research is conducted at the University of Helsinki's Department of Environmental Sciences and Aalto University School of Engineering's Lahti Centre. This expertise in the Lahti region is also supported by Tampere University of Technology and Lappeenranta University of Technology as well as Lahti University of Applied Sciences. Lahti Science and Business Park is a leading networking facilitator in the clean-tech sector in Finland co-ordinating the national clean-tech cluster operations.

The Lahti region is one of the most important centres of design know-how in Finland, and it is the most efficient region in utilising industrial design. In recent years, many successful companies in the region have chosen design as a vital competitive factor. The Lahti region will promote itself in design and business as possessing the ability to make design a crucial factor enhancing companies' competitiveness. The spear-head of higher education in design is the Institute of Design at Lahti University of Applied Sciences, which is at the apex in the field in Finland and is an internationally renowned school of industrial design.

Practice-based innovation
A special user-driven model of action for R&D and innovation has been developed in the Lahti region, one derived from the needs of companies. Its strengths and characteristics are fast application and commercialisation of ideas, and it is an efficient means to attract international expertise to support development. The companies in the region have successfully applied this model in their businesses. Lappeenranta University of Technology's Lahti School of Innovation hosts a research team that is the leader in Finland in innovation environment research. The team has also participated in the practical testing and development of the model.

Lahti region Competitiveness and Business Strategy 2009–2015

From these circumstances and new discoveries, the Lahti region started to develop its Competitiveness and Business Strategy for 2009–2015. The three areas of expertise were combined in the same context for the first time. The strategy relies on understanding the wide scope of innovation and concentrates on practice-based innovation in particular, and the spear-heads of expertise serving all industries and clusters, namely environment, design and practice-based innovation. This model enabled the co-ordination of all the strategies, plans and bodies in the region.

Participating in the creation of this strategy was the City of Lahti, the Regional Council of Päijät-Häme, regional development companies, higher education institutions and local businesses.

Collaboration of the areas of greatest expertise

With the principles of practice-based innovation as its point of departure, Lahti is a pioneer in developing modern innovation systems. The regional bodies of Päijät-Häme are generating a new, international, high-quality network of R&D and innovation, a 'meta-platform' that will combine the three areas of expertise with the strong regional clusters and industries in a unique way. This will help to identify innovative business potential in areas and industries requiring cross-disciplined expertise. The framework of the platform is presented in Figure 1.

Figure 1

Figure 1

The development platform is based on five premises:

  1. Companies, research institutions, development organisations and users form a platform and collaborate on a common issue, a so-called hot spot
  2. Focus is on the phases of testing, piloting and prototyping
  3. Creative combinations across borders of industries and sectors will be implemented in innovation
  4. Actions are user-driven: the customer is a subject in the innovation process
  5. Environmental expertise, design and innovation expertise will form a novel combination.

Monitoring and evaluation

A monitoring group consisting of representatives from local companies, the City of Lahti and other stakeholders evaluates the implementation of the strategy on a yearly basis. In addition, three boards consisting of major companies and other experts have been established to lead, monitor and evaluate each of the three areas of expertise. The board members have been selected to represent a variety of perspectives on the utilisation and development of the area of expertise. However, systematic monitoring and evaluation are tasks that are still undergoing development and improvement.

Practice before theory

The Lahti case provides an interesting example of a region working with Smart Specialisation even before the term was widely introduced. However, closer examination of the Lahti case makes it possible to identify variations in the six steps mentioned in the article "What is Smart Specialisation?" by Inger Midtkandal and Jens Sörvik. The process started with an analysis and evaluation of the regional situation and potential. A sound governance structure involving various stakeholders ensured that the process was rooted in each sector of the region. After that, three areas of expertise were prioritised and combined in a vision. A tool to realise the vision in practice was created with the development platform, and today the work is monitored and evaluated by a number of bodies.

The case of Lahti also indicates that even a region that is poor in R&D resources may show a high degree of innovativeness. Figure 2 shows the number of innovations in Finnish regions related to their added value in 1997–2007, showing Päijät-Häme among the most innovative regions in Finland despite its very low research input.

Figure 2

Figure 2

Back to Nordregio News Issue 5, 2012