It’s not just long winters that push Swedes to innovate

Quartz

Sweden has found the recipe for success. Getty Images/Al Bello

Innovation is a difficult quality to measure, but, by all accounts, Sweden is an innovative place and only getting more so, with top rankings in innovation surveys from the Legatum Institute, the World Intellectual Property Organization, and the World Economic Forum.

The foundation for this economic strength seems to transcend the absolute terms by which many people view Sweden—either as socialist nightmare or a capital of cool or a place scarred by long winters and Lutheran angst.  In fact, Swedes seem to be pragmatically pulling from their entire heritage—a culture of entrepreneurship going back a century, the social stability of the welfare state, and that sense of pop culture—to reach forward into a globalized future.

This is most obvious in a recent slew of stories on the vibrant Stockholm startup scene, headlined by Skype and Spotify, but now including hot companies like iZettle, Klarna and Wrapp.

But innovation in Sweden is not limited to techy startups. Sweden is a world leader in life sciences, with clusters in both the Stockholm area and in southern Sweden, in conjunction with Denmark. And it’s also long been considered on the cutting edge of clean tech, largely inspired in practice and principle by its vast natural resources—meaning its rivers, wind, seas and forests. The country actually imports 800,000 tons of trash a year to fuel efficient waste-to-power plants and gets more of its energy from biomass than oil, has set a goal to be oil-free by 2020, and is the leader within the EU in renewable energy.

All this creates a welcoming ecosystem for Swedish clean tech companies like gasification firm Chemrec and solar company ClimateWell. In the World Wildlife Fund’s 2012 Clean Tech rankings, Sweden ranked third behind only Denmark and Israel. From the report:

Sweden and the USA show a common pattern, scoring well on “evidence of emerging cleantech companies” and “general innovation drivers”. Sweden edged out the USA by scoring stronger (on a relative basis) on the “evidence of commercialised cleantech innovation” factor mainly due to its relatively strong deployment of renewable energy.

But Sweden and other Nordic countries across the board need to raise their manufacturing rate and be careful to avoid getting stuck as boutique innovators who never reach a larger scale.

So why does Swedish business “punch above its weight” in terms of innovation, as Skype founder Niklas Zennström recently put it?  Like anything connected to a buzzword like innovation, it’s almost impossible to pin down, but a few things do pop up regularly in analyses of both the Swedish clean tech industry and Swedish innovation in general:

  • Global outlook, including engagement with China
  • Emerging (or re-emerging) culture of entrepreneurship
  • Government support, from regulation to infrastructure to international promotion
  • Strong commitment to R&D, as well as links between universities, government and business
  • Forward-looking national market that serves as a good testing ground
  • Long, dark winters that leave Swedes with little to do but work

Innovation is often linked to a spirit of entrepreneurship but Sweden faces significant challenges in this department. It’s hard to give stock options, there’s not a lot of venture capital for startups, taxes are high and the local market is small. These factors, among others, have driven innovative companies like Spotify out of the country.

Then there is the big question: What about the welfare state?  You’d think the tired image of Sweden as a stagnant socialist backwater would have been kicked to the curb long ago. But it reared its ugly head recently after publication of an academic paper that claimed to show that Swedish “cuddly” innovation was dependent on the “cutthroat” innovation of places like the US.

This caused a minor fuss, with Chris Farrell, in Bloomberg Businessweek, highlighting a host of evidence to the contrary, that the welfare state actually encourages risk taking and innovation, and that the fraying safety net in the US is hindering innovation there:

Fledgling entrepreneurs without family wealth to tap would have every incentive to try their hand at starting their own business if they were confident the risk of entering old age without retirement savings is hedged and knew that their children would have decent health insurance.

I moved to Sweden for the first time in 2004, when the once all-powerful Social Democrats were still in power and long before the Economist started penning paeans to Scandinavian pragmatism. And I could never understand why Sweden was not filled with state-educated entrepreneurs leaping to take risks, knowing they would be caught to some degree if they fell.

I assumed at the time that there was some deep cultural resistance to risk in Sweden, and that maybe you had to be an American in Sweden to see the opportunities. Clearly, Swedish culture is moving fast to fill the gap, and it bodes well for Sweden’s place in a globalized world—especially in clean tech, which seems poised to break through after some tough years—that at least a subset of Swedes are catching up with their opportunities.

 You can follow Nathan on Twitter at @NathanHegedus. We welcome your comments at ideas@qz.com

More from Quartz

Rates

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

    AdChoicesagoodcooksSponsored
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

    CNBC
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Norwich Information Security MS

    Online, accredited, top ranked. NSA Center of Academic Excellence. Recognized by the Department of Homeland Security. Download your free brochure!

    AdChoicesNorwich UniversitySponsored
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Don't care about Alibaba? Here's why it may matter

    When the Alibaba Group Holding prices its initial public offering Thursday, small businesses in particular will be watching. Founder Jack Ma -the former English-teacher-turned-dot-com billionaire-has touted his e-commerce platform as a way for smaller merchants to expand their international…

    CNBC
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Wondering How You Could Save on Home Insurance?

    Get a quote from Farmers Insurance and discover how you could save. Speak with an agent to get the knowledge you need to make an informed decision.

    AdChoicesFarmers InsuranceSponsored
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • Don't buy Alibaba stock: 'Dean of Valuation'

    Investors should steer clear of Alibaba , valuation expert Aswath Damodaran said Wednesday. On CNBC's " Fast Money ," Damodaran, a professor of finance at New York University's Stern School of Business, noted that he was looking at Alibaba stock from the perspective of a long-term investor, not a…

    CNBC
  • Play

    Tues., Sept. 16: Watch Humana Stock

    Humana, Global X Social Media Index ETF and Majesco Entertainment are among stocks to watch. WSJ's Chris Dieterich discusses the details with Michael Casey. Photo: Humana

    WSJ Live
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Best Womens Wrinkle Creams 2014

    Mom reveals simple wrinkle solution that has researchers very excited. Try this free solution today to look and feel years younger.

    AdChoicesBellaLabs.comSponsored
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

    Reuters