REGIONAL INNOVATION STRATEGY FOR FINNMARK (RIS3)– based on SMART specialization principles

Foto 1. side: Varangerkraft/Bjarne Riesto og Hydrogenics

Finnmark fylkeskommune / Finnmárkku fylkkagieldaFylkeshuset, 9815 Vadsø

Tlf. 78 96 20 00 / fax 78 96 23 70e-post: postmottak@ffk.no

www.ffk.noLay-out: To Typer AS – www.totyper.no

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Preface ....................................................................................................................................................................... 4

Summary ................................................................................................................................................................... 5

Briefly about Finnmark as a region ................................................................................................................. 6

What is SMART specialization? ........................................................................................................................ 7

SMART specialization process ........................................................................................................................... 8

Organization of SMART specialization process - S3 ................................................................................ 9

Analysis of the prerequisites for innovation ................................................................................................ 10

Visions for SMART specialization in Finnmark ........................................................................................... 14

Priorities of Finnmark’s innovation strategy ............................................................................................... 17

Plan for the implementation of the strategy .............................................................................................. 18

Monitoring ................................................................................................................................................................ 19

References ................................................................................................................................................................. 20

TABLE OF CONTENTS

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Finnmark’s new regional innovation strategy is based ona holistic process in which we, together with the businesssector and innovation actors, have looked at the strengthsand weaknesses of the business sector and the innovationsystem in Finnmark. This gave us a good basis for prepar-ing a document that will point out Finnmark’s innovationand research policy in the years to come. At the same time,the process has been focussing on SMART specializationprinciples (S3). Therefore, we call Finnmark’s regional in-novation strategy “RIS3” (Regional Innovation Strategy -S3).

SMART specialization is the EU’s tool for regional develop-ment. The purpose is to strengthen the competitivenessof regions by identifying and prioritizing areas with a po-tential for increased value creation. The regions’ economic,research and technological specializations should stimu-late productivity, competitiveness and economic growthin the regions. The Ministry of Local Government and Modernization has recently urged regions in Norway tospecialize in this way.

In Finnmark’s RIS3, we have identified five industries in thecounty that have the greatest potential in terms of in-creased value creation and employment. These are energyand petroleum, building and construction, mineral indus-try, Arctic bioeconomy and experience-based tourism. Byfocusing the regional innovation system on these indu -stries, we can create a smarter, more sustainable, inclusiveand more attractive business community in Finnmark. Inorder to strengthen our focus on the five business areas,we have selected the three important, crosscutting topics:“Arctic conditions”, “sustainable exploitation of Arctic

resources”, and “digitalization”. All three are of great importance for the five industries and there is a great potential for joint development of the business areas.

Sami culture and business practice together with Kven/Norwegian-Finnish presence are examples of the particu-lar Arctic knowledge and innovation in Finnmark over sev-eral hundred years. Sami and the Kven/Norwegian-Finnishculture, therefore, play a central part in the developmentof the experience-based tourism and in nature-based industries today.

RIS3 is also the gateway to future international coopera-tion between Finnmark and EU regions. SMART speciali -zation can be used to identify possible collaborativeconstellations with regions sharing the same challengesand strengths across the EU.

It will be important to continue work on the innovationstrategy in the future. Business mobilization, beyond whathas happened so far, is particularly important. At the sametime, the strategy must be continuously adapted to thechanging needs of the business sector.

The new innovation strategy in agreement with SMARTprinciples is a result of Finnmark’s desire to use innovationand research as an instrument for obtaining better eco-nomic and social conditions. The development will use ourmost important resource, the Arctic nature, in a sustain-able way. Nature is not only the basis for the businessesand the material foundation for culture, but also for theattractiveness of living in Finnmark.

PREFACE

June 2019

Ragnhild VassvikCounty Governor

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SUMMARY

On Wednesday, June 19, 2019, Finnmark County Counciladopted the Regional Innovation Strategy for Finnmark(RIS3). Finnmark County is thus SMART-specialized.

The SMART specialization process in Finnmark has pro-duced an updated report on the conditions for the busi-ness sector as well as a new, up-to-date innovationstrategy. This is the foundation to incorporate innovationand research into Finnmark’s plans and strategies and itwill serve as such a foundation after the merger withTroms.

The regional innovation strategy in accordance withSMART principles has been prepared based on the analy-sis of business’ conditions (see appendix). This report an-alyzes the business sector and the innovation potential inFinnmark, and identifies Finnmark’s five strong industriesaccording to the innovation potential, value creation andemployment. The five strong industries highlighted in thereport are:

– Energy and petroleum

– Building and construction

– Mineral Industry

– Arctic bioeconomy

– Experience-based tourism

During the close interaction with business and policy mak-ers, three main themes were pointed out. The recurringtopics were “Arctic knowledge”, “Digitalization/ITC” and“Sustainability” and they are relevant for the businesscommunity with the greatest potential for innovation. Oneexample is Smart Construction Cluster, where “digitaliza-tion / ITC” is also relevant for the building and constructionindustry.

