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How radical innovations trigger renewal of manufacturing industries? What firms, big incumbents or new entrants, are best in creating radical innovations? What firms are best in capturing value from them? What is the role of innovation ecosystemsin fostering national capabilities for commercialization radical technologies?

These questions are critical for governments faced with decline and lock-in in manufacturing industries, and establish the core focus of the RAID project. The project creates qualitative and quantitative empirical evidence on radical innovation triggered industry transitions –unfolding currently in Sweden and Finland-, advances new data mining approaches for early detection and management of radical innovations, and, finally, draws on this research to develop new “Smart Industrial and Innovation Policy” perspectives that are sensitive to the unique drivers, dynamics, and organizational features of different manufacturing sectors.

This project will support the efforts of Tekes and Vinnova to plan, analyse and implement new generation of “smart innovation policies” that target specific regional manufacturing challenges and create framework conditions for manufacturing industries to create and capture value from radical innovations. At the heart of new “Smart Policies” is a shift towards innovation in firms that are more susceptible for radical innovation, as well as able to make competitive innovation more “lasting”.

In terms of Swedish and Finnish innovation policy, the project aims to go beyond comparative analysis, to examine the rationale and modes of possible coordination of “smart policies”. This involves re-conceptualization of them as an industrial region within the EU and globally, as well as a reconsideration of the role of knowledge spillovers and concentration of innovation activities in the two countries.

The need for new, more sensitive and adapted, or “smart’ innovation and industrial policies in Finland and Sweden is growing in tandem with the mounting challenges of traditional manufacturing industries. In the face of the difficulties encountered by companies such as Nokia, Saab, or the Nordic forest industry, it is apparent that it is increasingly difficult for regions and countries to achieve resilient industrial leadership without fostering radical innovation and true industrial renewal.

The shortcomings of Finnish and Swedish manufacturing industries and industry leaders, we argue, include their lock-in in incremental innovation, inability to create or capture value from significant, industry-wide waves of radical innovation, as well as their “jobless” growth. The corporate and public policy strategies have in reality relied on investments in Research, Development and Innovation and incremental improvement of existing products and services, implicitly assuming that this will produce sufficient international competitiveness of domestic industries and firms. Yet, this strategy has been undermined by Finnish and Swedish MNCs offshoring their production and some R&D, as well as foreign (emerging economy) firms have upgraded to high-end innovations and services.

The assumptions underpinning traditional industrial and innovation policies, coined in the 1980s and 1990s, seem to be losing momentum and becoming inefficient in fostering sustainable industrial leadership in advanced economies. That necessitates radically new approaches in industrial and innovation policies.

RAID proposes to cast light on this dilemma by examining the emergence and implementation of significant shifts of radical technologies and innovations in manufacturing industries, and by providing technical advice on how to re-configure selected industrial sectors and their regional innovation ecosystems in order to enhance their capabilities in radical innovation, as well as to turn such competitive assets into “sticky” and hard-to or non-imitable.