We Asked the Estonian President What We Could Learn From Them – Nobel Winner Urged To Go ‘Head to Head’

Interviews on Digitalization – Estonian President Kersti Kaljulaid, Nobel Laureate Bengt Holmström from Tony Öhberg on Vimeo.

On the bright crisp Thursday afternoon, Finnish-Swedish Cultural Centre in Hanasaari, on the border between Helsinki and Espoo, provided the perfect setting for developing the centenary theme of “together.” Members of the government, business leaders and academics from Finland and Sweden and some from Estonia, met with an emphasis on working together with new innovations to enhance the benefit to society. Finland, Sweden and Estonia are forerunners in digitalization and some are calling this the Fourth Industrial Revolution but how might it impact on the future?

Kai Mykkänen, the Finnish minister for foreign trade and development highlighted how over the last 100 years in Finland the population directly involved with agriculture had declined from 70 percent to two percent today. We have watched the rise and fall of Nokia, but it was now encouraging to see the strengthening of the electronic game industry. It was pleasing to see Nordic countries being world leaders. Denmark propagated wind farms which Germany emulated. Sweden’s high oil fuel taxes encouraged the development of electric vehicles and now Norway has incentivized the use of them.  The government needs to be bold in policy designed to stimulate innovation and signs are encouraging particularly with Artificial Intelligence.

Bengt Holmström, professor of economics at the Massachusetts Institute of Technology (MIT) and a Nobel Laureate in 2016, provided the keynote speech. Although a Swedish-speaking Finn, Bengt opted to speak in English to remain neutral and neatly summarized his message into a few words: “You need a box to think outside the box.” Professor Holmström believes that imitation is the first step to innovation, kids do it naturally and adults somehow lose this talent. The copying of ideas and then adapting them to your situation, that’s innovation. However, constraints are essential because if things are in abundance humans are lazy and nothing happens. Lack of money or time creates innovation. Many successful companies despise investors, and money looking for ideas just causes problems.

Professor Holmström believes that imitation is the first step to innovation, kids do it naturally and adults somehow lose this talent.

So, what can business leaders do? It is essential to give people the sense of possibility by posing the right question or challenge. That is defining the boxes.  Then allow the freedom to move within the box to find a solution. Steve Jobs had the vision of a mobile phone and wrote the specifications, he created the box, and allowed the freedom for development.  Getting the structure in place to enable that is the most important role of the leader. Research is a journey and it is wise to be prepared for the unexpected. Accidents particularly lead to great innovation. A great example was the 3M development of a super strong glue that failed but luckily someone realized another use and the Post-it note was created. Structures need to be in place to cope with this change and a different result.

Martin Lundstedt, president and CEO of Volvo Group, commented that Volvo was already de-centralizing to create conditions for innovation and digitalization were giving savings of three to five percent each year. Karl-Henrik Sundström, CEO of Stora Enso the wood processing giant, suggested that paper demand may decline but everything we have today can be made from wood. Stora Enso was innovating to save energy thereby reducing the use of fossil fuels and also creating new products to develop the business. In 2015 they incorporated a semiconductor into paper labels and connected to the “cloud” for tracking and detecting parcel tampering. Much technology is available but not necessarily all utilized yet.

CEO of Kone Henrik Ehrnrooth stated that the elevator manufacturer was looking how digitalization can improve the service to the customer.  Their company philosophy is: we don’t just sell elevators and escalators, we ask the customer about their problem and provide solutions.  Kone had started late with the “Internet of Things” at the beginning of 2016 and after a year nothing concrete was being utilized. The problem was not the technology but getting the customer to see the advantages of monitoring equipment in the “cloud”.  Mr Ehrnrooth also thought that Artificial Intelligence was being overestimated now but probably would be underestimated in the future.

Estonian President Kersti Kaljulaid outlined the totally digital state now used by the whole population of 1.3 million people. Everyone has a digital ID, and it has been incorporated into the citizen’s travel documents. At birth, the baby is given the digital ID and the parents add the names later.  Public and private business both use the same platform which the government provides.  No enforcement for use was necessary because it is easy, cheap and reliable. Based on already available reliable technology it was easy to innovate for use in Estonia.  Savings of about two percent of gross domestic product have been made because of fewer government offices, fewer business offices and less waiting in queues. The systems were streamlined so that big bureaucracy didn’t become a big cyber replica. Most folks now prefer to do as much as possible online.

Savings of about two percent of gross domestic product have been made because of fewer government offices, fewer business offices and less waiting in queues.

Cyberspace should not be abandoned to criminals and the government needs to be there. Digitalization has created new opportunities and jobs, although government needs new methods of taxation to pay for the social infrastructure that everyone wants. Flexible opt-ins being a good solution. Transparency is needed regarding earnings and tax, however, all the data belongs to the individual.  In Estonia, if the government or any business looks at your data the person is notified so the individual monitors and is able to ask why. This builds trust in the system and is essential for it to work successfully.

Some governments claim to be making a move towards paperless government but still have a long way to go.  For example, the United States version of an e-prescription is an email from your doctor. In Estonia, the doctor makes the e-prescription which is then securely available to health professionals, the pharmacist and patient.  Secure digital is much more secure than the analog equivalent. Many countries have voting by post, how can voting by post be as secure? Security obviously is essential and people need educating about cyber-hygiene. Just like washing your hands after using the toilet, otherwise you may get sick.

Futureforum gave the participants opportunity to speak in Finnish, Swedish or English and the audience heard in either language, so language is no barrier to innovation. It was great to see two ladies confident in bringing their babies to the conference, and it complimented proceedings. Much to everyone’s amusement, the only time a baby cried out loudly, was when President Kaljulaid was relating the difficulty of registering a birth in a large central European country without digitalization. The conference provided much food for thought and it was good to see the confidence of Finland, Sweden and Estonia blazing ahead on the digitalization trail.

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