In addition to the three main themes mentioned above,Finnmark’s innovation strategy also looks for potential forinnovation where industries overlap. The traditional potential for innovation and development lies here. With the help of interviews with business and industry stakeholders, possible arenas for increased cooperationbetween the businesses and industries were identified. A good example is Smart Construction Cluster, which wasfounded in order to facilitate collaboration between ITcompanies and the construction industry.

It is also planned for the strategy to be properly imple-mented. Finland’s experience in the Lapland region showsthat implementation of the SMART method takes time. It is important that the identified areas are further deve -loped and adapted to the changing needs of the businesssector. It is also important to maintain the dialogue between the business sector, the policy makers and thosewho execute the innovation policy. In addition, it is impor-tant to work continuously on the dissemination of SMARTspecialization locally, regionally, nationally and interna-tionally.

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Finnmark, with its location farthest to the north, is Nor-way’s largest county. With the area of 48,618 km2, thereis ample space for its well over 76,000 inhabitants. Here,Norwegians, Sami and Kven / Finns have settled down andfound a livelihood with the use of outstanding naturalriches along the coast, in the fjords and on the Finnmarkplateau. Contact with and proximity to Russia and Finlandhas been important for business and social development,and in recent decades the labor market has been charac-terized by labor immigration from Eastern Europe, but alsothrough the settlement of refugees / asylum seekers froma number of countries. The proportion of employees in theprimary industries (agriculture, fishing, reindeer hus-bandry) is well above the national average, and service in-dustries related to natural resources are important foremployment. The traditional resource-based industries aresupplemented by new industries that partly compete forthe same areas, such as wind power, fish farming, miningand petroleum. The most important players that utilize theregion’s natural resources have ownership outside the re-gion, many also outside the country as they are companieswith global structures. Business and industry with local andregional ownership is little differentiated, and consists primarily of small units with limited available investmentcapital. The resources from Finnmark contribute to exportrevenues and increased value creation primarily for national and/or global players. The challenge is to ensure

that a greater part of the value creation remains in the region and helps to develop the business sector regionally.

The public sector is very important for employment in Finnmark and partly compensates for the private businesssector that has undergone significant efficiency improve-ments. The public sector contributes to creating a goodgender balance in the labor market in Finnmark, but overall, the labor market appears to be very gender-divided, with an overweight of male workers/employees inthe private sector, and many well-educated women whowork in the public (municipal, county and state) sector. Thepublic sector is expected to play an active role in socialdeve lopment, and to a greater extent than in other coun-ties, facilitate business development, especially in smallmunicipalities with few industrial pace-setters and weakconnection to industrial clusters.

Despite the region’s large geographical distances and scattered settlements, Finnmark has a relatively well-developed infrastructure with 11 airports, ports with largemarine and maritime activities, as well as well-developedroad networks, broadband coverage, and 4G. Finnmark’slocation as a border region with Russia and Finland givesthe business sector unique opportunities to reach a largermarket, but this industrial cooperation is also vulnerableto changes in national and international politics.

BRIEFLY ABOUT FINNMARK AS A REGION

Figure 1: Map of Finnmark

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Finnmark County is preparing a regional innovation strategy to strengthen Finnmark’s innovation and researchpolicy in the years to come. The process is based on theprinciples of SMART specialization (S3). Therefore, we callFinnmark’s regional innovation strategy “RIS3” (RegionalInnovation Strategy - S3). The innovation strategy for Finn-mark is the tool for implementing SMART specialization inFinnmark.

SMART specialization is the EU’s regional developmentframework launched in 2012. This means that the region’seconomic, research and technological specialization willstimulate productivity, competitiveness and economicgrowth in the regions. The purpose is to strengthen the regions’ competitiveness by identifying and prioritizingareas with a potential for increased value creation. Inshort, how can business in our region make more profitthat stays in the region and secure existing as well as create new jobs? The concept for Smart specialization isspreading across Europe as an increasing number of regions use it and design strategies based on their ownpreconditions (S3 Platform, OECD 2013)

All regions in the EU must develop such a strategy to gainaccess to the Structural Funds for business developmentfrom the EU system. Norwegian regions do not have access to these instruments, and strictly speaking do notneed to draw up such a strategy. After the initial introduc-tion of the S3 concept, however, many regions in Norway,such as Nordland, Trøndelag and Agder, have adoptedSMART specialization concept as an important part oftheir innovation policy. At the national level, KMD hastaken an active role in promoting SMART specialization inNorway, and has recently issued a guide (KMD, 2018) toassist Norwegian regions in compiling their innovationstrategy according to SMART specialization principles.

