Interview with Håkon Haugli, CEO, Innovation Norway

20 Mar Interview with Håkon Haugli, CEO, Innovation Norway

Business Focus (BF): What is Innovation Norway’s strategic vision and current priority areas?

Håkon Haugli: In small countries, bundling tasks within a single business ecosystem makes sense. Our organization traces its roots back to 1851 as an agricultural bank. Over 26 mergers and task transfers have shaped our evolution into Innovation Norway. We celebrated our 20th anniversary last December. The entity is 51% state-owned and 49% owned by local regional governments. Innovation Norway serves diverse functions, providing loans and grants for innovation and acting as Norway’s official trade and tourist promotion body and the national promotional bank within the European Union’s systems. Our vision is to globalize local ideas and foster nationwide value creation. Our main priorities include reducing climate emissions by 50% compared to 1990 rates by 2030 and increasing non-fossil-fuel exports by 50% by 2030. Other priorities include job creation, particularly in sparsely populated regions.

We facilitate business through various means, such as networking, competence enhancement, and financial support. Our statistics bureau has developed a sophisticated method to measure our impact, revealing a significant turnover, employment, exports, and productivity rise from our supported and non-supported companies. Each company receives a tailored mix of services, including participation in export programs, innovation funding, and advisory support. We serve as the government’s primary business liaison with nationwide offices. Our advisory services include finding business partners and aiding with financial aid applications. We aim to optimize projects through dialogue, advising against risky endeavors and suggesting alternative approaches.

BF: There are various external factors influencing the Norwegian economy and your efforts to promote business growth. What are the main challenges facing the economy and Norwegian business this year? Can these challenges be turned into opportunities, and how are you addressing them?

Haugli: Despite the challenging macroeconomic environment, Norwegian businesses thrive, marked by a record number of startups. Scaling remains a persistent challenge due to limited domestic markets, a concern other European countries share. Protectionist measures and geopolitical tensions further complicate international growth opportunities. The resurgence of protectionism and the polarized global landscape, coupled with recent shocks like the COVID-19 pandemic and ongoing conflicts, are among our top concerns. While some challenges are beyond direct intervention, we can assist companies in navigating the evolving operating environment.

For instance, the Inflation Reduction Act in the USA presents significant opportunities for Norwegian businesses looking to establish operations there, offering tax deductions. Norway’s expertise in green solutions, including hydropower, solar, wind, and wave technologies, also positions us as a global leader. Norway has been self-sufficient in green energy for 120 years and has 70 years of experience in oil and gas operations. The country excels in energy systems competence, which is crucial in the global transition toward decentralizing energy production. Norway’s success in rapidly adopting electric cars, with up to a 91% adoption supported by government incentives, showcases a swift shift from fossil fuels. This transition emphasizes Norway’s competence in system innovation and infrastructure development, with numerous companies providing charging infrastructure as a valuable commodity.

BF: In addition to the energy transition, energy infrastructure and energy solutions, are there any other sectors or business verticals that you would identify as offering strategic opportunities in global markets for Norwegian companies?

Haugli: In addition to the green energy transition, the world is also looking for new and responsible ways of producing food. While we have started tapping into oceanic food production, there is substantial untapped potential, particularly in oceanic plants, for various purposes, including energy. Although innovation projects in this area are emerging, they have yet to reach the desired scale. However, significant advancements are expected in the next decade, leveraging Norway’s unique oceanic competence and offshore experience gained from seafood farms and oil & gas operations.

BF: The European Union and the UK currently serve as Norway’s primary trading partners. What other markets are you prioritizing?

Haugli: Europe, especially Germany, now our largest trading partner, and neighboring countries like Sweden, Denmark, and Finland remain our primary focus. Emerging Asian markets offer opportunities, particularly in technology sectors such as welfare technology and green tech. Our strongest connections are with maritime nations like Singapore, where collaborative garbage collection and welfare technology projects are underway. Additionally, we are expanding into the US through investments in green industrial plants and collaborations with startups and scale-ups, signaling a growing market presence beyond pure exports.

BF: Over the past decade, foreign direct investment into Norway has more than doubled. What efforts is Innovation Norway undertaking to attract international investments, and in which areas would you like to see this investment flourish?

Haugli: We operate with two main functions. Firstly, our “Invest in Norway” initiative focuses on promoting the country to international investors and facilitating investment projects. Secondly, we assist regional businesses in becoming more attractive to foreign investors. While the decision for foreign investment lies with businesses, we provide support in bridging the gap between domestic and international opportunities. Notably, we’ve seen increased investment in green technology in Europe and globally, covering solutions from electric boat engines to energy transition projects. Though our role isn’t to direct investors, we aim to facilitate the process. Norway offers enticing value propositions in the green tech sector, including opportunities for battery factories within Nordic collaboration efforts.

