Linnar Viik: Back to the future

Linnar Viik, Estonia’s internet guru and innovation advocate, believes NIB and other IFIs will include innovation assessment in all project evaluations by 2015.

“Creativity is not embedded to the past but in the future. Assessing a company’s performance based on its balance sheet, assets and past performance is like driving a car looking only in the rearview mirror,” he says.

Mr Viik, who has been a member of NIB’s Business Advisory Group since 2008, continues:

“A lot of energy is put into improving current performance based on past experience, but the vision of where or who you want to be is a company’s greatest asset.”

In fear of sounding too idealistic, he quickly points out how, only 20 years ago, environmental assessment was ridiculed. But today most financial institutions will not consider a loan without undertaking a broad environmental assessment.

“If NIB and other IFIs start carrying out innovation performance assessments, it will be a strong stimulus and incentive for companies to focus on innovation,” Mr Viik remarks.

“The governments in the Baltic and Nordic countries are looking for ways to stimulate innovation. Innovation is a focus sector for NIB and enhancing competition is part of NIB’s mandate, I believe NIB can be a forerunner in innovation assessment,” says Mr Viik.

Long-term commitment

“In order to understand the importance and impact of innovation on a bank’s loan portfolio it needs to start by monitoring the innovation performance of the existing customer base and extend this experience to assessment of future projects,” he continues. “It’s impossible to predict the future of technologies but a bank can make sure that the management, culture and structure of its customers enable a good level of innovation performance.”

One of NIB’s strengths is its ability to offer long-term financing. Mr Viik regards this as an opportunity when lending to projects that are innovation and R&D intensive.

“NIB should look at its clients’ capacity to continuously innovate,” he says. “Long-term financing is even more dependent on careful innovation performance monitoring, as most of the technologies which lenders believe they can rely on when they start their project will become obsolete before the end of it. NIB cannot secure the quality of its loan portfolio on existing excellent technology, but needs to make sure customers are able to focus on innovation in the long run.”

Technology rationalist

Mr Viik believes we can innovate our way out of the financial crisis.

“Hunger is a prerequisite for innovation and the recession will bring forth new ideas,” he says.

While cost-cutting is the easiest way to meet short-term negative consequences, it is not a long-term answer to structural problems, Mr Viik states. “Most importantly, cost-cutting should not hinder opportunities to propose new ideas,” he says.

The innovation expert does not believe in a sole technological answer to the climate crisis.

“The 20th Century can be described as a century of technology. We have become so used to applying technological solutions to our problems that we have forgotten to look at their core. Some of the reasons for climate change, like mega-consumption and massive urbanisation, cannot be solved by a technological wonder. We have to change our behaviour,” Mr Viik asserts.

“I am neither a technology pessimist nor a technology optimist-I am a technology rationalist,” Mr Viik declares. “The recession offers a perfect opportunity to think differently. However, the threat of climate change demands deep changes in human behaviour and not just new technologies that allow us to maintain the current consumption patterns.”

Year of Creativity and Innovation

This year has been declared the European Year of Creativity and Innovation. Recently, as the year is about to come to an end, the European Environmental Agency has stated that even if every climate proposal from every country was carried out, it still would not be enough to limit global warming to below 4°C-two degrees more than scientists’ recommend. Mr Viik says Europe would have to undergo deep structural changes in order to win the war against climate change.

“In order for Europe to become the testing ground for innovation in green technology, we need to reform our raison d’être. The EU is a structure created for 20th Century needs and is not responding as well to challenges of the 21st Century,” he says, following up with an example.

“One way to mitigate climate change is to think and act locally, for example live and work within 100 kilometre perimeter communities, eat food produced locally, and travel less. This contradicts the basic idea of the borderless Europe created under the EU, the aim of which is to build a big and competitive global player.”

Mr Viik finishes up by giving a definition of innovation:

“Innovation is an idea brought into practice. In the last 20 years, innovation has developed from being based on industrial research to being driven by demand, and innovation no longer depends on access to national financial or natural resources, but on access to global knowledge.”

“In the next ten years,” Mr Viik forecasts, “the biggest potential for innovation will lie in agriculture and the food industry as well as in energy and logistics and transportation.”

Linnar Viik:

Education:
IT engineer and economist with degrees from the Tallinn Technical University and Helsinki University of Technology.

Appointments:
Associate professor at the Estonian IT College since 2000. Since 2007, Mr Viik has worked at Skype Technologies in a senior role, helping to merge a new set of communication services into Skype’s core software. He has also worked as a management consultant at KPMG and programme manager at the UNDP.

Advisory work:
Member of the Board of Directors and Head of the Multimedia Department at Levicom. Chairman of the Board of the IT and media company Meediamaa and Chairman of the Supervisory Board of internet service provider Netexpress. Joined the Business Advisory Group of NIB in 2008. In the same year, he was also elected as Member of the Governing Board to the European Institute of Innovation and Technology. Mr Viik has been advising the Estonian government in the fields of information society, innovation, and research and development since 1995. In 1999-2001, he was an adviser to the Prime Minister of Estonia and in 2000 he helped Estonia become the first country to adopt an e-governance system. In 2001, he cofounded Mobi Solutions and was a Member of the Board until 2007.