When the EU launched SMART specialization, it built onlessons learned from previous regional developmentstrategies. The challenges these strategies had in commonwere the lack of an (inter) national perspective: the regionswere studied and assessed isolated from their surroundingareas, they had too much public involvement and too littleinvolvement from businesses, they lacked analysis of theregions’ opportunities and challenges, and the public triedto “pick out winners”. It was attempted to copy those regions that did well without taking the own local contextand local opportunities into consideration (KMD, 2018).

SMART specialization seeks to avoid these pitfalls, whichare also relevant for Norway. SMART specialization is a

working method where thorough analysis and dialogueare the key words for a process that mobilizes the region’sbusiness sector, research, public authorities and interest-groups for common development of the area. SMART specialization also allows for seeking collaboration and exchange of experiences with other regions in Europe.

Why have we chosen SMART specialization as an innova-tion strategy for Finnmark? SMART specialization is amethodology that allows for greater variation and adap-tation to a reality that fits Finnmark. It offers an opportu-nity to cultivate the idiosyncrasies of Finnmark; the Arcticdimension with large geographical distances, scatteredsettlements, and the need to protect nature in the deve -lopment of the resource-based industries and businesses.

But why does Finnmark County finish such a process nowwhen the region will soon be merged with Troms? Finn-mark lacks an innovation strategy, and when Finnmark becomes one county with Troms, Finnmark will need agood assessment and strategies in order to develop an innovative business sector throughout the new region.Today, Finnmark does not have such an assessment, andFinnmark County has chosen to use 2018 to obtain anoverview and finish work on priorities using S3. Finnmarkwill thus have a better basis for working long-term with in-corporating an innovation strategy for business and research throughout the new region.

WHAT IS SMART SPECIALIZATION?

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1. Organization: It is important to engage regional players who can contribute to the development and im-plementation of a plan / strategy for business development, innovation and competence. People from otherregions who have completed similar SMART specialization processes play an important role and can beinvited into the process, for example during consultation rounds.

2. Analysis: By analyzing the region’s advantages and opportunities, SMART specialization promotes thedevelopment of new niches and business areas. The dialogue concerning the analysis is crucial, because thegoal is that the development of new business areas results in actions.

3. Vision and goals: To create a holistic and desired development in one’s own region, common visions, goalsand priorities are needed. Leading economic actors in the region must support the choices made. No regioncan be good at everything.

4. Priorities: The priorities are the discoveries that the players in the region see opportunities in and thereforechoose and try to implement. In order to follow up the priorities, the region is dependent on the fact thatthere are players who can go in front and implement. These are entrepreneurs or existing companies, aloneor together with research institutions and investors.

5. Implementation: During the implementation phase, different solutions are tested, the situation is under-stood in a better and new way, then the goals are adjusted and errors are corrected on the “map”. Themobilization of private players, entrepreneurs and investors who choose to invest in exploring new businessareas, is the most important aspect.

6. Measurement and learning: Monitoring, evaluation and learning should be integrated into S3 all the way,it is very difficult to add it in the end.

SMART SPECIALIZATION PROCESS

1 Based on: European Commission (2012). Guide, KMD (2018).

The elements of the regional innovation process based on SMART specialization are:1

The six elements of the description mentioned above willstructure the rest of the innovation strategy.

New niches and business areas are developed through theentrepreneurial discovery processes (EDP). These discovery

processes are the “engine” for both the development and implementation of SMART specialization strategies.Thus, what you discover is something that is larger than individual projects, but less than a new industry or sector,and often cross-border.

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On November 22, 2016, the County Committee of Finn-mark County decided to start the process of joiningSMART specialization, and applied for the EU Commissionon admission to SMART specialization. On June 30, 2018,the region admitted into the so-called Seville platform,which gives Finnmark access to expertise and advice in itswork on the innovation strategy - RIS3. In the autumn of2018, Finnmark County chose to seek the assistance of theresearch institute Norut / NORCE with researchers basedin Alta. Important business actors in the region (see appendix) were interviewed about their view of the indu -stry’s opportunities and challenges as well as the potentialfor the future value creation, employment growth and

innovation. On January 21, 2019, a workshop was held inVadsø, which was aimed at the actors and the regionalpartnership for regional development in Finnmark. OnMarch 27, 2019, a workshop was held in Alta, which wasaimed at both actors and business representatives. Atboth meetings, drafts were presented and discussed andthe participants provided valuable input that has been incorporated into the assessment report and this strategydocument. The SMART specialization process has beencarried out through the entrepreneurial discovery process(EDP) with a broad and inclusive participation of relevantactors in Finnmark.

ORGANIZATION OF SMARTSPECIALIZATION PROCESS – S3

Smart Construction Cluster, together with UiT, runs the visualisation center in Alta. The center allows walking(physically) through 3-D models of buildings as early as during the planning and design phase. The picture also showsthe visualization center as a drawing – such drawings work as the basis for the BIM-models. ©Nina Bellika

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Review of the relevant documents. The development ofthe innovation strategy - RIS3 for Finnmark builds on al-ready existing plans and strategies. Finnmark County hasa variety of strategies and plans concerning business andindustry that have been reviewed and analyzed. In addi-tion, other regional and national plans are relevant. Theseare described in more detail in the attached document.