BF: Norway, both as a nation and through its investment fund, ranks among the largest global investors, holding 2% of stocks worldwide. Beyond outward investments, international cooperation, knowledge transfer, synergies, partnerships, and investments are vital for the Norwegian economy’s future. How does Innovation Norway prioritize this aspect, and how does international cooperation contribute to the country’s current goals?

Haugli: Foreign direct investments significantly impact economic performance, with companies receiving foreign investments often outperforming others. It’s not solely about financial capital but also about accessing competence, networks, and distribution channels.

Many Norwegian startups seek foreign investors, particularly industrial investors, to expand their market reach. Participation in the global investment and trade landscape is crucial for Norway’s economic growth and knowledge sharing. Political leaders emphasize the importance of multilateral institutions and reliable trade frameworks. The threat of a trade war-oriented global landscape raises concerns for every company’s growth ambitions in Norway, impacting the economy.

BF: Can you share insights into Norway’s startup landscape and how Innovation Norway supports it?

Haugli: Supporting startups has been central to our mission since our inception. Over the past decade, Norway has seen a surge in startup activity, boasting 11 unicorns and ranking second in Nordic countries after Sweden. While indicative of a thriving ecosystem, recent challenges have emerged, particularly in accessing capital. Global uncertainties and rising interest rates have made investors more cautious, limiting capital availability for scale-ups. To address this, we’ve adjusted our funding schemes to provide later-stage loans and grants, mitigating risks for companies. Recognizing the importance of mentorship, we connect scaling companies with experienced mentors to facilitate growth. Given Norway’s small economy, accessing mentors with scaling experience is crucial, and we facilitate these connections through various mentorship programs. Additionally, we offer scaling programs in key hubs like Silicon Valley, New York, and London, providing networking opportunities and investor access. Our initiatives, spanning domestic and international networks, reflect our commitment to support startups and scale-ups through diverse funding schemes and programs.

BF: Norway consistently earns top rankings for ease of doing business, competitiveness, and innovation. What factors contribute to this success?

Haugli: Norway operates as a free-market economy characterized by openness and deregulation. Despite perceptions of heavy regulation, the country ranks highly in global economic freedom indices. Over time, Norway has prioritized business-friendly practices to balance economic growth and social welfare. Government initiatives, including streamlined bureaucracy and incentive schemes, support this balance. Ongoing political debate questions the extent of deregulation, but there’s a broad consensus that Norway should maintain both an open market economy and a robust welfare state, recognizing their interconnectedness.

BF: What are the top three advantages of doing business in Norway? What sets Norway apart as a business destination?

Haugli: One significant aspect is the emphasis on trust within Norway’s economy, characterized by reliability, minimal corruption, and a commitment to delivering on promises. Norway also stands out for its dedication to gender equality and work-life balance, with a culture that prioritizes family obligations and generous vacation allowances. This commitment supports high productivity levels achieved through efficiency efforts across industries. Sectors like automotive and aluminum have notably gained productivity, contributing to Norway’s reputation for innovation and sustainability, especially in green metal production.

BF: Regarding the green transition, sustainability targets, and ESG, the government has outlined ambitious environmental goals for the coming years, with a collaborative effort between the public and private sectors. This has led to the most significant transformation of Norway’s business sector in modern history. How is Innovation Norway contributing to this transition and supporting enterprises in achieving these goals?

Haugli: Every program and financial support initiative we undertake is dedicated to facilitating the transition to a zero-emission economy. Last year, we supported 6,000 projects aimed at advancing this transition, including reducing greenhouse gas emissions in traditional industries and fostering new sustainable businesses. While progress is notable, it still needs to reach the desired pace. Nevertheless, initiatives like electric ferries and the widespread adoption of electric cars demonstrate tangible progress. Businesses are increasingly advocating for more ambitious measures to accelerate the transition. Our core objective is to catalyze this green transition, aligning all our resources toward this goal. Importantly, this shift in mindset has seen climate action evolve from external demands to internal opportunities for economic growth and innovation. Norway’s expertise in areas like hydrogen solutions and electrical infrastructure positions us as a crucial partner for European countries transitioning to green energy. Our mission extends beyond Norway’s transition to supporting the broader global green transition, driving our daily dedication and commitment.