Strong industries. Through analyses of documents andworkshops, five strong industries have been identified inFinnmark, which have the potential for increased value creation and growth in employment. A more detailed description of these industries’ regional development andanchoring can be found in the attached document. Herewe want to focus on the industries’ innovation capacity inFinnmark.

Energy and petroleum are growing sectors, and thepetroleum industry’s entry into the Hammerfest region hascontributed to the establishment of a supplier network inFinnmark. The innovation capacity of the companies inFinnmark is difficult to exploit as the main focus is on theexecution of projects and little on R&D. R&D for increasedregional value creation varies with regard to companies’local strategies, and the companies based outside the region have greater capacity for R&D and to a greater extent use their in-house research expertise with less focuson regional development opportunities. Furthermore, thecompanies have challenges with recruitment as there is areduced demand for petroleum-related education andlimi ted capacity to support pupils and students with lack-ing specialized practice. Other parts of the energy sectorare met by demands of increased focus on green energy,

ANALYSIS OF THE PREREQUISITES FOR INNOVATION

: The arrival of the gas factory in 2005 marks the beginning of the oil and gas adventure in Hammerfest. ©Redningsselskapet

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and several regional energy companies are engaged inwind power projects with the goal of exporting greenpower. Lack of grid-capacity has so far limited develop-ment opportunities, and has led to the companies thinkingabout alternative use of “locked power”. This has resultedin innovative solutions with turning wind power into hydro-gen. Further development of wind power, and in particularnew projects in hitherto untouched areas, is controversialboth for environmental and recreational reasons, but alsoin relation to the reindeer businesses’ areal needs.

Building and construction industry is an important andstrongly locally based industry in Finnmark, which has suc-ceeded in winning bids for large contracts that previouslywent to national companies. High activity in constructionhas given the industry many good years. The industry isdependent on the public sector to give orders and use procurement with tender procedures that offer local com-panies an opportunity to be competitive with national andinternational players. The challenge ahead lies in creatingcontinuity in projects while public investment in Finnmarkwill be reduced. The industry is characterized by little innovation, and the innovation processes are mostly aboutimproving work routines internally and less about how external knowledge and networks can strengthen the com-panies. Smart Construction Cluster has worked to makethe building and construction industry adopt digital toolsto improve the planning and implementation of construc-tion projects. The public sector tends to choose “known”solutions in the form of standardized solutions. This challenges the innovation capacity and the capacity of thesector.

Mineral industry has historically been an important indu -stry in Finnmark, but after the bankruptcy of Sydvarangerthere are only two mines left operational: Stjernøya in Altaand Austertana. Both are owned by large foreign corpora-tions, and the innovation capacity of the company is limi -ted as it involves raw material extraction without furtherprocessing and with direct shipping to the market / export.Increased value creation in this industry requires that newmines will be opened for production, and with operatinglicenses in place in Kvalsund and in Kirkenes, such oppor-tunities for employment growth are now more realisticthan before. Both mining projects face controversy for en-vironmental reasons due to landfill solutions in nationalsalmon fjord, and indigenous people’s interests in contin-ued use of the land for Sami reindeer husbandry and fish-ing in the fjord. The innovation potential of these miningprojects is related primarily to better energy solutions, andthe monitoring of discharges to the fjord as part of the follow-up with regard to environmental requirements. Themineral industry’s contribution to the green shift is empha-sized by the fact that the world needs industrial minerals,and the strict environmental requirements in Norway

make such extraction in Finnmark more sustainable thanin other counties. There are different views and attitudesto such statements.

Arctic bioeconomy can be a collective term for the re-gion’s production of renewable biological resources andtheir conversion to, for example, food, feed, chemicals, ingredients, materials, pharmaceutical products andbioenergy. Seafood is the most important part of the bio -economy in Finnmark with its fisheries-based and aqua-culture-based value chain. The value creation in theaquaculture industry in the region has been considerable.For the aquaculture industry, Finnmark is mainly a produc-tion region with limited R&D activity. Innovation activitieshave mainly focused on measures to maintain productionvolume as a result of lice problems and escapes. The national and international fish farming companies oftenhave their own research departments outside Finnmark,but use some R&D in the region. The whitefish industry,king crab / snow crab fishery and newer biomarine indus-tries have been better at building research and innovationcapacity in the region. In these “newer” bio-resources,there is a large, yet unutilized innovation potential, butalso the need to build knowledge and networks outsidethe region. The most innovative initiatives focus on betterutilization of the whole fish by using residual raw materialsfor other purposes than human food (feed, health food,pharmaceutical industry, cosmetics industry), and on increased digitalization and robotization of the fishing industry.

Other important food producers are the Arctic agriculture,which, through knowledge and adaptation to the Arcticclimate, produces unique products for the local and national market. Unique in this context is the reindeermeat production, which stands for a good ecological andsustainable alternative to industrially produced meat. Inrecent years, the industry has experienced an increase invalue creation with good prices as a result of increasedfocus on innovation in marketing and product develop-ment.

Experience-based tourism forms a small part of the totaltourism industry in Finnmark, but has a great potential forincreased value creation through the unique products of-fered. The industry has been through major changes withfocus on and an increase of capacity in winter tourism.This has enabled many businesses to create year-roundjobs with offers over several seasons. Offering an exclusiveand genuine product to few tourists often provides greatervalue creation than offering standard products to groups.Customers are committed to sustainable products and in-dividual travelers have the opportunity to put togetherpackages with different products and providers. Providershave to have good expertise in digital solutions to offer

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A poster from the conference “Hydrogen in the wind” in Vadsø, March 2019. Hydrogen has many different uses and represents a huge potential for growth in Finnmark. ©Finnmark fylkeskommune

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their products worldwide. Small experience-based tourismplayers are still dependent on public actors for facilitatingmeasures such as skills enhancement and network build-ing, and more are increasing their innovation capacitythrough participation in international networks such asVisit Arctic Europe.

Strong industries - common characteristics. Finnmark’svalue creation is firmly rooted in the processing and saleof natural resources. A common characteristic is the geo-graphical nature of the natural resources that “binds”petroleum, wind, minerals, nature and bio-resources to theregion. It is expensive to transport resources. A key pointfor the regional innovation is therefore the issue of re-gional autonomy to process resources in geographicalproximity to local and regional arenas where innovation,value creation and employment are. However, this also re-quires strengthening the region’s “livability”, i.e. developingattractive conditions for living and growing up as well asleisure environments in the communities that surround thebusiness community.

Regional innovation system is an important instrumentfor exploiting our advantages and potential for innovation.We distinguish between so-called “thick” and “thin” inno-vation systems. “Thick” regional innovation systems arecharacterized by strong knowledge and R&D environ-ments, close collaboration between producers of knowl-edge and utilizers of knowledge, as well as strongbusiness-clusters. These are most often found in largercities. Innovation capacity is developed from inside the ac-tors in the region with limited need for new, external im-pulses. The opposite is found in “thin” peripheral regionalinnovation systems that have few players who can driveinnovations. There is a great need for outside impulses, butthe capacity to absorb such impulses is low. Finnmark is aregion that meets the description of thin regional innova-tion systems where the business community has few

knowledge environments located in the region that can as-sist with relevant research-based knowledge to developthe innovation capacity of the business community. Amore detailed description of the regional innovation sys-tem with R&D players, the regional partnership for devel-opment and other partners can be found in the attacheddocument.

Strengths and weaknesses of the regional innovationsystem. The regional innovation system in Finnmark isconsidered to be thin because there are few knowledge in-stitutions that can contribute relevant research expertiseto the business community. The business sector sees littleneed for the knowledge in the R&D institutions in the re-gion as well. Research from VRI (a policy instruments forregional R&D and innovation) shows that most of Finn-mark’s companies using research expertise find it outsidethe region. The region has few clusters that could help toput new initiatives within the business sector on theagenda, and that could prevail in the national cluster ex-cellence program. Furthermore, there is limited regionalcapital to support innovation, and get regional start-up orinvestment companies. Capital must most often be raisedfrom outside. There lies an opportunity in tying the re-gional innovation system more tightly to the knowledgeand capital possessed by the national and global playerswith operations in Finnmark, in research literature referredto as better utilization of global production networks, andat the same time utilizing the expertise inherent in expe-rience-based local knowledge and entrepreneurship. At thesame time, the stakeholders in Network Finnmark, and es-pecially the business sector and the incubators, have animportant task of connecting businesses and industry withthe relevant research arenas. UiT, with its campuses inTroms and Finnmark, has research expertise in all theaforementioned ‘strong industries’ of this strategy and canlink its national and international network with innovationprojects in Finnmark.

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Finnmark County believes that the regional innovationstrategy- RIS3 will strengthen the efforts to increase thepace of innovation in Finnmark. This work is based on theidentified strong industries, relevant R&D and knowledgearenas, as well as strengthened cooperation betweenstakeholders in Finnmark and with national and interna-tional players. The strategy will help to prioritize areaswhere the region has a special potential for growth andvalue creation. The goals and strategies should lay thefoundations for SMART, inclusive and sustainable growth.

Based on the analyses of the existing strategies and plansin Finnmark, the OECD NSPA (Northern Sparsely PopulatedArea) report, interviews with representatives of the key in-dustries, two stakeholder workshops, and an analysis ofvarious regional SMART specialization strategies from theNordic countries, the following vision for Finnmark’s re-gional innovation strategy - RIS3 has been developed:

The overall vision is to create a smarter, moresustainable, inclusive and more attractivebusiness sector in Finnmark by using SMARTspecialization

In addition, RIS3 aims to increase the interaction betweencompanies and industries in Finnmark, as well as strength-ening the interaction and cooperation between Finnmarkand other relevant players outside the region; at the regional, national and international levels. The discussionsduring the workshops showed that the frequently mentioned negative conditions associated with small businesses, entities and communities can be used assomething positive. It’s not always an advantage to be big.Being small, it is easier to adapt and adjust.

Some important key principles for realizing the vision arefurther discussed during the workshops. This is about hav-ing a focus on sustainable utilization of the Arcticresources because they will form the basis for futureeconomic growth in the region and must not be impaired.Furthermore, the use of existing, local knowledge relatedto the Arctic conditions must be emphasized because itprovides an opportunity to control and exploit Finnmark’speculiarities. Understanding the unique Sami culture andthe way of life is such an advantage that must beexploited to a greater extent in the development of Finn-mark. At the same time, the business community mustapply new technological knowledge in new areas to keepup with the digital development. The participantsemphasized that in a region with great distances such as

Finnmark, digitalization provides an opportunity toreduce the disadvantages caused by distances. Forexample, an increasing number of tasks can be performedregardless of physical location. An important mainprinciple is that the work must lead to a greater degree ofvalue creation happening higher up in the value chainand remaining in Finnmark. Finally, the participants dis-cussed the importance of better regional infrastructureand increased attractiveness. Businesses cannot bedeveloped without good local communities providing goodsurrounding conditions and public services.

Strong industries with thematic superstructures. As acontinuation of the vision and work on the analysis, afigure has been prepared that combines the various identi -fied strong industries in Finnmark with overarching topicsacross the industries. Figure 2 is the result of the discus-sions and summaries from the workshops in Vadsø inJanuary 2019 and Alta in March 2019.

Figure 2: Matrix over Finnmark

Important industrial sectors have been identified throughFinnmark’s S3 process in 2019: energy and petroleum,building and construction, mineral industry, Arcticbioeconomy, and experience-based tourism. These sectorsare also likely to form the basis for future industrialdevelopment and innovation in Finnmark. The horizontaltopics were raised and discussed as overarching topics thatinfluence and reinforce the importance of the strong in-dustries.

VISIONS FOR SMARTSPECIALIZATION IN FINNMARK

ARCTICKNOWLEDGE Localknowledgeregarding arcticconditions andthe sami andtheir culture

DIGI-TALIZATIONUse of new,digital solutionsand strengthen-ing of infrastruc-turer

SUSTAINA-BILITYGreen arctictechnology andthe green shift

Energi andpetroleum

Constructionindustry

Extractionand minerals

Arcticbioeconomy

Experiencebased

tourism

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Arctic knowledge consists of accumulated knowledge, ex-pertise and traditions of how to handle the Arctic condi-tions which Finnmark (together with the neighboringregions in the north) has a unique competence in, com-pared to other European regions. Furthermore, knowledgeand expertise about the Sami culture, traditions and theway of life is an advantage for Finnmark, which makes theregion unique. Digitalization is a global trend that isquickly affecting all regions. Digitalization can be seen asa threat to some industries, but at the same time repre-sents a great opportunity for peripheral regions to reachmarkets in a new way. Developing and adapting the digitalknowledge is one of the most important topics for imple-menting a digitalized Finnmark. In the public sector, in par-ticular, much experience has been gained in providingservices with great distances between the provider and therecipient, and where the potential for using digital knowl-edge has not yet been fully exploited. Sustainability is an-other global megatrend that is already affecting all sectorsand topics in Finnmark. The opportunity to develop com-panies, services and infrastructure in a sustainable way -through a green Arctic conversion – will have a significantimpact on innovation development in Finnmark. GreenArctic technology development with sustainable productsand services represents a growth opportunity for Finn-mark’s companies.

S3 Finnmark: Synergies. Possible arenas for collaborationand synergies across sectors have been identified throughinterviews with industry stakeholders as a part of the analysis of strong industries in Finnmark.

The SMART specialization process emphasizes identifyingand exploiting synergies between the strong industries inthe region. It is the intersections between the industriesthat are of interest. Figure 3 illustrates intersections be-

Rock engravings in Alta is a symbol of an attractive, historic and cultural industry. For centuries, husbandry has been anecological and sustainable industry, and it has become an important cornerstone for tourism and gastronomy.

©Andreas Haldorsen

Figure 3: Synergies between identified collaborative arenas.

Energy andpetroleum

Mineralindustry

Arctic bioecenomy

Experience-based

tourism

Buildingand

construction

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Table 1: Synergies between industries.

Industries Synergies / identified collaborative arenas

Energy and petroleum Seafood – supply of maintenance and manufacturing partsMineral – supply for development and maintenanceFishing – cooperation with local fishing boats on emergency preparedness

Building and construction Digitalization – visualize activities, work processes, planning toolsPetroleum – inspection and maintenanceTravel life – digital experiences

Mineral industry

Building and construction – construction phase, road and tunnel construction, use of heapsPetroleum – automation, control systemsEnergy – electrification, battery operated construction machinery

Arctic bioeconomy

Travel life – tourism at fish farms – how food is harvested and processedDigitalization – automation of tasks in the fishing industry / slaughterhouse, interpretation of big dataEnergy – electrification of fishing fleet, feeding vessels, transport

Experience-based tourismLocal food production – real raw materials: reindeer meat, fish, agricultureDigitalization – reach new markets with smart digital solutions, communicate with customers

tween different industries where synergies can be singledout and it shows how the idea behind identifying the synergies in practice.

The analysis of Finnmark’s business sector and interviewswith businesses identified several opportunities for syner-gies between the sectors, which is promising in terms offorming prioritized specializations in Finnmark. It is impor-

tant to understand that more potential synergy areas willbe gradually identified through the S3 process as morebusiness and R&D contacts are developed. The work withSMART specialization in other regions of Norway and internationally opens up future opportunities for findingsynergies that also cross both regional and national bor-ders. The table summarizes some synergy and collabora-tive arenas based on the analysis:

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Based on analyses and workshops conducted with stake-holders from the entire county in Vadsø and Alta in 2019,it has been possible to identify some preliminary priorityspecializations. Because the strategy process has beenshort, there is still a need to mobilize more players frombusiness, and industry and link the innovation strategy tothe ongoing merger process between Finnmark and Troms,these priorities must be seen as preliminary ones. Therewill be a need to specify these in the future.

We have identified the following main categories of prior-ity specializations; sustainable use of Arctic natural re-sources, sustainable use of the Arctic knowledge, andsustainable Arctic experience industry. The concept of sus-tainability is deliberately lifted in all the three categoriesto emphasize the importance of all the three sustainabilityelements: economic, social and environmental ones.

Sustainable utilization of the Arctic natural resourceswill continue to be the basis for Finnmark’s economic de-velopment in the future. The breakdown in various priorityspecializations includes not only existing sector-based ac-tivities, but also sector-wide activities such as digitalizationand synergy effects. An example is SMART energy solu-tions by utilizing “trapped wind-power” for the productionof hydrogen in Berlevåg, which is an easier way to store,transport and export energy. Sustainable and knowledge-based utilization of natural resources is a key factor for future growth and value creation in Finnmark.

Sustainable exploitation of the Arctic knowledge pro-vides an opportunity to show and exploit the knowledgethat individuals and institutions in Finnmark have aboutliving and working in Arctic conditions. An example of suchknowledge is “Arctic contingency planning” where the fish-ing fleet’s knowledge of coastal areas is utilized in contin-gency planning for oil spill. Although the R&D activity islow in the region, Finnmark has good knowledge and expertise in mastering the demanding Arctic living andworking conditions, as well as dealing with long distances.This is engrained in citizens’ way of life, the business com-munity’s use of machines, equipment, infrastructure, andthe entire community’s ability to meet the cold and rapidlychanging climate, and adapt to it. With respect for the vulnerable Arctic nature and the use of traditional know -ledge, experience is gained for future actions.

Sustainable exploitation of the Arctic experience(tourism) industry provides a great opportunity for Finn-mark to utilize, for example local food resources, harvest-ing and cooking traditions with experience-based tourism.The region has unique, clean food resources that can advantageously be included as a major part of a tourismproduct. The experience-based tourism industry can use storytelling about different cultures and tie cultural indu stry closer to product development.

New (possible) specializations will be developed all thetime based on technological developments (e.g. increaseddigitalization) and new global trends (such as the greenconversion), but also based on R&D and development ofnew innovations in Finnmark. SMART specialization alsomakes room for these new specializations.

PRIORITIES OF FINNMARK’S INNOVATION STRATEGY

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PLAN FOR THE IMPLEMENTATION OF THE STRATEGYDeveloping an innovation strategy according to SMARTprinciples is necessary but not sufficient to implement theconcept in the region. Putting the strategy to work andmobilizing relevant actors is of equal importance. In Finn-mark, the SMART specialization process started in early2019. The identified priority areas must be furtherdevelop ed and adapted to the needs of the business com-munity. At the same time, a merger process is underwaybetween Finnmark and Troms counties and the newcounty will be operational from 2020. What then is the following step in the implementation of the strategy inFinnmark?

Finnmark’s innovation strategy RIS3 will be presented asa “summary version” in order to maintain a focus on thepresentation of the main principles of SMART speciali -zation in a well-arranged manner. To move on to the nextstep with the implementation of SMART specialization inFinnmark, the particular initiatives that have beenmapped during the process must be further developed.The initiatives may come from several sides, but an en-trepreneur and an investor in collaboration with a researchinstitution is a common feature for many such projects.

The Department of Business Development at FinnmarkCounty, as coordinator of the work on the innovation strategy, will be the right body to coordinate the start-upactivities with the implementation of the strategy in thesecond half of 2019, including:

• Communicating Finnmark’s innovation strategylocally, regionally, nationally and internationally.The dialogue between Finnmark County and TromsCounty to start synchronizing the various activitiesbefore the merger is of specific importance.Nationally, it is important to continue the dialoguebetween Finnmark County and KMD, the nationaladviser and node for SMART specialization inNorway. Internationally, Finnmark’s new inno -vation strategy-RIS3 will be published on JRCSeville Platform’s website. Updated informationabout the process can also be accessed on Finn-mark County’s website https://www.ffk.no/interna-sjonalt/smart-2-3/). The new strategy opens formeetings, with other regions in Norway andinternationally, in order to conduct “peer reviewprocesses” where the purpose is to learn from eachother’s experiences.

• Finnmark’s new innovation strategy will be an-chored in various ways. A learning seminar will beheld in September 2019 to present and discuss thestrategy and continue work on prioritizing speci -alizations. There will also be a need to introducethe innovation strategy to new business repre -sentatives to better engage the private sector andbe a catalyst for new SMART specialization initia -tives and projects in Finnmark. Important playersfor creating arenas and meeting places forbusiness involvement and participation in the im-plementation of the strategy are the RUP partner -ship and Network Finnmark, as well as UiT.

Other regions’ experiences shows that RIS3 often remainson paper. The challenge is to achieve a real implementa-tion of the strategy in the regions. Certain regions, such asLapland in Finland, have focused on the implementationphase of their SMART specialization with good results interms of mobilization of key players and development ofinternational cooperation network (Regional Council of Lapland 2018). The strategy process from 2012-2013 inLapland was followed-up by an implementation processthat span from 2015 until 2019. RIS3 should therefore beseen as the starting point for the implementation, not asthe end point for the regional development process. Thestrategy process in Finnmark will be concretized throughreal projects.

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Monitoring is a systematic follow-up of activities and results based on publicly available statistics and reportingof activities and measures (KMD 2018). The monitoring ofthe SMART specialization process in Finnmark should givean indication of whether the effort is contributing to thegoals. The indicators can be both statistically (quantita-tive) and descriptive (qualitative).

To complement Finnmark’s strategy process, a structurefor the innovation strategy monitoring system will be pre-pared in June 2019. Selection of indicators, basic valuesand measurement parameters will be further developedas the next step after the synchronization of activities inFinnmark and Troms. The overall monitoring methodologywill follow KMD’s guide (KMD, 2018), as presented in Figure 4 below:

MONITORING

The examples of the estimated connections between the contribution and result

The resources thecounty can influence

The activities thecounty can

contribute to Outcomes Effects

Society effects

(long-term)

The survey ofdifferent actorsand opportunities,financing,regulation (area,infrastructure,etc.), organization(measures,schools, etc.)

Activities tostrengthen theknowledge of thenew market opportunities, toconnect the actorsin and outside theregion, tostrengthen thecompetence in theregion in therelevant fields, toget a morerelevant R&D, etc.

The knowledge ofthe new marketopportunities, newcooperation, newR&D projects, etc.

Activities in thenew sphere, butthat are connectedwith the presentspecialization inthe region

Growth and valuecreation in theregion

Risk evaluationAre we doing the right things? Are we doing them correctly?

The example assumed in the beginning was that thesupervisor showed a region with the potential tocombine seafood and IT-sphere and export the livecrab. How can the county and other public actors im-plement it in practice? What measures are necessaryand what can the enterprises manage themselves?The illustration above shows some resources thecounty can provide and what measures or activities

can be used. The activities will lead to specific results,such as better knowledge of the potential marketand its features, contact between the actors in ITand seafood industries that have not cooperated be-fore, more studies about the existing transport ofcrab and supervision of it, etc. The effect can be anew industry in the region, which will result in thegrowth and value creation.

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European Commission (2012): Guide to Research and Innovation Strategies forSmart Specialization (RIS 3), Brussels

KMD (2018) Smart specialization as a method for regional business development – Guide

OECD (2013) Innovation-driven Growth in Regions: The Role of Smart SpecializationRegional Council of Lapland (2018): Lapland- an Arctic and international highflier.https://arcticsmartness.eu/wp-content/uploads/2018/12/KV-julkaisu_englanti_4.12.2018.pdf

S3 Platform: Smart Specialisation Platform. http://s3platform.jrc.ec.europa.eu/

APPENDIX 1: Condition Report (separate document – will be published later)

APPENDIX 2: List of participants in the process (separate document)

REFERENCES